Adam Smith: The Father Of Economics

Adam Smith: The Father Of Economics

When asked “Who is the ‘father’ of modern economics?” most economists answer Adam Smith (A.D. 1723-1790). Smith was a Scottish “ moral philosopher,” pioneer of political economics, and author of The Theory of Moral Sentiments and An Inquiry into the Nature and Causes of the Wealth of Nations (A.D. 1776)—the first modern work of economics.  (Note Smith’s fixation on “morality”.  He was a “moral philosopher” and his first book involved “Moral Sentiments”.)

Smith was the quintessential “absent minded professor”.  He was fumbling, forgetful and inoffensive—but highly intellectual.  Alan Greenspan described The Wealth of Nations as “one of the great achievements in human intellectual history”.

Although Smith is widely cited as the “father of modern economics,” I suspect that someone far less “moral” is the true “father” of modern economics.  Smith may be the “father of economics”.  He is certainly the “father ofclassical economics”.   But, as you’ll read,  the true “father of modern (monetary) economics” is someone far less moral than Smith.

Smith’s Morality

Smith entered the University of Glasgow at age fourteen to study “moral philosophy”.  At that University, Smith developed a passion for liberty, reason, and free speech.  In 1748, as an Edinburgh university professor, Smith first expounded his economic philosophy of “the obvious and simple system of natural liberty.”

Smith was raised as a Christian, but reportedly became a deist (one who believes that a supreme being created the universe, and that this fact and other religious truths can be deduced by using reason and observation of the natural world alone, without need for faith or organized religion.)  Smith’s religious and moral inclinations are important in that they suggest that Smith’s economic theories were built on a “moral” rather than purely “monetary” foundation.

In his first published his first work (The Theory of Moral Sentiments; A.D. 1759) Smith first referred to his famous “invisible hand” to describe the apparent benefits to society when people behaved in their own interests. In the book, Smith critically examined the moral thinking of his time, and suggested that conscience arises from social relationships.  Smith proposed a theory of sympathy, in which the act of observing others made people aware of themselves and the morality of their own behavior. Again, in Smith’s proposed “sympathy,” we see evidence of Smith’s focus on morality.

I contend that Smith’s notions of morality colored the economic theories he advanced in his later work The Wealth of Nations.  In that second book, Smith claimed that the free market, while appearing chaotic and unrestrained, is actually “guided” to produce the right amount and variety of goods by a so-called “invisible hand”.  Smith opposed any form of economic concentration or regulation because he believed that it distorted the market’s natural ability to establish a price that provides a reasonable return on land, labor, and capital.  Smith advanced the idea that a true free market economy would produce a satisfactory outcome for both buyers and sellers, and would optimally allocate society’s resources.

According to Smith, “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.”

Smith believed that when an individual pursued his own self-interest, he indirectly promoted the good ofsociety.   Smith argued that self-interested competition in the free market tended to benefit society as a whole by keeping prices low, while still building an incentive for a wide variety of goods and services. Nevertheless, Smith was wary of businessmen and argued against monopolies.

Smith was an early proponent of free markets, limited government and he based his economic theories primarily on human morality.

For all of that, Adam Smith is truly the “father of classical economics”.

Classical (Moral) Economics Gives Way to Modern (Monetary/Immoral) Economics

Smith may be the father of classical (moral) economics, but he is not the father of modern “monetary” (immoral) economics.  Modern economic theory has no “moral” foundation other than “greed is good”.  The classical notions of moral right and wrong that animated Smith and classical economics have been replaced by a “modern economic theory” wherein “right and wrong” have been supplanted by “profit and loss”.

In modern economic theory, that which makes a profit is “good” and that which loses money is “bad”.  The subtleties and humanities of mankind’s morality have been abandoned for the stark simplicity of mathematical calculations.  Today, it’s simple.  It’s all about the money.  Mo’ money, mo’ money, “SHOW ME THE MONEY!” constitutes the essence of modern, monetary economics.  Is your business in the “red” (bad) or in the “black” (good)?  The mathematical “bottom line” of modern economics has replaced the “moral values” of classical economics.

