Adam Smith's lesson for Peter Mandelson

By Alex Singleton | 28 August 2005

The EU trade commissioner Peter Mandelson would do well to learn this from Adam Smith's Wealth of Nations:

The man of system... seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board; he does not consider that the pieces upon the chess-board have no other principle of motion besides that which the hand impresses upon them; but that, in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might choose to impress upon it.

Madsen Pirie writes on the Adam Smith Institute blog:

Mr Mandelson is a natural and very skilled juggler. He likes to control things, and is very good at it. The idea of letting markets do the work and allowing an order to develop that way does not appeal to his temperament. He'd rather manage things. He now concedes there was a "glitch" in the deal's implementation (take another bow). As the FT says,

"Yet glitches and protectionism go hand in hand. Attempts to micro-manage trade are destined to backfire. As retailers pointed out, Mr Mandelson has shown a lack of understanding of their business practices and of the time lag that generally occurs between orders and deliveries."

The reason for optimism is this. One senses the end of an era, as protectionism collapses into a mass of contradictions and absurdities. From the current shambles people are learning that free trade tends to get the goods produced by those who do it best, and we all become richer as a result. It is also easier than trying to micro-manage. Perhaps those who learn will include Mr Mandelson, who is also a very good learner.