morality - Adam Smith and Market Triumphalism

The following is a great summary of Adam Smith and the limits/dangers of market triumphalism:

We’re living with the economic fallout of the financial crisis and we’re struggling to make sense of it. One way of understanding what’s happened is to see that we’re at the end of an era, an era of market triumphalism. The last three decades were a heady, reckless time of market mania and deregulation. We had the free market fundamentalism of the Reagan-Thatcher years and then we had the market friendly Neo-Liberalism of the Clinton and Blair years, which moderated but also consolidated the faith that markets are the primary mechanism for achieving the public good. Today that faith is in doubt. Market triumphalism has given way to a new market scepticism.

It’s also a time, or so it seems to me, to rethink the role of markets in achieving the public good. There’s now a widespread sense that markets have become detached from fundamental values, that we need to reconnect.

Greed is a vice in personal relations, but the whole point of markets is to turn this vice into an instrument of the public good. This is the moral alchemy that markets are said to perform. We learn this from Adam Smith who said, “It is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner, but from their regard to their own self-interest”. “We address ourselves not to their humanity”, Smith said, “but to their self-love. Nobody but a beggar chooses to depend chiefly upon the benevolence of his fellow citizens”. This was Adam Smith.

It was my aunt and uncle who encourage me to download the Reith Lectures - they are fantastic.

If only the banker and city could acknowledge the limits of free-markets ...