Adam Smith and 'Das Adam Smith Problem'
Ed Kaitz writes (1 November) in American Thinker (HERE):
“… Adam Smith Problem”
[Please note I only discuss Ed Kaitz’s ideas on ‘Das Adam Smith Problem’ here and shall not comment on the views of presidential candidates in line with the long-standing Lost Legacy’s self-denying ordinance to only discuss the political policies of people in the country in which I vote (Scotland, UK)]
‘German scholars in the nineteenth-century exercised a good amount of frustration over something they dubbed "das Adam Smith Problem." To the consistency-minded Germans the brilliant yet humble Scottish economist and "father of capitalism" had nevertheless left a rather dubious literary legacy: two monumental and influential books that seem to argue in radically divergent and quite insurmountable directions.
…in the first of Smith's books, The Theory of Moral Sentiments (1759), Smith makes a quite humane and often beautiful case for the power of human sentiment in the practice of social virtue. He binds humanity together at an extraordinarily deep level and demonstrates why "we sympathize with the natural resentment of the injured" when, for example, greedy industrialists "violate fair play" and "throw down" their competitors "in the race for wealth and honors." Indeed, Smith seems to foreshadow the bleak finale expertly captured by Orson Wells in his Citizen Kane when he argues that the twilight years of greedy men will be filled with thoughts of "terror and amazement" at their prior conduct and make them outcasts from "the affections of mankind".
Conversely, in his magisterial The Wealth of Nations (1776), Smith relentlessly drives another point: that our darker and asocial instincts of self-preservation, retaliation and competition nevertheless provide the potent and necessary ingredients to "rouse the industry of mankind." In short, in his commanding treatise on capitalism it is self-interest and utility, not benevolence and sympathy that can solve the problem of economic scarcity: "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest." Indeed, what mystified German scholars was the quite sensitive and touching portrayal of human community in Smith's first book and statements like the following in his second: "It is his own advantage, indeed, and not that of society, which he has in view."
Similarly, to Smith, the only way to produce the public good is to not think of the public good! In his words: "By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good." Self-interest then produces the public good through what Smith famously called "the invisible hand." More wealth is created for everyone when each thinks about his own interest. To Marx and Rousseau however this doesn't cut it since the very definition of morality is to think of others first, not yourself.
As a sentimentalist philosopher, Smith also noticed something quite remarkable about the human condition: we're all hard-wired with common sentiments concerning what constitutes fair competition and what appears to us as fraud or greed. We universally condemn the behavior of rapacious capitalists who "throw down" their competitors - they appear "detestable" to us. He recognized in his Theory of Moral Sentiments that the virtue of "justice" was required to keep these people in line with proper legislation. The danger however is that the lawgiver might "push" this legislation "too far" and "destroy liberty, security, and justice."
Why was Smith so concerned with preserving freedom? Because he understood that human sentiments like "beneficence" were only possible in a free society. In short, unlike justice, which can be extorted by force (threat of punishment), moral virtues like beneficence or fellow-feeling would completely disappear under something like socialism or communism: "Beneficence is always free, it cannot be extorted by force, the mere want of it exposes to no punishment; because the mere want of beneficence tends to do no real positive evil." Our common sentiment, in short, "approves" of fellow-feeling only if it has not been extorted by force. No one, says Smith, can force you to be a good neighbor - this has to be done freely.
Smith is interested in taking stock of human beings and finding out how to both preserve freedom and benefit society within the bounds of our given nature. Justice is there to force good behavior "to a degree" in a capitalist economy but we also need to recognize that the self-preservation instinct is the only dynamic engine for increasing wealth and avoiding poverty. But beneficence, freely given and not forced, serves as another check in the "race for wealth and honors." It is our common human sentiment says Smith that keeps us from looking "mankind in the face" and claiming that we prefer ourselves to all others.”
Comment
Ed Kaitz is a gifted writer and college teacher (I can’t give more details as there appear to be several 'Edward Kaitz’s' in US universities and all are plausible candidates as authors of the American Thinker article, which appears to be right of centre in tone).
