Monday, November 30, 2009

An Economist Speaks Up for Adam Smith's Legacy

David Smith writes in Economics HERE: and adds a most interesting postscript to an article:

Don’t expect too much blood from Darling’s Axe”

“Sometimes I feel obliged to defend the family name. On the Today programme, my former colleague John Cassidy, interviewed about his book How Markets Fail (Penguin, £25), blamed the free-market economics of Adam Smith, adopted uncritically by Alan Greenspan.

You might have thought, listening, that Smith’s ideas had been discredited by the credit crunch. That, however, is far from the case. Were Smith alive today, he would have been as critical as the bankers, and the failure to regulate them properly, as anybody.

In fact, as Cassidy makes clear in the book, Smith was even more sceptical of the motives of bankers as of most businessmen. He thought banks should not issue notes to speculative lenders and regulating them was as necessary as building party walls to prevent fires spreading. So don’t blame Smith. Blame those who misinterpreted him

I wouldn’t put it differently myself.


A Malevolent Invisible Hand?

Bryan Caplan, regular and brilliant columinist at the Econ Library of Economics and Liberty reports on “The Malevolent Invisible Hand” (HERE)

Lately my colleague Dan Klein has presented new evidence that the "invisible hand" was more central to Adam Smith's thought that most scholars now believe. Perhaps that's why this passage from Will and Ariel Durant jumped out at me. It's a discussion of the ultramontanist philosopher de Maistre:

"War is divine, since it is a law of the world" - permitted by God through all history. Wild animals obey this rule. "Periodically an exterminating angels comes and clears away thousands of them." "Humanity can be considered as a tree that an invisible hand is continually pruning, often to its benefit... A great deal of bloodshed is often connected with high population." [emphasis mine]

I was curious about what the Durants left out in the ellipses. It makes de Maistre sound worse! "In truth the tree may perish if the trunk is cut or if the tree is overpruned; but who knows the limits of the human tree?" [emphasis original] I can almost hear him cackling with maniacal glee. Who knew the invisible hand metaphor would have such broad appeal


I replied (in brief):

“Hi Bryan

I am curious as to what exactly you mean in this sentence:
"Lately my colleague Dan Klein has presented new evidence that the "invisible hand" was more central to Adam Smith's thought that most scholars now believe."
Is it "that" or "than"?

"Most [modern] scholars" certainly believe that Smith meant a great deal when he used the metaphor of "an invisible hand", which is in itself a strange story, given its relatively recent (post 1950s) invention.

I would be cheered if Dan Klein had found something to contradict the few scholars (myself included) who do not believe that Smith meant by his use of the metaphor what "most scholars" on the contrary now believe, if you get my drift.

Dan has to be congratulated for his detective work, to which I shall respond shortly after I have completed pressing and unavoidable domestic obligations.

Gavin Kennedy”


Sunday, November 29, 2009

A Wee Gem of a Little Book

Packing my library of Adam Smith books today I came across a number of “treasures” related to my interrupted preparations for a new paper on the “invisible hand” controversy, of which my response to Daniel Klein’s most interesting discovery (great detective work! of an apparent intentional location of Smith’s use of the metaphor in both Moral Sentiments and Wealth Of Nations is reported and discussed. I shall post the response separately first as soon as I get a breather from downsizing a large 5-bedroom house into a much smaller 3-bedroom house nearby, to which get access on 4 February. Meanwhile we are also moving sufficient furniture and a very small library to our daughter’s house, also nearby, though in the opposite direction (the bulk of the rest are going into storage on 14 December).

The main subject of the new paper is on the semi-political use made of the metaphor of an “invisible hand” by modern economists since the 1940s, though there are isolated examples of its use in similar vein starting in the late 19th century and re-appearing in the early 1930s. It was to continue full-throttle from the 1940s, and then, Niagara-falls like, from the 1950s.

I believe that the evidence for an invented, completely new meaning to the metaphor of the “invisible hand”, certainly quite different from its use by Adam Smith (on the two occasions in which he used it in 1759 and 1776; his use in 1744-58 in his unpublished essay, History of Astronomy, [1795] is definitely not consistent with either of his later uses) is, I believe, almost overwhelming from my recent research into the writings of modern economists.

One of the ‘treasures’ from this afternoon was an unpretentious little book by George Stigler, editor, “Selections from the Wealth Of Nations” 1957, Appleton Century-Crofts, New York. I append some excepts from Stigler’s introduction, (pp vii-ix):

The contents of the Wealth of Nations ccanot be summarised, as so many famous books are, by a pat phrase, but the broad base upon which the volume is erected is the examination of the economic behaviour of men who are acting freely in pursuit of their own interests. How in such a (private enterprise) economy will the quantities and prices of the various commodities be determined, how will incomes be divided among workers, capitalists, and landlords, and how will the accumulation of capital affect these economic processes. The analysis which answers these questions provides the theoretical skeleton on which the entire work hangs. …

Smith’s strong common sense deserves emphasis because the legend has grown up that his whole system rested upon a naïve doctrine of the “natural identity of interests” – doctrine that whenever a person seeks to serve his own ends, he invariably serves the ends of society. …

The doctrine of the “natural identity of interests”, indeed, is not really a doctrine at all: it is a problem. It is the problem of discovering those social arrangements under which the pursuit of self-interest is at worth harmless and at best greatly helpful to the remainder of the community. Under a set of conditions which economists summarize by the word competition, Smith demonstrated that it is possible to reconcile personal liberty and economic efficiency with peaceful liberty and economic efficiency with peaceful social co-existence in a large area of a man’s life. This reconciliation is one of Smith’s permanent contributions to the understanding of social life

This is fairly familiar “modern” prose on what Adam Smith was about, with much of which I would concur. If modern economists like Stigler had stopped there then a major part of Adam Smith’s legacy would have been protected instead of lost.

You should notice that Stigler, while on familiar territory of the “natural identity of interests” under which it is “possible to reconcile personal liberty and economic efficiency with peaceful liberty and economic efficiency with peaceful social co-existence in a large area of a man’s life”, does not mention anywhere in the introduction anything about the famous “invisible hand”.

In fact, Stigler explicitly criticises “legends” of the “naïve doctrine” that Smith should be associated with notions that “whenever a person seeks to serve his own ends, he invariably serves the ends of society”.

In 1957, at least, Stigler was able to write that Smith “demonstrated that it is possible to reconcile personal liberty and economic efficiency with peaceful liberty and economic efficiency with peaceful social co-existence in a large area of a man’s life” and concluded that this was “one of Smith’s permanent contributions to the understanding of social life”.

Here, what was to become the mandatory linking of this accurate conclusion with the absence “an invisible hand” is revealing. The soon to be flood of mandatory references to the invisible hand was only just becoming visible in some textbooks (example, Paul Samuelson’s Economics, 1948, p 36) – the general media was not yet infected to the extent that it has become from the 1980s.

I shall draw on Stigler's introduction as part of the case for exposing the modern myths of the invisible hand as a "doctrine", "concept", "theory", of Adam Smith. Meanwhile, it's back to preparing the family property for two-month's storage.

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Saturday, November 28, 2009

Why Use Superstition to Explain Markets?

Mark Perry, professor of economics and finance at University of Michigan (Flint) writes a seasonal piece for (US) “Thanksgiving” (HERE): quoting an example from in Boston Globe in 2003.

Giving Thanks for Capitalism, The Invisible Hand, the Miracle of the Free Market and No Turkey Czars

Like in previous years, you probably didn't call your local supermarket ahead of time and order your Thanksgiving turkey this year. Why not? Because you automatically assumed that a turkey would be there when you showed up, and it probably was there when you showed up "unannounced" at the grocery store to select your bird.

The reason your Thanksgiving turkey was waiting for you without an advance order? Because of "spontaneous order," "self-interest," and the "invisible hand" of the free market - "the mysterious power that leads innumerable people, each working for his own gain, to promote ends that benefit many." And even if your turkey appeared in your local grocery stores only because of the "selfishness" or "corporate greed" of thousands of turkey farmers, truckers, and supermarket owners who are complete strangers to you and your family, it's still part of the miracle of the marketplace where "individually selfish decisions lead to collectively efficient outcomes."

In a 2003 Boston Globe column titled "Giving Thanks for the Invisible Hand" Jeff Jacoby explains below why he is thankful for the miracle of the invisible hand that makes affordable turkeys automatically available so efficiently at Thanksgiving:

The activities of countless people over the course of many months had to be intricately choreographed and precisely timed, so that when you showed up to buy a fresh Thanksgiving turkey, there would be one -- or more likely, a few dozen -- waiting. The level of coordination that was required to pull it off is mind-boggling. But what is even more mind-boggling is this: No one coordinated it...

Adam Smith called it "the invisible hand" -- the mysterious power that leads innumerable people, each working for his own gain, to promote ends that benefit many. Out of the seeming chaos of millions of uncoordinated private transactions emerges the spontaneous order of the market. Free human beings freely interact, and the result is an array of goods and services more immense than the human mind can comprehend. No dictator, no bureaucracy, no supercomputer plans it in advance. Indeed, the more an economy *is* planned, the more it is plagued by shortages, dislocation, and failure.

It is commonplace to speak of seeing God's signature in the intricacy of a spider's web or the animation of a beehive. But they pale in comparison to the kaleidoscopic energy and productivity of the free market. If it is a blessing from Heaven when seeds are transformed into grain, how much more of a blessing is it when our private, voluntary exchanges are transformed - without our ever intending it - into prosperity, innovation, and growth

I wonder where Professor Perry (and Jeff Jacoby) read where Adam Smith called the “invisible hand” the “the mysterious power that leads innumerable people, each working for his own gain, to promote ends that benefit many”, or where he described the “invisible hand” as a “miracle”?

