One of my favourite economists Kate Raworth says the following about Adam Smith in her book Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist:
“When Adam Smith, extolling the power of the market, noted that, ‘it is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner’, he forgot to mention the benevolence of his mother, Margaret Douglas, who had raised her boy alone from birth. Smith never married so had no wife to rely upon (nor children of his own to raise). At the age of 43, as he began to write his opus, The Wealth of Nations, he moved back in with his cherished old mum, from whom he could expect his dinner every day. But her role in it all never got a mention in his economic theory, and it subsequently remained invisible for centuries.”
Adam Smith, a founding father of economic philosophy, had a complex view of humanity, arguing that although self-interest is crucial for the functioning of markets, concern for others is crucial for the functioning of society.
However, economic theory has narrowed down to examining simply this aspect of human nature, which may be quite destructive. I find it peculiar that when students gain knowledge of the characteristics of a rational “economic man,” they increasingly prefer self-interest and competition while rejecting benevolence and teamwork.
By and large, we tend to act in ways that are consistent with the image of ourselves we have created. Because of the stories we tell ourselves, we develop into those people.
As Seth Godin and Benedinette Jiwa would always say: The stories we tell ourselves define who we are. We are the culmination of all of our stories, some public, some private.
Even if we have a tendency toward selfishness, we are also the most sociable mammal and have developed robust features of cooperation and altruism.
Because of focusing on one side of Adam Smith’s The Wealth of Nations, competition and self-interest, we now have The Debt of Nations.
Many people report feeling happiest when they are able to aid others. However, orthodox economics has omitted this facet of human nature. Consumption-based competition between us has led to widespread indebtedness.
What we know for a fact is that many people report feeling happiest when they are able to help others. However, orthodox economics has omitted this facet of human nature and focused on maximising shareholder wealth.
The current economic paradigm is reinforced by the pervasiveness of marketing and advertising that appeals to people’s primal desires.
These days, going shopping is more of a pleasure than a necessity.
Marketing and advertising are created to make us feel inadequate, which contributes to the rampant consumerism we see on the high street. Advertisers hone their abilities to the point where they can exploit the weakest portions of human nature.
It’s true that advertising often overlooks or ignores aspects of human nature. The reason for this is that 20th-century company systems were created with the sole purpose of maximising shareholder profits.
However, it is quite possible to create businesses whose primary mission is to provide social benefit, while still generating a satisfactory rate of return for shareholders.
The good news is that the economic picture of humanity is currently being redrawn, and it’s about time.
Perhaps Adam Smith’s economic theory would have been somewhat different if he had recognised the value of the free labour provided by his mother [Margaret Douglas] in the form of cooking and washing for him.