Monday, June 27, 2011

Helpful Review of My Adam Smith 2010 Book

John McHugh, PhD, visiting assistant professor of Philosophy at Denison University in Granville, OH, reviews in Metapsychology, Jun 21st 2011 (Volume 15, Issue 25) the second, paperback, edition of my recent book on Adam Smith HERE:

Adam Smith: A Moral Philosopher and His Political Economy
by Gavin Kennedy, Palgrave Macmillan, 2010,

Like much recent scholarship on Adam Smith, Gavin Kennedy's Adam Smith: A Moral Philosopher and His Political Economy aims to shatter some common misconceptions. One misconception in Kennedy's sights is that Smith was a "purist advocate" of laissez-faire economic policy (2; 180-189). Another, the one that most concerns Kennedy, is that Smith's Wealth of Nations is nothing but a primitive predecessor of contemporary mathematically-focused "textbook[s] on economics" (2). Kennedy believes that many modern economists have failed to appreciate the fact that Smith employs a "method" that is not an imprecise ancestor of the ones they use but one that is "entirely different" (1). Although Kennedy suggests that Smith's alternative way of "understanding how societies and their economies work" could serve as a "learning aid" for modern economists, he mostly leaves to others the task of showing what these economists should learn from it (2). His primary goal is to ensure that his readers are clear about the nature of Smith's work.

Kennedy's efforts result in an accessible yet thorough reader's guide to the Wealth of Nations. In keeping with Kennedy's objective of demonstrating that Smith was never interested in building clean mathematical models of economic activity, the book illuminates the elements of history, sociology, and psychology at work in Smith's use of Britain as a "case study" to show how modern commercial societies have developed, wherein lies their wealth, and what policies will best promote the growth of this wealth (2). The book is also sprinkled with interesting observations regarding the development of what Kennedy sees as the inaccurate depiction and use of Smith by economists writing after him (e.g., 158-62; 173-4).

The book's greatest strength, however, lies in its attention to the unity of Smith's thought. Kennedy sets up his treatment of the Wealth of Nations with a chapter on Smith's method of performing educated thought-experiments to trace the development of important human institutions (famously dubbed "conjectural history" by Dugald Stewart), a chapter on Smith's moral psychology, and a chapter on what is reported to be Smith's multifaceted theory of law (as Kennedy points out, most of our information about this aspect of Smith's thought comes from notes taken by students attending his lectures at the University of Glasgow). By showing how the Wealth of Nations is just one component of Smith's broader inquiry into the human condition, these chapters lay the groundwork for Kennedy's reading of Smith as a political economist who was interested in the behavior of real human beings, not abstractions who are motivated solely by the desire for financial gain.

The unity of Smith's thought and his concern with actual human behavior become particularly evident in Kennedy's discussion of the specifically human propensity to bargain and negotiate. Following philosopher James Otteson, Kennedy points out that this propensity plays as central a role in Smith's developmental accounts of language and of morality as it does in his developmental accounts of the division of labor and of commerce in general; underneath all these institutions, Smith argues, is our natural desire to make agreements (15-18; 25-38). Kennedy also points out that since this foundational propensity is social in nature, economists cannot claim inspiration from Smith if they decide to represent commercial interaction exclusively as the antagonistic clashing of solely self-interested atoms (61-4). Although Kennedy does not fully articulate what he takes to be the social aspects of our propensity to "truck, barter, and exchange," his emphasis on its general "other-centeredness" makes quite clear the complex, non-simplistically egoistic way in which Smith understood the psychology of economic behavior (53; 62).
We see what is perhaps an even more striking instance of this complexity when Kennedy observes that Smith's understanding of economic interaction between the "mutually anonymous" members of modern commercial societies mirrors in important ways his account of the kind of interaction that fosters the development of an agent's impartial moral conscience (32). If the former mirrors the latter in teaching us to take seriously others' points of view, it, surprisingly, must have some moral value. Thus, we see another source of unity within Smith's project and another source of difference between his and many modern understandings of economic interaction.

The remaining chapters walk the reader through all five books of the Wealth of Nations. Obviously, this is a lot of ground to cover in (roughly) 150 pages, but Kennedy does so without sacrificing detail. Many of these chapters contain helpful lists of the myriad examples and arguments that Smith uses to explain things like the differences in wage rates between professions (88-9) and the psychological traits, social practices, and official polices that have served as "obstacles to the progress of opulence" (111-2). As in the earlier ones, most of the writing in these chapters is admirably non-technical (although there are some spots in which more precision would have been welcome, as when Kennedy discusses the tendency of "modern authors [to] imply that the [invisible hand] metaphor itself was its own object"; he seems to mean that these authors simply make too much of the metaphor, but it is not clear why this exaggeration amounts to "making the metaphor the object of itself"; 154, 157). Also like the earlier chapters, these ones are titled and structured around a quoted Smithian phrase. This organizational device would work better if it were paired with a more straightforward indication of the chapter's subject matter. This is especially true in the chapters on the Wealth of Nations, which should also state the exact sections of Smith's text to which they correspond; the same goes for the titles of the subsections of these chapters. The book would better perform its function as a commentary on the Wealth of Nations if it made more explicit the way it follows the structure of Smith's text.

