From: lessgovt@gmail.com   
      
   Adam Smith’s Solution to Poverty   
   By Rainer Zitelmann, June 15, 2023, WSJ   
      
   Adam Smith’s last will and testament left his nephew David Douglas feeling   
   disappointed. He received far less than he had hoped, and the will confirmed   
   what Smith’s friends had long suspected: The Scottish economist, who always   
   earned an above-   
   average income, had donated almost his entire fortune to the poor, mostly in   
   secret.   
      
   Smith, who was baptized on June 16, 1723 (his birth date is unknown), is best   
   known as a champion of capitalism. Yet he wasn’t free of the i   
   tellectual’s resentment of the rich. In his two main works, “The Theory of   
   Moral Sentimentsâ€� (1759) and †  
   œAn Inquiry Into the Nature and Causes of the Wealth of Nationsâ€� (1776),   
   it’s hard to find a passage where he speaks positively about the rich and   
   powerful. Merchants and landlords are almost exclusively painted as people who   
   want to assert their    
   selfish interests and create monopolies. You will find clearer praise for   
   capitalists in “The Communist Manifestoâ€� than in Smith’s works.   
      
   Many passages exhibit sympathy for the condition of the “poor,â€� by which   
   he didn’t only mean those in poverty, but also the “not richâ€�—the   
   majority of the population, who must exchange their labor for wages to earn a   
   living.   
      
   â€œSympathyâ€�—today we would call it empathy—was the central pillar of   
   Smith’s moral philosophy. And Smith’s sympathy was, above all, for the   
   working poor.   
      
   A famous passage from “The Wealth of Nationsâ€�: “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 so much of their own   
   labor as to be themselves tolerably well fed, clothed, and lodged.â€�   
      
   Today, these words are sometimes misinterpreted to claim that Smith advocated   
   government-led redistribution of wealth. That wasn’t his intention, and he   
   certainly wasn’t calling for social revolution. Poverty, according to Smith,   
   wasn’t preordained,   
    and above all, he didn’t trust government. He points out that only economic   
   growth can raise living standards. Continuous economic growth is the only way   
   to raise wages, and a stagnant economy leads to falling wages. Elsewhere he   
   writes that famines    
   are the result of government price controls.   
      
   While Karl Marx claimed nearly a century later that capitalism would lead to   
   growing impoverishment for workers, Smith predicted that economic growth would   
   lead to an increase in living standards.   
      
   When “The Wealth of Nationsâ€� was published, capitalism was in its infancy.   
   At the time, 90% of the global population lived in extreme poverty. And   
   poverty meant something different back then: It is estimated that about 20% of   
   the inhabitants of    
   England and France weren’t able to work at all due to malnutrition. At most   
   they had enough energy for a few hours of slow walking a day, which condemned   
   most of them to a life of begging.   
      
   Smith was right about the effects of economic growth, as the past few decades   
   have confirmed. In recent years, the decline in poverty has accelerated at a   
   pace unmatched in any previous period of human history. In 1981 the absolute   
   poverty rate, which    
   the World Bank currently defines as living on less than $1.90 a day, was   
   42.7%. By 2000, it had fallen to 27.8%, and today it is less than 9%.   
      
   Smith predicted that only an expansion of markets could lead to increased   
   prosperity. This is precisely what has happened since the fall of socialist   
   planned economies. In China, the introduction of private property and market   
   reforms reduced the share    
   of people living in extreme poverty from 88% in 1981 to less than 1% today.   
   Free-market economist Zhang Weiying of Peking University says, “China’s   
   rapid economic development over the past four decades is a victory of Adam   
   Smith’s concept of the    
   market.â€� Contrary to prevailing interpretations in the West, Mr. Zhang says   
   economic growth and declining poverty in China weren’t “because of the   
   state, but in spite of the state,â€� caused by the introduction of private   
   property.   
      
   Smith’s plan to lift people out of poverty didn’t involve the abolition of   
   private property or redistribution by the state. Neither did he advocate a   
   libertarian utopia—he believed governments played an important role.   
   Nevertheless, in 1755, two    
   decades before “The Wealth of Nationsâ€� appeared, he warned in a lecture:   
   â€œMan is generally considered by statesmen and projectors as the materials of   
   a sort of political mechanics. Projectors disturb nature in the course of her   
   operations in human    
   affairs; and it requires no more than to let her alone, and give her fair play   
   in the pursuit of her ends, that she may establish her own designs. . . . All   
   governments which thwart this natural course, which force things into another   
   channel, or which    
   endeavour to arrest the progress of society at a particular point, are   
   unnatural, and to support themselves are obliged to be oppressive and   
   tyrannical.â€� Prophetic words.   
      
   Smith showed the world how to overcome poverty. He didn’t leave much to his   
   nephew, but his great legacy is showing the world that only economic growth   
   can lift people out of poverty, and that the most important condition for that   
   is economic freedom.   
      
   Mr. Zitelmann is a historian and sociologist and author of “In Defense of   
   Capitalism.â€�   
      
   https://www.wsj.com/articles/adam-smiths-solution-to-poverty-eco   
   omic-growth-300-years-wages-8274f904   
      
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