Why I detest and abominise modern free market economics

A friend asked me why I was so scathing and dismissive of free market economics and modern market economic models whilst at the same time admitting to great admiration for Adam Smith, the author of free market economic theory. Following my answer he encouraged me to publish it in my blog. I have to apologise however, because, my answer is necessarily lengthy for a blog such as this and involves letting Adam Smith speak for himself, rather than me attempting to interpret him. In addition I will reinforce this perspective by quoting Alfred Marshall, the author of neoclassical economics to support my conclusion that modern free market economics is a fraud, and a lie. Why? Well, modern economists argue support for such abominable practices as zero-hours contracts, 'flexible' working practices, managerialism, longer working hours, days, and weeks, and the reduction of workers rights, which they hide under a concern for what they term 'regulation'. They also demand the restriction of trade union activity and condemn all industrial action for whatever reason. My first response was that Adam Smith was most certainly not the author of what we call the free market model of economics and that any attempt to blame his for that does him a great disservice. That however, requires a book in itself to explain, but we can get an insight into why he was not by actually looking at what he said. Now, on the subject of working people's wages and improvements in their living standards, Adam Smith asks the question

"Is this improvement in the circumstances of the lower ranks of the people to be regarded as an advantage, or as an inconveniency, to the society? The answer seems at first abundantly plain. Servants, labourers, and workmen of different kinds, make up the far greater part of every great political society. But what improves the circumstances of the greater part, can never be regarded as any inconveniency to the whole. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, clothe, and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, clothed, and lodged."

In support of this point of view Alfred Marshall writes

 "The drift of economic science during many generations has been with increasing force towards the belief that there is no real necessity, and therefore no moral justification for extreme poverty side by side with great wealth. The inequalities of wealth, though less than they are often represented to be, are a serious flaw in our economic organisation."

Now, it has to be remembered that Smith published in 1776 and Marshall in 1890. What they are writing is as relevant, if not even more so, to 2016 as it was then. That must be to the eternal shame of British society today, and especially to our economic and political policy makers. It is a dreadful commentary on modern Britain that can I present such observations on 18th and 19th century Britain as relevant to the 21st century. Thus, according to a 19th century real economist, as opposed to the charlatans that we are being oppressed by and driven into intellectual barbarity, the economic structures and organisation of our society are both immoral and seriously flawed. In another observation on the condition of working people Smith writes

"The liberal reward of labour, as it encourages the propagation, so it increases the industry of the common people. The wages of labour are the encouragement of industry, which, like every other human quality, improves in proportion to the encouragement it receives. A plentiful subsistence increases the bodily strength of the labourer, and the comfortable hope of bettering his condition, and of ending his days, perhaps, in ease and plenty, animates him to exert that strength to the utmost. Where wages are high, accordingly, we shall always find the workmen more active, diligent, and expeditious, than where they are low"

 And in a discussion of the most economically beneficial situation for the greater social good of the whole nation Smith writes

 "If masters would always listen to the dictates of reason and humanity, they have frequently occasion rather to moderate, than to animate the application of many of their workmen. It will be found, I believe, in every sort of trade, that the man who works so moderately, as to be able to work constantly, not only preserves his health the longest, but, in the course of the year, executes the greatest quantity of work......In reality, high profits tend much more to raise the price of work than high wages.....In raising the price of commodities, the rise of wages operates in the same manner as simple interest does in the accumulation of debt. The rise of profit operates like compound interest. Our merchants and master manufacturers complain much of the bad effects of high wages in raising the price, and thereby lessening the sale of their goods, both at home and abroad. They say nothing concerning the bad effects of high profits; they are silent with regard to the pernicious effects of their own gains; they complain only of those of other people."

This could easily have been written as a comment about the whole thrust of economic policy emanating from the pigsty since the coronation of Queen Margaret, and gives an insight into some of the reasons for the economic crisis in 2008. In light of what is admittedly a very small flavour of the observations of people whom I call real economists it becomes quite obvious that neither Smith nor Marshall would thank you for categorising them with the academic illiteracy and moral bankruptcy that poses as economics in the modern world. Indeed Marshall poses a question that should make all Tories retire in shame to contemplate the misery and damage they have inflicted on society when he asks

 "Now at last we are setting ourselves seriously to inquire whether it is necessary that there should be any so-called “lower classes” at all: that is, whether there need be large numbers of people doomed from their birth to hard work in order to provide for others the requisites of a refined and cultured life; while they themselves are prevented by their poverty and toil from having any share or part in that life……The question cannot be fully answered by economic science. For the answer depends partly on the moral and political capabilities of human nature, and on these matters the economist has no special means of information."

In a commentary on the academic and mathematical models of economics that are destroying our world he writes

"Ethical forces are among those of which the economist has to take account. Attempts have been made to construct an abstract science with regard to the actions of an “economic man,” who is under no ethical influences and who pursues pecuniary gain warily and energetically, but mechanically and selfishly. But they have not been successful, nor even thoroughly carried out. For they have never really treated the economic man as perfectly selfish; no one could be relied on better to endure toil and sacrifice with the unselfish desire to make provision for his family; and his normal motives have always been tacitly assumed to include the family affections. But if they include these, why should they not include all other altruistic motives the action of which is so far uniform in any class at any time and place, that it can be reduced to general rule? There seems to be no reason."

So much for the free market nonsense of the rational and self-interested individualist consumer. In addition, Marshall addresses the question of how we should act as to increase the good and diminish the evil influences of economic freedom? As a flavour of his solutions I quote

"Some harsh employers and politicians, defending exclusive class privileges early in last century, found it convenient to claim the authority of political economy on their side; and they often spoke of themselves as "economists." And even in our own time, that title has been assumed by opponents of generous expenditure on the education of the masses of the people, in spite of the fact that living economists with one consent maintain that such expenditure is a true economy, and that to refuse it is both wrong and bad business from a national point of view."

Note the difference Marshall makes between economics and true economy. This post is now too long and I trust you are not bored if you have read this far. However, I will leave you with one more quote from Marshall when he turns his attention to the low paid.
"Though arithmetic warns us that it is impossible to raise all earnings beyond the level reached by specially well-to-do artisan families, it is certainly desirable that those who are below that level should be raised, even at the expense of lowering in some degree those who are above it"

Note his reference as a comparison to specially well-to-do artisan families. This is a quite different thing to a minimum or living wage. How does the free market neo-liberal reconcile such sentiments? I repeat, we are being degraded as a people and a nation by gangsters and fraudsters who pose as educated experts, but are in effect promoting policy to degrade and enslave the mass of the common people of this country. We must reject their economic model and their policies and return to an economic model that puts the working human being on an equitable level with every other human being regardless of class, race or gender. That is economics, the consideration of the whole human being, their economic, social and political reality in relation to their neighbour. I thank you for reading this far and you have been warned.

Your Servant
Doktor Kommirat