What exactly is the “invisible hand”? Is it always benign? How does anybody know? Is it operated as an intention, a process, or an outcome? Is it divine?
Is it really the case that “the miracle of the marketplace” is where "individually selfish decisions lead to collectively efficient outcomes”? Even the word “efficient” is suspect because it is not one that Smith used (more a neo-classical invention).

Even allowing for the probable fact that Professor Perry’s “Thanksgiving” piece is not intended for technical scrutiny and that it is an example of a snappy piece of journalistic licence intended for popular consumption, I still find it disappointing that the existence of commercial markets for multi-millennia, based on the universal human behaviours of the propensity to “truck, barter, and exchange” (Book I, Wealth of Nations) is wrapped into such unscientific language and thinking as something allegedly “miraculous”, divine, and evidence of “God's signature”, yet how markets work has been known for several centuries.

The phenomenon of social markets which were once “surprising” and then a source of “wonder” has since the 18th century have matured to being “admirable” (Smith’s History of Astronomy, [1744-58], edited by Joseph Black and James Hutton, 1795).

Like the rainbow, which once amazed (‘pots of gold’) and frightened humans in equal measure under thrall of unscientific “pusillanimous superstition”, is now understood as a optical phenomenon to most school children who pay at least a modicum of attention to their lessons. Yet in economics, which claims to be a science, social if not natural, and among mathematical economists in particular, the metaphor of the invisible hand has become a corner stone of neo-classical market doctrine.

Look up almost any of the popular mainstream textbooks since the 1950s and you will find the invisible-hand metaphor spreading its non-secular gloss on a social phenomenon, which is understood by all neo-classical economists, in their cases, perfectly.

It’s a strange old world.

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Thursday, November 26, 2009

An Excellent Review of The Failings of Neo-classical Economics

In Reality Base Blog (HERE)a book review by John Gray in the London Review of Books, is reported (25 November):

Animal spirits and what else is wrong with neoclassical economics”

“A much discussed book this year has been Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism by George Akerlof and Robert Shiller.

He credits Akerlof and Shiller for their evisceration of neoclassical economics for assuming at its core rational behavior of human beings—conceiving them to be a species, homo economicus, that is not us. Gray goes beyond this and points out that even if we all were homo economicus, important parts of the future are always unknowable and cannot be quantified and factored into market decisions as probabilities. A third theme of the review is the hubris of the neoclassical school in assuming that the magic beans they had discovered would work in any environment and that, indeed, no other doctrine would lead to economic abundance. Unaccountably and regrettably, these ideologues appear not to have noticed in the real world the massive contradictions to that view. A few excerpts:

. . . . The trouble with prevailing theories, in Akerlof and Shiller's view, is that they assume human beings are more rational than they actually are. 'This book, which draws on an emerging field called behavioural economics, describes how the economy really works,' they claim. 'It accounts for how it works when people really are human, that is, possessed of all-too-human animal spirits.' . . . .

. . . . If economists have failed to explain repeated crises, it is because they have interpreted economic activity through an unreal model of rational decision-making. Thinking of human behaviour in this way allows them to claim a high degree of precision for their discipline, which is presented as a kind of applied mathematics. But they have left psychology out of their equations.

. . . . The fact that markets are flawed seems novel only in the context of the economic orthodoxy that prevailed between the wars, and in the run-up to the recent crisis. It is wrong to imply, as Akerlof and Shiller do, that the classical economists believed otherwise. 'Just as Adam Smith's invisible hand is the keynote of classical economics,' they write, 'Keynes's animal spirits are the keynote to a different view of the economy – a view that explains the underlying instabilities of capitalism.' Here they are endorsing the caricature of Smith propagated by neoliberal ideologues anxious to confer a distinguished patrimony on an illegitimate intellectual offspring. . . .

If Akerlof and Shiller's grip on the history of economic thought is shaky, they also fail to grasp why Keynes rejected the idea that markets are self-stabilising. . . .

[I]n his canonical General Theory of Employment, Interest and Money (1936) he concluded that there was no way anyone could make forecasts. Future interest rates and prices, new inventions and the likelihood of a European war cannot be predicted: there is no 'basis on which to form any calculable probability whatever. We simply do not know!' For Keynes, markets are unstable less because they are driven by emotion than because the future is unknowable. To suggest that the source of market volatility is unreason is to imply that if people were fully rational markets could be stable. But even if people were affectless calculating machines they would still be ignorant of the future, and markets would still be volatile. The root cause of market instability is the insuperable limitation of human knowledge. . . . .

The central flaw of the economic orthodoxy against which Keynes fought in the 1930s was to imagine that an insoluble problem – human ignorance of the future – had been solved. The error was repeated in the 1990s, when economists came to believe that complex mathematical formulae could tame uncertainty in the murky world of derivatives. . . .

. . . . Hayek said that governments could never know enough to plan the economy successfully – a claim vindicated by the miserable record of central planning in Communist countries. At the same time, he attributed near omniscience to markets, and never doubted that if left to its own devices the economy would liquidate mistaken investments and return to equilibrium. Against this, Keynes had shown that there is no market mechanism that ensures revival; economic contraction can be self-reinforcing, and only government action can then create a way out

This is more like it. Not having read Akerlof and Shiller’s book, I cannot blindly endorse everything they may have said, but their charge against “Homo economicus”, also made regularly on Lost Legacy, and their objections to mathematical modeling of economics, which precludes humans behaving as they really are, is very welcome.

Nobody actually reading Adam Smith would conclude that humans are, or will become, rational calculating machines, or that economies are closed systems in general equilibrium, and thus predictable, let alone always prone to the working for the public good in a Dr Panglossian “best of all possible worlds”.

That markets are better, in an acceptable sense, than their alternatives is a modest requirement, as the experience of Soviet central planning and the accompanying tyranny, is adequate testimony. But that is where we start from, not where we end.

The hubris of a belief in a predictable world, and events in it, is a serious flaw in the modern “science” of economics. Smith, like the later Keynes, did not endorse the myths of predictability – hence there are few, perhaps only one or two, specific predictions in Wealth Of Nations - one being that the former British colonies in North America would be wealthier (measured by the “annual output of the necessaries, conveniences, and amusements of life” within a century of 1776).

Nor was the 20th-century re-invention of the metaphor of "an invisible hand" as a comforting assurance that whatever the moral failings, or externality-induced misery, that was inflicted by individual "merchants and manufacturers" (to which we can add some governments some of the time, and a few governments all of the time), on the rest of society, was somehow a social benefit.

It wasn't, and economics as a "science" can only delude its practitioners into believing such nonsense by denuding its "models" of human beings. This charge cannot be made against Adam Smith.

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Wednesday, November 25, 2009

Time Travel to the Heady 1960s

I attended a meeting addressed by Robert Skidelski last evening (6.00pm - 7.15pm – left before last questions). He is a very clear speaker and fluent in Keynes and ‘Keynesian’ macro-economics – so much so it was like sitting in a graduate economics class in the late-60s.

His analysis of the current crisis focussed on “uncertainties in modern economies” and the fallacies of rational expectation and market efficiency theory (the latter which he asserted was the followed by “all” economists). His ascription to “all” was challenged by Professor David Simpson in the early question session, to which Professor Skidelksi responded that those few economists who disagreed with it were from minor universities, had undistinguished publication records, mainly in “uncited” and "non-peer reviewed” journals (an impolite caricature that certainly did not fit Professor Simpson – Harvard, etc.).

I enjoyed much of Skidelski’s talk on regulation (what, and by whom, though?), which when he went, under questioning from various economists in the large audience, onto Bancor, for narrower and managed exchange rate stabilities, and various old-familiar “remedies” to currency depreciations, speculation and other problems of the 50s-70s, plus "fiscal policies",suggested that Skidelski had not moved on to 2009.

He did not mention Adam Smith, who was not an equilibrium economist, nor stuck with the imaginary ‘Homo economicus’ and a laissez-faire economy of the late 19th century that led to the mathematisation of what essentially cannot be treated that way – economic behaviour is peopled by, er, people. They do not behave as well-behaved functions.

Keynes knew this too (“An End to Laissez—Faire”); apparently, Skidelski conflates modern economics with praise-worthy, but as yet unearned, credentials, while enjoying his re-born role as the authoritative voice of Keynes.

I came away disappointed, as did my economist wife; both of us children of 1960s economic degrees.

It was back to filling of boxes for our house move (see recent Announcements).

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Saturday, November 21, 2009

Adam Smith Quotations

Jonathan Schwarz writes in “A Tiny Revolution” (HERE)

Once Again Adam Smith Betrays the Principles of Adam Smith

Several finance professionals just co-wrote a column for the New York Times saying this:

American workers are overpaid, relative to equally productive employees elsewhere doing the same work. If the global economy is to get into balance, that gap must close...the recession shows that many workers are paid more than they’re worth.

Here's Adam Smith, describing columns like this in The Wealth of Nations in 1776:

"In reality high profits tend much more to raise the price of work than high wages. Our merchants and master-manufacturers complain much of the bad effects of high wages in raising the price, and thereby lessening the sale of their goods both at home and abroad. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people.”

