Smith grounded capitalism in a natural human disposition to save rather than spend

Evidence

Smith’s capitalism rests upon a psychological predisposition to save rather than spend. As Smith puts it rather hopefully, although “some men may increase their expense very considerably though their revenue does not increase at all, we may be assured that no class or order of men ever does so … because the principles of common prudence … always influence … the majority of every class.” Clearly, Smith did not envisage the twenty-first-century American mortgager or the European universal bank. But what did he see, and fear, was something that would upset this natural desire to save and invest: easy money, which is what credit markets (debt) offer. In short, by perverting the sensibility of saving into lending to the government, “great nations are … impoverished by … public prodigality and misconduct.” — Mark Blyth, Austerity, 298

Categorization

• DEFINE: Clarifies Smith’s core assumption about human psychology underpinning capitalism — the parsimonious-saver premise.
• XREF: The natural-saver assumption that debt threatens connects directly to Mattei’s critique of austerity and to later chapters on how credit actually works. — connects to: Smith’s system has no lags, leakages, hoarding, or debt, merely saving and investment — Mark Blyth, Austerity: The History of a Dangerous…, 297; Supply-side economics descends directly from Smith’s saving-drives-investment theory — Mark Blyth, Austerity: The History of a Dangerous…, 296; Smith grounded economic growth in an innate Scots frugality present from birth — Mark Blyth, Austerity: The History of a Dangerous…, 295 (+3 more)

Broader Connections

• Smith held that states, unlike merchants, are not natural savers #expands (0.85) — Mark Blyth, Austerity, 302
• Adam Smith’s homo economicus was culturally specific, not a natural universal type #complicates (0.75) — Jessica Whyte, The Morals of the Market, 86