Paul Knowlton on How Misreading Adam Smith Broke Capitalism, Why the “Invisible Hand” Never Meant What You Think, and Whether Generosity Actually Works in Business (The Price and Value Journey, Episode 159)
In part one of a two-part conversation, Paul Knowlton, patent attorney and co-author of Better Capitalism: Jesus, Adam Smith, Ayn Rand, and MLK Jr. on Moving from Plantation to Partnership Economics, joins host John Ray on The Price and Value Journey to discuss why 50 years of misreading Adam Smith has broken capitalism and left professionals wondering whether an “others first” mentality actually works anymore.
Paul’s framework addresses something bigger than pricing strategy. It’s about the ethics that govern our entire economic system. Since Milton Friedman declared in 1970 that the only social responsibility of business is to maximize profits, we’ve operated under an extraction-based model that rewards dishonesty, celebrates greed as somehow serving the greater good through market forces, and has made generous professionals question whether their values are just naive. Paul traces this error back to a fundamental misreading of Adam Smith. The “invisible hand” appears exactly once in the 1,000-page Wealth of Nations, and it doesn’t mean selfishness becomes social good through market magic. The actual framework Adam Smith presents in The Theory of Moral Sentiments requires an “impartial spectator” evaluating whether both parties have both their own self-interest AND each other’s self-interest at heart. That’s mutual benefit, not extraction.
This conversation gives you a different lens. Paul explains plantation versus partnership economics, his two-part test (“Do I have my self-interest at heart and do I have your self-interest at heart?”), why chronic underpricing is plantation economics you practice on yourself, his landscaping contractor story showing partnership economics in action, and what his law firm is doing to restructure around sustainability and fulfillment instead of just maximizing profit. If you’ve been immersed in extraction-based thinking for so long that you don’t realize there is an alternative, or if you’re weary of observing dishonest individuals succeed while you question whether generosity is merely foolishness, this episode provides a framework that is both ethical and sustainable.
The Price and Value Journey is presented by John Ray and produced by North Fulton Business Radio, LLC, an affiliate of the Business RadioX® podcast network.
Key Takeaways You Can Use from This Episode
- Underpricing removes good actors from the marketplace. When you price unsustainably low, you eventually burn out and exit the profession. That’s not generosity. That’s self-imposed plantation economics.
- Use Paul’s two-part test: “Do I have my self-interest at heart and do I have your self-interest at heart?” You need mutual benefit. If both parties don’t have both their own AND each other’s self-interest at heart, reconsider the arrangement.
- Adam Smith’s “invisible hand” appears exactly once in the 1,000-page The Wealth of Nations. It doesn’t mean selfishness magically becomes social good. It means pursuing self-interest while considering how your actions appear to an impartial spectator.
- The impartial spectator asks whether both parties have both their own self-interest AND each other’s self-interest at heart. Adam Smith’s actual framework from The Theory of Moral Sentiments requires mutual benefit, not just individual gain justified by market forces.
- Partnership economics in action: Paul’s landscaping contractor gave him a price. Paul said, “I am not trying to negotiate your price. I anticipate that you are an exceptional professional who will not compromise on quality. The result? The outcome is exceptional work that doesn’t require Paul to fret po exert much effort.
- Stanton Law’s mission: “Build a profitable and sustainable firm so that each of us can pursue a fulfilling and satisfying life.” Both parts matter. If the business isn’t sustainable, nobody will be fulfilled. If it’s only about sustainability without fulfillment, what’s the point?
Topics Discussed in this Episode
00:00 Introduction and Overview
00:25 The Generosity Mindset vs. Economic Exploitation
02:56 Introducing Paul Knowlton and His Framework
03:32 The Plantation System in Law Firms
09:44 Defining Plantation Economics
15:46 Partnership Economics Explained
17:29 Adam Smith and the Misinterpretation of His Work
32:57 Applying Ethical Business Practices
38:54 Conclusion and Teaser for Part Two
Paul Knowlton
Paul Knowlton, JD, MDiv, is a pioneering Atlanta attorney, ethicist, and co-founder of the Institute for Better Capitalism, where he champions “partnership economics” as an antidote to exploitative “plantation economics.” Holding a JD from Georgia State University and an MDiv from Mercer University, he transitioned from forensic engineering at Georgia-Pacific to IP law, building a robust practice at firms like Kilpatrick Stockton, co-founding another serving Fortune 500 clients, and teaching as an adjunct professor. This foundation in business law informs his holistic critique of capitalism, blending legal acumen with theological insight to advocate for profitable, ethical systems.
