Monday, August 31, 2009

Beyond The Facts

Anthony North posts in Beyond the Blog HERE:

“Let me make something very clear. Greed is not bad. In order to succeed both individually and as a society, we need to be stimulated. Due to this, we have urges. Without them I doubt if humanity would have advanced at all – and greed is one of those urges.

The problem comes in the level of greed we display. Be too greedy and we hurt both ourselves and society, so it’s a matter of balance. Sadly, though, in today’s capitalism we have a glorification of greed, with it getting out of control. This was not how capitalism was meant to be, originally devised by Adam Smith as a
philosophy to go alongside thrift. We seem to have turned something noble into a feeding trough.”

Comment
“Greed is one of those urges” but is it predominant? Is everybody greedy for everything all of the time? I don’t think so. Life would be pretty grim if it was.

Bernard Mandeville, author of “The Fable of the Bees” (1724), developed a whole philosophy on the basis that greed predominated and he gave it his blessing (“Private Vice, Public Virtue”).

Ayn Rand modernised the idea that selfishness was a virtue and created a school for her philosophy (“Objectivism”) which found popularity undergraduates philosophy classes. (You can find some of her lectures on U-Tube, with wide-eyed students listening in awe).

However, greed and selfishness were never popular with Adam Smith. He called Mandeville’s philosophy “licentious” but plausible in parts as an observation of an aspect of human nature in his book The Theory of Moral Sentiments (1759).

Anthony asserts that “in today’s capitalism we have a glorification of greed, with it getting out of control.” Well, is a point of view, though you can read 18th-cxentury sermons in the same tone, and I doubt whether you will find examples throughout history where similar sentiments have not been expressed by someone about their contemporaries.

But Anthony also asserts “This was not how capitalism was meant to be, originally devised by Adam Smith as a philosophy to go alongside thrift.” Where does Anthony get the mishmash of erroneous ideas to compose such a sentence?

There is no such way in which ‘capitalism was meant to be’. Social systems are not ‘designed’ by anyone. The appear in various forms and experience different histories according to how individuals react to circumstances.

Hayek, and others, refer to this as a ‘spontaneous’, or ‘emergent’ order, unintentionally arising by the independent actions of people. That, if I may say so, is their strength. No single person could undertake the myriad of actions that would enable an economy to establish itself, for good or ill.

Which makes the second part of his paragraph, “originally devised by Adam Smith as a philosophy to go alongside thrift”, a misreading of both the emergence of what we call now call capitalism and a misattribution to Adam Smith of that which he had no conscious part.

For a start, Smith neither knew the word, nor the phenomenon of ‘capitalism’. The word itself was first used in English (Oxford English Dictionary) in 1854 by Makepeace Thackeray in his novel, The Newcomes. Smith died in 1790. He couldn’t devise that which did not yet exist, and couldn’t devise a complex economic system even if he had wanted to. In fact, he warned against ‘men of system’ who, ‘wise in their conceit’, force their designs upon others.

Adam Smith was a moral philosopher and saw his scholarly duty as ‘doing nothing, but observing everything’. He analysed how commercial societies functioned in 18th-century Britain – already a major trading economy and major political player in Europe – and wrote in his Wealth Of Nations a devastating critique of mercantile political economy, as practised in Europe.

The players in commercial society dispersed in their private lives did not conform to a master plan for commerce or government. Depending on their history and circumstances their commercial societies grew ‘slowly and gradually’ (some of which struggled because state interventions held back their natural courses and all were affected by the usual ‘jealousies of trade’, petty wars of dynastic succession, legislated anti-competitive tariffs, protections and prohibitions, and the vagaries of different personalities.

To see history as a journey from a sort of ‘ideal’ design towards “a feeding trough” is quite inadequate. Anthony North should re-think his assessments, perhaps read a bit more Adam Smith, and reflect on his current opinions.

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9 Comments:

Blogger PRODOS said...

Thanks for making me aware of Bernard Mandeville. I haven't studied any of his writings yet. An etext of The Fable of the Bees or Private Vices, Publick Benefits is located HERE.

I've added it to my list of works to study when I get back to Melbourne, but it won't be until after I've carefully gone through Theory of Moral Sentiments.

I noticed that the Wikipedia article on Bernard Mandeville quotes a section from The Wealth Of Nations, Glasgow Edition, footnote to page 27, section I.ii.3 which the article claims "makes use of some of his (Mandeville's) examples".

