The article provides us with a profound insight of the Adam Smith’s philosophy. Moreover, it depicts Smith in a new light, which was unknown to most of the people, even those interested in economic theory and philosophy. Amartya Sen, in his article “Adam Smith and the contemporary world” asserts that usually people underestimate Smith’s influence on the economic theory and society as a whole. To prove the point, the author provides scores of relevant examples, quoting different passages from various works.
Everyone knows that Adam Smith is considered to be a “father of a modern economy”, however, not all of his ideas are popular among the big masses. The article talks about Smith’s thoughts and ideas published in his work named “The theory of moral sentiments”. This work is far less popular than his “Wealth of nations”, but it does not make it less significant. Amartya Sen claims that most of concepts described in “The theory of moral sentiments” have been unfairly neglected, and those notions were the central theme of the aforementioned article.
They say that Adam Smith had been quoted more than he was read, and that seems to be the reason why even those, interested in the economic theory, have missed out myriad of his concepts and ideas. All of us know Smith, as the guy who “propagated the excellence and self-efficiency of the market”, and that is what we learn about Smith at schools and universities. This one sentence does not explain Adam Smith’s philosophy, and moreover, it is far from what he actually meant.
The first important feature, taken from the article, is that Adam Smith believed that poverty leads to inequality. He argued that all of the people need the same resources and earnings for having the same abilities, and in order for those capabilities to grow for everyone, the economy have to grow. People in different societies have different needs, and those needs of a rich society are tremendously different from needs of a poor one.
Another important point, highlighted in the article, was that Adam Smith did not believe in the free market excellence, as well as he did not consider profit to be the main motive for market players. He believed that there could be more practical and ethical reasons for motivating, other than self-interest and prudence. Smith was confident that in order to have a decent society, man should not be guided only by his own interests. Ironically, Smith has a reputation of a thinker, who believed that self-interest is of unique importance for all human beings. However, it is not so. Adam Smith indeed talked about self-interest, as one of the main motivators, but only for trade, not for the success of the economy as a whole. So that is the main misunderstanding between how Smith is interpreted, and what he truly believes were. The main reason for such a misconception is the fact that most of the young scientists do not read Smith’s works; they just get acquainted with small excerpts, which do not allow learn the whole point of his philosophy.
Adam Smith’s ideas are of a big relevance these days, as he studied not only economic processes, but also the ways of building a decent society. Smith believed that justice in society is of a big and lasting importance, and that is the notion that cannot be neglected. Unlike the devotees of transcendental institutionalism (Kant for example), Adam Smith believed that there couldn’t be a recipe for a perfect justice; on the contrary, he said that it should be only “relevant comparisons of justice and injustice”. “Smith’s focus is only on actual realizations, and on comparisons rather than on transcendence”.
The article gives us also an explanation of a forgotten idea of the “impartial spectator”. First of all, it should be said that is not a prevalent fact, that Adam Smith had a great influence on the philosophers of the Enlightenment era, even Emanuel Kant himself.
At the end of the article, the author, Amartya Sen, compares Adam Smith and William Shakespeare, explaining that both of those men could reach people’s hearts and minds through time. To agree or not to agree with such an extraordinary comparison everyone has to decide personally, but everyone should agree that Smith’s ideas, concepts and believes are still inherent in today’s world, despite the fact that he lived and worked more than two hundred years ago.
Having read the article, I ascertained that history tends to repeat itself, and everything that was true two hundred years ago will almost always be true and actual at any given period of time in the future. Especially when it has something to do with people, economy, and society as a whole.
The case about the Newmont Mining Company and the unfortunate disaster that had happened 2000 gives us a good and clear perspective on the issue of social responsibility. It is a rule that every company, firm or corporation should be responsible for its people, society and the environment where the company operates. The issue of the social and environmental responsibility becomes acuter, when we talk about huge corporations, which work in the sphere of heavy industry.
In the situation, described by the authors of the case, it can be noticed that they’re two relevant stakeholders: the people, citizens of the Chiripampa city, and the top managers and the shareholders of the Newmont Mining Company. Of course, it can be argued that the Peru government can also be named as one of the stakeholders, but the decision has been made to highlight only the main ones. Both sides have diametrically opposite interests, and the main task is to find the alternative decision, which would satisfy both sides. The people want to live on their own lands, breathe fresh air and drink clean water, what cannot be done when there is a working mine in the vicinity. On the contrary, the heads of the mining companies chase their own interest, which is profit maximization. As it was already said, both of these interests cannot be satisfied simultaneously, and that is why there is a clash of interests in such a case.
Having analyzed the case in detail, I have decided to highlight these issues, as, in my opinion, they are the main cause of all the troubles and misunderstandings between the businessmen and the locals.
The first ethical issue, which cannot be neglected under any circumstances, is the responsibility for one’s actions. If we take a look at the example depicted in the case study, the Newmont Mining Company did not have a tradition of social responsibility for the damage it was making to the environment, and, as a result to the people, living close to the mines. There is no doubt that people sitting in the headquarters of the Newmont Mining Company knew about the damage they were doing, but their greed and cupidity overtook them, so all the damages were simply ignored. The mines that belonged to the Newmont Company were the main cause of the air and water pollution in the Choropampa area, and the company was responsible for taking measures and reducing the amount of the dangerous emissions.
If we go back to the catastrophe described earlier before, it can be clearly seen that it could have been prevented, if only all the safety measures were taken. However, the company, being irresponsible, just ignored all the safety. Moreover, even after the damage was done, the company did not take the required actions, in order to ease the consequences of the incident for the people. The fact that the mine employees were telling people that the spill would not have any influence on their heath is nonsensical. Such behavior is totally unacceptable, and the people responsible for it should be punished.
The second ethical issue, which makes the conflict between the stakeholders even deeper, is the fact that the mining company pursues only its own interests, ignoring everyone else. Of course, the supporters of the Objectivist ethics might argue that everyone pursues its own goals and interests, and that is the norm, however, it has to be said that such a demeanor is admissible only if there is no conflict of men’s interests. One can put one’s own interests above the others, but only when he acts rationally, without encroaching the interests of others. For example, when the Newmont Mining Company was planning on building a new mine on the mountain, they did not take into consideration the fact, that the mountain was of a big spiritual importance to the local people. People’s interests were publicly ignored, what proves that the demonstration of leadership in safety, stewardship of the environment and social responsibility exists only on the paper, written under mission statement heading.
First of all, the Newmont Mining Company has to accept the idea of social license, what means that if the local people do not agree with the company’s policy dealing with the environmental issues, the company will need to change something about it. This will allow people to have control over the environment they live in.
Secondly, the company has to think about ways of raising the level of education in the area, what in the future will allow them to hire local people, and reduce the unemployment level. This will also help to earn people’s loyalty, which is also very important, as it can prevent different troubles and conflicts in the future.
The last, but not least important issue that has to be considered is the problem of chronic malnutrition. It is abnormal that the company can have billion-dollar revenue, earned on the lands where children die from a lack of food. In such a case, social responsibility has to be the first priority for such companies, and they have to do everything possible to solve the problem.
There can be a lot more ways to solve the conflict of human interests, however, the ones described above are the easiest to accomplish, and in my opinion the most effective ones.