Our world is not improved by that change.

Where Smith advocated a “free market” wherein each individual’s “self-interest” would result in “benefit” to all, our current markets are manipulated and their “benefits” are primarily reserved for a few “insiders” rather than the nation at large.  Smith advocated “natural liberty”; today’s economics push for debtor bondage.  Smith’s classical (moral) economics promoted The Wealth of Nations; today’s monetary economics promotes The Wealth of Special Interests (or perhaps, The Wealth of Bankers).

The Father of Modern, Monetary Economics

1st Timothy 6:10 declares “For the love of money is the root of all evil . . . .”  Note that the Bible never declares “money” to be evil.  It’s the love of money that we’re warned against.

Money, itself, is not bad.   Money is necessary, common to virtually all cultures, and important to operating a complex nation.  Money is morally neutral.  It’s the love of money that tends to immorality.  It’s the love of money that gives rise to prostitution, hit men, and the insatiable greed of some corporate executives and politicians.

If you want to find the “father” of today’s monetary economics, I suggest you look back in history for the man who most loved money.

I suggest that man was Mayer Amschel Rothschild (A.D. 1743-1812), the founder of the Rothschild fortune and dynasty that controls much of the world’s economy to this day.  Mayer Rothschild is famous not only for his wealth, but for his primary ambition in A.D. 1790:

“Give me control of a nation’s money and I care not who makes her laws.”

I doubt that you can find a clearer expression of the love of money than Rothschild’s hope and dream that if he could control a nation’s money supply, then the lawmakers (both human and divine) would become irrelevant.  In Rothschild’s view, money is the real “god” of this world.

Rothschild’s “give me control” statement laid the intellectual foundation for modern, monetary economics.

The Apple Doesn’t Fall Far From the Tree

In A.D. 1815, twenty-five years after Mayer Rothschild expressed his dream to control a nation’s money supply, his son Nathan reaffirmed his father’s (and family’s) love for money when he declared:

“I care not what puppet is placed upon the throne of England to rule the Empire on which the sun never sets. The man who controls Britain’s money supply controls the British Empire, and I control the British money supply.”

The patriarch’s dream of controlling England’s money supply had been achieved.  His son Nathan “cared not” who ruled England as sovereign because Nathan “controlled the British money supply.”  As a result, Nathan was now so rich that he believed himself to be “above the law” of man or God. And Nathan was certain that by controlling the money supply, he and the Rothschild family would accumulate even more wealth and power.

The Rothschild’s claimed to control England.  But England was not the only nation that had a money supply to control. Each of the world’s nations had its own money supply, and the Rothschild family determined to one day control them all.

For example, it’s alleged that in A.D. 1791, through Alexander Hamilton, the Rothschilds established a central bank in the USA called the First Bank of the United States.  When Congress voted in A.D. 1811 against renewing that bank’s 20-year charter, Nathan Rothschild warned, “Either the application for renewal of the charter is granted, or the United States will find itself involved in a most disastrous war.”

The following year, England declared war against the USA in “The War of 1812.”  It’s alleged that the Rothschilds planned to cause the US to build up such an enormous debt in fighting this war that the US would have to surrender to the Rothschilds and allow a new US central bank to be chartered.  If so, we can see the beginnings of an economic and even global system dedicated to “endless war for endless debt.”  (Incidentally, before she died in A.D. 1849, Mayer Amschel Rothschild’s wife “Gutle” nonchalantly remarked, “If my sons did not want wars, there would be none.”)

In A.D. 1815, as England’s Wellington faced Napoleon at Waterloo, the five Rothschild brothers reportedly supplied gold to both armies.  As condition for Rothschild loans, the warring armies had to agree to honor the debts of the vanquished.  I.e., if Napoleon won, he’d pay whatever England owed to the Rothschilds.  If Wellington won, England would pay whatever Napoleon owed to the Rothschilds.  This began the Rothschild policy of funding both sides in wars in order to generate massive, risk-free debt.  It didn’t matter which country lost the war because the Rothschild loans were given only on the guarantee that the victor would honor the Rothschild debts of the vanquished.

