Tuesday, August 17, 2010

Yet Another Good Review of Nicholas Phillipson's Enlightened Life of Adam Smith

Adam Smith: an Enlightened Life By Nicholas Phillipson (Allen Lane, London). Reviewed by Diane Coyle (New Statesman, 16 August) HERE:

'The myth of Adam Smith is that he was the hard-nosed high priest of self-interested capitalism. A new biography shows that his intellectual goals were far greater and nobler.

Adam Smith's best-known book, An Inquiry into the Nature and Causes of the Wealth of Nations, still exerts an extraordinary influence, well over 200 years after it was first published in 1776. Many people know some of the book's most celebrated passages; a few even still read it. It is acknowledged as one of the founding texts of economics, and widely believed to be an apologia for unrestricted free markets. This belief dates from the enthusiastic adoption of Smith by free-market politicians and economists a generation ago. In this new biography, Nicholas Phillipson reclaims the author from that ideological fringe. He gives us the rounded man in place of the caricature.

… In setting out the scope of his subject's intellectual goals, Phillipson has portrayed an Adam Smith for our times. Perhaps every generation gets the Smith it is looking for. We are certainly living in an era when the idea that self-interest is a principle sufficient for a well-ordered society and economy has lost the appeal it once had. But more than that, this new biography reminds us that the goal of constructing a Science of Man was a driving force of the epoch of discovery in the 18th century. Men like Smith and Hume did not regard the study of human visual perception, say, as a field of endeavour separate from and unrelated to the study of the division of labour. Today, there is once again convergence between the academic disciplines as we learn about the evolutionary roots of patterns of human thought and behaviour. (I am sure that Smith, were he alive today, would have been enthralled by these discoveries - he would likely be an avid participant in TED­Global conferences.)

For all its . . . daring, his philosophy is the work of a modest man who set out to reflect on a simple, apparently unremarkable characteristic of human nature: our desire, when all things are equal, to improve our own lot, that of our families and that of the civil society to which we belong. It was a disposition the day labourer shared with the aristocrat, the young person making his or her way in the world with the sage and elder statesman.

Human nature hasn't changed; Smith's question is still the one to answe

Diane Coyle’s review is both sympathetic to Phillipson’s project and in my view a fair representation of Adam Smith’s life’s work. I cannot say the same for two commentators.

‘Tim’ writes: ‘Smiths' explanation of markets reaching equilibrium due to the "invisiable hand" is a a fallacy. Markets do not always reach equilibrirum and the failure of economist to challenge this rather than accept equilibrium theory as a given shows a lack on itntellectual rigour’.

That the invisible hand metaphor has become a myth since the 50s (Samuelson) does not discredit Adam Smith: he never wrote anything about the invisible hand in relation to markets, nor did he write about equilibrium in markets. For Smith they were always in flux.

‘William’ takes the biscuit: ‘he (Smith) never examined the world’.

This a preposterous nonsense. His ‘world’ took him from Greco-Roman times back and forwards to 18th-century Europe, India, China, South-central-and North America. His use of data is tiring (not missing) and his examples multiple which one reason for the book being so long and so off putting to modern readers as poorly informed about history as they are of the contents of Wealth Of Nations.



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