Tuesday, May 05, 2009

Not Sure About Chomsky's Version of Adam Smith

More on Noam Chomsky: Education is Ignorance (2 May) in W.E.A.L.L.B.E. here:

“[Smith] did give an argument for markets, but the argument was that under conditions of perfect liberty, markets will lead to perfect equality. That's the argument for them, because he thought that equality of condition (not just opportunity) is what you should be aiming at.”

I am at a loss to place this statement in Wealth Of Nations, not to recognise Smith as advocating it as an aim ‘you should be aiming at’.

If equality was a consequence of something happening which he observed (he was a moral philosopher, not an advocate) then it might be plausible but in mid-18th century Scotland I think he had more pressing concerns – mainly employment of poor labourers from incremental commercial growth – in mind than redistributive justice (a not well-known idea at the time).

When intensive poverty is the main experience, ‘equality’, however defined, may not have been an answer foremost in Smith’s mind. Nor is it clear why perfect liberty (which is not the same as laissez-faire, as understood by the some of the French Physiocrats at the time) should bring about equality.

The problem of markets in poor countries (like Scotland) was their relative absence, not their presence. But if you massage a visceral hatred for markets, as Chomsky appears to indulge, then nothing about theories of markets, or their ‘failings’ – their absence is also on the charge sheet against them – is allowed to appear in their favour. Markets are intimately involved in employment creation from productive investment out of revenue earned in earlier market exchanges.

Setting markets to work is not easy from scratch, as everybody who has observed where they are absent well knows (and leftwing thinkers, unimpressed with actual progress in getting markets to start, want to ‘kick-start’ with state subsidies, or protectionism – which inhibits market formation).

Chomsky believes markets are demeaning, inhuman, stupidity creating, and ignorance generating, and his remedy requires such a root-and-branch change in nearly everything that it ain’t going to happen on any scale quickly and threatens a far greater tyranny than Chomsky is willing to admit (though he may be more comfortable with tyranny for ends he approve of than most Classical Smithians and Lost Legacy would endorse).

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Blogger andrew said...

Adam Smith, The Wealth of Nations, Chicago: University of Chicago Press, 1976 (original 1776). An excerpt (Book I, ch. X, p. 111):

The whole of the advantages and disadvantages of the different employments of labour and stock must, in the same neighbourhood, be either perfectly equal or continually tending to equality. If in the same neighbourhood, there was any employment evidently either more or less advantageous than the rest, so many people would crowd into it in the one case, and so many would desert it in the other, that its advantages would soon return to the level of other employments. This at least would be the case in a society where things were left to follow their natural course, where there was perfect liberty, and where every man was perfectly free both to chuse what occupation he thought proper, and to change it as often as he thought proper.

4:17 pm  
Blogger Gavin Kennedy said...

Hi Andrew

I am off to St Andrews in a while for a smeinar on David Hume and I shall respond to your most intersting and helpful comment (for which many thanks) when I return to Edinburgh this evening.

There's much more than meets the eye in Wealth Of Nations.

7:06 am  
Blogger Mike Hammock said...

Andrew, if that is the passage to which Chomsky refers, then he has confused compensating differentials with income equality. Smith is not arguing that incomes will be equal for all people; he is arguing that if one job is easier or more fun than others, then more people will pursue it, pushing the wage down, until it is no more attractive than other jobs--not in terms of the wage alone, but in terms of all attributes of the job. Smith is merely making describing labor market equilibria.

Nowadays we would say that in equilibrium, the marginal worker is indifferent between employment in different industries. Inframarginal workers are not indifferent; they like being where they are.

As for perfect liberty, it sounds to me as though Smith is talking about a lack of restrictions on labor mobility, not liberty in a general political sense.

In other words, if that is the passage to which Chomsky refers, his case is weak indeed.

4:02 am  
Blogger Gavin Kennedy said...

Just noticed your comments. I agree completely. Chomsky is looking for allies to bash the idea that freer markets are better for people than their absence. How long would Harvard remain independent if markets ceased to exist?