Pretty slick, hmm?  Heads, Rothschild creditors win; tails, Rothschild debtors, lose.  With this formula, Rothschilds were sure to win every war.  You can see why Rothschilds would favor and even cause wars.

By means of having great wealth, the Rothschilds were able to acquire even more wealth and power.  Some estimate that in the early 1800s, the Rothschild family controlled over half the wealth of the western world.

In A.D. 1816, the US Congress rethought its position on having a central bank, and passed a bill permitting yet another Rothschild-dominated central bank, which again gave Rothschilds significant control of the American money supply.  But Andrew Jackson (running on the slogan “Jackson And No Bank!”) was elected 7th President in A.D. 1829.  Jackson planned to take the control of the American money system to benefit the American people rather than allow the Rothschilds’ profiteering.  Jackson succeeded in “killing” America’s 2nd Central Bank.

Once removed by Jackson, the Rothschilds did not return in force to the US until A.D. 1913 when they established our 3rd central bank:  The Federal Reserve that we all so know and love today.

In fact, this is the same Federal Reserve that is currently “saving” our country (or at least our country’s bankers) from an economic recession/depression.  And how is the Federal Reserve “saving” us?  Under the fearless leadership of “Helicopter” Ben Bernanke, the Fed has been flooding the country with paper, fiat dollars.

In other words, by “controlling the supply of money” (exactly the formula advocated by Mayer Rothschild in A.D. 1790), our Federal Reserve proposes to solve our current economic crisis.  The Fed does not see our current economic crises as a result of a loss of national moral values (of the sort Adam Smith advocated).  Instead, operating under the Quantity Theory of Money, the Fed is attempting to prop up the economy with yet another monetary “fix” of the sort that held us together through a number of economic downturns in the 1980s and 1990s.

As I explained in last week’s article (provocatively entitled, “Vt = nT/M”), the Quantity Theory of Money is the modern world’s predominant economic theory.  It’s based on the primary presumption that if you can control the money supply (“Quantity”), you can absolutely control the economy.   Thus, today’s predominant economic theory can be traced back to Mayer Amschel Rothschild’s 1790 declaration that “Give me control of a nation’s money and I care not who makes her laws.”

Therefore, I contend that the true father of modern economic theory is not Adam Smith but Mayer Amschel Rothschild.

It’s interesting that Smith and Rothschild were contemporaries.  Smith published The Wealth of Nations in A.D. 1776 (the same year as our “Declaration of Independence”).  Rothschild declared his love of money and intent to “control a nation’s money” just fourteen years later in A.D. 1790.  Smith advocated a theory of economics that was based on moral values and was intended benefit a “Nation”.  Rothschild advocated an immoral economic principle that was intended to benefit, enrich and empower only the “special interests” of the Rothschild family.  Initially, Smith’s theory seemed predominant, but eventually (and currently) the Rothschild theory of modern, monetary economics (control the money supply) rules.

If we had adhered to morally-sound economic theories (like Smith’s), our nation would have continued to prosper with benefits and blessings for all.  But—because we’ve embraced the Rothschilds’ theory of economics, we have lost national prosperity, we are the biggest debtor nation the world, and we’re headed for economic and social catastrophe.

If the Bible is true and the “love of money” is the root of all evil, then by embracing a purely monetary (but immoral) theory of economics (based on the Rothschilds’ “love of money”) we shouldn’t be surprised if the result is something very unpleasant.

The true “father” of our modern, monetary-based economy theory is not the moral Adam Smith—it’s money-lover Mayer Amschel Rothschild.

Punch line:  In A.D. 1790, virtually every nation had its own money supply.  Today, there are only five remaining nations without a Rothschild-controlled central bank: Iran; North Korea; Sudan; Cuba; and Libya.  There had been a sixth—Iraq—but their central bank’s independence ended with our A.D. 2003 invasion.

At arm’s length and within my political choice of venue: The United States of America,

Alfred Adask