Sunday, December 09, 2007

Wrong About Adam Smith and Laissez Faire in India

Sidin Vadukut, a lively columnist on The Hindu Business Line (here) (9 December), writes an avuncular piece mentioning Adam Smith:

Behavioural economics, conversationally described as the attempt to define or may be explain economic activity in the context of human psychology, sounds like a pretty spiffy science. But it has been around for a long, long time. Or at least since Adam Smith. (The Wealth Of Nations guy. Famous fellow. Famous book.)

Adam Smith is widely considered the father of modern economics. Or at least of the modern economics text book. His Wealth of Nations is still a seminal work and provides stellar rationales for free markets and laissez faire government policies.
Twenty years before he wrote his masterpiece, he wrote a less known book called the Theory of Moral Sentiments. I am not going to go into the details of the book. To simplify it to a line, Smith states that human beings develop certain natural laws based on a certain sympathy for the fellow man. He said that humans tend to put themselves in the other person’s shoes when making emotional choices.”


Comment
Not to be taken too seriously:

His Wealth of Nations is still a seminal work and provides stellar rationales for free markets and laissez faire government policies.”

Sidin Vadukut would do well to read yesterday’s piece on Adam Smith his laissez faire before he next makes such an incorrect statement.

3 Comments:

Blogger Curt said...

Gavin,

Maybe you think it's obvious, but I have no idea what you're criticizing him about. State how he is incorrect with a statement so general that I am not even sure what he means..

curt

1:26 a.m.  
Blogger Gavin Kennedy said...

Hi Curt

Sorry for taking you for granted. The sentence that I criticise is this one:

"His Wealth of Nations is still a seminal work and provides stellar rationales for free markets and laissez faire government policies"

Adam Smith never gave a 'stellar rationale' for 'laissez faire government policies'.

I did not go on to show why, simply because the previous post is a long refuation of any calim that Adam Smith was in fvaour of laissez faire policies and to which I suggested the author read.

Not only in that poast but in regular posts on Lost Legacy I criticise such notions (including the two post immediately following).

The regular association of Adam Smith with laissez faire is not just sloppy, it is inaccurate, and feeds a regular school of journalism - and too many academic lectures (including from Nobel Prize Winners and front rank academics) - when the truth is much more interesting.

The main cause of these inacccurate
attributions is the decline (and nearly the absence) of the teaching of the history of economic theory in US and UK universities since the 1990s.

Lost Legacy is trying to its bit to rectify this situation in its modest way.

Gavin

9:21 a.m.  
Blogger Mike said...

Thank you for "trying to (your) bit to rectify this situation in its modest way." I've become highly interested in economics as of a few months back finishing a few books (Supercapitalism, The Worldly Philosophers, and soon Making Globalization Work) and daily reading economic blogs (Economist View, Brad Delong, Krugman, Stiglitz, and Robert Reich). Your "Lost Legacy" is also a regular read, so thank you, and I look forward to purchasing your new book.

5:44 a.m.  

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