... Probably referring to THE SIXTH DIALOGUE BETWEEN Horatio and Cleomenes. Interesting.

Short of reading complete essays on Ayn Rand's approach to "selfishness" one can find useful excerpts from her work HERE in order to work towards an informed view.

If someone was video-taping me when I listened to my good friend Tim Warner of the Australian Adam Smith Club explaining last year to members of DISCOVER CAPITALISM, at my invitation, how Wealth of Nations follows logically from Theory of Moral Sentiments you'd have seen me (if I may re-use Dr Kennedy's phrase) "wide-eyed ... listening in awe" and admiration at the wisdom and magnificence of Adam Smith's wisdom and reasoning. :-)

Best Wishes,

PRODOS
Heading back to Melbourne on Saturday!

2:21 pm  
Blogger Gavin Kennedy said...

Hi Produs

I didn’t know you were not in Melbourne, so, safe journey home.

The numbered footnotes in WN (the Glasgow edition published by Oxford University Press and Liberty Fund) are by its editors, Campbell and Skinner. The Lectures in Jurisprudence were given in 1762-63 and much of what went into WN are shown to have been part of Smith’s oeuvre long before he wrote WN (1776).

Mandeville’s Fable of the Bees, 1724 (also available in a discounted 2-vol. edition from Liberty Fund) were well known at the time and Smith was well acquainted with his work.

Mandeville was lamenting the alleged fact that savages did not adopt a very deep division of labour, and Smith commented on this as being the reason for the large gap between the material goods available to a savage with those available to the meanest poor labourer in 18th-century Scotland.

I discuss this in my ‘Adam Smith: a moral philosopher and his political economy’ (Palgrave Macmillan, 2008).

I am sure I too have sometimes listened in awe to experts in their field; I think, however, my comments refers to those who do not listen critically to impressive, charismatic figures.

Tim Warner sounds an interesting person; maybe sometime I might attend his lecture.

On that note, I expect to be in Sydney in February next for a couple of weeks, treading some old haunts of when I was there in the 50s and 70s, on the occasion of my 70th birthday.
Best wishes

Gavin

4:40 pm  
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7:08 am  
Blogger Anna Warner said...

Anthony North's problem is his confusion concerning the word "greed". Does "greed" mean the desire and pursuit of wealth or does it mean the reckless pursuit of wealth? I thought it meant the latter but he seems to think it means the former.

Unfortunately discussions of capitalism are frequently marred by the ambiguity of the word "greed" with everyone having their own unspecified definition. To make matters worse, some people conflate the two meanings and assume that the striving for wealth equals "greed" and is thus destructive in and of itself.

North seems to fall into this trap when he identifies the difference between the good "greed" (striving for wealth) and the bad "greed" (recklessness) as one of degree. But surely, recklessness or "greed" is not about the degree to which wealth is pursued - rather it is the means by which it is done!

11:29 pm  
Blogger anthonynorth said...

Thanks for the link. A few observations. To argue that Smith could not have had an important place in capitalism because he didn't know that word is similar to saying Mendel had nothing to do with genetics. Rather, Smith laid out most of the early elements of capitalism as an idea.
Ideas do, of course, lead to your social systems which are only emergent to a point in the way you put it. Take Hayek's idea, which you feature. Yet, through the Mont Pelerin conference, he dilutes his own thoughts by beginning the intellectual movement that led to modern free market economics as a direct war on collectivism.
Movements may well be in the spirit of the people, but are then defined by a very few people. As philosophers have argued from Bacon to Foucault, he who controls the knowledge holds the power.
Greed, in my context, is in its simplest form - excess - no matter what method is used.

7:26 am  
Blogger Gavin Kennedy said...

Anthony
Thank you for your contribution.

"To argue that Smith could not have had an important place in capitalism because he didn't know that word is similar to saying Mendel had nothing to do with genetics. Rather, Smith laid out most of the early elements of capitalism as an idea."

The Mendel analogy is not helpful. The road to genetics via research by scores of individuals did not start after Mendel's research was 're-discovered', nor could we unproblematically describe Mendel as 'designing' genetic theory in the 1950s.

Smith did not lay "out most of the early elements of capitalism as an idea." If you follow that route you would have to include a long list of contempories (Turgot for one), and predecessors (Cantillon, for example), and a host of pamphleteers (Yales holds 3,000 titles), who discused their ideas of 'commerce', some of them in fairly precise terms, nefore Smith published Wealth Of Nations or lectured at Glasgow.

