CAPITALISM'S ACHILLES HEEL Dirty Money and How to

298 CAPITALISM’S ACHILLES HEEL
Chapter 12, that moral philosophy and ethical theory again became richly
debated. And with Rawls, Smith’s Moral Sentiments reemerged as a book
commanding careful attention.
Where did Adam Smith’s own sentiments lie, with the rich building national
wealth or with the poor seeking equity and justice? Carl Menger, an
economist, answered this question in 1891, as follows: “A. Smith placed
himself in all cases of conflict of interest between the poor and the rich, between
the strong and the weak, without exception on the side of the latter. I
use the expression ‘without exception’ after careful reflection, since there is
not a single instance in A. Smith’s work in which he represents the interest of
the rich and powerful as opposed to the poor and weak.” 35
What is most important about Adam Smith is that in his person economics
and philosophy were brought into a concordance well surpassing
that found in any earlier writer. It is a legacy that has continued to this
day. Yet at the same time, it is also the misfortune that has befallen his
life’s work. The reductionist misapplication of his free-market doctrine
displaces the painstaking composition of moral underpinnings upon
which he built capitalism’s foundations. Economics and philosophy remain
conjoined, but it is that other philosopher, Jeremy Bentham, whose
work has supplanted Moral Sentiments and settled into the center of economic
thought.
Adam Smith today would be appalled to see that the pursuit of fraudulent
transactions and illegal profits has become utterly routine, unencumbered
by the moral safeguards he envisioned, generated by people lacking
the traits of character he knew were necessary for effective conduct of the
free-market system. He would be heartbroken to find that the popular grasp
of his economic thesis, while generating wealth, has promoted inconceivable
income gaps, with three times as many people left in deplorable poverty as
constituted the entirety of the world’s population in his own time. If he
chose to remark on the invisible hand, he would identify it now with international
pickpockets lifting the purses of the poor for deposit into the farflung
accounts of the rich.
No, a resurrected Adam Smith is not a happy man. Remember, his first
love, his first commitment, is to moral philosophy. He spends 50 years
studying the subject, 30 years adding to and sharpening his ethical system.
We take his free markets but ignore his ethics, precisely what he does not