The Dangerous Wisdom of Adam Smith
The Dangerous Wisdom of Adam Smith
Note: This is a rough transcript. Since the Dangerous Wisdom podcast uses many names and terms that transcription software fails to recognize, a more accurate transcript is not possible at this time. But this version is as close as we can manage.
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Welcome to Dangerous Wisdom, a journey into mystery and a gateway to the mind of nature and the nature of mind. This is dr. nikos, your friendly neighborhood soul doctor. I’m happy to be here with you so that together we can create a culture of wisdom, love, and beauty.
Auspicious interbeing to you and yours, my friends. Today, we will consider the dangerous wisdom of Adam Smith—Captain Capitalism himself.
I’ve been wanting to consider the capitalist system for some time. But it’s no small topic, and it’s not easy to contemplate with care. Some people love capitalism, some people hate it, some people think it’s the only choice we have.
The trouble is that economics pervades our life. It has an ungodly influence on us, and we need to think through some of it.
This will become a series of dialogues and contemplations to help us approach the dangerous wisdom we need right now if we want to help ourselves and the world. The first dialogue will come out next week, and this week we’ll consider a few important and even surprising things to get us started.
I say surprising because, in preparation for this contemplation, I went back and read some more Adam Smith. I haven’t read much Adam Smith since my undergraduate years, and I wasn’t asked to read very much back then. He’s not exactly the most brilliant philosopher, even though he’s rather perceptive and clever in some ways. He’s not even really a philosopher so much as a professor of philosophy, and that kind of writing rarely interests me.
But I did go back and read more of Smith’s work, and what shocked me was both the nature of his ignorance and the nature of some of his insights. Some of the things we will consider from Smith’s own writing sound like they could have come from Karl Marx. Other things he wrote seem quite confused, and some other things seem sadly pessimistic. Adam Smith’s writing seems perfectly symptomatic of the dominant culture.
By thinking through economic ideas from a philosophical viewpoint, we can come to a little better understanding of the dominant culture, its influence on the world, how we got to this tragic historical moment, and how we can potentially create a shift.
As I said, because of the importance of this subject matter, and the central role of capitalism in our lives, we will have a series of contemplations and interviews about all of this, and try to creatively imagine ourselves forward, into a truly wiser, more loving, more beautiful world.
And we’re starting with Adam Smith, since he’s so strongly associated with capitalism.
First let’s acknowledge a few things. One thing we need to acknowledge is that economics may seem boring to most of us. We’re going to try to avoid boring by staying in touch with the LoveWisdom and the fascinating cultural issues that I think will prove interesting and inspiring.
Second, let’s acknowledge how reactive people can get when they discuss politics and economics. And even people who have thought very little about economics can have strong opinions about capitalism.
I think even the staunchest defenders of capitalism will find themselves agreeing with some of the key suggestions we’ll consider together. And I think most people will find some common ground. And, again, over the course of the series, we’ll consider some fascinating cultural history, and we will do everything we can to cultivate a common ground, so that capitalists and anti-capitalists can begin to relax into some of the most essential things we can all agree on.
To get our contemplation going, it seems helpful to think of economics as having two aspects to it that have become somewhat divided, as if they’re two completely different things. One aspect of economics is descriptive and analytical, and that’s much of what Smith did: He described something.
Adam Smith didn’t invent capitalism. Rather, he describes for us what was starting to happen in his context.
This descriptive and analytical aspect of economics has become so elaborated that now we think of economics as rather complicated and even scientific.
There are various reasons why this happened and why it has become dominant, and it’s a potentially complex story, but let’s consider several basic drivers that make economics look the way it does now, which is rather mathematical and seemingly scientific.
One of the reasons economics seems so mathematical has to do with the fact that all the disciplines in the dominant culture developed physics envy, including philosophy—by which I mean the activity of the professors of philosophy. As Alan Watts suggested, professors of philosophy would probably wear lab coats if they thought they could get away with—or at least some of them would.
Because of this physics envy, economics could only really legitimize itself by trying to look like a science. In the case of capitalist economics, we find an incredible drive to orient ourselves toward delusion as precisely as possible, rather than even imprecisely orienting ourselves toward wisdom.
In this regard, we find that the plot thickens, and we can discern another level of legitimization going on. By presenting itself as a science, economics doesn’t just legitimize itself, but it legitimizes the whole economic and political system that dominates our lives.
This itself has a few aspects. The most shocking aspect reveals the foolishness of the whole endeavor: Economists like to keep their framework in equations, because if they put the framework into ordinary language, we’d all laugh them out of the room. Why?
Because the equations of economics as we know it treat us like a bunch of sociopaths. They create a false creature, a fantasy monster called homo economicus. Homo economicus has one interest: himself. He doesn’t really even have friends or family. He only has ways of satisfying his own self-interest. And he tries to do this as rationally as possible.
We know very well that we aren’t all sociopaths, otherwise the psychological definition would mean nothing. So the economists don’t tell us they think of us as sociopaths. Instead, they just do the math and make their predictions.
By habit, by association, this infects our consciousness, and we start to think of economics as not just an analysis of yet another process. Instead, all that math and that seeming credibility makes it appear in a certain sense as if capitalism itself must be scientific, as if capitalism is just in accord with reality. By implication, what doesn’t accord with capitalism doesn’t accord with reality. That leaves us stuck, and it chokes our imagination as well as our ethical sensibility.
