Monday, April 04, 2011

Aye, Those Canny Scots...

John Churchill posts (3 April) in the Phi Beta Kappa blog (HERE):

“Those Canny Scots”

“Smith, of course, looms in almost cartoonish effigy over economic struggles of our own day. As the apostle of the free market, and source of the notorious “invisible hand” metaphor, he is trotted out with great regularity as the canonical spokesman of “laissez-faire” capitalism and the principle that public regulation of private enterprise is at best a necessary evil, to be minimized when it cannot be avoided altogether.

One might begin to question the adequacy of Smith’s perspective to the present day with the observation that he lived and wrote before industrial modes of production, urbanization, and the explosive growth of technologies ─ not least those of transportation ─ and populations had begun to give shape to the world in which we now live. The water frame and the spinning jenny had barely been invented in the years in which he wrote, and the power loom appeared a decade after. It is fascinating but ultimately elusive of resolution to speculate what he would have made of our world.

Still, we can note some things that turn up in the Wealth of Nations that seem, in interesting ways, to cut against the grain of the popular image Smith has been given. For example, he notes that, while one might assume that the point of production is to provide for consumption, the interests of consumers are often sacrificed to those of producers. His example is the maintenance of the (then) North American and West Indian colonies: “A great empire has been established for the sole purpose of raising up a nation of customers who should be obliged to buy from the shops of our different producers. . . . For the sake of that little enhancement of price. . . ., the home-consumers have been burdened with the whole expense of maintaining and defending that empire.” Cold Scots logic, that.

John Churchill, unlike many modern economists, is spot on with his short post on the authentic Adam Smith, particularly on the presumption that he was as apostle of laissez-faire (words he never used; nor did he use the word ‘capitalism’, first used in English in 1854), which is often confused with the 17th-18th century ideas of natural liberty from Grotius, Pufendorf, Carmichael, and Hutcheson and learned by Adam Smith when a student at Glasgow University.

I liked the description of him being the modern “source of the notorious ‘invisible hand’ metaphor”, a commonly used metaphor in the 17th-18th centuries by theologians, moralists, historians, preachers, and playwrights (Shakespeare) and novelists (Defoe, Walpole) [see also Professor Harrison’ paper on Adam Smith and the ‘invisible Hand in the September 2010 issue of the Journal of the History of Ideas) long before Adam Smith used it only three times for quite different purposes (and only once in Wealth Of Nations).

Modern economists made Smiths use of the ‘invisible-hand’ metaphor “notorious”, and without foundation in how Adam Smith used it, and applied it to contexts far removed from Smith’s use (most of whom apparently have not yet read Adam Smith on the proper use of metaphors, available in his Lectures On Rhetoric and Belles Lettres, [1763] 1983, p 29, Oxford University Press).

And, as the inimitable Robert Burns put it A Dream:

facts are chiels that winna ding’ An downa be disputed’. (“A Dream’)

In English this translates as:

“facts are fellows that will not be overturned, And cannot be disputed”.

Can I say more?

John’s praise of Hume and Smith as the ‘canny Scots’ is appreciated.

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