Thursday, January 06, 2011

On Misreading What Smith Wrote

"daphne millar" in a comment to the post below, said:

"I think this comes so close to the comment you opbject as to make no difference.

" In almost every other race of animals, each
individual, when it is grown up to maturity, is entirely independent,
and in its natural state has occasion for the assistance of no other
living creature. 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 shew them that it is for their own advantage to do for him what he requires of them. Whoever offers to
another a bargain of any kind, proposes to do this. Give me that which
I want, and you shall have this which you want, is the meaning of every
such offer; and it is in this manner that we obtain from one another the
far greater part of those good offices which we stand in need of. It is
not from the benevolence of the butcher the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity, but to their self-love, and never talk to them of our own necessities, but of their advantages”.

The quotation is from Adam Smith, Wealth Of Nations, Book 1, chapter ii. I offered a completely different interpretation to her implied endorsement of the ‘selfishness’ assertion by misreading what Smith meant, and I have repeated below my original comments which may by missed by casual readers of the main posts:

Daphne Millar has selected a passage from Wealth Of Nations that she believes answers my defence of Smith against allegations that he advocated a thesis that the ‘selfish’ actions of individuals benefit society, viz: “everyone seeking their own selfish ends works to serve the common good by producing the goods we want the most.”

I believe that she (and many others who rely of quotations from Smith’s Works alone) misreads and misunderstands what Smith meant the passage that she quotes.

Let me explain:

The point that Smith makes about animals, and individuals among them, is that they do not need nor depend on other individuals of their species for anything once they reach maturity.

However, ‘man’ is in an entirely different situation with different behaviour sets in consequence. Men are dependent (‘constantly’) for ‘the help
of his brethren’, whereas, individual animals can survive in their selfishness (the strongest and the crafty doing marginally better), mankind has to co-operate with others in myriads of ways just to get by. Extremes of poverty are associated with high levels of dependence on self, not others, because their societies do not produce large surpluses of goods, even the most basic, and often depend wholly on local needs, curbed individually by their low productivity and consequent low output of tradable goods.

This alters their behaviours considerably. It doesn’t turn them into angels, nor does it institute a regime of total and indiscriminate benevolence. Cooperation is a learned habit, even disguised in many ways. As Mirabeau put it in the 18th century: the individual thinks that he works for himself, but actually he works for everybody else.

We cannot be totally self-sufficient – more so in early modern commercial societies, of the kind that Smith wrote about and knew about – and,, therefore, we rely on what others can do for us for what we cannot provide for ourselves. With the division of labour and supply chains stretching in anonymity (only present in crude forms in early societies) and into other continents, individuals had access to wider ranges of tradeable goods, exchanged from within local and, increasingly, distant sources, and the rising real personal incomes from these processes.

Poverty is the absence of access to such complex supply chains, and poverty remains a problem for as long as they remain absent.

In commercial societies, believed Smith, our relationships are dominated, not by selfishness (though we are all selfish in some degree), but by persuasion. One prevalent, though not the only, form that such persuasion takes is in what Smith correctly identified in the passage that Daphne quotes, and is known as bargaining, derived form the ancient propensity to ‘truck, barter, and exchange’.

Now bargaining requires a mediation between parties that transact to get what they want from someone in exchange for something that they want, hence, wrote Smith: ‘Give me that which I want, and you shall have this which you want”, which is in Smith’s words “the meaning of every such offer”, adding that “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”.

Smith elaborates by pointing out that the most effective way to persuade others to supply us with our wants is by ‘addressing’ their ‘self-love’ or ‘self interest’, and not just by addressing our own ‘interests’. 

Two selfish individuals would have great difficulty in persuading each other to exchange something for whatever they wanted from the other. We give to get. Each tries to persuade the other that their interests are best served by accepting whatever they offer in exchange for whatever they want.

This applies, for example, to the seller of a car persuading a potential buyer that the car is just what they need for whatever purpose they have a need for a car – big and roomy, if it’s a family, fast if it’s a trendy youngster, reliable in all weathers or terrains for a long-distance and ‘up country’ drivers, long-lasting for a low income family, looks good for a socialite, and so on.

Daphne has got Smith so wrong.

Smith attacked selfish philosophies (Bernard Mandeville) and also selfish actions (tripping up rivals, taking from others without giving something is return, cheating the poor, and other examples in his Theory of Moral Sentiments).

He had no time for selfish ‘merchants and manufacturers’ who ‘narrowed the competition’ and ‘raised prices’. He had no philosophy of selfishness.

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Blogger Joe Winpisinger said...

I think you hit the nail on the head there is a huge difference between selfishness and pursuing excellence. I have not read a great deal of Smith but that is what I took from him.

3:01 am  

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