link: Adam Smith


 "It is the maxim of every prudent master of a family never to attempt to make at home what it will cost him more to make than to buy...What is prudence in the conduct of every private family can scarce be folly in that of a great kingdom." (Adam Smith. Inquiry into the Nature and Causes of the Wealth of Nations. 1776)

NOTION OF FREE COMPETITIVE ECONOMY OR 'LAISSEZ- FAIRE ECONOMICS' In the eighteenth century Age of Enlightenment, almost every facet of the Old Regime in France was severely criticized. The 'philosophes' reacted strongly against controlled economy and the 'mercantilist doctrine' of equating money and wealth. They proclaimed the 'liberal doctrine' of a natural and freely competitive economy known as 'laissez-faire economics', a term which was derived from 'laissez faire, laissez passer' meaning live and let live or 'let nature take its course'. It was philosopher Adam Smith from Scotland who formulated the classical doctrine of the free competitive economy of laissez-faire economics.

SMITH WROTE 'WEALTH OF NATONS' In 1776 Smith published his book Wealth of Nations in which he gave a new meaning to the term 'wealth', a term which had been synonymous with accumulation of some kind of 'specie' - gold, silver, money. Smith perceived wealth in terms of economic well-being which resulted not from the possession and accumulation of treasure but from the process of improving one's social conditions through productivity or 'work'. Furthermore productivity could be increased on a national scale with the 'division of labour'.

Smith claimed it was natural law that governed the economic liberty of the individual and free trade among individuals and among nations as well. According to the laws of nature, people compete freely in their striving to improve their own social conditions. And individuals who work in free competition naturally enrich their society as a whole as if they are being guided by nature's 'invisible hand'.

The notion of laissez-faire economics provided the framework for his theory of 'free trade among nations'. Smith believed that though the process of social improvement depends on economic freedom, true liberty of the economy is dependent on the right education.

These enlightened views of a natural human economics were to be misinterpreted in the American culture which promotes the metaphor of 'economic man'.

MISINTERPRETATION OF 'SURVIVAL OF THE FITTEST'  The misintrerpretation of Adam Smith's concept of economic man is based on a misinterpretation of Darwin's phrase 'survival of the fittest'. In the context of Adam Smith's philosophy of economics, the term is used incorrectly to signify that the human indiviudal proves his fitness by amassing wealth and running his competitors out of business. Furthermore, sympathy spent on victims of the economic struggle is sympathy wasted because victims of the economic struggle are considered Nature's unfit'. In this context, the interpretation of the concept of 'economic man' pitted one individual against another, each absorbed in his own self-interest. Fostering a type of human fragmentation, the economic man concept set one aspect or phase of human nature against others. Not only were human individuals to be divided against each other, but they were to be divided against themselves. The life of the individual was to be divided into compartments or 'roles' with sound proof walls between them.

 As compartmentalized selves, individuals who were faced with social and cultural conflicts have to try to harmonize the various 'selves' of their experience - their domestic self, their business self, their religious self, their civic self, their political self ...all housed in one physical self which does not listen to what is said in the role of the economic self of 'economic man'. This compartmentalized and divided self finds it very difficult to mature into a psychologically, intellectually, emotonally and morally whole human being. The individual has difficulty building sound linkages of responsibility with the world when education in the cultural atmosphere is both exalted and despised. It is difficult for a child to grow to maturity in a culture in which the natural hazards of life are greatly multiplied by the confusions of the culture.

As a result of the misinterpretation of Adam Smith's economic theories, the concept of 'economic man' cut the bonds of mutual responsibility between human individuals.

It is commonly believed that economic advantage can be pursued by any means and that the pursuit of wealth is not subject to supervision by religion or by ethics. As a result, conditioning influences of the culture are in conflict. The resulting cultural conflicts which are produced have effects which are relevant to the problem of personal growth and maturity. Cultural conflicts include for example a faith in education and at the same time a contempt for educated people, apathy and at the same time a driving ambition and so on... The individual who attempts to adapt to conflicting cultural forces becomes a divided self, with doubts, fears and inner tensions and anxieties. On the social scale these are manifest in the mental illness, violence, crime, alcoholism, drug addiction, social prejudice and so on. With the lack of wholeness in the conditioning influences of the culture, the individual is hampered from growing into a psychologically whole, mature human being.

Children growing in this kind of environment face an abnormal temptation to give up in their striving for self-realisation and to remain dependent and irresponsible.

IMPLICATIONS FOR EDUCATION True economic freedom of the individual depends on an education of the person as a whole being... i.e. 'holistic education'. Holistic education is education which provides the necessary social conditions appropriate for personal growth i.e. the psychological, emotional, intellectual and moral growth i.e. mature growth 'self-actualisation'. Education for self-actualisation results in the formation of mature, ethical and responsible citizens of a civilised society.