He does a reasonable job in his discussion of the issues involved in ‘Das Adam Smith Problem’, to which I make some observations for readers who may not be aware of the missing links in Ed Kaitz’s exposition.
The German origins of the ‘Das Adam Smith’s Problem’ in the last quarter of the 19th century come from a misunderstanding occasioned by the different dates of publication of Moral Sentiments (1759) and Wealth Of Nations 1776) and is often presented today as Smith having ‘changed his mind’ in the 17 years between publishing his two books. This is a wrong inference from the separated publication dates.
Students’ notes of Smith’s lectures (1762-3 and ‘1764’) at Glasgow University were discovered in 1895 and 1958 and show that he taught his classes both from lectures that became Moral Sentiments and lectures that became Wealth Of Nations to students in the same classes. Large sections of his Lectures in Jurisprudence (1762-4; published in 1978 by Oxford University Press) were taken verbatim into Wealth Of Nations, as were taken his classes in Ethics into Moral Sentiments. The ideas matured together, first as lectures to students and then as prose for his two books, and there were no contradictions between the two books despite the different dates of their publication.
Moreover, Smith revised both books in the different editions published after their publication: Moral Sentiments' editions: 1759; 1761; 1767; 1774; 1781; 1790) and Wealth Of Nations editions: 1776; 1778; 1784; 1786; 1789. These co-terminus editions, together with the fact that his lectures in the 1750s-60s were delivered to the same classes of students each year, show conclusively that there is no question of Adam Smith ‘changing his mind’ about moral motives and economic behaviours.
If his students had not noticed that ‘he seem[ed] to argue in radically divergent and quite insurmountable directions’ in his lectures, contemporary faculty colleagues would have noticed and commented, and more importantly, he would have noticed too. The imagined ‘problem’ was noticed by nobody until misinformed
faculty in Germany a hundred years later jumped to the wrong conclusions, by which time philosophy and political economy were quite separate disciplines, though for Scottish moral philosophers a hundred years earlier they were part of the same discipline.
Ed Kaitz explains why "we sympathize with the natural resentment of the injured" when, for example, greedy industrialists "violate fair play" and "throw down" their competitors "in the race for wealth and honors" and then neatly implies a switch from Smith’s discussion ‘Of the sense of Justice, of Remorse, and of the consciousness of Merit’ in Moral Sentiments (TMS II.ii: p 82) to what a casual reader would suppose is Wealth Of Nations, because Ed Kaitz continues ‘for example, greedy industrialists’, when in fact Kaitz is still quoting from Moral Sentiments. The fuller quotation below illuminates the distinction (not that Smith would probably have meant the same thing as Kaitz in introducing ‘greedy industrialists’as we know some of them from 19th -20th-century history today:
“Though it may be true, therefore, that every individual, in his own breast, naturally prefers himself to all mankind, yet he dares not look mankind in the face, and avow that he acts according to this principle. He feels that in this preference they can never go along with him, and that how natural soever it may be to him, it must always appear excessive and extravagant to them. When he views himself in the light in which he is conscious that others will view him, he sees that to them he is but one of the multitude in no respect better than any other in it. If he would act so as that the impartial spectator may enter into the principles of his conduct, which is what of all things he has the greatest desire to do, he must, upon this, as upon all other occasions, humble the arrogance of his self-love, and bring it down to something which other men can go along with. They will indulge it so far as to allow him to be more anxious about, and to pursue with more earnest assiduity, his own happiness than that of any other person. Thus far, whenever they place themselves in his situation, they will readily go along with him. In the race for wealth, and honours, and preferments, he may run as hard as he can, and strain every nerve and every muscle, in order to outstrip all his competitors. But if he should justle, or throw down any of them, the indulgence of the spectators is entirely at an end. It is a violation of fair play, which they cannot admit of.” (TMS II.ii.2.1: p 83)
That there are examples of ‘greedy industrialists’ in the recent past behaving in reprehensible manners, has nothing to do with Smith’s point about people who ‘justle’ and forego the patience of the ‘impartial spectator’. For an account of Smith’s theory of the ‘impartial spectator, see my Adam Smith: a moral philosopher and his political economy, 2008, Palgrave Macmillan).
