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September 19, 2010

Adam Smith has no monopoly on economic ideas

And, you don't have to oppose him with Karl Marx to demonstrate that. In fact, Adam Smith has no monopoly on GOOD economic ideas. In an excellent Atlantic article from a few years back, James Fallows reminds us of several important facts.

1. The England of Smith's time, and more than 50 years thereafter, was strongly mercantilist. England only really pushed free trade when it figured its economy was so strong free trade would help it, not hurt it. And Smith just ignored this. Well, not totally; he said "national defense" deserved mercantilist support, then broadly defined what that included.
2. The U.S. of Alexander Hamilton's time all the way up to Bretton Woods was similarly mercantilist. And, in its early days, especially, took a take similar to Smith's on "national defense."
3. Continental European economists of Smith's time up until Marx defended government intervention in a way that, especially via Germany, and its economic success after unification, went on to influence Asia. And, of course, none of the Asian tigers started their rises to power as free traders, and most haven't moved far in that direction even today.

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