I agree with Jonathan Schwarz that many people who write on Adam Smith are highly selective in their quotations from him, and also apparently unaware of the context in which his quotation appears.

This suggests that Adam Smith is more often quoted than read in the original from which they quote. Jonathan concludes: “I assume these people just never read anything”, and I agree.

It is not clear from Jonathan’s piece exactly on what grounds the “finance professionals” who contributed to the New York Times piece made their assertions about US productivity. However, it is not clear to me on what grounds Jonathan makes that particular quotation from Wealth Of Nations. *

From memory Smith's reference to the failure to mention the role of higher profits in determining high prices is part of his analysis of higher monopoly profits imposed on consumers by the colonial trade, a most protected business in British affairs, due to the imposed monopoly on the carriage trade (shipping) under the Navigation Acts and the application of marchnats' monopoly trade to and from Britain and Europe.

These monopoly practices enabled Britain to export to the British colonies in North America a wide range of consumer and producer commodities and to charge high monopoly prices in the absence of competition from European rivals.

Moreover, as all colonial exports had to be shipped in British ships with British crews, on the same monopoly basis, the same British traders were able to pay lower prices for colonial goods (nobody else was allowed to compete with them by paying higher prices), and, then charge British consumers high prices to buy the imports once landed in Britain (and other European consumers had to pay higher prices on goods off-loaded and transhipped to the continent).

Adam Smith exposed this highly-profitable, extended monopoly racket in Book IV of Wealth Of Nations. British and colonial consumers both lost out in the racket, though British ‘merchants and manufacturers’ gained from it.

That was Adam Smith’s point about the merchants saying “nothing concerning the bad effects of high profits” and for them blaming the fact of the relatively high wages of labour in the Colonies (compared to wgae sin Britian) on the high prices the merchants charged to British consumers for colonial imports.

It was a con, but Smith saw through it.

Therefore, I don’t think we can use these historical facts to justify, though perfectly warranted, criticism of the “finance professionals” who described US workers today as being “overpaid”. They may well be wrong, but so to Jonathan Schwarz may be wrong too, in selecting Adam Smith’s quotation to justify his criticism of the “finance professionals”.

Incidentally, this foreign-trade racket was highly profitable for thos merchants who risked the perils of the 18th century sea-trade. But some British merchants preferred not to take on the risks, despite the profits, and preferred for "their own security" to stick exclusively with domestic UK trade, which led Smith, having explained these circumstances clearly in Book IV, Chapter ii, paragraphs 1-9, to use the popular 18th-century “invisible hand” metaphor for those merchants who opted out of the colonial trade.

[Apologies for not supplying all the references here, but my Adam Smith library (Glasgow edition of the Works and Correspondence of Adam Smith, Oxford University Press) is in another place, temporarily].

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Markets and Panglossian Invisible Hands

Scott Cooney, author of Build a Green Small Business: Profitable Ways to Become an Ecopreneur (McGraw-Hill) writes a slanted piece in Triple Pundit (‘people, planet, profit’) HERE: “Paul Hawken on the State of the Markets”:

To those that argue the efficient market hypothesis, based on Adam Smith’s theory that the ‘invisible hand’ of the markets will right our course and get us on a path to clean energy, Hawken responded that not only has this not occurred, but that the theories of the free market are even arguable at best. “Markets prove most of the people wrong, most of the time,” he said. Otherwise, they wouldn’t function. It’s a bit like Vegas.”

Scott’s article primarily is about environmental change, of which I have no comment, and while I have no particular sympathy with the “efficient market hypothesis”, or the rest of the apparatus of the omaginary mathematical markets without humans – a successor to the imaginary market beliefs of something vague called “Providence” inhabited by invisible gods and other superstitions – I am fairly certain, as I can be, that Adam Smith had little to do with any of them.

He certainly did not associate the invisible-hand metaphor with “markets”.

By observation, people make mistakes. Some people are sometimes “wrong” – have to be, otherwise how would a market work if everybody made the “right” decision, perfectly adjusting their efforts with infinite velocity to ever changing signal?

Adam Smith recognized these actualities in noting that ‘projectors’ who make mistakes and lose their capital (or anybody else’s) are in the same unproductive role of the prodigals. Losers of their capital do not reproduce their costs plus a profit, that is, they are unproductive.

Paul Hawken makes his case against markets by misquoting Adam Smith and attributing to him views out of context, which he did not hold. Paul believes certain of Smith's epigones, who justify their fantasy world of mythical general equilibrium outside of any known society of human beings, by trying to give their fantasies authority by linking them to the wholly innocent Adam Smith. They might as well call in Dr Pangloss for support.

[Apologies for not supplying references here, but my Adam Smith library (Glasgow edition of the Works and Correspondence of Adam Smith, Oxford University Press) is in another place - temporarily].

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Friday, November 20, 2009

Announcement V

Five Topics

1 First of three moves today (Move 1): Transferring basics and temporary office to my daughter's today and tomorrow (may work on-line between old home and my daughter's for a week or two). Hence, very busy with 1st move boxes and some furniture.

2 From the above event there may well be interruptions to Lost Legacy - please have patience.

Move 2 is when our old house is cleared into temporary storage on 14December (old house changes hands on 18 December).

Move 3 is from our temporary abode with my daughter (her second baby due - imminent this week!) of our furniture and my library from the storage people on 4 February to our new house, a couple of miles away.

3 The need to moderate comments continues - the Chinese spammers continue to make 'comments' (about what I do not know) in Chinese - but the Moderator system on Blogger is 'suspect'. I post to publish and they disappear!

Please could potential commentators post their comments via the email address at the top of the home page?

4 Work proceeds slowly on the 'metaphor in the middle' riddle but it is proceeding very slowly. This is most frustrating.

5 My review/discussion of Murray Wilgate and Shannon C. Stimson, After Adam Smith: a century of transformation in politics and political economy, 2009, Princeton University Press, is held up until at least 14 December, for which my deeply-felt apologies. It is worthy of notice by all Smithian scholars.

Thank you



Thursday, November 19, 2009

Adam Smith on "Ruin of a Nation"

Ben Stein writes on “Four lessons from the recession” in (19 November) in Fortune HERE which includes this observation:

And another little note ... my much-missed father used to tell me with great approval Adam Smith's famous quote regarding prophecies of doom for America, "there is a lot of ruin in a nation."

Another example of a famous quotation from Adam Smith being misapplied in meaning and, in this case, in its location too.

Smith was not writing of “prophecies of doom for America”, a country that did not yet exist when he penned his observation, which was a mild rebuke in fact to an excitable young correspondent overreacting to British reverses in the war of independence waged by the British colonists in North America.

The then young man was John Sinclair (1754-1835) of Ulbster and Thurso Castle, Caithness (in northern Scotland), educated at Edinburgh, Glasgow and Oxford, and called to the English Bar in 1775, aged 21. Sinclair wrote to Smith in 1782 (aged 28, I think, from memory), in a not auspicious year for the King’s course:

If we go on at this rate, the nation must be ruined. Smith replied: “Be assured, my young friend, that there is a great deal of ruin in a nation” (Adam Smith, Correspondence of Adam Smith, 1977): p 262, note 3, from Sinclair, Corr., i. 390-1).

It most certainly was not a prophesy “of doom for America” – it was a young man’s ill-informed mood-panic about military reverses for the British (particularly the British surrender at Saratoga (Ian Ross, The Life of Adam Smith, 1996, 327; new, second edition about to be published by Oxford University Press).

The only thing likely to be ruined by the end of the war was the British monopoly of colonial trade, a prospect about which Smith was not worried at all. His Wealth Of Nations. Book IV, is a polemic against mercantile political economy, the central idea behind England’s (after, 1707, Britain’s) foreign policy in the colonies.

Ben Stein (and Fortune's sub-editors) slipped up in his attributed meaning to Smith’s wiser words to young Sinclair.


Tuesday, November 17, 2009

The Very Best Short Summary of Adam Smith's Life and Work (Longish Post)

Chris Berry, Professor of Political Theory at University of Glasgow is a leading expert on the life and work of one of the University of Glasgow's most famous academics, Adam Smith.

He has created a 10 minute talk (HERE), published by the University of Glasgow, that describes the making of the man, the global significance of his writing and explains why Smith's work still resonates with us today:

Adam Smith was born in Kirkcaldy in 1723. He entered Glasgow University at the early - but for the time not unusual - age of fourteen.

He studied logic, metaphysics, maths and later Newtonian physics and moral philosophy under some of the leading scholars of the day. In 1740 Smith was awarded a Snell Scholarship (which is still in existence today) to study at Balliol College, Oxford. Smith preferred Glasgow, however, because Oxford’s curriculum was antiquated and he thought the teachers were lazy since, in contrast to Glasgow, their salary did not depend on the number of students taught.

After a period of freelance lecturing, Smith returned to Glasgow University, first as Professor of Logic in 1751 and then a year later as Professor of Moral Philosophy, a post he held until he left academia in 1764.

The mid-eighteenth century saw a period of intense intellectual activity, known as the Scottish Enlightenment. Universities were key players in this outburst of enquiry, with Glasgow a major force. Smith himself is of course the figure of overwhelming historical significance. But he was not alone. Smith’s fellow professoriate included pioneering chemists William Cullen and Joseph Black, as well as engineer and inventor James Watt who also worked at the University). Another historically important figure is a pupil of Smith’s, John Millar. Who became Professor of Jurisprudence and the author of a key work in what we would call historical sociology.

