Friday, June 13, 2008

Young Economists Appreciate the Adam Smith Born in Kirkcaldy

My Google search produced news of an interesting Blog (HERE:)

Undergraduate Economist ‘(‘Perspectives of an Economics Student’), with a post (13 June) from Alex M Thomas in India:

On the ‘Invisible’ Adam Smith”

This post mainly deals with the common misconception about Adam Smith, whose name is known to all students and professors of Economics; the misconception being the notion that he advocated laissez-faire. Sadly, his works are not as known. (Though the names of his two major works are widely known) So, this post tries to makes visible what is commonly invisible regarding Smith.

In the Indian Schools, textbooks in Economics associate him with the ‘wealth definition’. In Frank ISC Economics, which is authored by D K Sethi and U Andrews, Adam Smith is supposed to have defined Economics as “A science which enquires into the nature and causes of wealth of nations.” Definition is “a concise explanation of the meaning of a word or phrase or symbol”. [] Adam Smith has never defined Economics i[n] the afore mentioned way. Is it ‘right’ to teach such ideas? Isn’t it against the ethics of academics? A large number of students are programmed in such a way in school, whereby their notion of economics is constituted only by neoclassical economics. Plurality in economics has been totally done away with. Teachers teach what is printed in the textbooks. No questions are asked.
Also, it is not surprising to see classical economists (Smith, Ricardo, Malthus, etc) being seen as ‘classical’ or rather irrelevant, because of either their naive assumptions or their bad theories.

The primary focus of this blog post is to argue that Adam Smith never advocated Laissez-faire. Let me put forth two instances where such a misconception has been put forth.

The following paragraph was published in The Hindu Young World, a widely read Indian Newspaper.

Adam Smith’s fundamental proposition was that a free market is a self-regulating mechanism and tends to produce the most desirable types and quantities of goods.
The second instance is from Economy professor, an online dictionary of economics.
Adam Smith’s fundamental argument was that individuals should be allowed to pursue their own private economic interests as much as possible and so long as they do not violate basic principles of justice.

Smith called this the invisible hand of the market - although everyone is acting in their own self-interest, they are led to achieve the good of all as if by an invisible hand of economic forces. Therefore, outside interference will inevitably lead to disaster. This became known as laissez-faire economic policy.

In fact, there is very little evidence to state that Smith advocated ‘free markets’ through stating the importance of self-interested behaviour. Also, he viewed individuals as a part of the society and not like an individual that is cut off from the society - the Homo economicus. Sen rightly points out that “it is precisely the narrowing of broad Smithian view of human beings, in modern economies, that can be seen as one of the major deficiencies of contemporary economic theory.” [Sen, A.K. 1987: Economic Behaviour and Moral Sentiments. On Ethics and Economics. OUP].

I am encouraged that recently graduated students have picked up on the central message of Lost Legacy. Recently, I corresponded with an graduate economist from Oxford University. It augurs well for the future.

In the preface to Adam Smith’s Lost Legacy (Palgrave Macmillan, 2005) I opined the wish that:

‘…by the third centennial aniversary of Wealth Of Nations in 2076, the distinguished participants will convene to celebrate what Adam Smith actually intended and not merely to recount the fables created by those who misappropriated his legacy. That is my motive for writing Adam Smith’s Lost Legacy.’

Whether the participants do so depends on what young economists do during their careers, especially in research and teaching.

Given the increased longevity now being experienced in the world, expected to be experienced across a wider population in the coming decades, it is possible that some of you reading this in your early 20s will attend the 2076 anniversary. It’s down to you to ensure that they celebrate what the Adam Smith who was born in Kirkcaldy in 1723 actually believed and wrote about and not the ‘Adam Smith’ from empty hologram invented in Chicago’s 54th Street in the 1950s.

Congratulations to Alex Thomas for his post. I have bookmarked his site to follow his progress.



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