Sunday, December 20, 2009

Not Exactly Rocket Science, is it?

David Burchall writes in the Australian (“the heart of the nation”)

“Tis the season for reciprocity” HERE

Adam Smith's remarks about benevolence and self-interest are routinely quoted and just as often misconstrued. Smith observes that benevolence is an expression of true friendship and yet our whole lives are "scarce sufficient to gain the friendship of a few persons". Hence, unless we want to beg for what we need like a dog, we are compelled to find some basis of reciprocity on which to conduct life's transactions.
Further, when we choose to address ourselves to another's self-love rather than their humanity, this does not demean us as a human being. Rather, we are saying to them that we wish to deal with them in a relationship of parity, as someone who has something to give as well as something we wish to be given.

So far from giving and exchanging, benevolence and reciprocity, being opposites or alternatives, often work best in harness. Yet this simple, even elementary fact - so well known to everybody who has progressed out of moral infancy - seems to elude all our grandest political reckonings.”

What a clear understanding of Adam Smith of the famous passage on the “Butcher, the brewer, and the baker" is shown here by David Burchall.

‘Tis a pity that some economists quote the same passage and draw quite different (and wrong) conclusions from it, let alone the scores of theological commentators who use the passage to show how selfish-centred it makes its author, Adam Smith!

But man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in his favour, and show them that it is for their own advantage to do for him what he requires of them. Whoever offers to another a bargain of any kind, proposes to do this. Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages. Nobody but a beggar chuses to depend chiefly upon the benevolence of his fellow-citizens.” (WN I.ii.2: 26-27)

Smith describes eloquently the way we all acquire the “good offices” - those things which we stand in need of - as human beings. Mainly by bargaining; by exchanging things we have for things we want.

And neither is this a zero sum game, because people value things differently. In free (in the sense of voluntary) bargaining in the presence of competition (not monopoly), people exchange things they value less for things they value more, that is, a non-zero sum game, with both parties gaining more than they give up.

David Burchall understands these basic relationships; why can’teverybody – it’s not exactly rocket science.

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