Moreover, the capitalists and financiers use all that complicated mathematics to make it seem as if ordinary people couldn’t possibly understand economics, and so we had better just leave it to them to figure out how to move the world forward. The level of complication is such that nuclear physicists have been employed to build stock trading technology, and complicated mathematics can get used to mask rather silly con jobs.
That’s part of what happened in the 2007-2008 crash: We had some crude scams hidden behind fairly complicated maneuvers. And, in general, we the people get told we aren’t smart enough to understand all of this stuff, but the fact is the people running the system don’t understand very much either, and we only need all this complicated stuff because of the insanity of the system. If it were rooted in reality, it would be complex, but not even half as complicated.
The mask of sophistication and complexity gives us the false impression that the system has some kind of scientific basis. But this isn’t true. It’s a rather utopian and foolish basic concept layered over with a lot of complicated mathematical and ideological rationalizations.
We could perform a complex mathematical analysis of a magic trick, and that wouldn’t make the magic real. We could also perform a complex mathematical analysis of slavery, and that wouldn’t make slavery a good idea.
That latter recognition touches on the more primal question of economics, which is a philosophical question, not a mathematical or scientific one in the narrow sense.
This is the other aspect of economics, the one we tend to ignore or rationalize. From this other perspective, economics has to do with the philosophical question of how we live together, how we coordinate our lives and take care of the home we share. These basic issues have nothing to do with equations. They are primary and far more important than the economics that wins Nobel prizes.
And in relation to all of this, one of the first things to recognize about Adam Smith is that he didn’t sit around thinking deeply, and then suddenly say to us all, “Here’s a really good idea. This is going to blow your minds. Nobody’s ever heard of this. I’m going to propose we organize our relationships around something I’m going call capitalism. Now, here’s what we’re going to do.” Nor did he arrive on Earth as a prophet sent from God, or a theologian who discovered capitalism in the Bible.
None of that describes what Adam Smith did. In fact, he didn’t even use the word “capitalism”. Rather, he critiqued what we refer to as the mercantile system, and he described something he saw developing in its place. No one should claim he advocated capitalism because he derived it on the basis of wisdom. Even capitalism’s proponents can’t call it wise.
As far as Smith’s descriptive work, he in fact misunderstood what he was describing—that’s something we’ll try to clarify either here or in another contemplation—and he unfortunately endorsed that emerging system, even though he admits some of its most basic and disturbing faults.
I don’t want to trash talk Adam Smith. He seems like a clever fellow who had some degree of respect for the wisdom traditions. And he seems to have genuinely wanted to help his fellow human beings. He was actively engaged in the intellectual life of his context, with the aim of helping to establish justice.
At the same time, he deserves some critical reflection, even if it seems important to put things rather bluntly at times. The system we inherited in part on the basis of his endorsement doesn’t accord with reality, and we need to think that through.
One way we might begin involves trying to imagine into the kind of world Smith lived in.
When we read Smith, and when we consider some of the historical context, we realize Smith had a genuine concern with a problem that some of us have little connection with, namely the problem of scarcity.
Today, people in the so-called developed states have easy access to food, water, and countless conveniences. Not all of the food is healthy, not all of the water is free of pollution, and many of the conveniences are dubious. Nevertheless, we live in a different world.
Smith would have seen poverty around him, and people sometimes struggling just to eat. And he would have also seen that very basic things were not always easy to get.
Smith gives us a now famous example of how capitalism can overcome scarcity, and he provides the example early in his book. It’s a funny example for some of us in the 21st century, because Smith discusses a pin factory.
At this point, we take pins for granted. Many of us have little use for pins, though we may use safety pins sometimes. Either way, we can get pins for next to nothing.
Smith points out that making pins by hand requires skill, and if you don’t have that skill, you can’t really make pins. If someone shows you how, then you could maybe make a few in a day, but not many.
That means we have to rely on artisan pin makers. And we won’t have many of those in our little town. Moreover, the wealthy will always be able to get their pins first. They can pay, and, since pins are scarce, that keeps them expensive.
We find Smith accepting here an idea that goes back at least to John Locke. In our contemplation of Horse Magic, Horse Medicine, Horse Mystery, we considered Locke’s idea of value coming from labor.
We sort of made fun of it. I won’t read the passage in a goofy English accent this time—you can go back and listen to that episode if you like.
But we considered a passage from his Second Treatise on Government, in which Locke claims that,
40. It is labour indeed that puts the difference of value on every thing; and let any one consider what the difference is between an acre of land planted with tobacco or sugar, sown with wheat or barley, and an acre of the same land lying in common, without any husbandry upon it, and he will find, that the improvement of labour makes the far greater part of the value. I think it will be but a very modest computation to say, that of the products of the earth useful to the life of man, nine-tenths are the effects of labour. Nay, if we will rightly estimate things as they come to our use, and cast up the several expenses about them—what in them is purely owing to Nature and what to labour—we shall find that in most of them ninety-nine hundredths are wholly to be put on the account of labour.
