NEO-LIBERAL IDEOLOGY AND POLICIES IN HISTORICAL PERSPECTIVE/175main expressions of mercantilism were Colbertism in France,
Bullionism in Spain and the policies of Cromwell and Petty in
England. Adam Smith is best remembered for his allegory of the
'invisible hand'. According to Smith, each individual fulfils 'an
objective that is entirely independent from his intentions .... While
seeking only his personal gain, he often works in a much more
efficient way in society's interests than had society's interest been his
real motivation' (Smith, 1776).
For Smith, public spending should be limited to defence, justice
and public works when and where private entrepreneurs were not
willing to take charge themselves, 'given that, in these matters, profit
would never be enough to return monies spent' (Smith, 1776).
Adam Smith's ideas correspond to the strong development of
English capitalism in the eighteenth century and laid part of the
foundation for 'economic liberalism'.
We should recall that Smith has not only been a source of
inspiration for liberals (and neo-liberals). Some parts of his analysis
(and that of the mercantilists he fought) were taken on by Karl Marx
in his critique of political economy. Indeed, for Smith, 'Labour is the
true measure of value' (Smith, 1776). David Ricardo expanded on
this notion, and Marx further developed it while acknowledging his
debt to Smith and Ricardo. Unlike Smith, Marx also used a number
of the mercantilists' contributions (see Labica-Bensussan, 1982).
Smith also makes a number of statements which today's neo-
liberals would find extremely irritating:
English businessmen frequently complain about the high level of
wages in their country. They say that this high level is the reason
why they cannot sell their goods at prices that are as competitive
as in other countries. But they remain quite silent about their high
profits. They complain about the high profits of others but are very
quiet about their own. In many cases, the high profits made by
capital are much more to blame for price rises than are exorbitant
wages. (Smith, 1776)This statement is truly heresy for today's neo-liberals, for whom
wages are always far too high, and the cause of inflation and poor
competitiveness.