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Adam Smith the Real-life Grinch Who Stole Christmas and Won


At about this time each year, without fail, the lament will go out about how the real meaning of Christmas has been lost. This pre-Christmas tut-tutting is as much of a tradition as the obligatory Christmas cards, and treated in the same casual way. But for many, Christmas was stolen and Dr Seuss's Grinch didn't do it.

The economist Karl Polanyi was the first to notice the crime back in the 1940's. In his classic work, The Great Transformation: The Political and Economic Origins of our Time, Polanyi drew attention to a remarkable event without historical precedent that discarded everything that had gone before. This was the emergence in the nineteenth century of the market as the central institution in our society, making the exchange of goods and services the key feature of human life, bordering on becoming the very reason for living. Understanding the nature of this transformation is the key to unlocking the crime.

But the latter day beneficiaries of this crime have become masters of subterfuge. With teams of experts, they easily bog down any attempt to get at the real story with complex economic concepts and political jargon. To avoid this we remind them, detective Goran style, that all systems, political, social and economic have one thing in common-people.

One of the tricks of the experts is to talk about these systems as if they exist independently of people. This is one of the oldest tricks in the book and enables the system to develop a life of its own, to exist in its own right with its own goals, ambitions and needs. It is important to remember these systems don't exist in their own right-we make them, for us. Their only goal is to provide a framework that encourages and enables enough people to like one another enough to live and work together, and that's all.

Ultimately, it is all about how people interact with one another. Finding the best way to interact has been the goal of humanity since the earliest times. We've been searching for the traits and characteristics that make humans like each other and trust each other enough so they prefer to live in society, rather than as a bunch of hermits.

Once we discovered these traits and characteristics, we then set them up as ideal standards of behavior and called them virtues, which found expression in our sense of decency and love. For millennia, chief of these virtues was the idea of self-sacrifice. In other words, we found the best way to get people to like us was to prove that we could be trusted to not only not harm them, but also act consistently in their interest. People whom we can trust in this way we call friends.

We discovered there were levels of trust. The more we could trust somebody the closer was our friendship. But the highest level of trust was when we formed a relationship with another person whom we could always rely on, no matter what, even if it meant that one of us could personally lose out.

We discovered that it was possible to form a relationship that was so strong that each person in this relationship would not think twice in putting down his or her life, for the sake of the other. This we called love.

With the discovery of love, we found the perfect standard for society. We found that a society bound by the ideals of love was not only incredibly strong and resilient, but the whole was greater than the sum of the parts. Individually we were weak and helpless, but cooperating as a society made us so powerful that nothing seemed out of reach, nor impossible.

In cooperating in this way, we discovered the secret of progress. Thus, the evolution of humanity can be seen as an evolution to greater levels of cooperation extending from the clan to the village, to the city and nation, and today, encompassing the whole globe. Christmas is the celebration of the discovery of this secret and veneration for one of its greatest teachers.

In gift giving, we remind ourselves of the central importance of the selfless act, which is the foundation upon which trust, friendship and love is built. In receiving a gift, we are reminded of the practicality of this wisdom-the more selflessly we give the more we receive. This is the secret of life.

Leading up to the Great Transformation, we thought we had not only discovered the secret of creating stable societies, but that we had refined it to a fine art. Naturally, there were disputes and disagreements, some resulting in war, but these related to fringe issues: the central principles of human relations were never in dispute.

Imagine the surprise and shock when a group of thinkers in the Middle Ages suggested this basis of society was so wrong, the only option was to throw it out. That it needed to be replaced with a new system, built on what amounted to an opposite set of beliefs. The idea of self-sacrifice and selflessness was now outdated, they said. According to this new thinking, the opposite characteristic of selfishness was the key to building a new society where trust was no longer necessary. These ideas were initially received with shock and disdain, but eventually they took seed finding expression in Adam Smith's Wealth of Nations, a work of enormous scope and breadth, earning him the title of father of the social science we call economics.

According to these thinkers, this new economic system was able to transform the vices of society into virtues through the mechanism of the market. Thus pride, vanity and greed should no longer be considered as bad, they said, but should be encouraged and promoted as good because these were the engines of this new society.

In this economic-based society, self-sacrifice, kindness and altruism were to be avoided because these tendencies, they said, created a class of people who were dependent on others. These people could never fulfil their human potential, and rather than being useful, contributing members of society, they became parasites. As such, those who practiced self-sacrifice, kindness and altruism were do-gooders of the worst kind. In their misguided attempt at doing good, they were, in fact, doing great, irreparable harm to those they were trying to help, and to society in general.

Even to this day, most people find it difficult or impossible to reconcile these beliefs. I don't know of any parent who would deliberately teach their children that sharing and being kind to others was bad, and that being greedy and selfish was good. Despite over one hundred years of indoctrination, most of us still believe the self-centered, the greedy and the proud can never be trusted and should be avoided. It is inconceivable that these characteristics can form the basis of true friendship, let alone love.

Yet, despite our continued misgivings, we continue to hold the market as our central institution because the idea of self-sacrifice-the gift of Christmas-has been stolen. As a result, we are now tied to the market for our material needs, even our very existence, forcing many of us to live a double life. In private and family life, we try to live by the ideals of love and altruism, but in our external dealings, we are forced to live by the law of the market which is self-interest.

Living a double life makes it hard to bring up children in any consistent way. The children hear their parents teach one set of rules, but see them and the heroes of society behaving in exactly the opposite way. And when the heroes of society are the greedy, the vain and the proud; the job of the parents becomes almost impossible.

Living a double life is hard, if not impossible, because as humans we need to live by a consistent set of beliefs. Eventually we gravitate to one set of beliefs, and because our most basic need for survival is linked to the market, we start to adopt the rules of the market as our own, sometimes imperceptibly. This is why selfishness is now the distinguishing characteristic of Western society. This is the reason our society is becoming a society of the lonely, the divorced and the depressed.

Polanyi argued that previously the market was imbedded in society, meaning that all transactions in the market were merely extensions of social relations. In other words, extensions of people relating to people and subject to the same considerations, where profit was merely an incidental by-product, not the sole and only consideration.

As the economics of greed took hold, the market was extracted out of this social context reversing all the normal rules of social interaction in the process. In this new setting, voluntary cooperation and altruism were driven out as people were made to compete against one another. With competition came greed and self-interest, and these were promoted as the key virtues of a new type of human being-the Economic Man.

The new system of economics was ruthlessly efficient, and great strides were made in productivity, but at a huge cost-- environmentally and socially. People surrendered their central position in society, becoming just another commodity that could be bought and sold in the marketplace. As a result, relations between people came to be seen as extensions of market transactions, and with this, the Great Transformation was complete-people became nothing more than a means to an end for other people. With this sleight of hand, the gift of Christmas was not just stolen; it was replaced with unthinking consumerism.

In the best tradition of Detective Goran, we place in front of the culprits not only the indisputable evidence of their crime, but also the repercussions. The pain and suffering of millions that go hungry each day and without the basics of life while a small minority live in luxury. The continued, heedless destruction of our biosphere; the crime and the violence in our streets, and the lies and the deceit that passes for politics.

It is time to expose the hoax, cuff the culprits and reclaim the gift of Christmas.

George Matafonov is author of Economics of Greed Antivirus: Towards the Great Transformation back from Selfishness to Cooperation. ( http://www.eofg.net )

George Matafonov