Ed Kaitz states ‘we're all hard-wired with common sentiments’, which may express Kaitz' view but it isn’t Adam Smith’s. The notion that we are born with a moral sense was that of Smith’s tutor, Professor France Hutcheson, among others, which Smith explicitly rejects in Moral Sentiments.
People learn about what others will go along with as part of their socialization (as we term it today), starting with the chastisement from parents and other adults, and then in the ‘great school of self command’, our school fellows, and on throughout our experience until we become mature adults. Other people set the boundaries of our behaviour, as we do theirs, which is Smith's very point about impartial spectators.
Hence, the notion that “what constitutes fair competition and what appears to us as fraud or greed” and that “We universally condemn the behavior of rapacious capitalists who "throw down" their competitors - they appear "detestable" is Ed Kaitz’s interpretation (to which he is entitled) but it was never an assertion of Adam Smith in either of his books.
Similarly to assert that Smith believed that ‘moral virtues like beneficence or fellow-feeling would completely disappear under something like socialism or communism’, is a construction too far if meant as a belief of Smith’s. Neither ‘socialism or communism’ had any meaning for Smith in the 18th century; these horrors were a long away ahead, which Ed Kaitz is perfectly entitled to articulate but not to enroll Adam Smith (who died in 1790) into his beliefs, though I agree with Ed’s sentiments.
Ed Kaitz quotes from Moral Sentiments that each man “naturally prefers himself to all mankind, yet he dares not look mankind in the face, and avow that he acts according to this principle”. If the immediately preceding sentences from the same section of Moral Sentiments are read we can see Ed's spin on these words is unjustified:
“There can be no proper motive for hurting our neighbour, there can be no incitement to do evil to another, which mankind will go along with, except just indignation for evil which that other has done to us. To disturb his happiness merely because it stands in the way of our own, to take from him what is of real use to him merely because it may be of equal or of more use to us, or to indulge, in this manner, at the expence of other people, the natural preference which every man has for his own happiness above that of other people, is what no impartial spectator can go along with. Every man is, no doubt, by nature, first and principally recommended to his own care; and as he is fitter to take care of himself than of any other person, it is fit and right that it should be so. Every man, therefore, is much more deeply interested in whatever immediately concerns himself, than in what concerns any other man: and to hear, perhaps, of the death of another person, with whom we have no particular connexion, will give us less concern, will spoil our stomach, or break our rest much less than a very insignificant disaster which has befallen ourselves. But though the ruin of our neighbour may affect us much less than a very small misfortune of our own, we must not ruin him to prevent that small misfortune, nor even to prevent our own ruin. We must, here, as in all other cases, view ourselves not so much according to that light in which we may naturally appear to ourselves, as according to that in which we naturally appear to others. Though every man may, according to the proverb, be the whole world to himself, to the rest of mankind he is a most insignificant part of it.” (TMS II.ii2.1: pp 82-83)
Finally, Ed Keitz asserts:
“Conversely, in his magisterial The Wealth of Nations (1776), Smith relentlessly drives another point: that our darker and asocial instincts of self-preservation, retaliation and competition nevertheless provide the potent and necessary ingredients to "rouse the industry of mankind." In short, in his commanding treatise on capitalism it is self-interest and utility, not benevolence and sympathy that can solve the problem of economic scarcity: "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest."
This is a misreading of the paragraph in Wealth Of Nations (WN I.ii: pp 26-7) – a misreading widely shared by the majority of economists (and philosophers) who quote it. Smith actually enjoins readers to serve the self interests of others, in this case the ‘butcher, brewer, and baker’, in order to serve their own self interests (food for themselves and their families). Be other-directed and not self–directed!
The ultimate selfishness is to expect our necessary sustenance from others, free, gratis, and for nothing! Who will give the butcher, the brewer, and the baker things that they and their families need in food, clothing and shelter, let alone the objects considered necessary for a decent living standard? Smith observed, he did not preach.
If Ed Kaitz reads Adam Smith’s books as he wrote them and as he taught his students for years before, he will really understand why ‘das Adam Smith problem’ is a fantasy created by some talented people who didn’t understand his ideas, nor did they know about the context from which they were generated.
