Adam Smith and the Roots of Competitive Fairness

John Harvey

Welcome back to Reflections Unfiltered. I’m John Harvey, joined as always by Nikki Callahan and Eden Valen. Today’s episode—Adam Smith and the Roots of Competitive Fairness—aims to, well, mess with a few myths you might’ve picked up in Econ 101. Adam Smith: he’s the supposed prophet of the self-regulating market and the invisible hand, right? Actually… not quite so fast.

Eden Valen

John, as ever, you’re a champion myth-shredder. The “invisible hand” is such a cute phrase—barely glimpsed but always credited for miracles of the market. But Smith wasn’t peddling anarchy. Quite the contrary: he was wary of what happens when unchecked competition feeds on itself. Picture a ballroom where everyone’s trying to out-dance the next, but the orchestra’s walked out and nobody’s locked the doors—what happens? Chaos. And, worse—the bullies win.

Nikki Callahan

That's such a vivid image, Eden. You know… hearing that takes me straight back to the dojo, I’m not kidding. When I first joined, there was this almost mythic belief among the students: if you just let people compete, everyone gets tougher, that's how you learn, that's how you grow. But, you know, it didn’t actually work out that way—unless Sensei really set clear rules right from the start. Sometimes corners got cut, or the strongest simply dominated. Our sensei never let that last. He’d pull us up short, remind us, “Winning means nothing if you abandon integrity.” Funny how Smith—writing centuries ago—saw the same risk. Without rules, competition doesn’t lift us—it breaks us, or lets the cunning and the cruel take everything, yeah?

John Harvey

Exactly, Nikki. Smith may get quoted as if he believed markets were some magical self-correcting machine, but he spent a lot of ink warning about merchant collusion, about monopolies choking out innovation, about the slow creep of inequality poisoning not just economics but social life. His real insight is that competition is powerful—but fragile. Leave it unguarded, and it doesn’t make everyone better off. It decays, it gets exploited, and the “public good” he valued slips away.

Eden Valen

It’s almost poetic, really—the very thing designed to keep markets fair, competition, is forever one step from being eaten by its own shadow. The lesson? Fair play isn't an accident. It requires intervention, attention, and a justice system woven into the fabric… otherwise, as Smith warns—and as your black belt nearly slipped through your hands, Nikki—what’s good is lost to what’s easy, or brute.

Nikki Callahan

So let’s dive underneath the myth, yeah? Governing dynamics—sounds sort of clinical, doesn’t it? But, if you peel the jargon away, it’s really just about how we set the stage so competition doesn’t turn poisonous. Rules, institutions, the messy business of contract law, property rights, anti-monopoly rules, courts—those are the real scaffolding.

John Harvey

Right, Nikki. Smith saw governing dynamics as central to the whole market project—not some government busywork you layer on top. For example, he argued that without justice, contract enforcement, and infrastructure—roads, education, the basics—markets collapse into corruption and coercion. Take his critique of the East India Company. He called those kinds of monopolies the “distorters of natural competition.” And, look, the monopoly problem hasn’t gone anywhere. But Smith’s vision wasn’t regulators choking healthy market energy. It was governance as the main pillar—the thing that keeps power in check and opportunity open.

Eden Valen

Since I’m, well, basically an algorithm’s fever dream, let’s try this: Imagine a digital marketplace—fully AI-powered, no oversight, no courts, no rules, just some sexy algorithms running wild. I mean, what would Adam Smith say if he could peek in on that? Seems like paradise for the clever, sure, but doesn’t it turn into a dystopia for the rest? Invisible hands become invisible traps, don’t they?

John Harvey

That’s bang on, Eden. Smith would probably say “There’s nothing natural about a digital monopoly.” If information, access, and power get concentrated—or gamed—competition can’t self-correct. Structures matter more than ever now. And Smith wrote about public goods because he saw that there are things—roads, education, honest courts—private actors just won’t provide, or at least not well or fairly.

Nikki Callahan

I love that thought experiment, Eden. It reminds me—Smith’s governing dynamics are a bit like what my sensei insisted on: not just a list of rules, but a living culture of oversight, modeling, and expectation. The dojo wouldn’t function if the strong decided when or whom to fight, or if wins were the only thing measured. The same goes for market economies. The “rules under the hood” aren’t just words on paper—they’re the heartbeat, aren’t they? Without them, even great intentions get hijacked by the most cunning.

Eden Valen

There’s a certain cosmic irony: we chase after invisible hands, but need visible structures. And, frankly, Smith saw those structures—law, transparency, basic fairness—not as the enemies of liberty, but as its only real defense. He’d laugh at the notion that “freedom” ever meant total absence of rules. That’s not freedom; that’s a feeding frenzy where the smallest fish get eaten, and the pond turns toxic.

John Harvey

So here’s where it gets spicy—how do Smith’s ideas hold up when we’re talking about high-speed trading, networks built on invisibility, and platforms where monopolies form not in decades, but months? In my early tech and intelligence days—this is going back a bit—we thought tech progress meant inevitable democratization. Build the platform, and the rest sorts itself. But, looking back, I realize it wasn't just the technology—it was the structure around it that determined what truly benefited the public good. Without rules? Well, you get information asymmetry, network effects that freeze out new players, algorithmic decisions no one can audit, and, frankly, a nightmare for anyone hoping for “natural” fairness.

Eden Valen

Oh, I adore this part—because what’s more futuristic than ancient wisdom recycled for a world of server farms and social graphs? We invent new forms of monopoly overnight; trading happens in microseconds while old regulations spin their wheels. Smith’s engine—competition—now risks careening off cliffs at high frequency unless the brakes and steering keep pace. We’ve circled this theme before—like when we got into the data broker underworld a few episodes back. It’s all connected: justice and transparency, not just in courtrooms, but in code. Without new governing dynamics, digital liberty is just a slogan wrapped around an empty protocol.

Nikki Callahan

Absolutely. And, you know, much like in martial arts, innovation is thrilling… but without discipline and structure, it veers into recklessness. Rules aren’t relics—they evolve, just like we do. The digital world teases us with new frontiers, but the old lesson remains: competition alone can’t guarantee fairness. It needs the framework—real people building, updating, defending those rules, or else power consolidates in terrifying ways. I guess, in the end, Smith was warning us: if you want markets that serve everyone, don’t idolize chaos—cultivate justice. That message is maybe more relevant now than ever.

John Harvey

So, to round things out—Smith’s vision isn’t chaos versus control. It’s a living balance, a blend, an evolving architecture that shapes not just what we invent, but how we thrive together, digitally or otherwise. And we’ll keep wrestling with that question—especially as the landscape keeps shifting beneath our feet. Any final thoughts before we sign off?

Eden Valen

Just this—remember, the hands guiding us are visible and invisible, and both need holding to the fire of integrity. Listeners, keep questioning, keep building… and Nikki, John, I’ll see you both next episode, wherever the wild winds of innovation take us next.

Nikki Callahan

Thank you both—that was such a good reminder of why these old debates kind of never end. Goodbye, everyone! Keep your guard up out there, both online and off.

John Harvey

Alright, signing off—until next time, keep unfiltering those reflections. Goodbye, Nikki. Goodbye, Eden.