41. There cannot be a clearer demonstration of anything than several nations of the Americans are of this, who are rich in land and poor in all the comforts of life; whom Nature, having furnished as liberally as any other people with the materials of plenty—i.e., a fruitful soil, apt to produce in abundance what might serve for food, raiment, and delight; yet, for want of improving it by labour, have not one hundredth part of the conveniencies we enjoy, and a king of a large and fruitful territory there feeds, lodges, and is clad worse than a day labourer in England.
We suggested that this view seems rather ignorant in many ways. Locke was a townie who saw the soil as passive rather than abundant and alive, having its own processes and purposes as part of a sacred order. In our time, we know how wrong he got it, even from a strictly scientific perspective, to say nothing of a properly holistic LoveWisdom. Locke was a professor, not a philosopher.
At the same time, we can sense a partially correct opinion. That’s how Plato describes our ignorance when our ignorance has some resemblance to wisdom, or carries some fragment of wisdom in it.
Clearly, we do value skillful effort, and skillful effort can make something beautiful and useful. Note that skillful effort is not mere effort. Locke doesn’t emphasize this, and Smith will in fact reject the importance of skill in an important and rather tragic sense.
And what Smith does, is he says we can break down the skill of making pins so that it requires basically no real skill at all—we just eliminate skill from the process. Remember, he says that an unskilled person who has to make pins could scarcely make 20 in a day. An expert can make more, but still cannot possibly make hundreds of pins in a day.
But Smith says he saw a small operation of ten people who divided up pin making into tasks that require no skill at all, and he says that this one group of ten people could make 48,000 pins in a day. It’s kind of crazy when you think about it.
We take away the possibility that people could become artisans and find meaning and engagement in their work, and as a result we get more pins than we know what to do with. It suggests a profound disruption to the way the world functions, but Smith didn’t notice that.
Smith didn’t invent the labor theory of value, and he didn’t invent the division of labor. But he did embrace them as a way to improve people’s lives.
The idea is that, if we could take this same model and apply it broadly, then we would solve the problem of scarcity. We would have all the pins we need. Smith seems to have valued agriculture in particular, and he likely thought we’d have all the food we need too.
Ten years before he published The Wealth of Nations, a major riot erupted in England because of bad harvests. But, overall, England was doing better at agriculture in some key ways. Jethro Tull had invented the seed drill, the Norfolk four-course system had evolved, and population had begun to grow.
On the one hand, Smith might have had high hopes. At the same time, food production seems to have struggled to keep up with population growth, and things would in various ways get worse from a few years before Smith published The Wealth of Nations all the way until guano and finally the fuller industrialization of agriculture with fossil fuels, including chemical fertilizers. (Guano is bird and bat poop—lots of it from the Americas—that saved degraded soils before the fuller industrialization of agriculture.)
The enclosure process made things rather worse for the poor—and rather worse for all of us—in several ways. Obviously in an unequal society, the rich will eat better than the poor. But the commons had provided the poor with wood for heating as well as supplemental food. Moreover, the commons provided an ongoing relationship with Nature. By enclosing those ecologies, they became unavailable to the poor, which meant a disconnection from Nature both in its spiritual and ecological presence.
Karl Marx apparently had a kind of conversion or intellectual awakening when he did some research on this in his own time and found out that over 80% of prosecutions in Prussia in the early 1840s had to do with the common people taking wood from formerly common lands that had become privatized.
A famous anonymous poem sums up the evil of enclosing the commons in a humorous way:
“The law locks up the man or woman
Who steals the goose from off the common,
But lets the greater felon loose
Who steals the common from the goose.”
What I love about that poem is that it includes non-human beings as the victims of the crime. The process that drives capitalism steals from geese, bears, beaver, honey bees, and countless sentient beings, including humans. This is how capitalism creates profit.
In his time, Adam Smith would have seen people facing sometimes severe scarcity of various kinds, including food scarcity and general inequality, and he may have had a genuine concern about how to increase production so as to better provide for everyone, and he may even have harbored some inclination to think about how to put all those rural people to work as they got shut out of common lands, and as agriculture began to require fewer laborers. This process made labor available for things like making pins without the need for much skill or creative intelligence.
This is the aspect of Smith that we should have some compassion for. He seems to have wanted to help solve the problem of scarcity, and help facilitate a way for people to find work that could give them wages that would in turn allow them to improve their quality of life.
But, sadly, this is an example of Smith’s ignorance, because he blunders in several ways. That may sound strong, so let’s put it conservatively, as a question: Is this the proper way to diagnose the problem of scarcity? And, whether it is or isn’t a good diagnosis, is capitalism the proper prescription to help people live healthy and meaningful lives?
We’re going to come back to the diagnosis. It’s really important to get that right, but we’re going to put some of our questioning of it into another contemplation.
For now, we want to focus on Smith’s dangerous wisdom, as opposed to his dangerous ignorance. That dangerous wisdom shows up in at least two important and deeply interrelated ways. The first aspect of Smith’s dangerous wisdom will lead us to question his whole project (which we could think of as a key aspect of his diagnosis), and the second will lead us to question his prescription.
