Arnold Schwarzenegger recently went out of his way to tout the views of an 18th-century economist long revered as an icon by GOP politicians. "I am more comfortable with an Adam Smith philosophy than with Keynesian theory," the actor told the Financial Times of London. But now that he's running for governor, we should ask whether "an Adam Smith philosophy" really squares with Schwarzenegger's eagerness to make state government more deferential to the wishes of business owners.
Adam Smith may be a patron saint of present-day Republicans, but his writings actually contradict the "free market" rhetoric embraced by Schwarzenegger. The facile spin on Smith's work presents unfettered investment as the key to prosperity. But Smith openly declared that labor creates all wealth. He wrote: "It was not by gold or by silver, but by labor, that all the wealth of the world was originally purchased."
Smith was no champion of workers. Yet, in the context of present-day politics, it's a good guess that he would dissociate himself from Schwarzenegger and other free-marketeers who claim to be walking in his footsteps. While Schwarzenegger proclaims that policy-makers in Sacramento should become more friendly to the corporate sector, such ideology flies in the face of Smith's actual words.
In "The Wealth of Nations," published 227 years ago, Adam Smith wrote with realism about manufacturers and merchants. He described them as "men whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it."
The wealthy business leaders who have raced to support Schwarzenegger's campaign are among those who have "an interest to deceive and even to oppress the public." And Schwarzenegger looks like a very useful tool.