Adam Smith's Faustian Bargain

Abstract

Adam Smith created a social model which subordinated faith to reason and reason to the instincts which, when released, drive the "system of natural liberty," facilitating peace, prosperity, and especially freedom. Smith's Faustian Bargain, which underlies the model, is to trade beneficence for self-preservation plus freedom. Without restraint, the social instincts would endanger private property and social stability. Smith recommends limited but effective government and a plethora of social devices, including a reconstituted, impotent collection of churches, to bolster morality and prevent instability. Transplanted to America, Smith's system and Biblical Christianity restrained immorality and allowed free enterprise to flourish yielding unprecedented freedom and prosperity. The decline of faith in the Biblical God and moral absolutes at the end of the nineteenth century upset the delicate balance between freedom and morality resulting in social problems not susceptible to voluntary solutions. Government intervention slowed economic growth and restricted individual freedom. Will a twenty-first century Biblical revival restore morality and permit once again the flourishing of individual liberty, or will government intervention continue to erode freedom?