You express Adam Smith's ideas with elegance.

3:42 pm  
Blogger Mike Hammock said...

Thanks Gavin. I'm not sure you can call me elegant, given my typo. I wrote:

"Smith is merely making describing labor market equilibria."

But I meant to write:

"Smith is merely describing labor market equilibria."

4:55 pm  
Blogger Lexo said...

"(though he may be more comfortable with tyranny for ends he approve of than most Classical Smithians and Lost Legacy would endorse.)"

To say that Chomsky is 'comfortable with tyranny for ends he approve[s] of' is, as you know, a slander, and if you don't know it, you should actually read and make some token effort to understand the things that you comment on.

12:56 am  
Blogger Paul said...

From Noam Chomsky...
"Andrew, whoever he is, took the trouble to check the reference I cited, which says exactly what I said it did. You don’t have to be a Smith scholar to see that my paraphrase of the passage I referenced is exactly accurate. If you read the other comments you’ll see that they are trying to evade the fact by claiming, falsely, that I was confusing differentials with income equality. Nothing of the kind. I simply cited Smith accurately, giving the source so anyone could check.

The rest is just the usual childish slanders that deface the internet."

2:56 am  
Blogger Gavin Kennedy said...

A number of correspondents write to say that Chomsky is at MIT not Harvard. I stand corrected.


9:33 am  
Blogger Chris said...

”led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society”

This seems to me like such an obvious source of Chomsky’s assertion that Smith thought that “conditions of perfect liberty, markets will lead to perfect equality” that I am sure that I am missing something? Of course Smith isn’t saying that genuine free markets aim at delivering equality but he does seem to think that this would be the result and that this would be a good thing?

7:12 pm  
Blogger Gavin Kennedy said...

Thanks for you comment.
Two basic points of fact.
First, your reference to Smith is from Moral Sentiments (Part IV, chapter 2) 1759, which does not deal with markets at all. Second, Smith refers to ‘a rich and unfeeling landlord’ who is ‘led’ to feed his servants, retainers, and those who toil in his fields, breaking the landlord’s illusion when viewing his fields that he ‘consumes’ for himself all that he sees. In fact, Smith notes when the landlord shares his crops in this manner, supplies the poor with sufficient to amount to the ‘subsistence’ of ‘the necessaries of life’ (from Smith’s definition of the annual wealth of society being the annual output of the ‘necessaries, conveniences of life”).

This does not amount to anything resembling or approaching ‘equality’ from the emergence of property in the ‘first age of mankind’ through to the ‘age of commerce’ (markets, and later ‘capitalism’). The rural poor lived in notorious conditions of minimal subsistence, and still do in parts of the world. The ‘advance the interests of society’ reference is to the minimal maintenance of sufficient population to ensure the “propagation of the species’, albeit it at tremendous personal cost to the families of the poor (large numbers of children dying early).

The IH metaphor refers to its object: the mutual dependence of the rich landlord on his toilers (no subsistence, no toil), and the toilers on the landlord (no toil, no subsistence).

In market economies, annual consumption has gone well beyond subsistence – covering “conveniences” and “luxuries” – indeed, the middle earners and someway below them, enjoy access to consumption way beyond that enjoyed or available to landlords of past millennia, and of the richest “merchants and manufacturers” that Smith knew about. Of course, the very richest today have incomparable access to wealth (as defined by Smith), but no sane employee of purveyor of alternatives to capitalism (including Chomsky) would willingly return to her grandmother’s living standards. It’s not equality, but markets do not bring that about, and neither did Smith claim that they did.

I do not accept Chomsky’s assertions.

6:20 am  
Blogger Chris said...

Thanks Gavin. I have recently taken an interest in the works of Adam Smith but I really am very new to him so please forgive my ignorance. I was aware, however, that this was from Theory of Moral Sentiments. I wasn't saying that Chomsky was right in his interpretation of Smith but did wonder if this could be the source of it?

12:28 pm  

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