“… Adam Smith Problem”
[Please note I only discuss Ed Kaitz’s ideas on ‘Das Adam Smith Problem’ here and shall not comment on the views of presidential candidates in line with the long-standing Lost Legacy’s self-denying ordinance to only discuss the political policies of people in the country in which I vote (Scotland, UK)]
‘German scholars in the nineteenth-century exercised a good amount of frustration over something they dubbed "das Adam Smith Problem." To the consistency-minded Germans the brilliant yet humble Scottish economist and "father of capitalism" had nevertheless left a rather dubious literary legacy: two monumental and influential books that seem to argue in radically divergent and quite insurmountable directions.
…in the first of Smith's books, The Theory of Moral Sentiments (1759), Smith makes a quite humane and often beautiful case for the power of human sentiment in the practice of social virtue. He binds humanity together at an extraordinarily deep level and demonstrates why "we sympathize with the natural resentment of the injured" when, for example, greedy industrialists "violate fair play" and "throw down" their competitors "in the race for wealth and honors." Indeed, Smith seems to foreshadow the bleak finale expertly captured by Orson Wells in his Citizen Kane when he argues that the twilight years of greedy men will be filled with thoughts of "terror and amazement" at their prior conduct and make them outcasts from "the affections of mankind".
Conversely, in his magisterial The Wealth of Nations (1776), Smith relentlessly drives another point: that our darker and asocial instincts of self-preservation, retaliation and competition nevertheless provide the potent and necessary ingredients to "rouse the industry of mankind." In short, in his commanding treatise on capitalism it is self-interest and utility, not benevolence and sympathy that can solve the problem of economic scarcity: "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest." Indeed, what mystified German scholars was the quite sensitive and touching portrayal of human community in Smith's first book and statements like the following in his second: "It is his own advantage, indeed, and not that of society, which he has in view."
Similarly, to Smith, the only way to produce the public good is to not think of the public good! In his words: "By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good." Self-interest then produces the public good through what Smith famously called "the invisible hand." More wealth is created for everyone when each thinks about his own interest. To Marx and Rousseau however this doesn't cut it since the very definition of morality is to think of others first, not yourself.
As a sentimentalist philosopher, Smith also noticed something quite remarkable about the human condition: we're all hard-wired with common sentiments concerning what constitutes fair competition and what appears to us as fraud or greed. We universally condemn the behavior of rapacious capitalists who "throw down" their competitors - they appear "detestable" to us. He recognized in his Theory of Moral Sentiments that the virtue of "justice" was required to keep these people in line with proper legislation. The danger however is that the lawgiver might "push" this legislation "too far" and "destroy liberty, security, and justice."
Why was Smith so concerned with preserving freedom? Because he understood that human sentiments like "beneficence" were only possible in a free society. In short, unlike justice, which can be extorted by force (threat of punishment), moral virtues like beneficence or fellow-feeling would completely disappear under something like socialism or communism: "Beneficence is always free, it cannot be extorted by force, the mere want of it exposes to no punishment; because the mere want of beneficence tends to do no real positive evil." Our common sentiment, in short, "approves" of fellow-feeling only if it has not been extorted by force. No one, says Smith, can force you to be a good neighbor - this has to be done freely.
Smith is interested in taking stock of human beings and finding out how to both preserve freedom and benefit society within the bounds of our given nature. Justice is there to force good behavior "to a degree" in a capitalist economy but we also need to recognize that the self-preservation instinct is the only dynamic engine for increasing wealth and avoiding poverty. But beneficence, freely given and not forced, serves as another check in the "race for wealth and honors." It is our common human sentiment says Smith that keeps us from looking "mankind in the face" and claiming that we prefer ourselves to all others.”
Comment
Ed Kaitz is a gifted writer and college teacher (I can’t give more details as there appear to be several 'Edward Kaitz’s' in US universities and all are plausible candidates as authors of the American Thinker article, which appears to be right of centre in tone).
He does a reasonable job in his discussion of the issues involved in ‘Das Adam Smith Problem’, to which I make some observations for readers who may not be aware of the missing links in Ed Kaitz’s exposition.
