Monday, February 18, 2008

Adam Smith's Example of the Little Finger and the Chinese Earthquake: a debate

Lost Legacy received a comment from the author of the article mentioned two posts below (on the man's little finger and the Chinese earthquake in Moral Sentiments) and because he entered it in the post immediately below on an entirely diferent subject (student memories), I have re-posted his comments and my response here because it deserves a wider readership in view of the big names who support his interpretation:

"tarmstro3 said...
Thank you, but I’m not sure I’ve come to an “unwarranted and erroneous conclusion.” If I did, than you are also suggesting Gary Becker–a Nobel Prize and Presidential Medal of Freedom winner–did as well.

Smith describes his “little finger” and China bit and goes on to change his tone. That’s true. He says:

“It is not the love of our neighbour, it is not the love of mankind, which upon many occasions prompts us to the practice of those divine virtues. It is a stronger love, a more powerful affection, which generally takes place upon such occasions; the love of what is honourable and noble, of the grandeur, and dignity, and superiority of our own characters.”

His point seems to be clear and direct. We do not serve others–i.e. “neighbour” or “mankind”–because we love them, we do so because of honor, dignity and “superiority of our own characters.” Notice he is still saying we don’t do good for others because we like them, we do good for others because of our love for ourselves. We are pompous creates who are concerned about our own dignity and self worth.

I don’t see how anyone could read it any other way. And yes, I own copies of both Adam Smith's great works, but I'll admit to only reading Wealth of Nations. You have me there.

Gary Becker, myself and others read it differently than you. Yes, people appeal to other people's interest in order to help themselves. That's true. But why do we appeal to other people's interests in the first place? Is is not because we are just trying to satisfy our own interests?

All intellectuals I know of read it like Becker and myself. Just check your typical Milton Friedman, Thomas Sowell, Thomas DiLorenzo, etc. books.

Thank you, and I'll plan to continue reading your blog, although I'm sure we still disagree."


My response:

Hi ‘Tarmstrow’

Thank you for responding.

Authorities are not in themselves a certainty that their interpretations of Adam Smith’s texts are correct. The only relevant authority in our differences of interpretation of something Adam Smith said can only be Adam Smith’s text. Modern interpretations of Wealth Of Nations and Moral Sentiments are replete with errors of attribution and interpretation of his meaning, both in the statements he made and in the relevant context in which he made them.

Adam Smith lectured and wrote in the classical rhetorical tradition. He stated a proposition which appeared to state one thing and then questioned what he had stated with further elaborations until he had undone the original statement. The single, though long, paragraph I quoted is an excellent example of this lecturing technique. He regarded it as the best way to educate young students.

Moral Sentiments (1759) was written from his class lectures in his moral philosophy course at Glasgow University (1751-63). They first accepted what he stated – it being a reasonable account of the topic – and then, while their acceptance was fresh in their minds he gradually unpicked it and helped them realise their first acceptance was in error. They were unlikely to forget the lesson (learning being about correcting our errors and confusion).

Consider the extracts:
‘When our passive feelings are almost always so sordid and so selfish, how comes it that our active principles should often be so generous and so noble?’

Bernard Mandeville (1724: ‘Fable of the Bees’) generalised the ‘passive feelings’ into the guiding principle of human behaviour. Adam Smith rejected his philosophy (‘private vice, public virtue’) as ‘licentious’ (TMS VII.ii.iv: pp307-14) and it is often mistaken as being Smithian (not all ‘experts’ read Moral Sentiments right through).

Adam Smith asserted that humans are capable of a more generous disposition to others, which is why societies can live in harmony, if not entirely in mutual love and affection (TMS, Chapter 1 of Book 1, on sympathy) and elaborated on this them throughout Moral Sentiments:

But though the necessary assistance should not be afforded from such generous and disinterested motives, though among the different members of society there should be no mutual love and affection, the society, though less happy and agreeable, will not necessarily be dissolved. Society may subsist among different men, as among different merchants, from a sense of utility, without any mutual love or affection; and though no man in it should owe any obligation, or be bound in gratitude to any other, it may still be upheld by a mercenary exchange of good offices according to an agreed valuation’. (TMS II.ii.3.2: pp 85-6)

Contrast that extract from Moral Sentiments with your assertion in your response:

Notice he is still saying we don’t do good for others because we like them, we do good for others because of our love for ourselves. We are pompous creates who are concerned about our own dignity and self worth.’