Knowlton’s landmark 2021 book Better Capitalism: Jesus, Adam Smith, Ayn Rand, and MLK Jr. on Moving from Plantation to Partnership Economics, co-authored with Aaron Hedges, reinterprets economic giants to propose reforms in finance, corporations, government, and culture. Endorsed by figures like Walter Brueggemann and David Gushee for its data-driven, values-rich challenge to extremes like laissez-faire absolutism or socialism, the work has sparked dialogue via Cato Institute reviews and Amazon bestseller status. His legal background enables practical proposals, such as relieving sectors for mutual flourishing and making abstract ethics actionable for executives and policymakers.
Today, as Partner Emeritus at Stanton Law LLC, Knowlton integrates his capitalism vision into IP, business succession, nonprofit law, and coaching, while advancing the Institute’s mission through resources, testimonials, and calls for imagination and courage. His efforts—praised for originality by economists and theologians—aim to humanize markets, fostering common good without sacrificing innovation, as seen in his Ubercounsel practice and Georgia Bar wellness initiatives. This balanced legacy positions him as a unique voice at the nexus of law, faith, and economics.
John Ray, Host of The Price and Value Journey
John Ray is the host of The Price and Value Journey.
John owns Ray Business Advisors, a business advisory practice. John’s services include business coaching and advisory work, as well as advising solopreneurs and small professional services firms on their pricing. John is passionate about the power of pricing for business owners, as changing pricing is the fastest way to change the profitability of a business. His clients are professionals who are selling their expertise, such as attorneys, CPAs, accountants and bookkeepers, consultants, coaches, marketing professionals, and other professional services practitioners.
John is a podcast show host and the owner of North Fulton Business Radio, LLC, an affiliate of Business RadioX®. John and his team work with B2B professionals to create and conduct their podcast using The Generosity Mindset® Method: building and deepening relationships in a non-salesy way that translates into revenue for their business.
John is also the host of North Fulton Business Radio. With over 900 shows and having featured over 1,300 guests, North Fulton Business Radio is the longest-running podcast in the North Fulton area, covering business in its region like no one else.
John’s book, The Generosity Mindset: A Journey to Business Success by Raising Your Confidence, Value, and Prices
John Ray is the author of the five-star rated book The Generosity Mindset: A Journey to Business Success by Raising Your Confidence, Value, and Prices, praised by readers for its practical insights on raising confidence, value, and prices.
If you are a professional services provider, your goal is to do transformative work for clients you love working with and get paid commensurate with the value you deliver to them. While negative mindsets can inhibit your growth, adopting a different mindset, The Generosity Mindset®, can replace those self-limiting beliefs. The Generosity Mindset enables you to diagnose and communicate the value you provide to clients, which allows you to price your services more effectively in order to receive a portion of that value.
Whether you’re a consultant, coach, marketing or branding professional, business advisor, attorney, CPA, or work in virtually any other professional services discipline, your content and technical expertise are not proprietary. What’s unique, though, is your experience and how you synthesize and deliver your knowledge. What’s special is your demeanor or the way you deal with your best-fit clients. What’s invaluable is how you deliver outstanding value by guiding people through massive changes in their personal lives and in their businesses that bring them to a place they never thought possible.
Your combination of these elements is unique in your industry. There lies your value, but it’s not the value you see. It’s the value your best-fit customers see in you.
If pricing your value feels uncomfortable or unfamiliar to you, this book will teach you why putting a price on the value your clients perceive and identify serves both them and you, and you’ll learn the factors involved in getting your price right.
The book is available at all major physical and online book retailers worldwide. Follow this link for further details.