We’re going to find that Adam Smith didn’t really believe in his own diagnosis or the prescription he recommended. That’s a bit shocking in some ways—though maybe it should come as a relief. Maybe everyone who harbors even the vaguest suspicions about capitalism can breathe a sigh of relief, and say, “Ok, maybe I’m not crazy. Maybe I’m not some terrible person for thinking we have some deep problems here, and maybe it’s not so foolish to ask tough questions.”
In a later contemplation, when we get a little more into challenging his diagnosis, we can begin to understand why he endorses something he doesn’t really believe in.
But we need to get clear on why endorsing capitalism leaves even Adam Smith seeming incoherent. If this is the guy we so strongly associate with capitalism, and if even he didn’t really find it a wise and virtuous way of organizing our lives, shouldn’t that give us pause? After all, when something fails the test of being wise and virtuous, we must conclude it has significant ignorance and corruption in it.
Let’s begin with the title of Adam Smith’s famous description of what we have come to call capitalism. He called it, An Inquiry into the Nature and Causes of the Wealth of Nations.
What is the proper wealth of nations? What is our true wealth?
We have over time become so infected with certain cultural habits and ideas that we can’t always see them clearly, and thus we can’t see our own situation clearly.
Before Adam Smith wrote his Inquiry into the Nature and Causes of the Wealth of Nations, he wrote about ethics, in a book called, The Theory of Moral Sentiments. Since he had his attention on ethics, he made some more skillful philosophical suggestions.
For instance, he asks us,
“What institution of government could tend so much to promote the happiness of mankind as the general prevalence of wisdom and virtue? All government is but an imperfect remedy for the deficiency of these. Whatever beauty, therefore, can belong to civil government upon account of its utility, must in a far superior degree belong to these.”
That’s a pretty clear statement, one that takes its cue from the wisdom traditions. Whatever our philosophical, religious, or spiritual orientation, if we practice in or identify with a venerable tradition of wisdom, love, and beauty, that tradition will agree that nothing can secure the peace, happiness, freedom, and general well-being of a culture or its citizens better than wisdom and virtue.
Adam Smith agrees with this. He has to. He couldn’t maintain the respect of his fellow professors of philosophy, or even the respect of common citizens, if he would foolishly reject such a core teaching of ever true philosopher we know of, whether religious or not.
Speaking from a human-centered view, the real wealth of a nation is its people. But not just its people in any old condition at all. No. The real wealth of a nation is in the level of wisdom and virtue, the level of wisdom, love and beauty in the citizens of that nation. No other measure of wealth can compare.
And we all know this. It’s not controversial to suggest this, because the wisdom traditions offer us—wisdom. The common ground shared by such a wide range of traditions exists because that common ground of wisdom, love, and beauty seems to reflect reality. And these traditions make it clear that the job of a culture is to make good people, so that the people and the culture live in accord with reality, and so that Nature and culture can thrive in mutuality.
Some of the most interesting wisdom traditions equate the proliferation of laws with the breakdown of wisdom and virtue. The more laws we have, the more we must be neglecting the cultivation of wisdom, love, and beauty. Big government means big failure in education, and it comes as a sign that a culture has lost touch with wisdom and virtue.
Smith accepts these core teachings, and yet he decides to start us on a road that brings us to where we are today. And Smith actually does see this as a choice between two roads. He writes about these two roads. First he sets them up. He writes,
“We desire both to be respectable and to be respected. We dread both to be contemptible and to be contemned. But, upon coming into the world, we soon find that wisdom and virtue are by no means the sole objects of respect; nor vice and folly, of contempt. We frequently see the respectful attentions of the world more strongly directed towards the rich and the great, than towards the wise and the virtuous. We see frequently the vices and follies of the powerful much less despised than the poverty and weakness of the innocent.”
Smith is trying to acknowledge our social nature. The subtle idea we find here is that, we are such social creatures that our social context dominates us at first, and our task in life is to arrive at a liberation of our fuller consciousness. We rely on others, and we naturally care if they respect us or condemn us.
This doesn’t have to become an encumbered thing. We don’t have to live as if we need constant validation or as if we can’t think or act in ways that challenge our social context. But Smith recognizes that we are nevertheless social or relational beings.
How do we become properly respectable people? How do we live in such a way that others have a genuinely positive view of us? And on what basis will they respect us? On what basis will they have a positive view of us?
Here Smith recognizes a fork in our path through life. He writes,
“Two different roads are presented to us, equally leading to the attainment of this so much desired object; the one, by the study of wisdom and the practice of virtue; the other, by the acquisition of wealth and greatness. Two different characters are presented to our emulation; the one, of proud ambition and ostentatious avidity; the other, of humble modesty and equitable justice. Two different models, two different pictures, are held out to us, according to which we may fashion our own character and behaviour; the one more gaudy and glittering in its colouring; the other more correct and more exquisitely beautiful in its outline: the one forcing itself upon the notice of every wandering eye; the other, attracting the attention of scarce any body but the most studious and careful observer.”
Sadly, Smith encouraged us to pursue the wrong road, the road of materialism, the road of extrinsic, self-enhancing values, rather than the path of virtue, the path of intrinsic, self-transcending values. We have inherited the consequences of this philosophical ignorance, this tragic error that causes us so much suffering.
