A Debate Among Friends Rumbles On
Many thanks to several regular readers for drawing my attention to the article in the Economic Affairs journal (Marc 2011) on Daniel Klein's hypothesis that the physical centrality of Adam's Smith's use of the invisible-hand metaphor (with my response). Earlier last year I was invited by the Economic Affairs Journal to write a response to Daniel Klein's paper, the original draft of which he had kindly sent to me much earlier (we are both members of the Republic of Letters, where the participants engage in 'arguments among friends'). I had also commented on Daniel's earlier draft article about his and Brandon's discovery, and we both published our early papers on the Social Science Research Network (SSRN - available free - google it).
The gist of my response was to accept the results of the detective work by Daniel Klein and his colleague, Brandon Lucas, namely that in both Moral Sentiments (from the 3rd edition) and in Wealth Of Nations for the first six editions, the metaphor appeared in the physical centre of each book (chapter 1, Part IV and chapter i2, book IV respectively). When facts are stated and corroborated by the evidence, scholars should submit to the facts, which I did.
However, the explanations of the facts and their consequences are still very much open to debate, which I do in my response to Daniel and Brandon's article, but their explanation for their results was not part of those facts. Specifically, they did not (nor has Daniel ever done) answer the counter-fact of Adam Smith's taught meaning of the role of metaphors in the English language and Rhetoric (see student notes of his Lectures on Rhetoric and Belles Lettres, [1763] 1983, Oxford University Press/Liberty Fund, page 29), or consult any text on English grammar, including that by Hugh Blair, who took over Smith's Rhetoric lectures delivered in Edinburgh, 1748-51 and delivered his version thereafter at Edinburgh University.
Metaphors are used to describe their object in a "more striking and interesting manner"; they do not exist as their own objects - there is no 'invisible hand' with the mystical or romantic properties usually ascribed to it by modern economists, such as that Smith's invisible hand, for example, referred to 'competitive market forces'.
Smith's use applies to: a) the unavoidable necessity of rich landlords, including those of a vile disposition, in feudal Europe having to feed their slaves, serfs and labourers, if only to maintain them in their ability to work his land; and b) the insecurity felt by some, but clearly not all, merchants who chose to invest locally in the 'domestick' economy rather than undertake the perceived greater risks of foreign trade, which raises 'the domestic national output of the necessities and conveniences of life', the whole being the sum of its parts (that is, nowhere near the heavy maths of general equilibrium, nor the deep philosophy of Daniel's arguments, including the Talmud.
In neither example is the invisible hand absolute and applicable to all - some 'vile' feudal lords treated the subsistence of their dependent serfs despicably, and some from their humanity and fed their slaves, serfs, etc., reasonably well (subject to abrupt change no doubt through the passing generations), and many merchants invested their capital locally for other motives than their insecurity, just as some merchants chose to invest abroad with alacrity and enthusiasm. Smith was making a 'striking and interesting' point with the invisible-hand metaphor about specific lords and specific merchants and the unintentional consequences of their behaviour.
Modern economists (post-Samuelson from 1948) attributed a whole tranche of invented meanings to Smith's use of the invisible-hand metaphor, such as, but not only, that it was about perfectly competitive markets, natural liberty, a version of Pareto's welfare theorem, supply and demand, and general equilibrium. All these inventions fall on considering the specific objects of Smith's two uses only of the invisible hand metaphor - the behaviour of feudal landlords in their (non-competitive) agricultural economies and some merchants in Mercantile (and also in anything but competitive) Britain. These facts are ignored in all the debates on the invisible-hand that I have had with Daniel Klein and (for example, but not only) David Friedman (see my statement above about scholars ' scholars should submit to the evidence...).
The common usage since the 1970s of the invisible-hand metaphor applies it in Adam Smith's name to many modern phenomena and then back-projects its ascribed properties onto Smith's two examples, which is a factual error as well as being, in my always humble, opinion a conceptual mess, because the facts of the feudal centuries do not correspond with any of the circumstances associated with the modern attributions, nor do the facts of what is meant by competitive economies as understood by the same modern economists.
At this point, for now, I rest my case.
The gist of my response was to accept the results of the detective work by Daniel Klein and his colleague, Brandon Lucas, namely that in both Moral Sentiments (from the 3rd edition) and in Wealth Of Nations for the first six editions, the metaphor appeared in the physical centre of each book (chapter 1, Part IV and chapter i2, book IV respectively). When facts are stated and corroborated by the evidence, scholars should submit to the facts, which I did.
However, the explanations of the facts and their consequences are still very much open to debate, which I do in my response to Daniel and Brandon's article, but their explanation for their results was not part of those facts. Specifically, they did not (nor has Daniel ever done) answer the counter-fact of Adam Smith's taught meaning of the role of metaphors in the English language and Rhetoric (see student notes of his Lectures on Rhetoric and Belles Lettres, [1763] 1983, Oxford University Press/Liberty Fund, page 29), or consult any text on English grammar, including that by Hugh Blair, who took over Smith's Rhetoric lectures delivered in Edinburgh, 1748-51 and delivered his version thereafter at Edinburgh University.
Metaphors are used to describe their object in a "more striking and interesting manner"; they do not exist as their own objects - there is no 'invisible hand' with the mystical or romantic properties usually ascribed to it by modern economists, such as that Smith's invisible hand, for example, referred to 'competitive market forces'.
Smith's use applies to: a) the unavoidable necessity of rich landlords, including those of a vile disposition, in feudal Europe having to feed their slaves, serfs and labourers, if only to maintain them in their ability to work his land; and b) the insecurity felt by some, but clearly not all, merchants who chose to invest locally in the 'domestick' economy rather than undertake the perceived greater risks of foreign trade, which raises 'the domestic national output of the necessities and conveniences of life', the whole being the sum of its parts (that is, nowhere near the heavy maths of general equilibrium, nor the deep philosophy of Daniel's arguments, including the Talmud.
In neither example is the invisible hand absolute and applicable to all - some 'vile' feudal lords treated the subsistence of their dependent serfs despicably, and some from their humanity and fed their slaves, serfs, etc., reasonably well (subject to abrupt change no doubt through the passing generations), and many merchants invested their capital locally for other motives than their insecurity, just as some merchants chose to invest abroad with alacrity and enthusiasm. Smith was making a 'striking and interesting' point with the invisible-hand metaphor about specific lords and specific merchants and the unintentional consequences of their behaviour.
Modern economists (post-Samuelson from 1948) attributed a whole tranche of invented meanings to Smith's use of the invisible-hand metaphor, such as, but not only, that it was about perfectly competitive markets, natural liberty, a version of Pareto's welfare theorem, supply and demand, and general equilibrium. All these inventions fall on considering the specific objects of Smith's two uses only of the invisible hand metaphor - the behaviour of feudal landlords in their (non-competitive) agricultural economies and some merchants in Mercantile (and also in anything but competitive) Britain. These facts are ignored in all the debates on the invisible-hand that I have had with Daniel Klein and (for example, but not only) David Friedman (see my statement above about scholars ' scholars should submit to the evidence...).
The common usage since the 1970s of the invisible-hand metaphor applies it in Adam Smith's name to many modern phenomena and then back-projects its ascribed properties onto Smith's two examples, which is a factual error as well as being, in my always humble, opinion a conceptual mess, because the facts of the feudal centuries do not correspond with any of the circumstances associated with the modern attributions, nor do the facts of what is meant by competitive economies as understood by the same modern economists.
At this point, for now, I rest my case.
Labels: Invisible Hand, Smith on Metaphors
0 Comments:
Post a Comment
<< Home