Thursday, August 27, 2009

Ron Mwangaguhunga writes in the Awareness Blog HERE

Revisiting Adam Smith's "Invisible Hand"

Chinese Premier Wen Jiabao said:

“If you are familiar with the classical works of Adam Smith, you know that there are two famous works of his. One is 'The Wealth of Nations.' The other is the book on the morality and ethics. And 'The Wealth of Nations' deals more with the invisible hand, that is, there are the market forces. And the other book deals with social equity and justice. And in the other book he wrote, he stressed the importance of playing the regulatory role of the government to fairly distribute the wealth among the people.

If in a country most of the wealth is concentrated in the hands of the few, then this country can hardly witness harmony and stability.

"Harmony," granted is an organic part of Chinese thinking (as, say, "liberty" is a part of the American political vernacular). Still, Jiabao has a point despite his own country's profound deficits of freedom (Averted Gaze). This Sunday's New York Times Book Review also revisited Smith, noting, ".. as the historian Emma Rothschild has noted, 'The Wealth of Nations' uses the phrase 'invisible hand' precisely once. In the 1,231-page Bantam edition, it appears on Page 572." Only once!

It is interesting that the "invisible hand" has, over the years, become an almost inarguable Archimedian point as to how human beings make economic decisions. Did that "invisible hand" simply vanish the Scottish author's other long-forgotten book, Theory of Moral Sentiments?"


Comment
Wen Jibao
has been saying the same thing for at least a year. I do not recognise anything in Moral Sentiments about redistributing wealth (not a common idea in the 18th century as we understand it).

Ron Mwangaguhunga may be giving a free paraphrase of what Wen said, or Wen may be freely paraphrasing Adam Smith knowing how few people in the West read either of his books.

But Ron quotes what many will find surprising – though no regular reader of Lost Legacy will be among them – from Emma Rothschild that Smith only mentions the so-called invisible hand metaphor only once in Wealth Of Nations and only once in Moral Sentiments (it didn’t ‘vanish’ at all).

Ron is correct in saying “the "invisible hand" has, over the years, become an almost inarguable Archimedian point as to how human beings make economic decisions”. How and why is the subject of a paper I am preparing for next year’s conference season (“An Invisible Hand: from myth to modern icon”).

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3 Comments:

Blogger PRODOS said...

Dr Kennedy writes that Chinese Permier Wen Jibao ...
... may be freely paraphrasing Adam Smith knowing how few people in the West read either of his books.

But has Wen Jiabao read Adam Smith?

If he has read Adam Smith, has he done so in order to inform himself? To make his country a better place? Or merely to give himself a polemical tool for disarming Westerners?

If he has indeed read Theory of Mental Sentiments, yet misrepresents what it says or means, what good is that to anyone?

Furthermore, I'm perplexed at Dr Kennedy's earlier post stating that it is ...

Great to see that a Chinese communist is reading Adam Smith’s Moral Sentiments, if only to wrong foot capitalist leaders who haven’t read Moral Sentiments, or even Wealth Of Nations.
(My bold emphasis.)

Surely anyone - especially a leader - who misuses a great thinker like Adam Smith in this way (if that is what Wen Jiabo is doing) deserves suspicion and scorn, not praise.

I don't see any good cause being served by praising such a possibly cynical misuse of important ideas - whether they be of Adam Smith, Karl Marx, or Ayn Rand.

Best Wishes,

PRODOS
Melbourne, Australia

12:37 p.m.  
Blogger Gavin Kennedy said...

Hi PRODOS

Thanks for your comment, though I am not sure how to answer your questions.

Lost Legacy is not an ideological expression of my views. I am more pragmatic. It is part campaigning and part informative, but generally low key.

The quotes of Wen are not very specific and appear to be orally transmitted at source, so it is not clear what Wen is about. I am suspicious more than certain as to his motives.

But even him mentioning Moral Sentiments is interesting, even if, as I suggest, his motives are more cynical than genuinely constructive. Others in China may react to Wen's claimed familiarity with Adam Smith's works by reading them for themselves. That would be a start.

I am interested in ideas not ad hominen commentary. Also, from the text I quoted from 'Ron', it is clear that Ron is none too familiar with Smith, and I would rather not some across 'pure' and 'severe' with a beginner, by blasting him off the page, than score points with yourself (much of what you do and stand for I would agree with).

I hope I didn't come across as praising Wen's use of Adam Smith; I would rather he claim to read Smith than slap him down because, after all, he is a communist and head of a party that does not practice Liberty for its people.

Best regards

Gavin

1:22 p.m.  
Blogger PRODOS said...

Good evening Dr Kennedy,

You wrote:
Lost Legacy is not an ideological expression of my views. I am more pragmatic. It is part campaigning and part informative, but generally low key.

Having spent many, many hours reading your essays and blog posts, frankly, I think what you're doing is brilliant.

Following your "campaign" to track, challenge and correct the many misconceptions about Adam Smith's thinking, research, ideas, views, and insights has been, and continues to be, an inspiration.

I'm greatly looking forward to ordering your "Lost Legacy" book in the next couple of weeks.

Regarding Chinese Premier Wen Jiabao, the quote attributed to him ("If you are familiar with the classical works of Adam Smith ... etc. ...") seems to be from a CNN.com transcript of what Wen Jiabao said, but through an interpreter. Ron Mwangaguhunga seems to have accurately copied from the transcript.

A few months ago, Dr Xu Xaonian, economics professor at the China Europe International Business School in Shanghai criticized Australian Prime Minister Kevin Rudd (Labor Party) for his advocacy of Keynesianism.

Adam Smith was not mentioned, but there do seem to be signs that the Chinese are entering the intellectual fray and are exploring some valuable Western ideas and thinkers.

4:54 a.m.  

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