This is not to say that you are wrong; I am only claiming that your assertion was not Adam Smith’s view. He specifically excluded the need to do ‘good’ (serve their interests) ‘because we like them’ (though that did not exclude that we could so for that reason - our family, say). He showed that we could transact ‘without any mutual love or affection’ and, indeed, in both books he showed that the exchange mechanism operates anonymously to enable us to consume goods and services from perfect strangers, even from people we may dislike, provided the terms of the transaction (‘mercenary exchange’) were agreed by what he called ‘bargaining’ (or the ‘propensity to truck, barter, and exchange’) in Wealth Of Nations (WN I.ii.1: p 25).

He also defined bargaining: ‘Give me that which I want, and you shall have this which you want’ … and it is in this manner that we obtain from one another the far greater part of these good offices which we stand in need of’. (WN I.ii.2: p 26).

Then follows the well-known passage (often quoted, seldom correctly understood) from Wealth Of Nations:

It is not from the benevolence of the brewer, the butcher, or the baker, that we expect our dinner, but from their regard for their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages’ (WN I.ii2: pp 26-7).

You say that you cannot see ‘how anyone could read it any other way’ the whole passage of the ‘little finger and the Chinese earthquake’. I think you should read it carefully again. Smith’s challenge to his students and readers (and you) was for you to consider a mind game that the man who sleeps soundly after his thinking about his 100 million brethren dying in the earthquake, is offered an exchange: sacrifice your little finger and the earthquake would be averted, what would he do? Would he save his finger and 100 million Chinese would die? (It’s stated clearly in the paragraph at the top of page 137.)

Adam Smith states his answer forcefully: ‘Human nature startles with horror at the thought, and the world, in its greatest depravity and corruption, never produced such a villain as could be capable of entertaining it.’

Your response is to half-quote again: ‘It is not the love of our neighbour, it is not the love of mankind, which upon many occasions prompts us to the practice of those divine virtues. It is a stronger love, a more powerful affection, which generally takes place upon such occasions; the love of what is honourable and noble, of the grandeur, and dignity, and superiority of our own characters’, and to draw the Bernard Mandeville cynical and licentious conclusion.

But Adam Smith leads towards his answer in the same paragraph:

When we are always so much more deeply affected by whatever concerns ourselves, than by whatever concerns other men; what is it which prompts the generous, upon all occasions, and the mean upon many, to sacrifice their own interests to the greater interests of others? It is not the soft power of humanity, it is not that feeble spark of benevolence which Nature has lighted up in the human heart, that is thus capable of counteracting the strongest impulses of self-love. It is a stronger power, a more forcible motive, which exerts itself upon such occasions. It is reason, principle, conscience, the inhabitant of the breast, the man within, the great judge and arbiter of our conduct. It is he who, whenever we are about to act so as to affect the happiness of others, calls to us, with a voice capable of astonishing the most presumptuous of our passions, that we are but one of the multitude, in no respect better than any other in it; and that when we prefer ourselves so shamefully and so blindly to others, we become the proper objects of resentment, abhorrence, and execration. It is from him only that we learn the real littleness of ourselves, and of whatever relates to ourselves, and the natural misrepresentations of self-love can be corrected only by the eye of this impartial spectator. It is he who shows us the propriety of generosity and the deformity of injustice; the propriety of resigning the greatest interests of our own, for the yet greater interests of others, and the deformity of doing the smallest injury to another, in order to obtain the greatest benefit to ourselves. It is not the love of our neighbour, it is not the love of mankind, which upon many occasions prompts us to the practice of those divine virtues. It is a stronger love, a more powerful affection, which generally takes place upon such occasions; the love of what is honourable and noble, of the grandeur, and dignity, and superiority of our own characters.” (TMS III.iii.4: pp 136-7)

Once again if you read this carefully you will see what he was getting at. If you are not familiar with Adam Smith’s meaning in the ‘eye of this impartial spectator’ you will need to read Moral Sentiments, but you get a feel for this important idea of Smith’s from a common sense reading of the passage.

Finally, I note your appeal to ‘All intellectuals I know of read it like Becker and myself. Just check your typical Milton Friedman, Thomas Sowell, Thomas DiLorenzo, etc. books.

I am familiar with three of the intellectuals you cite and I defer to their standing among economists. I do not defer to their understanding of Adam Smith on the points we are discussing, should your cited affiliation be correct (I am surprised to find you mentioning Thomas Sowell, a fine scholar on classical economics - the title of his excellent book of that name), but I can only present the case from Adam Smith’s texts and do my bit to re-claim his legacy.

Please, continue reading Lost Legacy and any comments from you are welcomed.

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