Let’s get very clear: If we have two roads, and one of those roads is the road of wisdom and virtue—what then do we think we should call the other road? We can call it capitalism, but clearly the more accurate name is the road of ignorance and vice.
It might help us to understand how wrong we can go on this other road by considering an example. Obviously, we can just consider the proper name for this road—the road of ignorance and corruption—and we can look at the state of the world to understand that ignorance and vice can have catastrophic consequences.
However, it will help to consider a few concrete examples. But I think we should save those for our next contemplation, and consider a just a few more gems of wisdom from Captain Capitalism.
In some ways, the best is yet to come in this inquiry into the dangerous wisdom of Adam Smith, and I think you’ll enjoy the coming journey. We need to arrive at a more holistic view of capitalism, and that’s going to take some further contemplation, including the consideration of some of the shocking ways capitalism can infect our thinking, and lead us into genuine evil.
And I’m very much looking forward to thinking through those concrete examples with you, because they can teach us a lot, and they give us a lot of insight into Adam Smith’s dangerous wisdom as well as his dangerous ignorance.
At this point, we have the first element of his dangerous wisdom, and with that first element we have in some ways captured the essence of the problem with capitalism—namely that the road of capitalism, the royal road to riches, is a road of ignorance and vice.
This is perhaps the most crucial element of the dangerous wisdom of Adam Smith. We’ve got several elements of dangerous wisdom from him that we will consider, but we could see this one as the very heart of the matter.
To say it again, because it bears repeating, Adam Smith—Captain Capitalism himself—recognizes that there are two roads: There’s the road of wisdom and virtue, and the road that we call capitalism. We’ve begun to clarify why we can quite aptly characterize this other road as the road of ignorance and vice.
This will get clearer in our next contemplation, but let’s conclude the present contemplation by considering another bit of dangerous wisdom from Smith that goes together with the first one. They’re interwoven. And this little gem of Smith’s dangerous wisdom makes it all the more incoherent that he encourages us to take the road of ignorance and vice.
Here’s the gem: Smith recognizes that the road he recommends can never make us truly happy and at peace, and he goes so far as to say it can suck our lives away.
His discuss includes something that surprised me a little, because Smith lived in the 1700’s. But, even though he wrote his books over 200 years ago, Adam Smith basically describes people as pretty darned consumerist.
Here’s what he wrote in The Theory of Moral Sentiments:
“6 How many people ruin themselves by laying out money on trinkets of frivolous utility? What pleases these lovers of toys is not so much the utility, as the aptness of the machines which are fitted to promote it. All their pockets are stuffed with little conveniencies. They contrive new pockets, unknown in the clothes of other people, in order to carry a greater number. They walk about loaded with a multitude of baubles . . . some of which may sometimes be of some little use, but all of which might at all times be very well spared, and of which the whole utility is certainly not worth the fatigue of bearing the burden.
“7 Nor is it only with regard to such frivolous objects that our conduct is influenced by this principle; it is often the secret motive of the most serious and important pursuits of both private and public life.”
In some ways, Smith tries to offer a nuanced diagnosis. The main diagnosis is that we waste our energy chasing after stuff, chasing after trinkets.
Smith tries to add nuance by basically saying we like our trinkets not so much for what they do, as for the coolness factor. He’s pointing out the contradiction between the use value and the exchange value.
This shows up in all sorts of ways in our modern lives, and it’s astonishing how little we’ve changed since Smith’s time. For instance, people in the horse world love their trucks. But I recently asked a fellow horse person to come and help clear up some rocks from the pasture as part of a land restoration project. This person has an extremely nice truck, which must have cost at least $70,000. They didn’t want to help, because they didn’t want anything to happen to their truck.
By coincidence, another friend who lives in the mountains near me spontaneously said to me a few days later, “People will spend $70,000 on a truck, and then they’re scared to use it. Mine cost very little, but I use it every day and love it. I love my truck, and it’s far more useful to me than these expensive trucks are to the people who waste their money on them.”
It was a funny synchronistic comment. Clearly this fellow rejected the capitalist contradiction between the use value of something and its exchange value.
Similarly, an iPhone has very little usefulness beyond that of phones that cost far less money—at least for the vast majority of us. Sure, a few people may like it because it functions as their primary camera, or because of some other feature. But most people just love the coolness factor. They love the design.
Apple spends a lot of money on design features that amount to uselessness. And people pay them for that uselessness.
I got a glimpse into this because a friend of mine founded a tech start-up, and he employed an engineer who had formerly worked at Apple. That engineer had worked with a small team of other engineers. They were all paid 6-figure salaries. They had one job: To optimize the feel of the click on the Mac Book touch pad.
We’re not talking about the function of the pad. They did nothing regarding the functionality. Instead, this team of highly-educated, intelligent, and creative people had a huge budget to optimize the feeling of clicking that touchpad. That’s what they spent 40 or more hours each week working on.
Maybe someone at Apple read Adam Smith.
But Smith finds this foolish.
Granted, he’s incoherent. We have to keep that in mind. The guy recommends that we follow this path, and yet he also sees it as ultimately useless.
He’s not just saying that we ruin ourselves by spending money accumulating expensive trucks, Apple products, electric cars, and so on. He’s saying we waste our lives pursuing extrinsic, self-enhancing rewards. He directly acknowledges that wealth and reputation can never make us truly happy and at peace, and that only wisdom and virtue can do this.
