(Mis)quoting Adam Smith

It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest. (The Wealth of Nations,  Adam Smith)

This Adam Smith’s quote is oft used to justify self-interest as an overarching pursuit and the consequent pure capitalist economy. However, Adam Smith died before the industrial revolution, which along with advancements in productivity also created immense concentration of wealth, and income inequality. The butcher, brewer, baker, and consumer of Adam Smith’s time had income parity and bargaining ability. However, with MNCs now with annual revenue’s greater than the GDPs of some countries, the bargaining (and manipulative) power is completely skewed. In addition, a disproportionate number of products in the market are non-necessities, the transaction of which does not result in a net benefit to both parties.

The news is replete with examples of how concentration of economic power (a necessary consequence of rising inequality) is prone to corruption. The rising tide does not lift all boats. Clearly, we need to think beyond capitalism as a development tool.

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