Moreover, as I remind people, the authors of Genesis described the sequence from the Eden Garden (Gatherers), via shepherding (Able) and farming (Cain) to the city economy (Cain in exile), which Smith described as the 'Four Ages of Man' in his Lectures on Jurisprudence (1762-63).

The differences between
'commercial society' and 19th century capitalism include the new factor of substantial holdings of finance in private hands - the scale matched the state's - and these mobil funds were the source of capital-ism. Whereas, Smith's commercial society was dominated by small finance funds held by individuals from their thrift.

Thackeray observed the presence of private finance and its effects on families. 'Capitalism' was an idea before any 19th-century economist thought of it.

Moreover, much of Smith's observations about commercial society as an economy, and many of his prescriptions aganist mercantile political economy, have either been ignored or transformed.

Worse, modern economists have attributed to him a host of powerful ideas that he never held, incluidng the oft-repeated claim that he 'invented' capitalism. It was gainst that notion that I commented on your article.

Gavin

9:14 am  
Blogger anthonynorth said...

Yes, I accept your point about precedents. After all, we can deconstruct Galileo's achievements to the point that he didn't do anything new - other than upset a pope. But I'd argue that Smith added great influence to the idea of individual enterprise as moral and good for society, which must be the basis for capitalism.
But this is still a process involving specific people who become attached to the knowledge/power construct, thereby being against the pure idea of emergence by society. It is more akin to the onward development of a specific elite consensus, which is how I consider societies always develop - unfortunately.
This said, let's go back to my words that seem to have prompted you to write:

'This was not how capitalism was meant to be, originally devised by Adam Smith as a philosophy to go alongside thrift.'

I still do not see how this is wrong. Is it correct to say Smith devised his concepts within an ethic of thrift? I think so. Take this away and we have a knowledge/power structure based on excess. As this is the acceptable philosophy of the times, then the feeding trough analogy stands, surely?

2:35 pm  
Blogger PRODOS said...

Good afternoon.

Gavin Kennedy: I didn’t know you were not in Melbourne, so, safe journey home.

Thanks! :-)

We're flying back tomorrow morning. My wife's American, we've been visiting her parents.

Thanks for the additional notes about Bernard Mandeville and Adam Smith.

Gavin Kennedy: "Mandeville was lamenting the alleged fact that savages did not adopt a very deep division of labour ..."

Let me check this ...

From Mandeville's Fable of the Bees:

Man, as I have hinted before, naturally loves to imitate what he sees others do, which is the reason that savage People all do the same thing:

This hinders them from meliorating their Condition, though they are always wishing for it:

But if one will wholly apply himself to the making of Bows and Arrows, whilst another provides Food, a third builds Huts, a fourth makes Garments, and a fifth Utensils, they not only become useful to one another, but the Callings and Employments themselves will in the same Number of Years receive much greater Improvements, than if all had been promiscuously follow’d by every one of the Five.


Yes. Interesting.

Gavin Kennedy: I discuss this in my Adam Smith: a moral philosopher and his political economy (Palgrave Macmillan, 2008).

I was planning to first purchase your earlier book Adam Smith's Lost Legacy.

Should I, instead, start with A moral philosopher?

Gavin Kennedy: Tim Warner sounds an interesting person; maybe sometime I might attend his lecture.

Perhaps you and Tim would like to have a talk about Adam Smith on my podcast (internet radio) show? This would be a telephone interview.

By the way, the "Anna Warner" (Dr Anna Blainey Warner) who left a comment on this post is Tim's wife. Also a very good friend of mine, and an excellent historian and thinker - who has specialized in studying the Women's Movement, Prohibition, and the Abolitionists.

Tim and Anna first met at one of my DISCOVER CAPITALISM meetings in Melbourne. :-D

CLICK HERE for a pic of Tim, Anna, Barboo (my wife), and me.

Gavin Kennedy: I expect to be in Sydney in February next for a couple of weeks, treading some old haunts of when I was there in the 50s and 70s, on the occasion of my 70th birthday.

Ah! Wonderful! I'm so glad you're fond of Australia! :-)

Best Wishes,

PRODOS
Email: prodos "at" prodos "dot" com

9:33 pm  
Blogger Gavin Kennedy said...

Anthony

I have moved this discussion to the main Blog posts. The HTML function in the comments does not take the long comments I tend to make when the subject is interesting.

Gavin

6:44 pm  

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