Adam Smith and Private Property


The following quote comes from The Wealth of Nations (B.V, Ch.1, Of the Expences of the Sovereign or Commonwealth) by Adam Smith, the so-called father of modern economics. And while it is true, as Noam Chomsky likes to point out, that Smith also exposed the "vile maxim of the masters of mankind" ("All for ourselves and nothing for other people…") the quote makes me wonder if he was okay with it.

Wherever there is great property there is great inequality…

So far so good. Thomas Jefferson also realized that property and inequality are related. In a letter to one of the founding rich white dudes he wrote that, "Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions or property in geometrical progression as they rise."

Progressive taxation has always been a commonsense approach. In fact, the first three measures numerically listed in The Communist Manifesto by Karl Marx and Frederich Engels, and to be implemented upon the success of a working class revolution are: (1) abolish private property; (2) institute a heavy and progressive tax; and (3) abolish the right of inheritance.

… For one very rich man there must be at least five hundred poor, and the affluence of the few supposes the indigence of the many….

Amen! It reminds me of President Eisenhower’s remark that, "Every gun that is made, every warship launched, every rocket fired, signifies in the final sense a theft from those who hunger and are not fed, those who are cold and are not clothed."

… The affluence of the rich excites the indignation of the poor, who are often both driven by want, and prompted by envy, to invade his possessions….

Hmm. Instead of "want" I would have used "need" since as Smith knew, the poor are… well, "poor." Envy? How about "prompted to right an injustice"? We are getting to the root of exploitation now, but let’s keep going…

… It is only under the shelter of the civil magistrate that the owner of that valuable property, which is acquired by the labour of many years, or perhaps of many successive generations, can sleep a single night in security….

Yup, exploiters need force to protect them from the exploited. "Valuable property" is also often "acquired by the labour" of others, and what right does someone have to inherit "valuable property"? Why should Paris Hilton potentially stand to inherit the hotel empire?

By allowing anyone to have private property (not to be confused with personal property) we give them a bargaining power to exploit others in terms of compensation and decision-making. I can only put it so simply: people should only be rewarded for what is within their power to control and that is how hard and long they work at socially valued labor. And everyone should be entitled to a fair say in decisions in proportion to the degree they are affected. These two principles, fair say and fair pay, are not compatible with private property.

… He is at all times surrounded by unknown enemies, whom, though he never provoked, he can never appease, and from whose injustice he can be protected only by the powerful arm of the civil magistrate continually held up to chastise it…

Unknown? Never provoked? Can’t appease? The "injustice" is the permitting of property to be used to create inequalities, not those who seek to remedy it. It’s not the impoverished who need to be chastised, but the affluent! It’s like what Gustav Flaubert said in a letter to a friend, "I have always tried to live in an ivory tower, but a tide of shit is beating at its walls, threatening to undermine it."

… The acquisition of valuable and extensive property, therefore, necessarily requires the establishment of civil government…

No disagreements. If we acknowledge that private property produces inequality and we know that these inequalities produce uprisings and if we side with the propertied then, yeah, we will need some muscle to fight off the rabble.

… Where there is no property, or at least none that exceeds the value of two or three days labour, civil government is not so necessary.

Eh, it’s not the size that is the issue. It’s the ownership. "Extensive property" that is socially owned and managed is not problematic or in need of a "civil magistrate" to "chastise" the now non-existent poor.

It’s amazing how Smith can see the relations between property and social inequalities but draw the opposite conclusion: defend the ivory tower. I can see Smith being one of those Marx and Engels have in mind when they said,

You are horrified at our intending to do away with private property. But in your existing society, private property is already done away with for nine-tenths of the population; its existence for the few is solely due to its non-existence in the hands of those nine-tenths. You reproach us, therefore, with intending to do away with a form of property, the necessary condition for whose existence is the non-existence of any property for the immense majority of society.

In one word, you reproach us with intending to do away with your property. Precisely so; that is just what we intend.

Hear, hear!

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