If Adam Smith could analyze the economic situation of the modern United States, he would be likely to make three major criticisms of our economic system. Firstly, Smith would criticize the existence of monopolies, and ineffectively or disingenuously managed companies, which manipulate the market to avoid engagement with competition. Smith envisions a system characterized by relatively small producers in competition with one another. A post-industrial, ideas-based economy means that expensive and sophisticated innovation can immediately win an enormous market-share, crushing potential competition.
A second criticism that Smith might make is the importance of lobbies in the American political culture. Throughout the book, Smith is extremely critical of “factions,” or interest groups that organize in order to influence the legislative process to regulate certain parts of the economy. As his arguments show, this process interferes with the natural balance in the economic system, causing disturbances and a less efficient distribution of resources.
The third development that Smith does not seem to have foreseen, and which his line of arguments would seem to criticize, is the growing centrality of conspicuous consumption. While the division of labor and the expansion of the market has led to an increased standard of living, individuals have come to demand increased leisure time. They also increasingly spend money on consumable goods, choosing to consume instead of invest.
