Monday, September 03, 2007

Why I Don't Agree with Sam Vaknin on This Occasion

Sam Vaknin writes on InfoMean Blog (3 Sept) on the subject of The Happiness of Others here

In his article (worth reading as it is clear enough for non-specialists) he makes two points about Adam Smith:

‘The “Hidden Hand” of Adam Smith (which, among other things, benignly and optimally regulates the market and the price mechanisms) - is also a “mutually limiting” model. Numerous single participants strive to maximize their (economic and financial) outcomes - and end up merely optimizing them. The reason lies in the existence of others within the “market”. Again, they are constrained by other people’s motivations, priorities ands, above all, actions.

You won’t be surprised to note that I am not impressed with the ‘hidden hand’ any more than with Smith’s ‘invisible hand’, or at least what modern posterity has adapted the metaphor to mean.

Smith’s use of the metaphor in Wealth Of Nations most certain did not do anything to do with ‘benignly and optimally regulates the market and the price mechanisms’. That is a fallacy.

The price mechanism is dealt with in Book I without the slightest hint that anything invisible, hand or otherwise, orchestrated ‘benignly’ its working. He fully explained the market without resort to such nonsense. If it had been in his mind he would have stated it as a central principle of his political economy along with the ‘propensity to truck, barter, and exchange’, the ‘division of labour’ and the desire to ‘self betterment’. He didn’t and didn’t need to.

In Book IV, his single reference in his book to ‘an invisible hand’ is to the risk aversion of merchants, in the absence of tariffs and other state inventions, including monopolies of the American colonial trade, would prefer to invest their capital locally, which would have the consequence that the sum of local capital investment would be greater because he merchant would strive to make profits from so doing, and on the principle (not stated) that the whole is the sum of its parts, local domestic investment would be higher than it would be if they trade abroad.

Risk aversion fully explains their behaviour; the metaphor was a way of asserting this (which is the role of a metaphor in rhetoric – Smith lectured on the subject of metaphors in ‘Lectures in Rhetoric and Belles Lettres’ in 1763) (Liberty Fund.
Sam also writes:
Adam Smith, on the other hand, adopted the spectator theory of his teacher Francis Hutcheson. The morally good is a euphemism. It is really the name provided to the pleasure, which a spectator derives from seeing a virtue in action. Smith added that the reason for this emotion is the similarity between the virtue observed in the agent and the virtue possessed by the observer. It is of a moral nature because of the object involved: the agent tries to consciously conform to standards of behaviour which will not harm the innocent, while, simultaneously benefiting himself, his family and his friends. This, in turn, will benefit society as a whole. Such a person is likely to be grateful to his benefactors and sustain the chain of virtue by reciprocating. The chain of good will, thus, endlessly multiply.’

Not quite right. Francis Hutcheson believed that the human moral sense was innate, placed there by God and people were born with it. Adan Smith didn’t. He did not adopt Hutcheson’s impartial spectator (the idea of the spectator circulated in the 18th century, for example David Hume).

Smith’s impartial spectator (Moral Sentiments, 1759) was formed by each child’s contact with others, including parents and adults, and other children (the ‘great school of self command’). Today, this is called ‘socialisation’. People learn what is acceptable to others (and themselves) by interacting and seeing their actions in society’s mirror. While the impartial spectator is ‘within the breast’, the norms of acceptable behaviours are formed from being in the society of others.

Steps away from acceptable behaviour are subject to the rules of justice and the dictates of the magistrate. Without justice, the negative virtue, society would ‘crumble to atoms’.

Relying on the opinion of the impartial spectator is insufficient for harmony in society, so is love and benevolence. The impartial spectator curbs those who follow its dictates and by seeking to be praise worthy (not just praised) the society can function, even if people do not love or have affection for each other, through the mechanism of the ‘mercenary exchange of good offices’.

Of course, mutual love is preferred but it is not necessarily in abundance. We remain a society of strangers.

Sam’s piece is an example of well-written and clear thinking, but on these two counts I am not inclined to agree with him on this occasion. Read his piece and see if you agree.

[Sam Vaknin is the author of “Malignant Self Love - Narcissism Revisited” and the editor of mental health categories in The Open Directory, Suite101, and His address is:]


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