Friday, May 01, 2009

Lost Legacy Prize for April - Simply the Best

Pejman Yousefzadeh in the New Ledger HERE
writes ‘In Praise of Adam Smith’ and introduces me (for which my deepest thanks, to Karen Horn, writing in Standpoint online HERE:

Instead, the present global financial crisis has made the godfather of classical economics look strikingly irrelevant in comparison with Keynes, the inventor of modern disequilibrium theory. Even worse, now that bankers are being castigated as the incarnation of greed, blindness and irresponsibility, the man who wrote in his famous Inquiry into the Nature and Causes of the Wealth of Nations that "it is not from the benevolence of the butcher, the brewer, or the baker" - or perhaps the banker in our day - "that we expect our dinner, but from their regard to their own interest" is again accused of being the chief advocate of heartless laissez-faire capitalism, a system that failed and had to fail. In this view, capitalism is nothing but a false religion, with Mammon as its god and Smith as its high priest. Critics worry that markets need a moral foundation that they automatically erode. They ridicule the naïve belief that free markets bring everybody happiness at no cost, a conviction allegedly lacking all philosophical underpinnings.’

From this unpromising start Karen Horn knocks the socks of almost all commentators on the relevance of Adam Smith. I sat up and paid attention when I read her next sentence:

His deep persuasion was that simply observing reality enables us to discover the underlying natural principles. The Scottish Enlightenment thinkers aimed at shedding light on the laws governing human behaviour, and on their consequences for life in society.’

She continued amazing me with her understanding of Adam Smith (I am so used to media commentators talking nonsense about him):

Absent-minded he may have been, but naïve he wasn't, let alone a cynic. Smith did not tolerate immoral behaviour. It would never have occurred to him that selfishness and greed might be viewed as being just normal - and even less that they might be morally laudable, let alone negligible. This differentiates him from Thomas Hobbes, in whose view man is a wolf to other men, and also from Bernard Mandeville, well-known for his poem "The Fable of the Bees", in which he - half satirically, half seriously - claims that private vices result in public benefits. Smith strongly objected to this view. The proof of this attitude is his first widely recognised book, the Theory of Moral Sentiments, published on April 26, 1759-250 years ago.

If you have not read, or understood, Smith’s Moral Sentiments, I recommend that you follow the link to Karen’s article. It’s by far the best short summary of Smith’s moral philosophy I have read for quite a while. She explains the ‘impartial spectator’ clearly. She also demolishes the so-called 'Das Adam Smith Problem:

It is true that almost two decades elapsed between the first publication of the Theory of Moral Sentiments and the Wealth of Nations. But Adam Smith never left it at the first editions of his works. Both books underwent numerous rewrites and additions until the end of Smith's life. He worked on them continuously and in parallel but never fundamentally changed his mind. His approach and the logical system that he built always stayed the same.’

I would add to this the fact that Smith’s Lectures in Jurisprudence [1762-63] carry verbatim much that was to appear in Wealth Of Nations, emphasising the continuity in his economics from his days at Glasgow before he met the French Physiocrats in 1764-6. These lectures were not available until 1896 when a manuscript of students’ notes were found in Oxford.

Smith's major works both take the same methodological route, using parallel premises and leading to analogous results. Smith's approach is typical of the empiricism that was in vogue during the Scottish Enlightenment. He describes meticulously that which is - and not so much that which should be. He looks at people's behaviour and tries to deduce universal laws from what he sees. Since man is a social animal, the observations focus on human interaction.’

I urge you to read Karen Horn’s article. It is too good to miss. And the sensible comments attached from readers are gems indeed. There is even a mention for a theme relevant something that I am working on at present for my paper on the ‘Alleged religiosity of Adam Smith':

Some scholars have attributed Smith's optimism to his alleged Deism. He seems to show a belief in a Creator who has endowed the world with certain natural laws accessible to human reason, but who refrains from intervening in the course of worldly events. True or false, this is no founding pillar of Smith's system. Smith places the individual dispositions and actions of men at the baseline of his analysis. If these dispositions and actions cannot be traced back to providence but are instead triggered by secular social learning or simply sheer evolution, this doesn't invalidate his logical result. The masterpiece that matters is the social co-ordination achieved through interaction, and the generation of useful institutions that channel life in human society.

I couldn’t put it better myself. I have no hesitation in awarding Karen Horn the Lost Legacy Prize for the best article on Adam Smith for April 2009.

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