I think we may disagree on a few issues here.

First I don’t think the relationship between finance and the real economy has been given anywhere near the level of attention it deserves. Many on the left show little interest in financial questions.

Sometimes there is much value to be found in looking back at the past. The labour Party spent a considerable amount of time studying similar questions in the 1930s. The work of Durbin in parycilaur is well worth reading. Sadly much of this work seems long forgotten.

I have no problem with quite a lot of Smith’s writing. And I certainly don’t deny that capitalism/the market has contributed to economic progress.

I do though think it’s important to understand that we live in a ‘finance capitalist’ system.

I think the problem goes well beyond the micro-economic level of loan regulation. Indeed it goes beyond macro-economics and into the realm of political economy.

It certainly goes well beyond a simple Marxist divide between capital and labour. I wouldn’t argue that either was homogenous. Again Evan Durbin is worth reading.

As you note, in his time, Dalton was prepared to “think outside the box”. Agreed: ie disregard the formulae of “Finance and Full Employment”.

Adam Smith is held up, either as the father of a new order, or as a hate figure. Yet few acknowledge that he was a champion of the workers. Liberal economics per se, as Adam Smith puts it, was important to the economic progress of nations (ie at the macro-economic level). However he recognised that, when it comes down to micro-economic level, then regulation was necessary. Ricardo was even more forthright.

Let us be clear. Recent faults appear to have been driven by a mistaken belief that such ideas about liberal economics applied equally at macro- and micro- levels. Micro-economics was de-regulated to such an extent that individuals were tempted to get deeply into debt, and credit providers manufactured dazzling (but near-fraudulent) packages to lure banks and other investors into parting with their (or their savers’ money).

Think outside the box for sure, but don’t be driven by old (Marxist?) ideas about the “battle” between capital and labour.