Friday, May 06, 2011

More Essays on Journal Talk

The lively discussion Blog on Journal Talk carries two comments (by postgraduate students? – I say that because of the earlier reference to Daniel Klein, the formidable educator on all matters related to Adam Smith at George Mason University, Fairfax, Virginia) (HERE):

"The Two Faces of Adam Smith"
(in The Southern Economic Journal 1998 vol. 65, no. 1, 1-19).

Vernon Smith seeks to solve the Adam Smith problem and reconcile what seem to be two inconsistent views of human nature in Wealth of Nations and The Theory of Moral Sentiments. In Wealth of Nations, Smith’s invisible hand theorem proposes that it is not from benevolence, but rather “the propensity to truck, barter, and exchange one thing for another” which drives our behavior (1776; 1909: 19-20). In The Theory of Moral Sentiments, Smith declares that there are “some principles in… [human] nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it” (1759; 1976: 9). Vernon Smith asserts that these two views are consistent if we recognize a “universal propensity for social exchange” (3). He proposes the following behavioral axiom: ““the propensity to truck, barter, and exchange one thing for another,” where the objects of trade I will interpret to include not only goods, but also gifts, assistance, and favors out of sympathy, that is, “generosity, humanity, kindness, compassion, mutual friendship and esteem” (Smith 1759; 1976, p. 38)” (3). Vernon Smith then proceeds through historical, psychological, and experimental evidence to support this theory. Vernon Smith offers a very convincing and creative solution to the supposed Adam Smith problem. He makes crucial distinctions between reciprocated and non-reciprocated exchange. However, Vernon Smith seems to neglect the importance of non-reciprocated ethical behavior in Adam Smith’s work. Hanley (2010) elaborates on the distinctions between Adam Smith and Vernon Smith. He also points to divergences in opinion on intended beneficence and social vs. unsocial behavior. Vernon Smith asserts that Adam Smith’s explanation of beneficence is “utilitarian” and argues that it arises “from the expectation of reciprocal benefits” (17). This egoistic view of man may not fit neatly into Adam Smith’s conception which encompasses broader views on ethics and virtue”.
Echo Keif

“Echo’s critique is insightful, and touches on Hanley’s recent appraisal of the article. I would like to suggest that while Vernon Smith’s experiments are very interesting, that his jumping off point misses a better way to reconcile Adam Smith’s two works.
 Although Adam Smith does attribute the propensity to truck, barter, and exchange to man as one of his most innate qualities, it is not the most obvious bridge between the two books. As a method of operation in the world, the propensity is important; as an explanation of the origin of our behavior, less so. The Adam Smith of the Theory of Moral Sentiments proposes a picture of man who receives input from the world around him about how he ought to behave. The man wants to be loved and to be loveable out of a concern for his self-interest. Both works address the content of self-interested behavior. The content which makes up self-interest in each book is explained differently, but they both amount to an exploration of self-interest in different frames. Paganelli (2008) even suggests that self-interest is judged with a more friendly result in the Theory of Moral Sentiments than in The Wealth of Nations.
Self-interest, rather than the propensity to truck and barter, is perhaps the real tie between the two works. In the Theory of Moral Sentiments Smith addresses humanity in the full context of human interactions, while in the Wealth of Nations he addresses that part of society most affected by the virtue of prudence. The method of approach is therefore different, but the starting point for each is not so far apart as is often assumed.
John Robinson

Brief for now. There is some understatement of “the propensity to truck, barter, and exchange one thing for another”.

For Smith this was about more than exchange in connection with trade (indeed, I have read many misquotes of this phrase as saying ‘and trade (sic) one thing for another’. Jim Otteson linked it to all of Smith’s work, from his essay on the History of Astronomy, Moral Sentiments, his essay on the Formation of Language, and Wealth Of Nations (I also cover it in the first edition of “Adam Smith: a moral philosopher and his political economy” (Palgrave, 2008).

It is the propensity to exchange, ideas as well as things, that drives humans to co-operate in societies at all stages of human development. From that propensity, humans used speech to develop techniques like persuasion, reciprocation (the quasi- bargain - delayed), and the full (simultaneous) bargain, and relationship implied in friendship, politeness, manners and grief.


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