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Pierre Poilievre: Adam Smith was right. Free markets are moral

When corporate and political power merge, the public loses

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Monday is the 250th anniversary of Adam Smith’s Wealth of Nations. Smith is probably the best-known and least-read economist, which explains why he is so often misunderstood.

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For example, if you google “Father of Capitalism,” Smith’s name pops up, but neither his Wealth of Nations nor The Theory of Moral Sentiments uses the word “capitalism.” He did not preach the supremacy of capital over labour. He wrote that “the annual labour of every nation” is the true source of wealth, and he warned against profits earned through state protection rather than open competition.

Pierre Poilievre: Adam Smith was right. Free markets are moral Back to video

Another common myth is that Smith glorified greed. But when he wrote that we expect our dinner not from the benevolence of the butcher, brewer, or baker, but from their own self-interest, he was not celebrating selfishness, he was describing how incentives work in the market.

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In The Theory of Moral Sentiments, Smith reminded us that human beings are bound together by sympathy, which meant that we would feel each other’s pains and joys and thus our self-interest intermingled with our fellow. And if sympathy means to care truly and actively about another person’s wants and needs, then no one is more sympathetic than the entrepreneur who pays his bills by knowing and then supplying the needs and wants of others. As the saying goes, if you want to sell what the customer buys, you have to see through the customer’s eyes.

Smith did not invent the free market economy. He discovered it operating around him just at the moment in history when it began to flourish. Trade and labour mobility were beginning at that time to triumph over servitude and serfdom. The result of this change was an extraordinary growth in wealth. It was that growth that Smith set out to explain.

Before 1776, economic growth was almost flat. Estimates show that from year 1 to 1700, global GDP per person rose from roughly $444 to about $615, meaning living standards barely changed. From 1820 to 2000, per-person GDP shot up from $667 to over $5,700. At the same time, life expectancy in Western Europe increased from roughly 35–40 years in 1800 to over 75 years by the end of the 20th century.

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For generations, free markets lowered costs, raised wages, and lifted billions out of poverty. But now free market principles are facing pushback from politicians promoting socialism and protectionism, even if they don’t always use those words to describe their top-down policies. If we let them succeed, they risk turning the “wealth of nations” into the poverty of the people.

Working people across the western world have been betrayed. Governments took from the hardworking many to enrich the privileged few and they made the mistake of thinking you could have free trade with unfree countries. Wages stagnated. Housing stalled. Energy costs soared. And inflation eroded buying power. Government immigration policies priced workers out of the market and shut them out of prosperity.

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Under these conditions, it is no wonder that some people are tempted by socialists whose answer is to redistribute existing wealth to the poorest and claim that abolishing greed and eliminating private profit means that the savings can be passed on to consumers. Or by technocrats in slick suits who promise that if they are allowed to control the levers of economic and political power, they will deliver better results than the market.

Smith knew better. He warned that when corporate and political power merge, the public loses. He knew that if greed can exist in the market, it surely can thrive in the halls of governmental power, where it operates by force and free from the accountability demanded by consumers and competitors. We can see in our own society how governments that are not subject to market competition think they can afford to play favourites and corrupt the economy.

In a government-run economy, net-zero policies drive energy and food costs up and paycheques down, all to fill the pockets of connected insiders peddling green boondoggles. Protected monopolies shield big business from competition and keep prices high. Corporate welfare enriches those with lobbyists at the expense of taxpayers who have no one to speak for them.

Conservatives believe the answer is not more government but to restore the meritocratic, bottom-up free market competition; an economy where businesses must compete for workers through higher wages and for customers through better products and prices, rather than rely on handouts, carve-outs and bailouts.

Conservatives must be the party of balanced budgets and sound money. We must support lower taxes on work, investment, energy and homebuilding. We must ensure jobs go to our people, not low-wage temporary foreign workers. And we must unblock production of all forms of Canadian energy, including oil and gas.

That is how we build a Canadian economy that is stronger at home so we have unbreakable leverage abroad. Not by picking and choosing political favourites at the cabinet table, but by remembering Adam Smith and harnessing the power of the free market to build the wealth of our own nation.

Pierre Poilievre is leader of the Official Opposition and the Conservative Party of Canada.

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