The German origins of the ‘Das Adam Smith’s Problem’ in the last quarter of the 19th century come from a misunderstanding occasioned by the different dates of publication of Moral Sentiments (1759) and Wealth Of Nations 1776) and is often presented today as Smith having ‘changed his mind’ in the 17 years between publishing his two books. This is a wrong inference from the separated publication dates.
Students’ notes of Smith’s lectures (1762-3 and ‘1764’) at Glasgow University were discovered in 1895 and 1958 and show that he taught his classes both from lectures that became Moral Sentiments and lectures that became Wealth Of Nations to students in the same classes. Large sections of his Lectures in Jurisprudence (1762-4; published in 1978 by Oxford University Press) were taken verbatim into Wealth Of Nations, as were taken his classes in Ethics into Moral Sentiments. The ideas matured together, first as lectures to students and then as prose for his two books, and there were no contradictions between the two books despite the different dates of their publication.
Moreover, Smith revised both books in the different editions published after their publication: Moral Sentiments' editions: 1759; 1761; 1767; 1774; 1781; 1790) and Wealth Of Nations editions: 1776; 1778; 1784; 1786; 1789. These co-terminus editions, together with the fact that his lectures in the 1750s-60s were delivered to the same classes of students each year, show conclusively that there is no question of Adam Smith ‘changing his mind’ about moral motives and economic behaviours.
If his students had not noticed that ‘he seem[ed] to argue in radically divergent and quite insurmountable directions’ in his lectures, contemporary faculty colleagues would have noticed and commented, and more importantly, he would have noticed too. The imagined ‘problem’ was noticed by nobody until misinformed
faculty in Germany a hundred years later jumped to the wrong conclusions, by which time philosophy and political economy were quite separate disciplines, though for Scottish moral philosophers a hundred years earlier they were part of the same discipline.
Ed Kaitz explains why "we sympathize with the natural resentment of the injured" when, for example, greedy industrialists "violate fair play" and "throw down" their competitors "in the race for wealth and honors" and then neatly implies a switch from Smith’s discussion ‘Of the sense of Justice, of Remorse, and of the consciousness of Merit’ in Moral Sentiments (TMS II.ii: p 82) to what a casual reader would suppose is Wealth Of Nations, because Ed Kaitz continues ‘for example, greedy industrialists’, when in fact Kaitz is still quoting from Moral Sentiments. The fuller quotation below illuminates the distinction (not that Smith would probably have meant the same thing as Kaitz in introducing ‘greedy industrialists’as we know some of them from 19th -20th-century history today:
“Though it may be true, therefore, that every individual, in his own breast, naturally prefers himself to all mankind, yet he dares not look mankind in the face, and avow that he acts according to this principle. He feels that in this preference they can never go along with him, and that how natural soever it may be to him, it must always appear excessive and extravagant to them. When he views himself in the light in which he is conscious that others will view him, he sees that to them he is but one of the multitude in no respect better than any other in it. If he would act so as that the impartial spectator may enter into the principles of his conduct, which is what of all things he has the greatest desire to do, he must, upon this, as upon all other occasions, humble the arrogance of his self-love, and bring it down to something which other men can go along with. They will indulge it so far as to allow him to be more anxious about, and to pursue with more earnest assiduity, his own happiness than that of any other person. Thus far, whenever they place themselves in his situation, they will readily go along with him. In the race for wealth, and honours, and preferments, he may run as hard as he can, and strain every nerve and every muscle, in order to outstrip all his competitors. But if he should justle, or throw down any of them, the indulgence of the spectators is entirely at an end. It is a violation of fair play, which they cannot admit of.” (TMS II.ii.2.1: p 83)
That there are examples of ‘greedy industrialists’ in the recent past behaving in reprehensible manners, has nothing to do with Smith’s point about people who ‘justle’ and forego the patience of the ‘impartial spectator’. For an account of Smith’s theory of the ‘impartial spectator, see my Adam Smith: a moral philosopher and his political economy, 2008, Palgrave Macmillan).
