Stephen King: In praise of Adam Smith, Mozart of money
Elgar should never have been on British banknotes. His appearance represents a peculiar celebration of mediocrity
Monday, 19 March 2007
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"Britain's greatest composer is to be replaced with a far less familiar face, that of the 18th-century philosopher and economist Adam Smith, along with a picture of a pin factory." So wrote Jessica Duchen in Friday's Independent, disparagingly referring to the new £20 note which was first issued last week. In her tribute to Sir Edward Elgar (it's his 150th anniversary this year), Ms Duchen noted that "Elgar may be anathema to the Bank of England, but he is still recognised as arguably the greatest composer the UK has produced".
I think she's treating the Bank of England a little unfairly. Elgar may, indeed, have been the greatest British classical composer (although I'd suggest that Purcell and Britten might also be deserving candidates for that particular accolade). I'm not convinced, though, that any of our composers deserves to be on a British banknote. British composers are basically second-rate.
This conclusion might cause a bit of harrumphing here and there, but I make no apology. Elgar simply wasn't up to it. He wrote a bit of decent chamber music. The Cello Concerto still tugs at the heartstrings. The Enigma Variations are played, but only really remembered for Nimrod. Choirs up and down the country still like to belt out the occasional rendition of the Dream of Gerontius. And of course there's always the opportunity to indulge in a bit of Pomp and Circumstance. But world class? I don't think so.
Consider his contemporaries. While Elgar was churning out his two symphonies (composed in 1908 and 1911), Stravinsky was putting the finishing touches to the Firebird, the first of his major Diaghilev ballets. Between Elgar's Second Symphony and the Cello Concerto (composed in 1919), Stravinsky had knocked out Petrushka and the revolutionary Rite of Spring. Schoenberg finished Pierrot Lunaire in 1912. In the same year, Debussy completed Images, one of his great orchestral works. He was also working his way through the two books of Preludes for the piano. Ravel, meanwhile, had just composed Gaspard de la Nuit.
Alternatively, think of Elgar's position in the pantheon of great composers. What if Mozart, Beethoven or Verdi had been British? Would Elgar then have found his way on to a banknote of any description? Might he have displaced a British Bach, or challenged a Scottish Schubert? I somehow doubt it. Elgar should never have been on British banknotes in the first place. His appearance represents a peculiar celebration of mediocrity, the equivalent of choosing Noel Coward rather than Shakespeare to highlight Britain's cultural heritage.
Mediocrity is not a word you would ever associate with Adam Smith. He is genuinely the father of economics. He's one of the economic greats, the Bach, Mozart or Beethoven of his discipline. Edward Elgar, thankfully, he is not. His ideas may have been hijacked by Margaret Thatcher and the Tory right in the 1980s, but few politicians these days would argue that Smith was wrong, or representative of a particular political view. He just happened to be one of the very best economists the world has ever produced. He was British to boot.
From Smith, it's possible to trace the development of economics through to the modern day. He influenced Malthus, Ricardo and Marx, in effect establishing the so-called "classical school". His ideas hugely influenced the first major wave of globalisation in the latter years of the 19th century. He went out of fashion after the First World War, when markets failed and policymakers lost their way. Over the past 30 years, though, his ideas have made a triumphant comeback. Free trade, open capital markets and, more recently, labour mobility owe a great deal to his ideas. So, in turn, does the extraordinary recent success of many emerging markets.
Smith is often, unfairly, portrayed as a man who argued in favour of selfish behaviour. His supporters may occasionally have given this impression (Mrs Thatcher once famously claimed "there is no such thing as society") and his words are sometimes misquoted to support this view ("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 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."). Yet, throughout his works, he offers a sophisticated view of what, precisely, makes economies tick.
He is, of course, most famous for the invisible hand and the division of labour. Smith recognised the importance of the price mechanism. The invisible hand proved much better at resource allocation than any number of state planners, an observation sadly lost on those Soviet leaders who led Russia and its satellites into economic stagnation. As for the division of labour, his famous description of the pin factory stands the test of time. "A workman ... could scarce make one pin in a day. But in the way this business is now carried on ... the work ... is divided into a number of branches ... those 10 persons ... could make upwards of 48,000 pins in a day."
These arguments all appeared in his The Wealth of Nations, the first major book on economics and, mercifully, a book bereft of mathematical formulae. It was first published in 1776. He also, though, wrote The Theory of Moral Sentiments (1759). There, he established some of the ground rules for modern societies. He distinguished between self-interest and selfishness. For most of us, it's in our self-interest to have a system of justice in which each of us can expect to be treated fairly. From time to time, we might choose to cheat the system, thereby acting selfishly, but, were we all to act in this manner, the system would eventually crumble.
A system of justice, in turn, can underpin property rights. Smith's insights in this area were remarkable. He understood the need for legal "rules of the game", recognising that, otherwise, markets would fall apart. How could there be division of labour, for example, if workers didn't know, from one week to the next, whether they'd receive any wages for their pin-making efforts? The invisible hand might seem like a remote and rather cold concept, but Smith knew that, at the end of the day, the invisible hand would only work in a society where self-interest included showing sympathy for the interests of others, expressed through a binding set of legal rules.
As Gordon Brown stands up on Wednesday to deliver what will be presumably his final Budget, he might spare a thought for his fellow Scot. I'm not convinced that Smith would have embraced every aspect of Mr Brown's policies in recent years - the absence of serious public spending reforms and a rising tax burden might have been difficult to digest - but Smith would have doubtless applauded the Chancellor's commitment to economic freedoms, notably in Britain's open approach to the rest of the world.
And I suspect that, like me, Mr Brown applauds Adam Smith's appearance on the £20 note. Certainly, according to news reports documenting the tracks on his i-Pod, Mr Brown won't be losing too much sleep over Edward Elgar; he apparently prefers Beethoven, Bach, the Beatles and, famously, the Arctic Monkeys. And, if ever British musicians should make a reappearance on our banknotes, I'd have Lennon and McCartney over Elgar every time.
Stephen King is managing director of economics at HSBC
