Thursday, October 26, 2006

Love, Money, Greed and Adam Smith

William J. Polley’s Blog (‘Comments and Observations of Economics and whatever else catches my eye’) features this week a lively discussion on ‘Money and Opportunity Cost’ and a side-question about Tim Harford’s (‘Underground Economist’) points about ‘money is the root of all evil’, which I reminded him was more correctly given as the ‘The love of money is the root of all evil’ (I Timothy 6:10; King James Ist; 6th of Scotland transaltion).

This led to comments and somebody called ‘Guest’ (perhaps Beau’s brother?) opined that the ‘better translation was ‘greed’ (from the later Latin translation, not the Greek).

As these Blog comments go, it went into less relevant areas, bringing in Adam Smith too. I suggest you might want to read the original post and the continuing comments at: if only for amusement, plus a little economics.

My most recent post contains:

'A moment before we lose our perspective. ‘Guest’ moves from the statement using a word ‘love’ that we are discussing to a difference in interpretation, calling it ‘greed’, and elides into a definition of ‘greed’, as a ‘rapacious desire for more than one deserves’ to which I asked who decides what is ‘greed’ or what somebody ‘deserves’, to which I am told it is ‘economics’. Funny, I missed that course somehow.

To argue that something stands, ‘given a definition of social costs and benefits’ dodges the issue. Which definition decides that an instance of self-betterment (which could be self-esteem through to frugality as a source for moving into a division of labour and all that followed – including Smith’s arrow maker and the hunters’ transaction in Wealth of Nations) comes under the ‘love of money is the root of all evil’ admonition?

Smith was clear: he applauded the frugal person (particularly the one who saved as his net income rose and invested it or loaned it out at interest) over the prodigal; he applauded the rent payer towards the end of feudal power over the feudal lords, whom he mocked, who spent their sources of power (the ‘rents’ in kind taken from serfs) on ‘trinkets, baubles’ and etc.

In contrast, the urge to self betterment, present in all people, said Smith was a driving force for the transition from savagery toward modern society and, by implication, it would continue to drive commercial society beyond the 18th century. To wrap all of this behaviour under the rubric of a ‘love’ of money, or worse, a ‘rapacious desire for more than one deserves’, belongs properly in a pulpit.

The entrepreneurial urge resides in individuals, not the mass of others who have views on what they deserve – roughly what they have got – until the entrepreneur shows in markets what they could also have, which awakes a desire to better themselves.Smith’s verbal tirades against the super rich were directed not at their richness, but at their use of it for trivial ends. He bemoaned too, the futile urges that drove the son of a poor man to extraordinary ends extremes of self-betterment. That is part of the rich inheritance he left in his books and lectures, which unfortunately sometimes gets lost in salvoes of quotations and counter-quotations from his remarkable life’s work.


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