Friday, October 12, 2007

David Kelly's "Heresy" Spreads; Adam Smith 'Libelled'

Doug Mataconis posts on the The Liberty Papers Blog (here) reproduces ‘The Heroes Of Capitalism’ by David Kelly (described as a ‘philosopher’, which might explain his elementary confusion of Bernard Mandeville (1724) with Adam Smith):

In an article that appeared in yesterday’s Wall Street Journal, but only became available for free access today, Philosopher David Kelley marks the 50th anniversary of the publication of Atlas Shrugged by noting the novel’s central accomplishment, celebrating as heroes men and women who even today are still considered villains by a large part of society’

The article comments, without criticism of its ‘Mandeville’ confusion with Adam Smith, the paragraph from the original WSJ article, which I commented on in my post yesterday:

Economists have also known for a long time that trade is a positive sum game, yet most defenders of capitalism still wrestle with the “paradox” posed in the 18th century by Adam Ferguson and Adam Smith: how private vice can produce public good, how the pursuit of self-interest yields benefits for all. Rand cut that Gordian knot in the novel by denying that the pursuit of self-interest is a vice. Precisely because trade is not a zero-sum game, Rand challenges the age-old moral view that one must be either a giver or a taker.

And adds: “as I’ve noted elsewhere is the singular accomplishment that Ayn Rand should be remembered for. While the moral principles she wrote about had been part of the academic literature of Western Civilization for some time, they had never been popularized before in the way that Ayn Rand did. Because of that, it’s fair to say that there’s an entire generation of libertarians, and businessmen, whose first encounter with the idea that there isn’t anything wrong with profit, and that success isn’t a dirty word, came from a woman named Ayn Rand, and a book called Atlas Shrugged.”

Clearly, Ayn Rand (another philosospher) equated profit and selfishness for rhetorical effect and may have cross-influenced (‘contaminated?) Chicago economists at the time, who misread Adam Smith to create a Chicago version of him quite different from the man from Kirkcaldy. The autobiography of Alan Greenspan suggests the contamination linkage, fom which he appears to be retracting.

Read also the comment on the Liberty article posted with it by Chepe Noyon.

Apart from the commentator’s reference to the invisible hand (‘What’s important here is the Invisible Hand — that’s the device (the marketplace') that diverts selfishness — usually a vice — in a productive direction. Adam Smith wasn’t puzzled by the basic concept: he enunciated it 150 years before Ayn Rand came along. So let’s not lionize selfishness. Selfishness is not good. It often leads to results that are bad for everybody else. But capitalism and the marketplace are able to harness that selfishness and make it useful. So let’s raise a glass to capitalism — not selfishness’), he discusses the difference between capitalism and selfishness brilliantly.

So for Doug Mataconis it's one step backwards and for Chepe Noyon its three steps forward. For Lost Legacy that's welcome progress!


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