This is what he says:
“. . . wealth and greatness are mere trinkets of frivolous utility, no more adapted for procuring ease of body or tranquillity of mind than the tweezer-cases of the lover of toys; and like them too, more troublesome to the person who carries them about with him than all the advantages they can afford him are commodious.”
The very things our culture spends so much energy attaining amount to mere trinkets. Adam Smith encouraged us to follow a path of chasing mere trinkets—and he knew better.
He goes a little further, saying that we’re all in the same boat when it comes to our access to true happiness and peace. The richest person and the poorest person have equal access to true peace and happiness, because true peace and happiness have nothing to do with money or power.
Smith writes,
“In ease of body and peace of mind, all the different ranks of life are nearly upon a level, and the beggar, who suns himself by the side of the highway, possesses that security which kings are fighting for.”
If we take this suggestion philosophically in the fullest sense—which includes understanding it psychologically—then we can understand Smith as saying all efforts to pursue wealth and power are misguided, and that even the most powerful person in a society struggles in vain to obtain something a simple beggar can discover right here, right now.
It seems evident that, when Smith mentions a king failing to find what with a beggar sunning himself has already found, he has in mind one of the most famous stories in the philosophical traditions of the dominant culture, namely the famous encounter between Alexander the Great and Diogenes the Cynic. Smith would have known this story well, and he would have fully expected his educated readers to know it as well. And the story involves no ordinary beggar.
Since Adam Smith’s time, this once famous story has become far more forgotten. Here’s what happened:
The great conqueror and monarch Alexander of Macedon—the man we know as Alexander the Great—went to see the philosopher Diogenes, and found him by the side of a road or a street, basking in the sun.
Why would he go to see a philosopher? Because Alexander had been trained in philosophy, and he respected the original meaning of philosophy. At its highest level, philosophical training produces sages, and Alexander wanted to meet a man some looked upon as a sage.
Alexander had gone with a small entourage, and, as everyone gathered near him, Diogenes rolled on his side, propped his head in his hand, and set his gaze on Alexander, who was clearly the one in charge.
The monarch greeted Diogenes and offered to grant him anything he wished. Diogenes said, “You can get out of the way. You’re blocking the light.”
Alexander was impressed with Diogenes for the clear sense of his own dignity he presenced at that moment, for his utter lack of deference to a monarch, and for his total disinterest in wealth, power, flattery, or dishonesty. He saw a man with the kind of centeredness in the soul that Socrates supposedly had, a man for whom philosophy was not about abstractions, but about realizing true wisdom, true joy, and true peace.
As Alexander and his entourage turned to walk away, some of the men began to mock Diogenes. Alexander said to them, “Say what you like of him, but if I were not Alexander, I would wish to be Diogenes.”
On the basis of the teachings of the wisdom traditions, and also on the basis of his own experience, and on the basis of history, Smith recognized that only wisdom and virtue can give us true happiness and peace.
So, really, what we find is that Adam Smith’s dangerous wisdom goes together with his dangerous ignorance. Adam Smith says to us, “There’s the road to true happiness and peace, the road of wisdom and virtue. And then there’s this other road, the road of capitalism. And this other road cannot provide our happiness or our peace. We all know this, or we can verify it for ourselves. But I think we should take the foolish road anyway.”
It’s extraordinary.
We need to look at more details in future contemplations. But the issue we now face is that, once we let ourselves and our culture get onto that other road, we have started down a path of ignorance, a path of all kinds of ethical compromises and even downright evil, and thus we face all manner of troubling and tragic consequences. Worse yet, we put ourselves through all of this for something that can never make us truly happy or at peace, truly wise, loving, and beautiful.
We’re going to consider some examples of what happens when the style of thinking of this other road—this inferior road, this road of ignorance and vice—we’re going to look at what happens as it infects our minds and our culture.
Obviously, it wasn’t like we were starting off with a baseline of wisdom. But Adam Smith in part represents and arises from a more widespread abandonment of wisdom in our culture.
In the time of Plato and the time of Socrates, we had people standing up and saying, “We really need to follow a path of wisdom and virtue. We need to root our culture in wisdom, love, beauty.”
Plato started a school that offered an education very different from the kind of education we get today. In some ways, we could say the first university was Plato’s Academy. It was a university in the sense that it was an educational community oriented toward wholeness, and dedicated to real knowledge of self and world, as part of producing human beings who would be reliable, honorable, wise, loving, and beautiful. Plato wanted to produce real adults who might become real elders and even sages in some cases.
He wanted to produce justice, happiness, and peace in his culture. And Plato recognized that wisdom, love, and beauty are the only true sources of justice, happiness, and peace for ourselves and our culture.
By the time of Adam Smith, we had mostly abandoned this road. And Smith naturally goes along with that abandonment, instead of protesting.
He could have protested. He could have said, “Hey! We all know that materialism isn’t going to make us happy. We all know that we have already gotten on the wrong road. We need to get back on the path of wisdom and virtue. We need to think together about how to make that happen.”
But he didn’t say that. Instead, he joined with the other disciplines in the abandonment of wisdom. Smith in some sense founded a discipline. And he joined up with others like it.