The seeds of Smith's two great books were sown in his professorial years. The Theory of Moral Sentiments appeared in 1759 and drew on his lectures. It went through six editions in his lifetime. Smith’s intellectual range as a lecturer was extensive. Beyond courses in philosophy and jurisprudence he also discussed history, literature and language. He maintained his interest in science and wrote an essay on the history of astronomy. This is notable not only for the breadth of Smith’s knowledge but also as an attempt to link the development of different astronomical accounts to a basic human propensity to seek order.

Although his second great book the Wealth of Nations was published in 1776 we know that he had already considered many of its leading themes at Glasgow as he lectured on as he put it: 'those arts which contribute to subsistence, and to the accumulation of property, in producing correspondent movements or alterations in law and government'. In 1787 Smith was elected Rector of the University and in a letter of thanks remarked that he remembered is professorial days as 'by far the most useful and therefore as by far the happiest and most honourable period of my life'.
If Smith of popular repute is the ‘father of capitalism’, the advocate of ‘market forces’, the enemy of government regulation and believer in something called the ‘invisible hand’ to produce optimum economic outcomes then he would be a disappointed parent. All his work is deeply steeped in moral philosophy. Indeed the simple fact that the final edition of the Moral Sentiments containing extensive revisions appeared in 1790, the year of his death, tells us is that Smith’s commitment to the moral point of view endured alongside and beyond the publication of the Wealth of Nations.

The Moral Sentiments is a leading example of a particular approach to moral philosophy – one that regards it not as sets of rationally or Divine ordained prescriptions but as the interaction of human feelings, emotions or sentiments in the real settings of human life. In many ways it is a book of social and moral psychology. What we can call economic behaviour is necessarily situated in a moral context. But more than that the key theme of the book is an opposition to the view that all morality or virtue is reducible to self-interest. Indeed his opening sentence declares that everyday human experience proves that false, he writes: "How selfish soever a man may be supposed, there are evidently some principles in his nature which interest him in the fortune of others, and render their happiness necessary to him, though he derive nothing from it except the pleasure of seeing it".
Our morality is founded on certain truths about human nature. Everyone is capable of sympathy, or fellow-feeling, and that ability enables us to imagine what we would feel if we were in the situation of another and, once we have made that imaginative move, we can then judge whether those feelings are appropriate. We have to learn about ‘situations’ but Smith believes that happens because humans are social creatures.

Smith illustrates the natural fact of human sociality by likening society to a mirror. It is this responsiveness to others - pleasure in their approval, pain in their disapproval - that Smith used to explain why the rich parade their wealth while the poor hide their poverty. The rich value their possessions more for the esteem they bring than any use they get from them and it is this disposition to "go along with the passions of the rich and powerful" that establishes the foundation for distinctions of status. And it is this desire for esteem that explains the incentive, we all possess, to better our condition. This is one of the links between the Moral Sentiments and the Wealth of Nations. In many ways the moral interactions Smith describes in Moral Sentiments bear on the practices that characterise his contemporary commercial society. The very complexity of that society meant that the bulk of inter-personal dealings were with strangers.

A ‘society of strangers’ is a commercial society which Smith identifies in the Wealth of Nations as one where 'everyman is a merchant'. A commercial society's coherence - its social bonds - do not depend on love and affection. You can coexist socially with those to whom you are emotionally indifferent. As Smith famously said:

“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”

Nothing in this means that Smith is denying the virtuousness of benevolence. When Smith came to write the Wealth of Nations he made it clear that the ‘wealth’ lay in the well-being of the people. This covered not only their material prosperity but also their moral welfare. Accordingly he thought to be in poverty is to be in a miserable condition and commerce is to be praised for improving human life.
The great achievement of the Wealth of Nations was to discern the principles of order in the seeming chaos of commercial or market behaviour – it wasn’t random, it could be reduced to some simple principles. It was for this reason that Smith was described as the Newton of political economy. It is no idle fact that the full title is Inquiry into Nature and Causes of the Wealth of Nations.

He identifies basic principles such as the human propensity to ‘truck, barter and exchange’ that he argues underlies the division of labour but says that this depends on a market and that requires some institutional structures like those that uphold justice such as government and how that in turn mutually relies on principles of public finance.

All of this is placed by Smith into a historical narrative. In his Glasgow lectures he had outlined an account of four stages of social organisation focused around the characteristic form of economic endeavour – hunter-gatherer, herder, farmer, commerce - and in the Wealth of Nations he gives a set-piece account of the transition from the farming to commerce. This process of social change was not brought about by deliberate human policy. This fact reveals for Smith a general truth about social life, namely, that it is pervaded by unintended consequences. This supports the widely-held view of Smith as an opponent of attempts to direct ‘the market’ but, in fact, what he really opposes is the attempt to direct individual’s activities, their ‘natural liberty’ to pursue their own ends in their own way. This is itself a ‘moral’ position and Smith never abandons that perspective.
In the opening chapters of the Wealth of Nations, he celebrates the productiveness of the division of labour with the example of pin-makers but later notes that those whose lives were spent performing a "few simple operations" were rendered "stupid and ignorant" and were incapable of "forming any just judgment concerning many even of the ordinary duties of private life". The 'morality' into which these individuals are socialised is defective; the 'mirror' in which they see themselves reflects back to them to their "mutilated" condition. This is the probable course of events, says Smith, unless "the public" takes remedial steps by instituting a subsidised system of elementary schooling. This example clearly illustrates how Smith's social and moral theories cannot be fully understood in isolation and must be seen as a whole.
Adam Smith’s legacy has had global impact and it is fitting that the work of a world-historical figure was forged in this world-class University.”

This short article is a measure of the quality Professor Chris Berry’s intellect and balance. He is without doubt the clearest scholar writing on Adam Smith today. He covers all of Smith’s scholarly range and shows its continuity and cross-linkages. What a breath of fresh-air is in Chris Berry's treatment of the "invisible hand"!

Professor Berry is the director of the Adam Smith Research Foundation at Glasgow University, which aims to promote and sustain research within the UK, European and international arenas. The Foundation promotes the engagement of staff in key policy debates and in shaping policy for the future. It provides the environment in which to foster further links between the Faculty's disciplines and supports the development of interdisciplinary research both within and beyond the University.

The Foundation seeks to honour the Enlightenment legacy of Adam Smith (1723-1790) with independent, original research that impartially advances utility and enhances social happiness or well-being in the Information Age.

The Foundation's five research themes are:
• Public policy, governance and social justice
• Work, ethics and technology
• People, places and change
• Macroeconomics, business and finance
• Legal and political thought

Professor Berry’s commitment to both the historical scholarship of the Scottish Enlightenment and to modern applications of moral and social science to contemporary issues, problems and situations,is a great credit to his and Scottish scholarship. If his approach and understanding of Adam Smith’s Legacy was the general approach across academia, and predominant among Smithian scholars, then Adam Smith’s Lost Legacy would have less to do.


Monday, November 16, 2009

Adam Smith on Government Roles

By Dr Bharat Jhunjhunwala writing (22 November) in Organiser (HERE):

Economy Watch - In defence of regulation of markets”

“This veneration of free markets was first propounded by famous economist Adam Smith about 200 years ago. He said that competition in a free market establishes public good as if an invisible hand was guiding the businessmen. There was no need to separately worry about public good. His logic was like this. Competition in the market pushes the businesses to produce goods at a lowest cost. This leads to cheap goods being made available to the people. For example, I had brought an electronic calculator from United States for my father in 1973 for 100 dollars or about Rs 1,000 at that time. Today, a much better calculator is available for Rs 50 because of the improvements brought about by competition. The slum-dwellers today have the pleasure of watching the TV and drinking cold water from the refrigerator because of the steep reduction in the price of these goods. Thus Adam Smith suggested that the government must not interfere in the market

Question to Dr Bharat Jhunjhunwala:

Exactly where does Adam Smith makes the statement: “that competition in a free market establishes public good as if an invisible hand was guiding the businessmen. There was no need to separately worry about public good?”

This is a paraphrase at best and a distortion of Adam Smith.

He never used the words “as if and invisible hand was guiding businessmen”. The addition of “as if” to his use of the metaphor of an invisible hand is fairly common among those who have not read Wealth Of Nations in general and the single paragraph in Book IV (chapter 2, paragraph 9: page 456) in which he uses the metaphor of ‘”an invisible hand”.

He most certainly never linked the metaphor to “competition” (which he discussed in Books I and II). He expressed reservations about leaving all decisions to “merchants and manufacturers” and such personages as bankers and their clients, especially where this “might endanger the security of the whole society” (WN II.ii.94: 324).

Nor did Adam Smith suggest such an extreme view “that the government must not interfere in the market”.

He saw a role for government, or public agencies, in stamping cloth and conducting assay tests on precious metals, to ensure that they been inspected for quality, that it should manage the currency and coinage, run the post office and general supervise markets and contract-making through an independent judiciary, and provide wholly or in part a national education system – and make a start on dealing on palliative care with “obnoxious diseases” like leprosy. All this, plus “facilitating commerce” by public works.

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Sunday, November 15, 2009

Adam Smith On Education and the Division of Labour





Gavin Kennedy

Michael Robbins writes in digital emunction (“I refer to largesse in thought HERE:

Best books of the year. A mug, a game. Benjamin Schwarz predictably plumps for biographies & Alice Munro, while Amazon readers appear to be, in Adam Smith’s words, “as stupid and ignorant as it is possible for a human creature to become . . . not only incapable of relishing or bearing a part in any rational conversation, but of conceiving any generous, noble, or tender sentiment, and consequently of forming any just judgment concerning many even of the ordinary duties of private life.”

