mith's belief that competition, the market's invisible hand, would lead to proper pricing played a large role in his economic policy recommendations. He therefore strongly opposed any government intervention into business affairs. Trade restrictions, minimum wage laws, and product regulation were all viewed as detrimental to a nation's economic health. This laissez-faire policy of government non-intervention remained popular throughout the Victorian Era and still plays an important part in present-day economic policy. Capitalists, in particular, supported Smith's policies and often twisted his words to justify mistreatment of workers. They suggested that child labor laws, maximum working hours, and factory health codes constituted a violation of their rights and Smith's golden rule. Similar attempts by factory owners to use Smith's teaching in order to further their own ends continued well into the twentieth century.
Contrary to popular belief, however, Smith was not an apologist for the capitalist class. One of his least repeated statements warned that a group of capitalists rarely gather together under one roof without the talk turning towards collusion against the public. For this reason Smith firmly favored anti-monopoly laws. Furthermore, his support of competition remained contingent on the fact that it encouraged economic growth, something Smith felt would benefit all members of society. He proposed that as long as markets grew, an increased demand for labor would prevent owners from exploiting their workers. But he failed to consider that the process of urbanization wouldreak havoc on the labor market, and his optimism about growth seemingly ignored the possibility that capitalists might disproportionately consume the benefits of expansion. The inability of growth to substantially increase general living conditions became the primary concern of Smith's intellectual descendants. Thinkers such as Ricardo and Malthus postulated that overpopulation, low wages, and starvation would always continue to plague society. Economics, which started with Smith's guarded optimism, quickly became known as "the dismal science" (David Barber, Adam Smith).
Related Web resources
- Gavin Kennedy's Adam Smith's Lost Legacy (UK)
Last modified 1996;
link last added 15 April 2005