‘UNINTENDED CONSEQUENCES OF INTENDED ACTION’
Scottish philosopher of morals, politics and economics, Adam Smith was a contemporary of the Empiricist, David Hume (1711-1776), and is very close to him in outlook and philosophic temperament. His lectures on ethics and logic were published under the title Theory of the Moral Sentiments but he is most famous for his work of political economics, The Wealth of Nations.
Favoured philosopher of Margaret Thatcher and darling of Conservative economists, Smith is famous for his views on private property, the free market economy and the doctrine that ‘unintended consequences of intended action’ will be to the benefit of society at large. The idea behind this most fortunate if true of principles is that in intentionally serving one’s interests one unintentionally serves the interests of society as a whole.
‘The Wealth of Nations’ is one of the most important and deservedly read works of economic and political philosophy in the history of Western thought.
A simple example will illustrate the essence of Smith’s idea. Suppose that Jones, in seeking his own fortune, decides to set up and run his own business, manufacturing some common item of everyday need. In seeking to provide for his own fortune, Jones’ entrepreneurial enterprise has a number of unintentional benefits to others. First, he provides a livelihood for the people in his employ, thus benefiting them directly. Second, he makes more readily available some common item which previously had been more difficult or more expensive to obtain for his customers, thus easing one, if only minor, aspect of their lives. The forces of market economy ensure that these unintentional benefits occur, for if Jones’ workers could find more profitable employ elsewhere they would either cease to work for him or he would have to raise their salaries in order to secure a workforce. Likewise, if Jones’ product was available more readily or less expensively from some other source, Jones would either go out of business or be forced to lower his prices to a competitive rate. The model assumes the absence of a monopoly, both in the labour and economic markets.
The belief that ‘unintended consequences of intended action’ will be of benefit to society held great imaginative power over the industrial philanthropists of the 18th and 19th Centuries and provided the philosophical groundwork for the later ethical theories of Bentham and Mill. However, criticism is not hard to come by. It is surely a blinkered view, if comforting for the entrepreneurial capitalist, to suppose that pursuing one’s own self-interest constitutes a magnanimous and philanthropic act towards society at large. One has only to review the social history of industrial Britain, to witness the treacherous and exploitative working practices of the industrial age, the extreme poverty and degrading social conditions of the suffering working classes, to realise Smith’s idealistic model has far more serious ‘unintended’ consequences. What has largely brought an end to such conditions in the industrialised West is not a triumphant adherence to Smith’s principles in Western economics, but a shifting of the poverty and exploitative working practices from one part of the world to another. In other words, the living conditions of those in the West has improved to the detriment of other countries just insofar as the labour required to support Smith’s economic philosophy has been removed from Western societies and transferred to those of the Third World.
Related:
Regardless of one’s political views on Smith, The Wealth of Nations is one of the most important and deservedly read works of economic and political philosophy in the history of Western thought. It needs to be read and understood by its detractors as much as it does by its supporters.
Arts, reviews & current affairs 