NOT too long ago, I read an article in the Harvard International Review (HIR) with the headline“Where did Adam Smith Go Wrong?”. As most, if not all economists accept, Adam Smith is regarded as the godfather of economics. He built his iron-clad reputation on the belief that unfettered free market, guided only by the “invisible hand”, is the surest way to economic development and wealth accumulation.
He delivered this sermon in his classic book “The Wealth of Nations, written in 1776. The Smithian paradigm attributes economic growth to a natural propensity in human nature to maximize wealth. Smith posits that individuals find it rational to carry out full-scale production by cutting their costs, and as a corollary, what’s good for individuals is supposedly good for the aggregate economy.
The author of the article in question was trying to decipher this theory in the context of today’s hyper-globalization. He made a case that the path that the so called “Asian tigers”, namely, Singapore, Taiwan, South Korea and Hong Kong and for that matter, Japan, trod on their way to developmental height, seemed at odd with the time-honored Smithian tradition. I seconded his motion.
For a start, it should be noted that Adam Smith was a pretty complex individual. The book itself is a buffet of concepts, from which individuals could pick their choices and be happy. He made room for both liberal and conservative economists to figure him out differently.
It was he who said, “N.