Ted Malloch: Donald Trump Thinks Like a Modern Day Adam Smith
Donald Trump is not an economic theoretician. He is an active business actor and political leader
But like Adam Smith he knows there are three explanations of the origins of prosperity.
First, prosperity is viewed as the product of magic.
Second, prosperity is the product of conquest.
Third, prosperity is the rooted in the human creative capacity.
The first two views assume that wealth is pre-existing; the third view posits that prosperity can be created by human effort.
Trump’s notion of capital reflects this third way.
The kind of knowledge and effort involved, however, cannot be wholly captured by the liberal neoclassical economic assumption of a completely rational, utility maximizing, fully informed homo economicus.
In the past, attention has focused on financial capital and physical capital as static, limited assets to be accumulated and managed.
The source of economic prosperity was always taken for granted, largely, as an existing condition to be exploited.
In this context, economics was modeled more on the basis of resource management in large systems, with growth and development coming largely from management of costs. And government intervention
For Trump, economic growth is not reducible to a mechanical model that can be planned at the macro level or directed by the State.
It requires freedom, it requires inspired effort, and it requires commitment to a larger “spiritual vision,”[i]a sense of American greatness.
Economic development is also, as Peter Berger reminded us in Pyramids of Sacrifice, a “religious category.”
Economic development is clearly a vision of redemptive transformation.
President Trump spelled this out convincingly in his SOTU address this very week.
This sense of capital is founded on an understanding that all resources are entrusted to people.
That individual persons, families and groups are called to preserve and develop a wealth of resources for which they are accountable here and later and which endowments must be managed and deployed wisely.
Thus, spiritual capital is about this stewardly entrustment of responsibility and a care for the creation it exhibits.
Trump knows this intuitively.
Within the Judeo-Christian inheritance, creative obedience or norms in economic activities are one primary way for adherents to acknowledge and demonstrate faith.
Such capital is reflected economically in three ways.
First, there has been phenomenal economic growth associated with the technological project that cannot be explained in traditional ways.
Second, some people are more productive, entrepreneurial and work harder than their counterparts in other developed or undeveloped national economies.
Third, some people are more philanthropic than other people, more even than any in the history of the world.
How is Judeo-Christian spiritual capital related to economics? And particularly to democratic capitalism featured in Trump’s America?
Part of the answer depends on how one understands economics.
Economics as a discipline is often very helpful, and individual economists often present important insights.
However, understood as a pure social science, economics has not generally been useful, and that is for two reasons.
First, there are no timeless truths in any of the social sciences, only occasionally useful, highly qualified generalizations.
Second, economic institutions and practices interact with other non-economic ones.
We can neither understand economic phenomena independently of history and other social institutions nor can we reduce our understanding of other social institutions to economics.
Trump knows markets and trade, including international trade, have existed from time immemorial.
He also knows, as did Adam Smith, to be mutually beneficial they must be free, fair and reciprocal.
It is of course the presence of technological innovation that accounts for the extraordinary importance of market economies in our modern world and in the American experiment.
David Hume (empiricist and historian among many things) and his friend, Adam Smith (moral philosopher and the first economist who held a Scottish-Enlightenment view of historical stages) were the first to appreciate the connection between technological innovation and free market economies.
The connection between economic phenomena and other social phenomena is reflected in Smith’s two most important works, The Wealth of Nations and the earlier The Theory of Moral Sentiments.
Review them here to better understand Trump.
The heart and heart are tied together and produce the kinds of unprecedented economic results we are now experiencing in the Trump era.
President Trump has made this connection and his policies are aimed at economic growth for all citizens, not for a few, an elite, Wall Street or any subgroup.
Everyone is participating for the good.
If you want to comprehend Trump – then think like Adam Smith and praise the results.