Recap for 1/31 - Ideas Matter

            This week we examined the ideas of Adam Smith and Thomas Malthus, as well as the capitalist views of David Ricardo. At the end of class on Wednesday Dr. Gannon concluded by discussing that ideas matter. The ideology of capitalism emerged during a time that the world was changing and people began to question feudalism and other dominant ways of thought. People made the decision to reject traditionalist views and create their own enlightened ideas, like Smith, Malthus, and Ricardo.

            As we learned last week and at the beginning of this week, Adam Smith founded the basic ideals of capitalism with concepts like self-interest, division of labor, and limited government involvement. Smith’s writings of capitalism spread across Europe, and his ideas of a prosperous economic system changed the manner in which people viewed how they should live their lives. Smith’s simple ideas of a new economic system changed the world forever because people realized the opportunities and good that capitalism could bring to all. Smith’s ideas mattered because people realized that the old way of life was holding them back and working against them. It brought about an age of revolution.

            Thomas Malthus and David Ricardo worked off of Smith’s basic ideas of capitalism and brought about their own concepts like human nature and class conflict. Hunt and Lautzenheiser explained in History of Economic Thought that “Ricardo saw society from the labor theory or production perspective. He focused sharply on the two major class conflicts of his era, and, in his theory, the interests of workers and capitalists were opposed. ‘If wages should rise,’ he repeatedly stated, ‘then… profits would necessarily fail’” (Hunt 116). Smith’s idea of capitalism focused on the good for all, but human nature, like greed and love of power, caused issues like class conflict. As Ricardo stated in the quote, if wages were to be higher like Smith supported, then profits would be lower and the business would be worse off.

            At the end of class on Wednesday we discussed the potato famine in Ireland. More than one million men, women, and children died of starvation due to the famine and their British counterparts had the opportunity to help those that were dying and supply them with food and services. The idea that government should never interfere with the capitalist market, also known as laissez-faire, stopped the British government from supplying the necessary food to help the starving. The British government believed that if they interfered with the market that there would be severe consequences to their local economy and even global ramifications. The idea that there should be limited to no government intervention in the market correlated to the death of more than one million Irishmen. This is evidence that a single idea matters because, unfortunately, sometimes it can mean life or death. Adam Smith believed that capitalism was good for all without examining the aspect of human nature. Malthus believed that human nature was darker than Smith would have believed. The Irish potato famine is the perfect example of how human nature should be considered in real life application. Often we like to think of capitalism as the perfect economic system with little-to-no downsides, but it’s important that we realize that Smith’s idea of capitalism is difficult to obtain. Human aspects, like greed and the love of power corrupt the system and create results like the deaths from the potato famine.

            In today’s world, we know that capitalism creates what we call winners and losers. The world has internalized the idea that it’s okay for there to be winners, the wealthy, and losers, the poor. This Darwin-like way of thinking has changed capitalism from Adam Smith’s, and even Malthus’ and Ricardo’s, original intents. The theme of this post is that ideas matter, and the idea that it’s okay to have winners and losers through capitalism has created some inequalities in today’s society. This idea matters because some children wake up in the morning to a comfortable, safe way of life while others wake up hungry and ill-fated. Smith’s idea of capitalism was about opportunity and efficiency so that all of society could benefit. Do you see his ideas in work today? Or have they been changed with time?