Thursday, April 30, 2009

Thought For the Day, no 8

It is often preached (a not inappropriate word in this context) that Adam Smith was a believer in what became known in the later 19th century as Homo eonomicus, or the perfectly rational person, driven by manic self-interest to maximise his personal utility.

In Moral Sentiments (1759), Adam Smith presents a different perspective to the uni-dimensional automaton that modern economists since the 19th century created, and which their successors in the 20th century increasingly refined, so to speak, to make this creature (for surely it was never intended to be regarded as human) fit into the determinate convenient mathematics of general equilibrium.

Smith on a richer, more complex, and more realistic vision of man in society is worth reading – and thinking about:

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. Though his own happiness may be of more importance to him than that of all the world besides, to every other person it is of no more consequence than that of any other man. 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. This man is to them, in every respect, as good as he: they do not enter into that self-love by which he prefers himself so much to this other, and cannot go along with the motive from which he hurt him. They readily, therefore, sympathize with the natural resentment of the injured, and the offender becomes the object of their hatred and indignation. He is sensible that he becomes so, and feels that those sentiments are ready to burst out from all sides against him.’ (TMS II.ii.2.1: 82-83)

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1 Comments:

Blogger mistah charley, ph.d. said...

I found your very interesting blog through a link from Brad DeLong.

Pertaining to the passage from Adam Smith you quote here, I would like to draw your attention to the views of William Black on the current financial crisis, as expressed in an interview with Bill Moyers

http://www.pbs.org/moyers/journal/04032009/transcript1.html

and one published in Barron's

http://online.barrons.com/article/SB123940701204709985.html

Black asserts that the roots of the current crisis, the collapse of the house of cards that finance had become, can be found in behavior that was not only foolish, not only selfish with a reckless disregard of the welfare of others, as Smith condemned, but criminal.

5:54 p.m.  

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