What we call science had already abandoned wisdom. It did so in part because, to the ego, it seems too hard to pursue wisdom.
And so, what had been called natural philosophy became science. By abandoning philosophy as it appears in the wisdom traditions, scientists didn’t have to pursue wisdom.
It’s a lot easier to look through a telescope than it is to become truly wise, loving, and beautiful.
It’s a lot easier to classify birds by species than it is to really listen to what a bird has to teach us about how to be wise, loving, and beautiful.
It’s so much more challenging to learn how to live well with a bird than it is to kill it, cut it open, and say, “Now I know this bird.”
So Smith is not alone. And let’s consider the major difference between Adam Smith and Socrates or Plato or any number of other great sages. Remember that Plato opened a school. He did that because he understood that the health and wealth of a culture depends on its ability to produce quality people.
Genuine philosophers like Plato understand that no culture should focus on making products, but must instead focus on making people—which means cultivating consciousness in the most vitalizing ways. A culture cannot truly flourish on the basis of material gain. It may do so for a century or two, especially if it has resources it can still exploit and ecologies it can still degrade. But eventually, reality will catch up to such a culture.
A culture can truly flourish only on the basis of spiritual and philosophical development, the active rootedness in, and cultivation of, wisdom, love, and beauty.
This applies to the individuals of the culture as well. And, because of the interwovenness of Nature and culture, this applies to the World.
But Smith abandons this sacred commitment to making people, making culture, and making the world, instead recommending the path of making products to sell, the path of making money.
Smith provides a lesson in the fact that structures of power need a philosophical justification.
This is part of the reason why we’re engaging in this contemplation at all—we need to recognize that this is all philosophical, even if it’s exceptionally bad philosophy, philosophy that goes against our own wisdom traditions and even our own experience. Capitalism’s immune system puts this bad philosophy to work every day, to keep the pattern of insanity going.
Capitalism’s immune system functions in part by getting us to identify with capitalism and markets. It has hooked into our identity, hooked into our consciousness and our unconscious too, such that conservatives, for instance, claim free market capitalism as a conservative value. Does that make any real sense?
This identification process affects even those who may critique capitalism, because capitalism has such a pervasive presence in our culture that we are forced to ask:
What are we?
What might we become?
Are we consumers?
Are we workers?
Are we capitalists?
Or are we more than capitalists? Are we more than what an economic theory says we are?
Very few of us count as capitalists, but if capitalism has hooked into our identity, hooked into our consciousness and our unconscious too, what are we?
Whatever else we might say in answer to that, it seems that, to varying extents, under the influence of capitalism, we are the consumed—all of us, even the capitalists, and even those who rebel against capitalism . . . capitalism itself still consumes us all.
Capitalism’s immune system also functions by convincing us we have no other option. Through the voice-box of countless intellectuals, politicians, business leaders, journalists, and others, capitalism creates a sense of rightness and even a sense of inevitability about itself, and in part this works on the basis of encouraging a narrow view of economics as a science—
and not just any science, but a science with only the most foolproof and rational assumptions. Economics in the mainstream tries to convince us that capitalism is just reality, or that it’s the best reflection of mediation of reality—the best option we have, with only nightmares as alternatives.
This is nonsense. It’s an excellent way to shut down our imagination, and keep us cut off from our wisdom traditions and our own experience. But it’s nonsense. Capitalism in fact seems distinctly at odds with reality—and Adam Smith knew it.
The system we have is a consequence of really bad philosophy and really poor philosophical assumptions. And that bad philosophy brought us to our present situation, in which intellectuals and people in power take it as obvious that this remains the proper path to take, even as we see its terrifying consequences.
And yet Adam Smith, Captain Capitalism, acknowledged that it is not the path of wisdom and virtue, and he acknowledged that only the path of wisdom and virtue could bring us true happiness and peace.
But once we abandon the road of wisdom and virtue and go down the road of ignorance and vice, all manner of insanity can ensue—including the degradation of the very conditions of life we all depend on.
My goodness, a recent study indicated that eating a fish caught wild from one of the rivers or lakes in the United States is as unhealthy as drinking contaminated water for a month! One fish!
And that’s because of capitalism, because of the ignorance and vice the capitalist path depends on and engenders. When we begin to add up all the negative consequences from capitalism, it far outstrips the evils of Stalin and Mao.
Through the style of consciousness that captured Smith, we have continued to double down on a pattern of insanity, and that has allowed things to get worse and worse, and to get further and further elaborated.
We have to recognize that millions of people work 40, 60, 80 or more hours a week, and their incredible combined effort drives us all further and further down this road to perdition.
Defenders of capitalism always ask, “What’s the alternative?” Even caring, open-minded people wonder, “What else could we do?”
Well, if we had the smartest and most creative people in our society—and in fact if we just had everybody in our society—working 20, 30, 40 hours a week or more on wisdom, love, and beauty; if we had everyone working to create a culture rooted in wisdom, love, and beauty; if we had everyone focused on producing truly wise, loving, and beautiful people, then we would have a completely different world.
