Adam Smith's Nightmare.

The bourgeois media tends to see these people as either evil cynics or incompetent fools. It seems that there isn't necessarily a dichotomy, this lot can easily be both. We should stay away from the language of 'reality' because ideology and reality are really mixed up together. There is no non-ideological position, just an ideologically charged space where you are involved/excluded. It seems increasingly plausible that David Cameron believes that what he's doing is for the good of the country while at the same time adhering to a 'small government' liberalism and behaving as a cynical pragmatist to that end. The possibility of pumping money into the economy to create jobs is already closed from this worldview, exorcised from the realm of the possible. There is no major contradiction to be found here, not even a whiff of double-think. There is room for exceptions to the rule, but the rule holds firm in the minds of Cabinet ministers.

It will be heralded as a victory even though the average rate of growth under Thatcher - around 2% - was the same as it was in the 'mediocrity' of the 1970s. In the meantime we find that the anti-recovery has had strange effects on the commentariat who are meant to be its primary apologists. Charles Moore has written that the Left are basically right in their view that the free-market is a cover for the interests it serves, namely that of concentrated economic power. He goes on to write that "The global banking system is an adventure playground for the participants, complete with spongy, health-and-safety approved flooring so that they bounce when they fall off. The role of the rest of us is simply to pay." Moore doesn't then give up on right-wing politics but looks to recover the old principles. He is concerned that the system he seeks to defend seems as though it was created by a "Left-wing propagandist as a satire of how money-power works".

The case Charles Moore really makes is for the reaffirmation of the old principles of free-market capitalism. The economic system has become a parody of left-wing propaganda, in his view, so we must reinvigorate the free-market system in order to emancipate the many and not just to feather the nests of the few. Moore takes comfort knowing that "conservatism will be saved, as has so often been the case in the past, by the stupidity of the Left." He has reiterated and clarified this position more recently and it is a fundamentalist one in its continued faith in the free-market. Ron Paul comes to mind. Capitalism remains the revolutionary batter-ram with which the bourgeoisie can rid the world of obstacles. This was true of the aristocracy and the trade unions, now it's true of the system itself as it has been hijacked. Rhetorically he asks of the reader "Did Adam Smith’s invisible hand, far from making the public rich and free, simply pick their pockets?"

We all know that Adam Smith was taken to be arguing against state-intervention in the economy on the grounds that it could be harmful. The emergent order of capitalism - as distinguished by the advent of profit - was natural in Smith's eyes. If individuals were allowed to pursue their own interests freely this would bring about an economic equilibrium. Supply would equal demand and all resources in society would be used fully. The implied view is that the forces of supply and demand will balance out inevitably, which would establish a natural price for all goods. The natural rate in turn provides income for capitalists, workers and landowners in the form of profits, wages and rent. If we follow this view to its ultimate implication we find that the equilibrium produced will prevent all future crises. This is the old classical economic reading of Adam Smith. It loses sight of the important subtleties of Smith's Philosophy of Society, of which economics is not the main focus.

It's actually a myth that Adam Smith was an opponent of government intervention in the economy, in fact he doesn't rule it out, for he welcomed the Navigation act. Interestingly, that act was passed to give British capitalists a monopoly over colonial trade. Similarly fascinating is the way that the Founding Fathers of the US rejected Smith's free trade doctrine in favour of the unabashed economic nationalism advocated by Alexander Hamilton. The US is just another cliche in the history of economics, that the state can boost growth and development. But more importantly, Adam Smith saw the market as instrumental - he was an Aristotelian - to the realisation of human fulfillment in conditions which allow perfect liberty to tend towards perfect equality. Wealth is not only composed of products, for Smith the word 'wealth' referred to everything that contributes to the quality of life. This would include equality as well as poetry and music. Furthermore charity, the preferred conservative means of the elimination of poverty, is an insufficient tool in wiping out poverty in Smith's eyes.

It is somewhat ironic that the process we have endured over the last 40 years was actually anticipated by the classical economists including Adam Smith. The fear was that the merchants and manufacturers would conspire to shape public policy in their favour, that they would do business abroad - investing abroad and importing from abroad. It would rake in enormous profits, but England would have been ruined. Smith argued that the merchants and manufacturers would give priority to their own country, as if by an "invisible hand" England would be saved in this way. Since the 1970s we have witnessed deindustrialisation at home combined with off-shoring of production abroad and the shift to financial management over industrial production. The causes of the crisis are barely discussed, we just have to look forward to the way out. We're not far from the nightmare of classical economists. But it's been pretty awful for a lot of ordinary people and it could easily get worse before it gets better. There is no "invisible hand" in sight.

The recovering Thatcherite John Gray has pinned the preconditions of global capitalism as well as for communism on monotheism because of its universal claim to Truth. This claim was unthinkable until polytheism with its implied relativism in a plurality of gods could be left behind with the predominance of the Abrahamic religions. The laws of economic science replace the Ten Commandments. But what Gray overlooks is that the capitalist system is not simply universalist. On this point he has yet to shake-off the old illusions of Thatcherism. Capitalism is universalist in scope but particularist in its structural needs. This is the reason that the system can tend towards an unregulated banking sector and free trade treaties as it seeks to close its increasingly porous borders. The markets are forces of moral relativism, cultural pluralism and political pragmatism; yet there is the need for the state and other institutions as a lifeboat in crises. But it is market forces which are principally responsible for the subversion of these institutions.

It may be more accurate to say that the markets are the gods with a claim to Truth than to pin the blame on monotheism strictly. For this carries the whiff of Paganism. We accept that the markets will react with extreme disapproval of a shift in policy towards expansive fiscal measures to create jobs. The view that the market actually acts consciously in its exertion of power over the economy is a form of faith. This is the implicit position when George Osborne claimed that the economy isn't recovering because of bad weather. The definition of fundamentalism: the rot is just a disturbance, it's not the system itself. And this brings us back to Charles Moore. As Gray points out, the moral code of the Christian tradition hasn't made us better people but it has enriched our vices. The cultural conservatives aren't looking to reinstate the old superstructure just to reassert traditional moral values, the real point is to give meaning to our sins. In the same vein, the free-marketeers are only looking to rescue the old principles of the material base in order to give their violation meaning once more.