Saturday, February 13, 2010

Adam Smith on Benevolence

John Milbank is quoted in the Faith and Theology Blog (HERE)

"The point about talking about a culture of trust is not some kind of moralistic wishful thinking; the point about a culture of trust is actually that an entrepreneurial culture needs trust. Even if you believe in the free market, it turns out that the model of individualist utilitarianism that goes all the way back to Adam Smith is actually the wrong model. Itʼs the wrong model for the free market itself because if you have endless checking up on people, if you donʼt have trust, that actually inhibits initiative, risk and creativity. This is why the Italian economist Stefanos Zamagni is saying we need to return to the principles of Italian political economy, not Scottish political economy, because the Italian political economists from the 18th century onwards saw sympathy as part of contract itself, not as standing outside contract.

"In the end Adam Smith subordinates sympathy to self-interest and he says that if your butcherʼs selling you meat heʼs not doing it out of the goodness of his heart. But this is untrue. In fact people do enter into economic relationships at the local level for social reasons, for personal reasons, and Zamagni argues in a really powerful way that the more we have relatively informal contracts between people, the more itʼs based on trust, the less you need the intervention of state law on the one hand, or of inner control by firms on the other hand. So this is a different way of thinking about the free market. The market would actually be freer if it was a moral market....


Comment
Smith's point in the 'butcher, brewer, baker' example is you cannot rely on benevolence alone to feed you (and everybody else), unless you are a beggar. In practice, you must address the butcher's, and etc.,'s interests not your own.

This is not a disavowal of benevolence - there is not enough of it to go round, so to speak. If everybody relied on benevolence for their daily needs, from whence would the objects of such benevolence come from?

This is clear from Smith's Moral Sentiments too. The divine has everything in his benevolent gift - the entire universe in fact - and still more than is needed by all of mankind. Mankind cannot match that degree of benevolence; its wants are many, its access to the means is limited; nature is niggardly, and so, necessarily, is mankind.

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Blogger entech said...

"Whoever offers to another a bargain of any kind, proposes to do this. Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. It is not from the benevolence of the butcher..."

It seems to me that there is an unstated corollary here:
Just as the customer cannot expect the merchant to give him a product simply because he wants it, neither can the merchant expect the customer to pay high prices for inferior quality products. This could be implied from the previous sentence which using expressions like “we obtain from one and other”.

The major supermarkets offer convenience and range while trying to dominate the market. Local markets thrive on free and open competition, choose from several stalls potatoes, sausages even prawns and lobsters that offer the best value. These markets are used by a range of people from the prosperous to the poor.

Like the “invisible hand” the “benevolence” quote is often isolated and misused to justify an already held position or theory.

12:14 a.m.  

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