If we want to know how we can have something better—not better stuff, not better iPhones and other junk that won’t make us happy, but a better world—if we want a better world, we need to start asking people to think in that direction, start teaching better ways of knowing that will allow us to shift our style of consciousness out of the present status quo and into something truly wise and virtuous.
If everyone is thinking down the wrong road, if they’re spending 40-80 hours a week on the road to perdition, then we’re going to get there. And we seem to have gotten shockingly close already.
We can begin to understand all of this in a way that helps us find common ground. Whether we consider ourselves liberal or conservative, we can find this common ground, and begin to heal the divisions in ourselves, our cultures, and our world.
For instance, take a moment and reflect on your highest values. What is it you think life is really all about? What’s most important to you? What do you most deeply want others to know about what you hold dear, what you hold sacred?
Is it family values of some kind? Do you value love? Do you value wisdom, knowledge, learning, and creativity? Do you value the teachings of a venerable tradition that helps guide your life? Is there some sort of moral order in the universe?
Now, how does any of that relate to the way we organize our culture in the most practical sense? If we set aside all the propaganda and indoctrination that we either accept capitalism or we have to accept Stalinism, and we recognize that we inevitably make a world together—then, on the basis of our highest values, what kind of world should we make?
When we think about it this way, it seems shocking that any liberal or conservative would approve of capitalism. Considered objectively, capitalism fails to properly accord with the values which either liberals or conservatives hold dear.
It’s crucial to understand that values cluster. We find cluster around extrinsic, self-enhancing values: Wealth, power, fame, conventional success. They all go together, and they all belong on the road of capitalism, the road of ignorance and vice.
We find another cluster around intrinsic, self-transcending values. Those values all go together, and they all belong to the road of wisdom and virtue.
Polling indicates the majority of people prefer that second cluster of values, the intrinsic, self-transcending values—especially on reflection. When people stop and think about what matters most to them, they pick the intrinsic, self-transcending values.
We find vitalizing common ground there, because the majority of both liberals and conservatives hold intrinsic, self-transcending values like family, community, and righteousness; wisdom, compassion, and justice; benevolence, love, and the absolute dignity and sanctity of the individual.
Why on Earth wouldn’t we make those the foundation of our culture, and find ways to ensure that our economic, political, and (most of all) our educational practices align with those values? Why wouldn’t we try to root ourselves and our culture in wisdom, love, and beauty, in sacredness, reverence, and wonder?
We could do this without forcing any particular religious or moral views on each other. The whole point here is that we already share a common ground, and we can enjoy the benefits of skillfully cultivating that common ground as we also cultivate self-direction and freedom. We could create a world in which we put wisdom and virtue far ahead of markets and materialism.
But we don’t. We instead focus on Gross Domestic Product, we follow self-help gurus of all kinds in order to get rich, we forsake democracy, and we view education as career preparation rather than the development of the fullest potential of each individual and the world as a whole.
One of the most important things we need to remind ourselves when it comes to our own highest values has to do with another crucial way the immune system of any repressive regime like capitalism works: It gets us all to feel we’re in the minority, and that any ideas we have that go against the system are misguided, unpatriotic, and even insane.
The majority of people hold intrinsic, self-transcending values; the majority of people think we should tax corporations and the hyper-rich; the majority of people think we should have single-payer health care; the majority of people think most politicians do little good for ordinary citizens; the majority of people want to protect the ecologies we all depend on.
But the politicians, the corporate leaders, the very wealthy, and countless others speaking as the voice of capitalism convince us that such ideas are ridiculous. It’s like a planetary-scale gaslighting campaign. We need to take a stand against it, and recover our sanity.
The way forward involves thinking together, rather than letting ourselves remain divided. It involves recovering both the spiritual and ecological commons from which capitalism and conquest consciousness have excluded us. We need to enter that common ground together. We need to think together, rather than letting those in power dictate to us how we will live and love, how we will work and create, and what we will become—what our world will become.
We need to clarify all of these things a lot more, but part of Smith’s dangerous wisdom is that he intuitively understood that we face this choice between two roads, and ultimately between two worlds. It may feel very tempting to declare we can have both, that we can have capitalism and wisdom at the same time. But we have begun to try to understand why Smith was right in his sense that we face a choice between two different roads, not one road that can reliably give us both wisdom and materialism.
In our next contemplation we’ll consider some concrete examples of how the capitalist style of conquest consciousness, or the capitalist style of ignorance, plays out—how things begin to change if we follow the road of materialism. These specific examples may offer us some excellent insights.
We’ll also reflect on some of Smith’s other dangerous wisdom—including his dangerous wisdom about class warfare. That’s right—Adam Smith recognized class war as part of capitalism long before Karl Marx did.
As I said, the best is yet to come in this contemplation of the dangerous wisdom of Adam Smith. We’re in for some surprising ideas and shocking facts. So join us for our second contemplation in this series, which will appear after the release of our first dialogue in the series—a dialogue with a rebel economist.
If you have questions, reflections, or stories to share about your experience with the dangerous wisdom of Adam Smith, or the possibilities of life beyond the system we have, get in touch through dangerouswisdom.org We might be able to bring some of them into a future contemplation.
Until next time, this is dr. nikos, your friendly neighborhood soul doctor, reminding you that your soul and the soul of the World are not two things—take good care of them.