Such relentlessly negative depictions of capitalists were unmatched by any other economist for more than half a century, until the arrival of Karl Marx. Yet Adam Smith became the most famous advocate of the free market, precisely because he saw individual intentions and dispositions as far less important in determining economic outcomes than were the systemic effects of market competition. The beneficial effects of free markets were to Smith “no part” of the “intention” of individual capitalists. Marx likewise saw systemic characteristics as more important than individual intentions and based his criticism of capitalism on his perception of its systemic characteristics, rather than on the motives of individual capitalists. He said:

I paint the capitalist and the landlord in no sense couleur de rose. But here individuals are dealt with only in so far as they are the personifications of economic categories, embodiments of particular class-relations and class-interests. My stand-point, from which the evolution of the economic formation of society is viewed as a process of natural history, can less than any other make the individual responsible for relations whose creature he socially remains, however much he may subjectively raise himself above them.

In short, both the most famous critic of free market capitalism (Marx) and its most famous advocate (Adam Smith) analyzed it systemically. Those who, in later times, attributed the things they disliked — whether rising prices or the high pay of corporate executives — to “greed” have taken a very different approach. To use greed as a causal explanation of economic phenomena is to assume that what people want determines what they get. That in turn assumes that businesses have a degree of control over the market that neither Marx nor Smith assumed, and that has yet to be demonstrated. Even such landmark anti-trust prosecutions as those of Standard Oil and the Aluminum Company of America have involved companies whose prices were declining rather than rising.

Misconceptions of business are almost inevitable in a society where most people have neither studied nor run businesses. In a society where most people are employees and consumers, it is easy to think of businesses as “them” — as impersonal organizations, whose internal operations are largely unknown and whose sums of money may sometimes be so huge as to be unfathomable.


Knowledge is one of the scarcest of all resources. Glib generalities abound, but specific hard facts about particular places and particular things at particular times that are relevant to economic decisions are something entirely different and much more scarce.

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