Tuesday, November 11, 2008

'Das Adam Smith Problem' Again

Among the books that I purchased at the Rome conference, one immediately caught my eye: Serge-Christophe Kolm, “Reciprocity: an economics of social relations”, Cambridge University press, 2008. Kolm is Professor of Economics at the Ecole des Hautes Etudes en Science Sociales, Paris; the bibliography contains 35 of his impressive publications in economics, many of them related to themes of reciprocity and justice.

I began reading his extremely interesting and informative study of reciprocity en route home because reciprocity is a theme of my analysis of the ‘Prehistory of Bargaining’. At this early stage I am not yet sure how much Professor Kolm’s in-depth knowledge of reciprocity will influence revisions of my earlier conclusions – ‘good reason perforce must give way to better’ (Shakespeare, Julius Caesar; though, admittedly, the character who says this died in the next Act).

However, I was surprised to read this paragraph on page 39:

Adam Smith was convinced by Parisian economists, if not to abandon the ‘moral sentiments’ of his first major study (which included reciprocity), at least to propose that if you need meat, you should expect it not from your butcher’s altruism but from his self interest in an exchange.”

There are many non-critical comments that I could make on the rest of this section in Kolm’s book, but these must await later treatment. For the moment I draw attention to something critically wrong with the hypothesis presented by the above paragraph in relation to Adam Smith alledgedly ‘changing his mind’ between the writing of Moral Sentiments, published in 1759, and the writing his famous lines about appealing to the self-interest of the ‘butcher, brewer, and baker’ as published in 1776 in Wealth Of Nations. This misconception is fairly common among economists; in its original form it was known as ‘Das Adam Smith Problem’, from the number of German authors in the late 19th century who believed they had discovered a flaw in Smith’s Works.

An hypothesis that Smith’s contact with the Parisian Physiocrats ‘changed his mind’ only has credibility if no account is taken of what Adam Smith was teaching in Glasgow from 1751-64 (perhaps longer if his lectures in Edinburgh from 1748-51 are taken into account).

We have credible evidence for the contents of these from the sets of students’ notes, one set found in Oxford in 1895: Lectures on Justice, Police, Revenue and Arms, delivered in the University of Glasgow by Adam Smith, edited by Professor Edwin Canaan and published in 1896 by Clarendon Press, Oxford, and another set found in Aberdeen in 1958 by Professor John M. Lothian.

Both sets of student notes, with extensive editorial work by R. L. Meek and W. D. D. Raphael and P. D. Steen, were published by Oxford University Press in 1978, Adam Smith, Lectures in Jurisprudence.

Adam Smith visited France in 1764-66 and met many of the French Phsyiocrats, widely known as the economistes. Professor Kolm appears to believe that Adam Smith was ‘convinced’ by his ‘Parisian friends’ to either change his mind or at least to downplay the themes he published in Moral Sentiments in 1759 when he came to write Wealth Of Nations, between 1764 and 1776.

This fairly common assertion is indicative of the unfamiliarity of those who make it with Adam Smith’s Jurisprudence lectures delivered in 1762-3 and read for him in ‘1766’ – more likely in 1764 by his temporary replacement after Smith left Glasgow suddenly in January 1764 to escort the Duke of Buccleauch on his French tour.

The Jurisprudence lectures are not only fairly close to being verbatim; they are also dated by day and month. The example of the ‘butcher, brewer, and baker’ was delivered on Monday, 28 March 1763, more than a year before Smith met some of the Physiocrats (he spent his longest time in Paris in 1765-6).

Smith says to his class:

Man continually standing in need of the assistance of others, must fall upon some means to procure their help. This he does not merely by coaxing and courting; he does not expect it unless he can turn it to your advantage or make it appear to be so. Mere love is not sufficient for it, till he applies in some way to your self love. A bargain does this in the easiest manner. When you apply to a butcher or brewer for beer or for beef you do not explain to him how much you stand in need of these, but how much it would be [his] interest to allow you to have them for a certain price. You do not address his humanity, but his self love. – Beggars are the only persons who depend on charity for their subsistence.’ [LJ(A) vi.45-6: P 347-8]

And in ‘1766’ [1764], Thomas Young, his stand-in lecturer reads from Smith’s script, which unknown students took down, saying:

Man, in the same manner, works on the selflove of his fellows, by setting before them a sufficient temptation to get what he wants; the language of this disposition is, give me what I want, and you shall have what you want. It is not from the benevolence, as the dogs, but from selflove that man expects any thing. The brewer and the baker serve us not from their benevolence, but from selflove. No man but a beggar dependence on benevolence, and even he would die in a week were their entire dependence upon it.’ [LJ 219-20: pp 492-3; see also: Ian S. Ross, 1995. The Life of Adam Smith, p 196, Clarendon Press, Oxford]

Evidence that Smith had taught these doctrines even earlier, perhaps duing 1748-51 in his public classes in Edinburgh, comes from a paper he is reported to have read to the Political Economy Club in Glasgow in 1755 (known as the ‘1775 Paper’), which Professor Dugald Stewart quoted in 1793 in his eulogy to the memory of Adam Smith, who died in 1790:

A great part of the opinions [Smith observes] enumerated in this paper is treated of at length in some lectures which I have still by me, and which were written in the hand of a clerk who left my services six years ago [1749]. They have all of them be constant subjects of my lectures since I first taught Mr Craigie’s class, the first winter I spent in Glasgow [1751-2] to this day, without any considerable variation. The had all of them been the subjects of lectures which I read at Edinburgh the winter before I left it, and I can adduce numerous witnesses, both from that place and from this, who will ascertain them sufficiently to be mine’ (D. Stewart, ‘Account of the Life and Writings of Adam Smith’ Transactions of the Royal Society of Edinburgh, 1793, published in Adam Smith, Essays on Philosophical Subjects, [1795] 1982, Oxford University Press, Oxford.

Taken literally, Smith claims to have been delivering the main themes of his political economy as long ago as 1748-51 in Edinburgh and from 1751 in Glasgow. Moreover, we know from his lecture schedules that he delivered his lectures on Ethics (which formed the bulk of the Theory of Moral Sentiments and his lectures on Jurisprudence to the same students in Glasgow who took their ‘AM’ degrees).

If there was a major contradiction between the two subjects as taught by Adam Smith it would have been obvious to him at the time (and his students, some of whom went on to become academics of note; for example Professor John Millar, reported by Dugald Stewart, op cit. ESP I.17, p 274-5). On the basis of this evidence, I think that Professor Serge-Christophe Kolm’s assertion that:

“Adam Smith was convinced by Parisian economists, if not to abandon the ‘moral sentiments’ of his first major study (which included reciprocity), at least to propose that if you need meat, you should expect it not from your butcher’s altruism but from his self interest in an exchange,”
is fatally challenged.

For the record I do not think there is any inconsistency in Smith’s treatment of self interest in Moral Sentiments and Wealth Of Nations. In other words, there is no ‘Das Adam Smith Problem’.



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