To which I was about to leap in and place Smith’s assertion in context by providing the full paragraph from Wealth Of Nations:

In the progress of the division of labour, the employment of the far greater part of those who live by labour, that is, of the great body of the people, comes to be confined to a few very simple operations, frequently to one or two. But the understandings of the greater part of men are necessarily formed by their ordinary employments. The man whose whole life is spent in performing a few simple operations, of which the effects are perhaps always the same, or very nearly the same, has no occasion to exert his understanding or to exercise his invention in finding out expedients for removing difficulties which never occur. He naturally loses, therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is possible for a human creature to become. The torpor of his mind renders him not only incapable of relishing or bearing a part in any rational conversation, but of conceiving any generous, noble, or tender sentiment, and consequently of forming any just judgment concerning many even of the ordinary duties of private life. Of the great and extensive interests of his country he is altogether incapable of judging, and unless very particular pains have been taken to render him otherwise, he is equally incapable of defending his country in war. The uniformity of his stationary life naturally corrupts the courage of his mind, and makes him regard with abhorrence the irregular, uncertain, and adventurous life of a soldier. It corrupts even the activity of his body, and renders him incapable of exerting his strength with vigour and perseverance in any other employment than that to which he has been bred. His dexterity at his own particular trade seems, in this manner, to be acquired at the expence of his intellectual, social, and martial virtues. But in every improved and civilized society this is the state into which the labouring poor, that is, the great body of the people, must necessarily fall, unless government takes some pains to prevent it” ((WN V.i.e.50: 782).

Moreover, to understand what Smith was up to it is necessary to see his comments on the effects of the division of labour as in reality as part of his belief in the importance of education provision, especially of the children of the poor majority of the families of labourers and their wives. So many speedy readers of Wealth Of Nations, searching for ammunition against the division of labour and commercial society, link the above paragraph directly to the division of labour and assert that Smith had reservations about the phenomenon of the division of labour that had raised living standards and technology well above those experienced by the remaining peoples in the Americas, Africa, and parts of Asia, who were limited to living of the fruits of the forest and small animals that lived there. But read this paragraph from the summary of the need for a nationwide programme on education:

The same thing may be said of the gross ignorance and stupidity which, in a civilized society, seem so frequently to benumb the understandings of all the inferior ranks of people. A man without the proper use of the intellectual faculties of a man, is, if possible, more contemptible than even a coward, and seems to be mutilated and deformed in a still more essential part of the character of human nature. Though the state was to derive no advantage from the instruction of the inferior ranks of people, it would still deserve its attention that they should not be altogether uninstructed. The state, however, derives no inconsiderable advantage from their instruction. The more they are instructed the less liable they are to the delusions of enthusiasm and superstition, which, among ignorant nations, frequently occasion the most dreadful disorders. An instructed and intelligent people, besides, are always more decent and orderly than an ignorant and stupid one. They feel themselves, each individually, more respectable and more likely to obtain the respect of their lawful superiors, and they are therefore more disposed to respect those superiors. They are more disposed to examine, and more capable of seeing through, the interested complaints of faction and sedition, and they are, upon that account, less apt to be misled into any wanton or unnecessary opposition to the measures of government. In free countries, where the safety of government depends very much upon the favourable judgment which the people may form of its conduct, it must surely be of the highest importance that they should not be disposed to judge rashly or capriciously concerning it” (WN V.i.f.61: 788).

In this light, Smith addresses his readers – the educated minority in 18th-century Britain, mainly in the ‘middling’ and ‘superior’ ranks of society – with, in effect, a final reason if they remain unconvinced of the case he has made on its own merits, for which the government would have to udnertake substantial expenditure, with a final reason for agreeing to action now:

your safety in turbulent times depends on your having provided for the education of the ‘inferior’ ranks as a barrier to these people being led astray by ‘enthusiasts’ and malcontents.’

However, I casually read the comments below Michael Robbins’ post and found, first, this comment from “Henry”:

I take it the Adam Smith quote is something of a joke. But why does the discussion of what people read so often have to start off on this note of snobbery & disdain? It turns me off immediately, so that I no longer care what you like to read.”

Plus a correct response from Michael Robbins:

Well, now, Henry, if you’d read the Smith in question, you’d know he’s not being snobbish at all, but denouncing the conditions that lead to such ignorance. I don’t see how regretting that people read Dan Brown & Glenn Beck is snobbish, either: it simply is a regrettable fact, objectively.”

To which I can only say: it pays to read the whole article and any associated comments, before assuming that their authors have got it wrong!

Michael Robbins hasn’t got it wrong. He was using his selection from Smith’s quotation to provoke a post like that of “Henry”, which worked.

Well done, Michael!.

[I hope my additional selection from Wealth Of Nations added some value to Lost Legacy readers.)

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Friday, November 13, 2009

Self-Interest is Not Selfishness

In a post I made on 10 November (see below), Greg Baldwin posted a comment. I would normally just reply to the comment. However, I consider the exchange of wider interest and importance, and to avert it being missed by those who do not search for the rare comments Lost Legacy receives, I post the exchange of comments for wider readership:

“Greg Baldwin said...

Thanks for the comment. Secretly I want to believe that self interest and selfishness can be neatly distinguished, but I'll confess quotes like this from our friend Mr. Smith have not helped me to find the clear distinction:

"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 self 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."

`Adam Smith, Wealth of Nations’

I'm not sure I fully understand everything Smith is trying to say here, but self-love + self interest do seem to be at least the basic ingredients for

What am I missing?"

To which I replied:

Hi Greg

Thanks for your comment.

Many people quote the “Butcher, Brewer, Baker” example from Smith’s Wealth Of Nations (WN I.ii.2: 26-27) without appreciating exactly what he was saying. He advanced the same example in the 1762-3 lectures (23 March, 176: vi.46: 348) that he gave in Glasgow University (Smith, Lectures On Jurisprudence, Oxford University Press/Liberty Fund: 1978), hence it was an early part of his oeuvre long before he wrote Wealth Of Nations.

‘Self-interest’ and ‘self-love’ in 18th-century discourse did not mean selfishness and were clearly distinguished.

Bernard Mandeville (1724) celebrated selfishness as a virtue (as did Ayn Rand in the 20th century). Smith regarded Mandeville’s teachings as “licentious” (Moral Sentiments, 1759: TMS VII.ii.4: 306-14)).

Examine the quote: we expect our dinner “from their regard to their own self interest”. But there are two people in each transaction: the hungry would-be diner and the shopkeeper potentially supplying the meat, beer, or bread.

Smith excluded the virtuous motive of their “benevolence” as too weak to rely upon regularly (as common sense suggests it would be, except at the margin). So how is the transaction to be conducted?

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.”

We don’t talk of our necessities in the transaction but address “their self-love” - they are self-interested too! They have gone to the trouble of securing supplies of “meat, beer, and bread” and offering them for sale to potential customers.

The earlier transactions of the “butchers, brewers, and bakers” to secure their supplies (from farmers and those along the supply chain) involved multiple transactions on the same basis. All suppliers need access to freely bargained exchanges to supply their families with their needs from others.

In the sentences immediately preceding the ones you quote, Smith wrote:

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.”
(WN I.ii.2:26)

This is a clear description of the bargaining processes by which we obtain “those good offices which we stand in need of”.

Each party is self-interested in the outcome, but (and it is an important ‘but’) neither can obtain what they want without addressing what the other wants in voluntary exchange transactions. Two utterly selfish egoists would seldom, if ever, come to a voluntary agreement – neither would give up anything in place of demanding their price “or else”.

As Smith put it, in social converation we “persuade” to get what we want. Highlighting why something (what we offer to give) is good for someone is often a good place to start when seeking what we want to get.

That is the meaning of the paragraph from which you take the well-known quotation (in the process of which you elide from the 18th-century meaning of self-interest and self-love to a later meaning).

To read this as Smith advocating selfishness is quite different from the intended and explicit meaning of Smith's moral philosophy, as expressed in that paragraph.

And that Greg is the answer to you question: “What am I missing?”

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Wednesday, November 11, 2009

Announcement IV

I took a short break yesterday either side of lunch and posted on Lost Legacy.

However, the spam comments attack continues - 17 since Saturday - all in Chinese and the bits in English are weird.

Those few appropriate comments were published - the rest were rejected.

I have snatched moments to continue reading and I am making slow progress in my response to Daniel Klein's paper. I think I can now track what Adam Smith did in his various editions to maintain 'centrality' of the metaphor of "an invisible hand".
However, with about 1/3rd of my books despoatached to local charity shops, I have a long way to go to clear the house in a couple of weeks.

Keep reading.



Tuesday, November 10, 2009

Eulogy To The Rational Expectations Hypothesis

Dr Madsen Pirie writes in the Adam Smith Institute Blog (10 November) HERE: a trenchant expose of the failings of the rational expectations hypothesis:

One of the few good things to come out of the financial crisis is a re-examination of the fundamentals of Austrian Economics. One of them is that value is entirely subjective, residing in the mind of the individual, not in the object contemplated, and that it changes over time and is different between individuals. This is light years away from the REH-based models that have dominated academic economics, and treated it as practically a subset of mathematics. For some years now most academic economists have talked only to each other, describing in ever more detail a fantasy world that never touches reality. If the crisis undermines the heresy of Rational Expectations, at least some good will have come from it.”

