An affluence for good

James Gubb, 14 March 2007

Before long, many of us will be sitting on Adam Smith. The Bank of England has just launched a new £20 note bearing an image of the Scottish philosopher and inventor of economics, writes Dr Peter Heslam.
It isn’’t clear whether the Chancellor, Gordon Brown, had anything to do with the decision. – He is a Smith enthusiast who is proud to share his birthplace of Kirkcaldy. In any event, it is a remarkable choice, given the way Smith’’s ideas are often associated with precisely what is wrong with the global economy today: its relentless, unethical pursuit of the free market, to the detriment of humanity.
Perhaps if the truth were known we wouldn’’t be so surprised. After all, Smith argued that the economy could function in the interests of all only if it was held in check, both by the state and by morality. In fact, he insisted that it could not thrive apart from a culture steeped in virtue.
He was also the first serious thinker to suggest that there was a solution to global poverty. It was not charity, philanthropy, state power or any other top-down or paternalist strategy; it was the freedom of the individual to pursue their own economic self-interest. Only this –directed as it was by the ‘invisible hand’ of Providence –had the capacity to unleash the human creativity necessary for economic prosperity.
Smith went further. The very aim of human society, he said, should be ‘universal affluence’ through the creation of wealth. This would put the economy at the service of human beings, rather than vice versa, liberating people from the prison of poverty and scarcity that was the inevitable consequence of the subsistence model that had dominated human history.
It was not the Make Poverty History campaign of 2005, therefore, that first inspired the public to think that something could be done about global poverty. It was Smith’’s book The Wealth of Nations, published in 1776 – a time when, even in the West, most people were poor.
Smith’’s own hand in economic affairs may now be invisible, but if we are to address contemporary global poverty, the ideas he articulated are worth revisiting. The new £20 in our pockets will be a reminder to do so. In this way, it may exert a greater influence for the good of humankind than through its purchasing power alone.
Dr Peter Heslam is director of Transforming Business at Cambridge University (www.transformingbusiness.net)