Non-History of a Famous Economist
Politonomist - Kelowna,B.C.,Canada, writes “A History of Famous Economists”, HERE:
“1776 marks the beginning of what most consider to be the birth of economics - the legendary Scottish Adam Smith publishes his lassiez-faire-supporting-invisible-hand-equilibrium work, An Inquiry into The Nature and Causes of the Wealth of Nations - colloquially known simply as, The Wealth of Nations. The work is unquestionably canonical in economics, so much so that one economist we interviewed bravely claimed “it’s more important than the Bible; even to non-economists!”
Smith, in the Wealth of Nations proposed a disproportionate number of ideas about the organization and performance of markets that survive today - nearly 300 years later, and an economic revolution or two after the publication. The concept of an “invisible hand,” which Smith barely even mentioned in his book, is widely associated with the text and Adam Smith himself. The invisible hand referred to the market structure that simply appears to organize itself, and, furthermore the simple organization of a market, even after a catastrophic or unexpected economic crash - generally returning itself to pre-disasterous state with no intervention by a greater body, whatsoever.
The book is a difficult read for modern economists, so much of the knowledge extracted from it is passed along to future economists through other, more modernized theories. At the time, there was no field of economics, there was no conception of “capitalism,” and feudalism was still a rampant force leftover from the middle ages in Europe. Much of what is discussed in the book makes very little sense in a modern context - but still, the concept of an equilibrium market, where various negative forces may be applied, generally from interventionism and negative economic situations, holds strong to this day.
Many economists question whether classical economics is truly the foundation for neoclassical economics based on a number of common rejections - particularly the development of Smithian value theory, where a distinction is made between market price and natural price. If, for example, neoclassical economics is the current development of classical economics - when did each start and end? Economic historians do clearly define these periods, focusing on the response to other rejections, as we do here."
Comment
Parts of this summary are almost correct; others are not correct at all.
“Adam Smith publishes his lassiez(sic)-faire-supporting-invisible-hand-equilibrium work, An Inquiry into The Nature and Causes of the Wealth of Nations”
Smith did not support ‘laissez-faire’, nor did he express an “invisible-hand-equilibrium work” (wrong on both the “invisible-hand” and on “equilibrium”).
Wealth Of Nations is not “a difficult read for modern economists”, unless they are illiterate. True, it is a different read to the common modern textbook because it is not an economic textbook.
“The concept of an “invisible hand,” which Smith barely even mentioned in his book, is widely associated with the text and Adam Smith himself. The invisible hand referred to the market structure that simply appears to organize itself…”
The invisible hand was not a concept – it was a metaphor – used only once in Wealth Of Nations, which at a stretch could be deemed to be “barely even mentioned”, though why “Politonomist” doesn’t just say “once” is surprising.
The invisible hand metaphor when used once by Smith did not refer to “market structure” at all, nor was it about a structure that “appeared to organize itself”. If anything it conformed to the arithmetic rule that the ‘whole is the sum of its parts’.
Smith’s writing on markets did not have “the concept of an equilibrium market”; it noted that the market price would ‘gravitate towards' natural price, sometimes undershooting, sometimes overshooting which is not an equilibrium. Prices are determined by the ‘higgling and bargaining’ of real people who are not governed by pure rational thinking – that’s why they ‘higgle and bargain’!
“Much of what is discussed in the book makes very little sense in a modern context” can only be believed if the author does not realize what the Wealth Of Nations was about.
Much of what Smith wrote about is still with us – the damaging role of the State in a commercial economy, when its legislators and those who influence them were guided by false doctrine of ‘mercantile political economy ‘ (still with us!), monopoly practices (still with us!), tariff protectionism (still with us!), problems of balancing the needs of public expenditure and the ability to bear taxation (still with us - perhaps even worse today!), wars for unimportant ends (sometimes still with us!), and meddling and unnecessary interventions in micro-management of people’s lives, under the influence of politicians (still with us, only more so!).
It is not clear what is meant by “the development of Smithian value theory”.
If it is meant to be the distinction Smith draws between ‘natural and markets prices’, then this may misunderstand what Smith was on about; basically the difference between how buyers and a sellers observe their interests to the value in exchange – buyers are not interested in a seller's costs, only in price; sellers are interested in their costs because price must cover their costs plus a profit.
If it is about Smith’s theory of exchangeable value, this is probably the most misunderstood element of Wealth Of Nations, mixed up as it often is with a supposed Labour Theory of Value, which Smith did not extend to commercial society because of the role of property once mankind left the forests.
Adam Smith cannot be understood by reading modern accounts of what he is supposed to have written, plus quotations from him at second, or tenth, hand, often out of context.
Politonomist should, I respectfully suggest, read Wealth Of Nations (and Lost Legacy).
