Harvard historian Niall Ferguson devotes his latest Newsweek column to Adam “Invisible Hand” Smith’s description of an 18th-century economic problem we might recognize today.

[M]uch of the developed world, including the United States, is stagnating. The founder of economics, Adam Smith, had a term for this. He called it “the stationary state.” In his day it was China that looked stationary: a once “opulent” country that had simply ceased to grow. Smith blamed China’s unfavorable institutions—including its bureaucracy—for the stasis. He also noticed how the stationary state favored the super-rich and civil servants, leaving poor laborers to slide toward subsistence wages. …

… So is there any way out of the stationary state? Smith made it clear that he thought imperial China’s sclerotic “laws and institutions” were the root of the problem. More free trade, more encouragement for small business, less bureaucracy, and less crony capitalism: these were his prescriptions. Well, we can live in hope that such policies get adopted by the next occupant of the White House.