I agree entirely with Madsen Pirie and commend his Blog article to all readers. It is the best, clear and explicit statement on the dead-end, black hole into which most modern economists has slid into that I have read for a long while.

[Disclosure: I am a Fellow of the Adam Smith Institute.]


Smith on Banking Regulation

Dr Hugh Goodacre, a teaching fellow at University College London, writes to the Financial Times (10 November) HERE on the subject of the “arbiter’s” role of the ‘invisible hand’ as presented earlier by Michael Rossman, who “praised” the “invisible hand” as “the arbiter of success and failure”.

Hugh Goodacre disagrees, pointing out that Adam Smith “makes it clear “that for an economy to be guided by his ‘invisible hand’ is not a reality, but an ideal”.

Moreover, says Goodacre, “the Bank of England acts “not only as an ordinary bank, but as a great engine of state”, and, according to Smith, “the stability of the Bank of England is equal to that of the British government” and ‘is too big to fail”.

Apart from the usual myth and invention about the role of the “invisible hand”, Goodacre is surely right.

Smith considered it permissible to override the imperatives of “Natural Liberty”, especially in banking (I have quoted many times his insistence of regulation to stop low-value ‘promissory notes’ being issued by banks at WN II.ii.94: 324), so those who quote him as an authority against regulation where it is appropriate, as defined by Smith, mislead their readers.

[Incidentally, the Financial Times, adds this proviso to the above brief letter:

Copyright The Financial Times Limited 2009. You may share using our article tools. Please don't cut articles from and redistribute by email or post to the web.” I am not sure why they are so draconian, though I am also sure my quotation meets the “fair use” criterion, but I am not sure that such necessary treatment portrays Michael Rossman's point of view adequately.]

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Selfishness is No Virtue

Greg Baldwin, President of VolunteerMatch, writes HERE:

The Case Foundation: Why Don't People Want To Give?”

“From The Case Foundation”:

“Well, the easy answer is that it's hard to make people give because people don't really want to. The logic is simple and compelling. People don't give because we are by our nature self-interested creatures pursuing our own survival in a competitive world. Adam Smith and Charles Darwin saw us for what we are: a collection of individuals looking to get ahead, not give back.”

Greg Baldwin has got the wrong end of the stick. Adam Smith wrote in detail (Moral Sentiments, [1759- 1790), the exact opposite of Greg Baldwin’s assertion. There is precious little Smithian morality in selfishness.

Smith’s criticism of Bernard Mandeville (Private Vice, Public Benefit, 1724) is quite specific on selfishness and Greg Baldwin attributes to Adam Smith what Mandeville became notorious for – making a virtue out of selfishness, a theme taken up by Ayn Rand (The Virtue of Selfishness), another person confused with Adam Smith’s diametrically opposed and explicit views about morality. Self interest is not about selfishness.

If everybody tries takes and few give in exchange, commercial society would be impossible. The very act of exchange is about each giving something to the other party which they prefer in place of what they give up to get it.

If everybody expects others to give without them getting something back, we would soon be impoverished. Poverty is the absence of exchange relations; it is not caused by them, Greg.

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Monday, November 09, 2009

On Searching Through Cupboards, Undisturbed Since 1998

The sort out of my library of books continues.

This morning I began on some cupboards in the garage, shut since 1998, when we moved here and I came across some ‘lost’, though not forgotten, books on economic thought, many of which I have kept since the 70s, some of which I have regularly lamented ‘losing’. In that previous move from a big house, where I had a large-room lined with book shelves, to the currently ‘smaller’ house, my then ‘library’ was too big to accommodate, and about half of my library was shipped to France, the best parts of which are housed in glass-fronted cabinets to keep out the dust – the rest in boxes piled in our large bedroom.

The other half was sent to the current and recently sold house, and much of that half was partly stored (‘temporarily’) in boxes and in some garage cupboards. Since 1998, a fair amount of new books have spilled over in piles on the floor.

In short, my depleted library is now in a mess.

We move from here in December and I have a chance (or, of you prefer, I am under family orders) to sort the books out, to safeguard the good books, including those I work from, or intend to do so, and to dispose of the rest to charity shops around town.

Interestingly, among the ‘lost’ treasures that I found this morning was an 1843 edition of Wealth Of Nations, “with a Life of the Author” (Dugald Stewart’s eulogy to Adam Smith in 1793 delivered in 1793) and also “A View of the Doctrine of Smith, compared with that of the French Economists; with a method of facilitating the study of his works; from the French M. Garnier.” Published by Thomas Nelson, Edinburgh, ‘MDCCCXLIII’.

And no, M. Garnier doesn’t mention the ‘invisible hand’ as part of Smith’s doctrine.

However, this particular volume provoked a rather funny, in retrospect only, incident in the mid-80s. At the time, we rented accommodation for our French holidays and I used to take our kids, and those of anyone’s staying with us, to a chain resort called AquaCity on the Bordeaux coast, where they could play in a safe environment (patrolled by dozens of safety ‘wardens’, instantly recognisable in their leopard-patterned costumes) of flumes, pools, rides in large rubber tyres and water, water, everywhere. They loved it.

So did I, but not for the swimming; it was a perfect location for focussed reading, despite the background noise. I would sit down near the cafeteria, read my book, and the older kids would comeback roughly every half-hour to let me know and the little ones were safe – they knew where I was and I was left in peace to read.

Now, to be truthful, I was not quite into the spirit of AquaCity, in that when assured everybody was safe and enjoying themselves, I would sit under a small tree and read. I was, as always in those days, in a suit, tie and heavy shoes (a Business School habit). The temperature was usually in the 70s-80s.

On this particular occasion I was reading this very 1843 edition of Wealth Of Nations.

Absorbed as I was in Smith’s prose “Of the Expense of Defence”, I was oblivious to what was going on around me (my research interests were defence economics), until somebody began shouting nearby, so I looked up, and realised that s man on a nearby path was shouting at me in French. I caught a few words, but most was lost in excitable non-translation.

I looked either side of me for help and a couple nearby, said in English that the man was accusing me of looking at his wife! (She was about ten paces, half hidden behind him.)

But I was innocent. The entire AquaCity landscape was dotted with people, most in bathing suits, many in bikini’s and more than a few topless. After some more outpourings of vitriol, he stormed off, realising I was not French, and, no doubt considering the way I was dressed, as some sort of oddity, as well, in his mind, of me being a quasi-pervert (though why he attacked me I cannot imagine, when I could now see that he and his wife were parading around, as people of a certain age do in France, more than semi-naked).

Fortunately, most of the kids turned up just then, looking for their lunch and soft-drinks.

So, finding this ‘lost’ 1843 volume of the Wealth Of Nations today was worthy of note. It brought back that scene at AquaCity - we have often laughed at it at dinner parties since. But truly, I have missed that particular volume for twenty years or more. Finding it is a joy.

Looking through my copy today, I found a sentence in Book IV (page 188: WN IV.ii.30: 464-5), which I had marked in ink:

As defence, however, is of much more importance than opulence, the act of navigation is, perhaps, the wisest of all the commercial regulations of England”.

No other passages are marked in this manner. As defence economics was my main subject in those years, I consider this as evidence as to the sole object of my full attentions that day….

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Tuesday, November 03, 2009

Announcement 3

I have a couple of pressing projects on the go:

1 Daniel Klein and Brandon Lucas's "In a Word or Two, Placed in the Middle" (October 2009), which is their most interesting paper on the significance of the "metaphor" of the "invisible hand" for Adam Smith (from an idea of Thucydides).

This is underway and I was estimating a response in a week or so.

2 A review of Murray Milgate and Shannon C. Stimson's "After Adam Smith: a century of transformation in politics and political economy", 2009, Princeton University Press, was to appear in chapter instlaments from this week.

However, we have had our house (downsizing after the children left the nest for their own homes) on the market since November 2008 (the month when the UK property market finally went into free-fall).

The market has picked up and we accepted a (negotiated) offer for our house. The purchasers required an early entry date ("before Christmas") and we agreed today to this condition, previously expecting a leisurely transfer in February 2010. This gives us about four weeks to dismantle the house contents down to sufficient for two persons instead of five. Plus move my library. And look around the market for a suitable new, smaller, house in south Edinburgh.

The immediate consequence is that I am going to be very busy domestically for several weeks emptying one house, moving some of our property into a daughter's house until we settle on a new house, placing most of our property into storage, ready for the new house, and sending some of the surplsu to our French house.

Scholarly-wise, this is most "inconvenient", while domestically it is a great relief, believe me.

I shall do what I can, when I can, on the above two projects, but slower than I had anticipated. Be sure, however, that the two projects will be completed and posted on Lost Legacy.

I regard Daniel Klein and Brandon Lucas's "In a Word or Two, Placed in the Middle" (October 2009), as the most important paper on the invisible hand for many a year and it requires a considered response. In my teens we called this a "put up or shut up" moment. I hope you will bear with me over the next few weeks as I prepare my "put up" response, or, if the case merits it, my "shut up" resignation.

My review of Milgate and Stimson, similarly, will plod a long somewhat slower but it will appear - that's a promise.

Thank you



Monday, November 02, 2009

"Centrality" Exchanges in an Invisible Hand Debate

Brad Delong has composed a selection of pieces on Adam Smith and the invisible hand controversy (including some interesting comments), of which Lost Legacy has contributed its two-pence worth these past 4 years (and health permitting and other circumstances, I shall continue to do so for the foreseeable near future).