Ed Kaitz states ‘we're all hard-wired with common sentiments’, which may express Kaitz' view but it isn’t Adam Smith’s. The notion that we are born with a moral sense was that of Smith’s tutor, Professor France Hutcheson, among others, which Smith explicitly rejects in Moral Sentiments.
People learn about what others will go along with as part of their socialization (as we term it today), starting with the chastisement from parents and other adults, and then in the ‘great school of self command’, our school fellows, and on throughout our experience until we become mature adults. Other people set the boundaries of our behaviour, as we do theirs, which is Smith's very point about impartial spectators.
Hence, the notion that “what constitutes fair competition and what appears to us as fraud or greed” and that “We universally condemn the behavior of rapacious capitalists who "throw down" their competitors - they appear "detestable" is Ed Kaitz’s interpretation (to which he is entitled) but it was never an assertion of Adam Smith in either of his books.
Similarly to assert that Smith believed that ‘moral virtues like beneficence or fellow-feeling would completely disappear under something like socialism or communism’, is a construction too far if meant as a belief of Smith’s. Neither ‘socialism or communism’ had any meaning for Smith in the 18th century; these horrors were a long away ahead, which Ed Kaitz is perfectly entitled to articulate but not to enroll Adam Smith (who died in 1790) into his beliefs, though I agree with Ed’s sentiments.
Ed Kaitz quotes from Moral Sentiments that each man “naturally prefers himself to all mankind, yet he dares not look mankind in the face, and avow that he acts according to this principle”. If the immediately preceding sentences from the same section of Moral Sentiments are read we can see Ed's spin on these words is unjustified:
“There can be no proper motive for hurting our neighbour, there can be no incitement to do evil to another, which mankind will go along with, except just indignation for evil which that other has done to us. To disturb his happiness merely because it stands in the way of our own, to take from him what is of real use to him merely because it may be of equal or of more use to us, or to indulge, in this manner, at the expence of other people, the natural preference which every man has for his own happiness above that of other people, is what no impartial spectator can go along with. Every man is, no doubt, by nature, first and principally recommended to his own care; and as he is fitter to take care of himself than of any other person, it is fit and right that it should be so. Every man, therefore, is much more deeply interested in whatever immediately concerns himself, than in what concerns any other man: and to hear, perhaps, of the death of another person, with whom we have no particular connexion, will give us less concern, will spoil our stomach, or break our rest much less than a very insignificant disaster which has befallen ourselves. But though the ruin of our neighbour may affect us much less than a very small misfortune of our own, we must not ruin him to prevent that small misfortune, nor even to prevent our own ruin. We must, here, as in all other cases, view ourselves not so much according to that light in which we may naturally appear to ourselves, as according to that in which we naturally appear to others. Though every man may, according to the proverb, be the whole world to himself, to the rest of mankind he is a most insignificant part of it.” (TMS II.ii2.1: pp 82-83)
Finally, Ed Keitz asserts:
“Conversely, in his magisterial The Wealth of Nations (1776), Smith relentlessly drives another point: that our darker and asocial instincts of self-preservation, retaliation and competition nevertheless provide the potent and necessary ingredients to "rouse the industry of mankind." In short, in his commanding treatise on capitalism it is self-interest and utility, not benevolence and sympathy that can solve the problem of economic scarcity: "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest."
This is a misreading of the paragraph in Wealth Of Nations (WN I.ii: pp 26-7) – a misreading widely shared by the majority of economists (and philosophers) who quote it. Smith actually enjoins readers to serve the self interests of others, in this case the ‘butcher, brewer, and baker’, in order to serve their own self interests (food for themselves and their families). Be other-directed and not self–directed!
The ultimate selfishness is to expect our necessary sustenance from others, free, gratis, and for nothing! Who will give the butcher, the brewer, and the baker things that they and their families need in food, clothing and shelter, let alone the objects considered necessary for a decent living standard? Smith observed, he did not preach.
If Ed Kaitz reads Adam Smith’s books as he wrote them and as he taught his students for years before, he will really understand why ‘das Adam Smith problem’ is a fantasy created by some talented people who didn’t understand his ideas, nor did they know about the context from which they were generated.
Labels: Das Adam Smith Problem, Moral Sentiments, Wealth Of Nations
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