“1776 marks the beginning of what most consider to be the birth of economics - the legendary Scottish Adam Smith publishes his lassiez-faire-supporting-invisible-hand-equilibrium work, An Inquiry into The Nature and Causes of the Wealth of Nations - colloquially known simply as, The Wealth of Nations. The work is unquestionably canonical in economics, so much so that one economist we interviewed bravely claimed “it’s more important than the Bible; even to non-economists!”
Smith, in the Wealth of Nations proposed a disproportionate number of ideas about the organization and performance of markets that survive today - nearly 300 years later, and an economic revolution or two after the publication. The concept of an “invisible hand,” which Smith barely even mentioned in his book, is widely associated with the text and Adam Smith himself. The invisible hand referred to the market structure that simply appears to organize itself, and, furthermore the simple organization of a market, even after a catastrophic or unexpected economic crash - generally returning itself to pre-disasterous state with no intervention by a greater body, whatsoever.
The book is a difficult read for modern economists, so much of the knowledge extracted from it is passed along to future economists through other, more modernized theories. At the time, there was no field of economics, there was no conception of “capitalism,” and feudalism was still a rampant force leftover from the middle ages in Europe. Much of what is discussed in the book makes very little sense in a modern context - but still, the concept of an equilibrium market, where various negative forces may be applied, generally from interventionism and negative economic situations, holds strong to this day.
Many economists question whether classical economics is truly the foundation for neoclassical economics based on a number of common rejections - particularly the development of Smithian value theory, where a distinction is made between market price and natural price. If, for example, neoclassical economics is the current development of classical economics - when did each start and end? Economic historians do clearly define these periods, focusing on the response to other rejections, as we do here."
Comment
Parts of this summary are almost correct; others are not correct at all.
“Adam Smith publishes his lassiez(sic)-faire-supporting-invisible-hand-equilibrium work, An Inquiry into The Nature and Causes of the Wealth of Nations”
Smith did not support ‘laissez-faire’, nor did he express an “invisible-hand-equilibrium work” (wrong on both the “invisible-hand” and on “equilibrium”).
Wealth Of Nations is not “a difficult read for modern economists”, unless they are illiterate. True, it is a different read to the common modern textbook because it is not an economic textbook.
“The concept of an “invisible hand,” which Smith barely even mentioned in his book, is widely associated with the text and Adam Smith himself. The invisible hand referred to the market structure that simply appears to organize itself…”
The invisible hand was not a concept – it was a metaphor – used only once in Wealth Of Nations, which at a stretch could be deemed to be “barely even mentioned”, though why “Politonomist” doesn’t just say “once” is surprising.
The invisible hand metaphor when used once by Smith did not refer to “market structure” at all, nor was it about a structure that “appeared to organize itself”. If anything it conformed to the arithmetic rule that the ‘whole is the sum of its parts’.
Smith’s writing on markets did not have “the concept of an equilibrium market”; it noted that the market price would ‘gravitate towards' natural price, sometimes undershooting, sometimes overshooting which is not an equilibrium. Prices are determined by the ‘higgling and bargaining’ of real people who are not governed by pure rational thinking – that’s why they ‘higgle and bargain’!
“Much of what is discussed in the book makes very little sense in a modern context” can only be believed if the author does not realize what the Wealth Of Nations was about.
Much of what Smith wrote about is still with us – the damaging role of the State in a commercial economy, when its legislators and those who influence them were guided by false doctrine of ‘mercantile political economy ‘ (still with us!), monopoly practices (still with us!), tariff protectionism (still with us!), problems of balancing the needs of public expenditure and the ability to bear taxation (still with us - perhaps even worse today!), wars for unimportant ends (sometimes still with us!), and meddling and unnecessary interventions in micro-management of people’s lives, under the influence of politicians (still with us, only more so!).
It is not clear what is meant by “the development of Smithian value theory”.
If it is meant to be the distinction Smith draws between ‘natural and markets prices’, then this may misunderstand what Smith was on about; basically the difference between how buyers and a sellers observe their interests to the value in exchange – buyers are not interested in a seller's costs, only in price; sellers are interested in their costs because price must cover their costs plus a profit.
If it is about Smith’s theory of exchangeable value, this is probably the most misunderstood element of Wealth Of Nations, mixed up as it often is with a supposed Labour Theory of Value, which Smith did not extend to commercial society because of the role of property once mankind left the forests.
Adam Smith cannot be understood by reading modern accounts of what he is supposed to have written, plus quotations from him at second, or tenth, hand, often out of context.
Politonomist should, I respectfully suggest, read Wealth Of Nations (and Lost Legacy).
Labels: Equilibrium, Invisible Hands, Labour Theory of Value
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