You can find the collage HERE:

Presently, I am composing a response to the excellently argued paper from Daniel Klein and Brandon Lucas on the “centrality” of Smith’s only references to the invisible hand metaphor in Moral Sentiments and Wealth Of Nations and its position in the ‘dead centre’ of both books. You should read Daniel Klein and Brandon Lucas’s paper HERE – and in Brad Delong’s excellent Blog:

Nov 01, 2009
Was the Invisible Hand "Central" to Smith?
Daniel Klein, Professor of Economics at George Mason University and Editor of Econ Journal Watch, asks:
What probably would you put on the truth of a broad hypothesis of deliberate centrality?

Here's more background on the question:

In a Word or Two, Placed in the Middle: The Invisible Hand in Smith’s Tomes, by Daniel B. Klein and Brandon Lucas: Abstract: The meaning and significance of Smith’s expression “led by an invisible hand” has been long debated, and especially lately. We speak to the large debate only in fine, by focusing on the conjecture, first hinted at by Peter Minowitz, that Smith deliberately placed his central idea, as represented by the phrase “led by an invisible hand,” at the physical center of his masterworks. We bring supportive evidence and argumentation to the conjecture. The four most significant points developed are as follows: (1) The expression “led by an invisible hand” occurs pretty much dead center of the 1st and 2nd editions of Wealth of Nations, and of the final edition of the volumes containing Theory of Moral Sentiments. (2) The expression in WN drifted only a bit from the center, only about 5 percent from the center in the final edition (and even less if the index is excluded). (3) The rhetoric lectures show that Smith not only was conscious of deliberate placement of potent words at the center, but thought it significant enough to remark on to his pupils, noting that Thucydides “often expresses all that he labours so much in a word or two, sometimes placed in the middle of the narration.” (4) There numerous and rich ways in which centrality and middle-ness hold special and positive significance in Smith’s thought. In conjunction with larger considerations, these points may be helpful in assessing the significance of Smith’s famous phrase.

Here's a figure showing centrality through the 7 editions of each work.

This is an attempt to rescue the invisible hand from critics who argue that the invisible hand idea that is attributed to Smith was not a central part of his writing (e.g. see Gavin Kennedy).
In answer to the question, it doesn't seem very likely to me that this was intentional.
Note: If you are unfamiliar with the debate over the invisible hand, here is Gavin Kennedy:
...Lost Legacy has never been slow in criticizing the ‘Chicago Adam Smith’, a person with ideas that are far from the ideas of the Adam Smith born in Kirkcaldy in 1723.

George Stigler’s boast that “Adam Smith is alive and well and lives in Chicago” (1976) reflects to invention of the Adam Smith of the “invisible hand” (a mere metaphor for Adam Smith whose single use of it in Wealth Of Nations referred to the unintended consequences of the risk-avoidance of some, but not all merchants ... who preferred the home trade), and had nothing to do, at least in Adam Smith’s mind, with how markets worked, ... or how the price system worked.
The belief that the “invisible hand” was a significant ‘idea’, ‘concept’, ‘theory’, or ‘paradigm’ was wholly invented in the 1950s by neo-classical economists on the back of general equilibrium mathematics ... and in support of a worthy criticism of Cold War, Soviet central planning. It is now taught in every economics 101 class as if it had historical validity, mainly by people who have never bothered to read Wealth Of Nations. ...

Update: See " Yet Another Note on Adam Smith's "Invisible Hand": What It Is and What It Is Not" by Brad Delong.
Posted by Mark Thoma on Sunday, November 1, 2009 at 10:54 AM in Economics, History of Thought Tweet This Permalink TrackBack (0) Comments (19)

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RW said...

Kennedy's account makes sense and is consistent with Cold War historical patterns as well; e.g., Congress adding the words, 'under God,' to the Pledge of Allegiance in 1954 to better contrast our system with the godless commies (and satisfy the then rather powerful Knights of Columbus and their allies).
Reply Nov 01, 2009 at 12:35 PM

Dennis Ashendorf said...
Dr. Thuma,
You agree with Kennedy? You consider Klein's "statistical" argument unpersuasive?

Reply Nov 01, 2009 at 01:11 PM
Tom Hickey said...
Who cares what Adam Smith "thought" or "intended." We'll never know. His use of the term may give the concepts and explanations derived from it (for Smith did not do so) some authority. But if orthodox economics is dependent on arguments from authority for its underpinnings, we are all in big trouble.
The question is, what testable hypotheses can be derived from the concept further fleshed out by subsequent economists. That is to say, can it be shown empirically that there are "natural forces" that incline markets to equilibrium. If these forces are "natural," then how do markets fail (and they do). Is the exogenous shock explanation a testable hypothesis, or a simply an assumption necessary to make the contraption work at the margin?

Reply Nov 01, 2009 at 01:59 PM
Richard H. Serlin said...
Places like George Mason and Chicago are really seeming like echo chambers. Are there people at those departments who aren't willing to use weak, deceptive, or downright embarrassing measures to defend the dogma? Is there any attempt to hire people with other views and training?

Reply Nov 01, 2009 at 03:20 PM

Fred C. Dobbs said...
'Hypotheses non fingo', as somebody
said, well before Adam Smith.
Reply Nov 01, 2009 at 03:34 PM

john wycliffe said...
I'm sorry.

If we can't agree on what Smith meant by "the invisible hand," how can anyone even suggest that it was a central feature of his thinking?
Seems to me a central feature would be something that gets rather more attention, doesn't it?
Or have I shown myself to be woefully ignorant? If so, please to explain?
Reply Nov 01, 2009 at 05:14 PM

Tom Hickey said...
@ Fred C. Dobbs
Watch your language, buddy. Just kidding.

It was Newton who said this, and it is well known that Smith was "impressed" with Newton's work. It is quite possible that Smith modeled his thinking to some degree on Newton (this is controversial), Certainly, the idea of natural forces in economics bears a relation to the physical sciences that had been so influential in this period. This influence may have persisted and may continue to persist in orthodox economic thought. For example, the notion of a "representative agent" that goes proxy for all consumers is an attempt to achieve the kind of elemental reduction of the hard sciences.

On the principle of hypotheses non fingo, it is unnecessary to account for assumptions like natural forces in terms of causes. Asking why is not needed because showing how is sufficient. Gravity doesn't have to explained in terms of causes. It works as an explanation of planetary motion, filling in the Copernican view.
However, there is a great difference here between natural forces like gravity (which elicited the hypotheses non fingo response from Smith in the first place), which result in predictions that can be tested empirically, the assumptions of orthodox economics that do not. It's not a matter of why here, the how is in question, since the economic models haven't exactly produced anywhere near the same engineering results. At this point, why is a legitimate question, and "because Adam Smith said so," isn't adequate justification.

Proponents of orthodox economics would object that experiments cannot be designed to test hypotheses in economics as they can in the physical sciences. But that still leaves them to explain how the what the hypotheses are good for if they can't actually predict and often apparently don't work. Steve Keen does a pretty good job showing this in Debunking Economics.

Orthodox economics sees to be in a position similar to psychology when B. F. Skinner dominated the field. No one got hired and certainly not promoted without toeing the line. Until Abraham Maslow came along and revolutionized the field.
My sense is that Abba Lerner's functional finance could be the Copernican Revolution in economics. The people using it as the basis for modern monetary theory are showing how this provides a coherent explanation independent of "natural forces" and one that can be corroborated through social engineering (full employment with price stability) if the political understanding and will can be found. Plus, it puts and end to a lot of the quasi-religious myths.

Reply Nov 01, 2009 at 05:35 PM
Tom Hickey said...
Ooops — (which elicited the hypotheses non fingo response from "Smith" in the first place) should have been "Newton."
Reply Nov 01, 2009 at 05:39 PM

wjd123 said...
Adam Smith was a moral philosopher and not a physicist. I doubt he would recognize the economic presuppositions of neo-classicist today much less approved of them.
Their underlying presuppositions about the nature of economic man and efficient markets is, in my opinion, turning American capitalism into a particular virulent strand of capitalism that it would be hard for moral philosophers to justify much less recognize.

It's my impression, from what little I know of Smith, that these neo-classicists, have presumed, quite illegitimately, on Smith's writings about the needs of the butcher, the baker, and the candle stick maker to turn them into an unseen force guiding markets.

How convenient for them, but it doesn't square with the Smith who advocated regulations and certainly not with any claim of theirs that Smith thought the invisible hand was a necessary evil. If someone can quote a specific statement by Smith on the invisible hand, justifying it without reliance on presumptions, I'm listening.

I'm not an economists but assertions based on weak suppositions don't belong in economic text books. It's more the sort of thing from which historical fiction is fashioned.

I think neo-classical economists are using historical fiction to turn American capitalism into a particular virulent strand of capitalism with Adam Smith wouldn't recognize.
I mention this because of a certain sentiment I hear more and more today that I particularly loath: the presumption that those in positions of power will naturally use their position to maximize their self interests. It's most egregious when it's used to justify the multimillion dollar salaries of CEOs.

I loath this logic because it appears to be an attempt by those in positions of responsibility to absolve themselves of any personal responsibility for their actions: "It's the governments fault for not stopping us before we killed again." And then the appeal, "If you were in our shoes you would have done the same" as though what they are doing is natural. Both appeals fit nicely with the presuppositions of neo-classical economists about self interested economic man where economic man is a self interested sot.

