Revisiting capitalism, Adam Smith and entrepreneurship - a new era?

Past Event: Monday 28th October 2024

Dr Samuel Mwaura of the University of Edinburgh Business School and David Hume Institute trustee discussed his latest thinking on capitalism and entrepreneurship with Dr Robbie Mochrie, author of How to think like an economist and Fran van Dijk, founder and CEO of One Stone Advisors. One Stone is Scotland's first B Corp: a certified company that meets high standards of social and environmental performance, transparency and accountability. 

One aspect of Adam Smith’s intellectual legacy has been surprisingly neglected in recent times: his grapples with the paradox of profit. 

Smith repeatedly, and resignedly, regarded profit an obscure “garb” and vehemently decried capitalists that profited at the expense of society. Indeed, while profit is incorrectly regarded as a return to capital, Smith and his peers instead associated residual profit with entrepreneurship although both concepts remained loose. 

Dr Mwaura discussed how classical economics had more firmly established interest as the return to capital. Yet, as capitalism emerged, capital rather expediently commandeered profit. Subsequently, profit became the sacrosanct lifeblood of capitalism, and the elephant in the room, unquestioned despite its importance “to our understanding of our economic order and, especially, to an appraisal of its fairness” as Harry Brown, a celebrated Georgist economist, observed in 1945. 

This event returned to this neglected debate, first decoupling profit from capital. Then building on Adam Smith and other classical thinkers to develop a radical new understanding of profit as residual errors to eradicate, not maximise, and firmly link this to entrepreneurship. This enables a coherent and readily implementable pathway to a new economy that delivers fair and sustainable outcomes, by design.

This event was produced in partnership with the University of Edinburgh Business School.