03 July 2020

1776 and the founding of modern democracy and capitalism

1776 was a good year for world changing documents.

The founding fathers gave us the Declaration of Independence and Adam Smith gave us The Wealth of Nations. Oh, and across campus from Adam Smith in Glasgow, James Watt was perfecting the steam engine.

The combination of markets and democracy since has transformed lives. The two enable each other. Usually, what is wrong with democracy can be solved with more democracy, and what is wrong with markets can be solved with more markets.

It's funny how nobody tells a runner that they should make one leg weaker and yet in my lifetime I've seen lots of folks argue that we would make progress more rapidly if only we made one leg weaker, weakening government or markets. (For instance, the Republican Party was hijacked by Grover Norquist who famously quipped, "My goal is to cut government in half in twenty-five years, to get it down to the size where we can drown it in the bathtub." His weird worldview has become gospel for many. Of course now that we're witnessing the literally fatal consequences of a weak government in handling a pandemic, perhaps more people will abandon this odd theology.)

We're looking back to 1776 this weekend. It's worth remembering that the gains we have made since are less product of markets or democracy than what is created in the interaction between the two.

I would like to think that Adam Smith and James Watt were walking on this very spot on campus one day and Adam said, "Imagine someday that a person will be able to capture this image with a device."
"Oh sure," said James. "And then they'll be able to send that image to a friend on the American continent."
And then they laughed and laughed and said, "Ha! We could tell that to our peers, but really, who would believe us?"

Glasgow University. Adam Smith taught here and James Watt worked on campus, tinkering away with the steam engine. When I visited a few years ago, I was giddy.

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