I think of this latter appeal as an attempt to democratize the behavior of these CEOs because the "you" isn't an appeal to their peers who are among the top earners in our society even before exercising their stock options but an appeal to the guy on the street, Main Street, struggling to make ends meet.

The guy in the streets has enough trouble without having these fat cats trying to get into his or her head. The guy in the street isn't in their shoes and to suggest that if he were he or she too would stuff their bank accounts by back dating their stock options or getting their quarterly reports to look good by hock or crook, is insulting.

I believe that the more wealth you have the looser your attachment to society. In this respect the filthy rich are not much different than the desperate poor. The desperate poor can't afford the norms of society and the filthy rich can't be bothered with them. It's a natural fit for the wealthy when being scrutinized by society for their irresponsibility to point to others who are in a position to act irresponsibly and present it as the way of world.

There is, however, an ethical difference between the desperate poor and the filthy rich in that the ethical "ought" implies "can". So ethically the poor person's "can't afford" offers some mitigation against the accusations of irresponsible behavior by society whereas the rich person's "can't be bothered" doesn't. (Also, there is nothing keeping the poor from having a sub-set of unofficial norms which they can keep since they are the most in need of protection. For protection the wealthy hire lawyers.)

The above justifications by those in positions of power acting irresponsible along with every other rationalization that can be thought up to excuse their behavior can be found in the financial media. It's a cornucopia of apologetics for anti-social behavior.

The idea that in the capitalistic society of the neo-classical economist it's only naturally that we learn to walk and talk like their capitalists may be a growing truism with horrible consequences for society yet to be imagined even after the financial crisis, or possibly because of it.

I would hate to live in a society where the strongest motivation for the butcher to keep his thumb off his scales is the fear of the law. Fear of the law is for people who haven't internalized the idea of the good. Fear of the law is for those who need a government to blame for their lack of responsibility; it's for those looking for a way to rationalize their behavior. Therefore, the constant refrain heard from those walking away with millions or abusing their powers is, "I haven't done anything illegal."

When I was a kid in grade school--a long time ago when taxes on the top earners were 90%--a well respected neighborhood dentist came in to talk to my class about his profession. The one thing I remember him telling us about dentistry was "It will keep food on the table and a roof over your head." That was sufficent, there was no talk about "cavier dreams."
I suspect it would have been sufficient for Adam Smith butcher. I dare to hope that it is sufficient for the man or woman in the streets today dispite the best efforts of neo-classical economist to get into their heads with their particular virulent strand of capitalism.
Reply Nov 01, 2009 at 11:53 PM

anon/portly said...
Okay, Daniel Klein is obviously a nut, but the question of how central to Smith the "invisible hand" concept was, or at the least the things Smith was using it to describe, is an interesting question.
"By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention."

I think this brings up several questions. How "many" other cases - a few, lots? What would some of those other cases be? Is the concept of "promot[ing] an end which was [unintended]" a big part of Smith's analysis, or not?

I don't think it's too crazy to see similarities between the merchants who Smith views as promoting the ends of society via risk-avoidance (as Gavin Kennedy notes) and profit-maximization (as Gavin Kennedy omits to note), and the well-known profit-maximizing merchants of this passage:

"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 self-interest."
Would this be a candidate for one of those "many other cases," or not?
You might think I am merely attempting to make a point but there's no use my denying it: I consider this to be a devastating, final 'proof' of my assertions.
Reply Nov 02, 2009 at 12:58 AM

reason said...
I'm with Tom Hickey on this. Who cares.
Reply Nov 02, 2009 at 01:49 AM

Fred C. Dobbs said...
Injecting 'the invisible hand' into the consideration of economics. Is that not a way to insert religion into the discussion, perhaps to suggest that the end really is near, as the 'invisible handwriting is on the wall'?
Reply Nov 02, 2009 at 02:26 AM

kharris said...
The problem with claiming a sparsely employed expression in Smith's writing to be central to the thought behind the writing is at least two-fold. First is that (OK, I know there will be objections, but stay with me) Smith is a very good writer. I'm not saying he is the sort of writer that today's reader can't put down, but neither is Shakespeare for a great many modern readers. Look at the sensation Smith caused in his own day. He managed to grab the attention of thinkers in his own time, and won praise in the process.

If a great writer had meant - as Smith suggested Thucydides did - to feature a particular idea by placing it carefully in the middle of the essay, wouldn't he have done so in a way that caused readers in his own age to notice? Kennedy's point is that "invisible hand" became a fad nearly 200 years after it was first shown to the world. If it were central to Smith's thinking, given that he is a good writer (more Herodotus than Thucydides, to my thinking), then wouldn't he have been able to make the expression a fad in his own time? If it did not become a sensation after the first edition, wouldn't he have made the sort of changes that would have given it greater prominence?

The second "fold" of the problem is that the claim of centrality based on location looks like special pleading aimed at push-back. If location is the only claim one can put forward for Smith's own intentions regarding the centrality of "invisible hand" thinking (thanks to Tom H, for inserting the "intentionalist fallacy" into the discussion), then the claim is a thin one. Do we know, for instance, that no other expressions were used in a roughly central position in the text - expressions that have not been adopted to make claims about Smith that are otherwise hard to support - but not elsewhere? If "invisible hand" is not unique in its Thucydidian locational qualities, then the argument for intent is weakened. I don't intend to do a search for every 2-to-5 word phrase in the middle 10% of the book to find out, but isn't it somewhat incumbent on Klein and Lucas to substantiate their argument with more than just Smith's fondness for a writing trick from Thucydides?
Reply Nov 02, 2009 at 05:32 AM

Barkley Rosser said...
"Invisible hand" was a general trope of the British
Englightenment. Smith was the first to apply it to
economics, although he did so in a way not consistent
with the current textbook interpretation.
It looks like it first appeared in a letter in 1712
from Robert Cotes to Isaac Newton in connection with
Newton's theory of gravity. Bodies are drawn towards
each other "as if by an invisible hand."
Reply Nov 02, 2009 at 06:52 AM

Barkley Rosser said...
I have just seen it noted that the phrase "invisible hand" appears in Shakespeare's "Macbeth," although in a much different usage. Pretty clear that the theory of gravity is closer to the concerns of Adam Smith than as means of undoing the mortal coil.

Reply Nov 02, 2009 at 07:03 AM
anne said...
The Tragedy of Macbeth
By William Shakespeare
Act III. Scene II.
The palace.
Enter LADY MACBETH and a Servant
Is Banquo gone from court?
Ay, madam, but returns again to-night.
Say to the king, I would attend his leisure
For a few words.
Madam, I will.
Nought's had, all's spent,
Where our desire is got without content:
'Tis safer to be that which we destroy
Than by destruction dwell in doubtful joy.
How now, my lord! why do you keep alone,
Of sorriest fancies your companions making,
Using those thoughts which should indeed have died
With them they think on? Things without all remedy
Should be without regard: what's done is done.
We have scotch'd the snake, not kill'd it:
She'll close and be herself, whilst our poor malice
Remains in danger of her former tooth.
But let the frame of things disjoint, both the
worlds suffer,
Ere we will eat our meal in fear and sleep
In the affliction of these terrible dreams
That shake us nightly: better be with the dead,
Whom we, to gain our peace, have sent to peace,
Than on the torture of the mind to lie
In restless ecstasy. Duncan is in his grave;
After life's fitful fever he sleeps well;
Treason has done his worst: nor steel, nor poison,
Malice domestic, foreign levy, nothing,
Can touch him further.
Come on;
Gentle my lord, sleek o'er your rugged looks;
Be bright and jovial among your guests to-night.
So shall I, love; and so, I pray, be you:
Let your remembrance apply to Banquo;
Present him eminence, both with eye and tongue:
Unsafe the while, that we
Must lave our honours in these flattering streams,
And make our faces vizards to our hearts,
Disguising what they are.
You must leave this.
O, full of scorpions is my mind, dear wife!
Thou know'st that Banquo, and his Fleance, lives.
But in them nature's copy's not eterne.
There's comfort yet; they are assailable;
Then be thou jocund: ere the bat hath flown
His cloister'd flight, ere to black Hecate's summons
The shard-borne beetle with his drowsy hums
Hath rung night's yawning peal, there shall be done
A deed of dreadful note.
What's to be done?
Be innocent of the knowledge, dearest chuck,
Till thou applaud the deed. Come, seeling night,
Scarf up the tender eye of pitiful day;
And with thy bloody and invisible hand
Cancel and tear to pieces that great bond
Which keeps me pale! Light thickens; and the crow
Makes wing to the rooky wood:
Good things of day begin to droop and drowse;
While night's black agents to their preys do rouse.
Thou marvell'st at my words: but hold thee still;
Things bad begun make strong themselves by ill.
So, prithee, go with me.
Reply Nov 02, 2009 at 08:34 AM
Barkley Rosser said...
Thanks, anne. Figured you might come through on this one. Exeunt, indeed, :-).
Reply Nov 02, 2009 at 10:13 AM

Harold said...
Doesn't "the invisible hand" really refer to a belief that Providence (in the form of ever-improving Progress) had directed (non-Darwinian) evolution in such a way as to assure that "the best" always came out on top, an outlook prominent during the period of British late nineteenth-century imperialism.
Herbert Spencer's libertarian "political philosophy" (otherwise known as the "police state" theory of government, which holds that government's role should be limited to protecting private property, dates from this era.
Reply Nov 02, 2009 at 12:45 PM

Barkley Rosser said...
Not in Newton or Smith, who way predate all that Victorian evolution...

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