Saturday, August 26, 2006

Professor Gintis, et al, 'Not Guilty' of Misunderstanding Smith's Legacy

In my Blog posting for Thursday 17 August I discussed my reactions to something Eric Beinhocker writes on page 121 of his Origins of Wealth (Harvard). He reports a recent book by Gintis, H., Bowles, S., Boyd, R., and Fehr, E., 2005. Moral Sentiments and Material Interests, MIT Press, Cambridge, and he wrote:

In a survey of recent behavioural research, Herbert Gintis, of the University of Massachusetts and the Santa Fe Institute, and a group of colleagues note that Adam Smith portrayed humankind as a selfish, materialistic creature in his Wealth of Nations. Gintis and company comment that many people forget that Smith wrote another book, The Theory of Moral Sentiments, in which Smith presented a more nuanced view of human nature, portraying it as capable of both selfishness and generosity.”

The Gintis, et al, book arrived this morning from Amazon and I reproduce what they actually wrote, which differs somewhat from how Beinhocker reported it:

Adam Smith’s Wealth of Nations advocates market competition as the key to prosperity. Among its virtues, he pointed out, is that competition works its wonders even if buyers and sellers are entirely self-interested, and indeed sometimes works better if they are: ‘It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner,’ wote Smith, ‘but from their regard for their own interest’. Smith is accordingly often portrayed as a proponent of Homo economicus – that selfish, materialistic creature that has traditionally inhabited the economic textbooks. This view overlooks Smith’s second – and equally important- contribution, The Theory of Moral Sentiments – and equally important – contribution.

How selfish soever man may be supposed,’ Smith writes in The Theory of Moral Sentiments. ‘there are evidently some principles in his nature, which interest him in the fortunes of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it.’ His book is a through scruitny of human behaviour with the goal of establishing that ‘sympathy’ is a central emotion motivating our behaviour towards others” (p 3).

Compare the two pieces. There are very different. Smith did not 'portray' 'humankind as a selfish, materialistic creature'; textbooks today portray him as such! There is a big difference. I suspected as much, which is why I declined to comment on Professor Gintis’s alleged remarks as reported by Beinhocker until I had read his book. Nor did Gintis et al say that many people 'forget' that Smith wrote Moral Sentiments; they said proponents of the false 'selfish, materialistic' view of Smith 'overlook' his second book. Having made their minds up firmly that Smith advocates 'the selfish' vision of humandkind, they have no need to read even Wealth of Nations. If Beinhocker was familair with Wealth of Nations (he quotes a secondary source on Smith's ideas, Backhouse's, The Penguin History of Economics, more than he does Wealth of Nations itself) he would have picked up on these errors.

Now that the Gintis book has arrived and I read the above opening paragraphs, I am completely relaxed that Gintis and his co-editors understand Smith’s stance more accurately that Beinhocker understands, or at least reports, theirs.

Indeed, Gintis, Bowles, Boyd and Fehr make this very clear in their statement in the thrid paragraph on the same page quoted above, which Beinhocker asserts he had reported:

The ideas presented in this book (namely, and incidentally that ‘co-operation stems not from stereotypical selfish agent acting out of disguised self-interest but from the presence of ‘strong reciprocators’ in a social group’) are part of a continuous line of intellectual inheritance from Adam Smith and his friend and mentor David Hume, through Thomas Malthus, Charles Darwin, and Emile Durkheim, and more recently biologists William Hamilton and Robert Trivers. But Smith’s legacy also led in another direction, through David Ricardo, Francis Edgeworth and Leon Walras, to contemporary neoclassical economics, that recognises only selfish behaviour” (p 3).

This seems to be the Beinhocker’s problem. He has picked up on complex adaptive systems, but has not quite yet shaken off the Chicago version of Adam Smith and its total inappropriate immersion in neoclassical economics, as taught in Chicago and almost all other US campuses. Chicago Smith through the lens of abstract equilibrium economics as hyjacked by Edgworth, Walras, et al, bears no resemblance to Kirkcaldy Smith, whose approach was based on the historical, evolutionary approach represented in his Wealth of Nations, Moral Sentiments, Origins of Language, History of Astronomy and Rhetoric.

When I have read Gintis, et al, I may report on anything I note that is relevant to Smith’s Legacy. Meanwhile, I shall finish reading Beinhocker and, hopefully, he steers clear of Smith (and John Nash). Everything else he writes is excellent quality, and readable, well documented and neatly explained.


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