Posted by: erichosemann | February 6, 2010

Adam Smith, Poet

There’s no escaping him.  If you read economics, you’re going to run into him.  And he was a wordsmith.  He cared about what he wrote enough to ask, from his deathbed, that his unpublished work be burnt.

I’m supplementing my macro text with nibbles on a book called Monetary Policy in the United States: An Intellectual and Institutional History. A case in point of Smith’s talent on page 5:

Smith cautioned that commerce and business were less secure when “suspended upon the Daedalian wings of paper money, [than] when they travel about upon the solid ground of gold and silver.”(emphasis mine)

The Daedalian wings of paper money. That really brings it home. It calls to mind a passage from Economic Policy wherein Mises sort of offhandedly mentions “over-developed” economies. Overdeveloped. We don’t hear too much about that concept, but it’s an interesting one.  People tend to take the status quo as, well, the status quo.  How could developed countries be “overdeveloped?”  People make choices, buildings get built, production rolls on.  Ah, but governments issue fiat currency.  And fiat currency floats on Daedalian wings, wings that might melt at any moment and send the whole thing plummeting down from the commanding heights.

P.S. As an introduction to Smith if you haven’t read him, or an appreciation of Smith if you have, I can’t recommend enough Coase’s The Wealth of Nations, reproduced in the collection Essays on Economics and Economists. The piece is reverential and honest all at once; a real treat.

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