This flaw, however, is by no means fatal. On the whole, Kennedy's book is a competent addition to the literature on Adam Smith. It is recommended primarily to those interested in the history of economics.

(Copyright John McHugh 2011)

John McHugh, PhD, visiting assistant professor of Philosophy at Denison University in Granville, OH, review is most welcome and shows he has understood what I, as the author, was attempting to achieve in my book on Adam Smith.

I prepared the second edition (paperback) under the constraint that Palgrave wanted the first edition cut down by amalgamating some chapters and editing down several others. Hence, chapter 12, on the IH metaphor, though it would benefit from more recent work, primarily from my appropriately friendly debate with Professor Daniel Klein (GMU, Virginia), from which I learned a lot, was squeezed to the point of my making difficult decisions on what to leave out.

Professor McHugh rightly identifies a weakness in the absence of my full argument, which I have advanced several score times this past year on the IH metaphor:

‘As in the earlier ones, most of the writing in these chapters is admirably non-technical (although there are some spots in which more precision would have been welcome, as when Kennedy discusses the tendency of "modern authors [to] imply that the [invisible hand] metaphor itself was its own object"; he seems to mean that these authors simply make too much of the metaphor, but it is not clear why this exaggeration amounts to "making the metaphor the object of itself"; 154, 157).’

My point is more than modern economists have made the IH metaphor ‘the object of itself’, important as that it is, because many of them have invented objects for themselves and palmed them off falsely as what Adam Smith meant on the only two occasions in which he mentions the metaphor in TMS and WN. The net effect is to invent meanings for the IH metaphor that makes it its own object. This evidence that many economists do not understand the purposes of metaphors in the English or any other European language given the close link between English and classical Greek and Latin.

Smith knew the purpose of metaphors both from his studies as a student at both Glasgow and Oxford, and knew the classical roots of metaphors in rhetoric from his fluency in Greek and Latin, a precondition of attending universities in the 18th century, and as significant, a precondition for becoming a professor because lectures were delivered in Latin by the professors (though Francis Hutcheson changed to English in his classes, as did Smith after he was appointed in 1751 and certainly by the early 1760s).

Smith lecture series in Edinburgh (1748-51) were originally entitled ‘Rhetoric’ and we have student notes of this series delivered at Glasgow in 1763 (Adam Smith, Lectures On Rhetoric and Belles Letters [1763] 1763). In these lectures he
Discusses metaphors and makes the point that a metaphor describes its object in ‘a more striking and interesting manner’ (p 29). This is critical for the debate about what he meant by the IH metaphor.

Most modern economists, wedded to the idea that an ‘invisible hand’ is at work in ‘markets’, ‘supply and demand’, ‘prices’ and ‘equilibrium’ producing unintended consequences - even transforming ‘selfish’ purposes of individuals (sometimes ‘always’!) into socially beneficial ends – assert that this is its role. Now this invention ignores the objects of the IH metaphor as used by Adam Smith in Part IV of TMS and Book IV of WN did not mention anything about these modern attributions and neither can they be remotely associated with them.

Adam Smith mentioned the objects of the IH metaphor on the two occasions he used it. In TMS it refers to the ‘proud and unfeeling landlord’ admiring his fields and imagining the crops, etc., were for his own consumption. Smith mocked this illusion (part of a more general ‘great deception’ driving the ambition of would-be rich men) by pointing out that the rich landlord could not consume the products of his fields even if he tried (his stomach is of limited size) and, moreover, he had to feed the ‘thousands whom they employ’, and their families, upon which his wealth depends. Cantillon (1735) observed the same relationship of mutual dependence – no food for labourers, no work from them; no work (and no wealth and greatness). In short, subsistence was distributed because of the absolute necessity for doing so, a truth obvious to kings, High Priests, and Conquerors in he Oriental Despotisms, to Greek and Roman slave owners, to war lords and feudal lords, Kings, Arab and North American slave owners. That inescapable necessity was represented by Adam Smith as ‘an invisible hand’.

In WN he discusses foreign trade in Book IV and observes that some, but clearly not all, merchants prefer to invest locally rather than invest abroad, and this adds to ‘domestick revenue and employment’ because it increases domestic investment. But ignored by almost every modern economist with whom I have debate this passage, is the plain fact that the are led to do so (‘by an invisible hand’) and he also informs readers the actual cause of their behaviour; in short, by identifying the metaphor’s object, not just once but several times. It is the ‘insecurity’ of these particular merchants, which they feel from what they perceive as the greater risks of foreign trade compared to ‘domestick industry’. The IH metaphor describes their behaviour in ‘a more striking and interesting manner’.

Given the fact that he analyses how markets and prices work, the effects of supply and demand, and the role of supply costs on the seller’s bargaining behaviour and market prices on the buyer’s behaviour, all without mentioning ‘an invisible hand’ it should hardly be a difficult problem to identify the object to which Smith’s metaphor refers.

Perhaps if there is a third edition on my book, I shall have the opportunity to explain these points. If not, and in the meantime, I shall continue to present the case on Lost Legacy.

It remains to thank John McHugh for his careful read of my book and for his constructive comments.


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