AARU is a New York-based company that uses artificial intelligence to solve problems or create new tools. Aaru specializes in “synthetic research” and simulating human populations. According to The Wall Street Journal, it automates labor-intensive, expensive tasks once controlled by research companies and consultants.
As for the company’s name, it is rooted in ancient Egyptian mythology. Also known as the Field of Reeds, Aaru was the heavenly paradise where the souls of the deceased resided in eternal peace.
The Journal recently reported that Aaru has reached a $1 billion valuation, “making it one of a growing crop of hot companies led by people who have barely cracked their 20s and want to shake up entire industries in lieu of attending college.” (My italics.)
Aaru’s co-founders started the company two years ago when they were 18 and 19 years old. Their technology chief was 15 years old at the time and was not old enough to join the board; his father had to sign off on the investment paperwork.
How many of us, upon learning about Aaru and similar dynamic startups in the U.S., ask ourselves: What is the distinguishing feature of a society that produces entrepreneurs who can be billionaires in their 20s?
The answer is freedom. Or, as Adam Smith would call it, “a system of natural liberty.”
This year marks the 250th anniversary of his book, “The Wealth of Nations,” which, compared to the equally famous tomes of his ideological opposite, Karl Marx, is somewhat “tame.” Marx claimed to have discovered the “law” — the “arc,” if you will — of human history and to have foreseen its development. He believed he had arrived at a scientific solution to misery, poverty, injustice, and inequality. His theory would usher in heaven on earth.
In contrast, Smith made no such claims about his credo. As economics professor Donald J. Boudreaux would put it, Smith’s book is “an inquiry, not the final word. It’s an initial contribution to an intellectual exploration. Smith wrote not as a prophet dispensing dogma, but as a companion surveying with his readers new economic terrain.” He built his arguments on historical data and contemporary observations. He believed that to understand economic “laws,” one had to look at how humans actually behaved across different centuries and civilizations — not how they should or ought to behave.
For best results, Smith said, there should be individual liberty, the rule of law, and competition.
In a discussion paper published recently by Britain’s Institute of Economic Affairs, economist Mark Skousen noted that for Smith, “competition acts as a moral regulator by disciplining greed and channeling self-interest into socially beneficial outcomes.” Smith strongly opposed government-granted monopolies (crony capitalism) and mercantilism, the primitive idea that a nation’s power and wealth were determined by how much gold and silver (i.e., money) it possessed. Smith pointed out that mercantilism actually made nations poorer. He said wealth is not a pile of gold in a king’s vault, but the total production and commerce of the people. He showed that it is economic freedom and free trade that generate greater prosperity.
How did Marxism fare in practice under its enthusiastic — if not trigger-happy — followers? So horribly that some still insist “real Marxism” has never been tried.
As for Smith’s prescriptions for a free society, Skousen said the Economic Freedom Index shows that societies with greater economic liberty achieve faster growth and higher living standards.
Another economist and author, Deirdre McCloskey, reminded us of the periodic famines in Western Europe in earlier centuries. In the 1800s, she said, it took nearly 80% of a population to grow enough food to avoid starvation. Today, in free-market economies, less than 2% of the population produces enough food to create a problem of obesity rather than scarcity.
And then there is the democratization of goods that were once reserved for royalty.
A 14th-century king, McCloskey said, could not buy an aspirin, a cell phone, or a pair of inexpensive leather boots that did not rot. Today, a person at the poverty line in a capitalist country has access to antibiotics, global communication, and climate-controlled housing.
A free society’s greatest gift, McCloskey said, was not making the rich richer, but making the “poor” substantially more comfortable and capable of “participating in the life of the mind” — to move beyond the immediate physical demands of survival and engage with the world of ideas, art, history, and reflection. In short, to better themselves.
In a free society, however, the burden of making good choices falls upon each and every one of us. And not all of us like the results of those choices. Meanwhile, a prosperous — because it is free — society is creating a large class of educated “intellectuals” who have no direct stake in economic production but have a vested interest in criticizing the system. They see only shortcomings, inadequacies, and those who have been “left behind” — but seldom the second, third, or more chances that only a free society can provide.
This is why political economist Joseph Schumpeter believed — and I hope he is wrong — that the free society, which Marxists termed “capitalism,” is doomed by its own achievements.
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Zaldy Dandan is the recipient of the NMI Society of Professional Journalists’ Best in Editorial Writing Award and the NMI Humanities Award for Outstanding Contributions to Journalism. His four books are available on amazon.com/.
