Debt: The First 5000 Years - autonomous learning

44 DEBT
Recall here what Smith was trying to do when he wrote The
Wealth of Nations. Above all, the book was an attempt to establish
the newfound discipline of economics as a science. This meant that not
only did economics have its own peculiar domain of study-what we
now call "the economy," though the idea that there even was something
called an "economy" was very new in Smith's day-but that
this economy operated according to laws of much the same sort as
Sir Isaac Newton had so recently identified as governing the physical
world. Newton had represented God as a cosmic watchmaker who had
created the physical machinery of the universe in such a way that it
would operate for the ultimate benefit of humans, and then let it run
on its own. Smith was trying to make a similar, Newtonian argument.2
God-or Divine Providence, as he put it-had arranged matters in
such a way that our pursuit of self-interest would nonetheless, given an
unfettered market, be guided "as if by an invisible hand" to promote
the general welfare. Smith's famous invisible hand was, as he says in
his Theory of Moral Sentiments, the agent of Divine Providence. It was
literally the hand of God.3
Once economics had been established as a discipline, the theological
arguments no longer seemed necessary or important. People continue
to argue about whether an unfettered free market really will produce
the results that Smith said it would; but no one questions whether "the
market" naturally exists. The underlying assumptions that derive from
this came to be seen as common sense--so much so that, as I've noted,
we simply assume that when valuable objects do change hands, it will
normally be because two individuals have both decided they would
gain a material advantage by swapping them. One interesting corollary
is that, as a result, economists have come to see the very question of
the presence or absence of money as not especially important, since
money is just a commodity, chosen to facilitate exchange, and which
we use to measure the value of other commodities. Otherwise, it has no
special qualities. Still, in 1958, Paul Samuelson, one of the leading lights
of the neoclassical school that still predominates in modern economic
thought, could express disdain for what he called "the social contrivance
of money." "Even in the most advanced industrial economies," he
insisted, "if we strip exchange down to its barest essentials and peel off
the obscuring layer of money, we find that trade between individuals
and nations largely boils down to barter."4 Others spoke of a "veil of
money" obscuring the nature of the "real economy" in which people
produced real goods and services and swapped them back and forth.5
Call this the final apotheosis of economics as common sense.
Money is unimportant. Economies-"real economies"-are really vast