Monday, August 15, 2011

New Interesting Seminar Course from Jeff Weintraub

Jeff Weintraub, a social & political theorist, political sociologist, and democratic socialist who currently teaches at the University of Pennsylvania, has appeared on Lost Legacy while we discussed, amicably and productively (as is proper and appropriate for scholars), matters related to Adam Smith’s thinking. He put on his blog (25 January) most interesting details of a course he ran recently (oh, to be a student once again!).

What is striking about Jeff’s course outline is the centrality of the question he has set for his students to examine. This centres on a theme often discussed on Lost Legacy (though not necessarily subscribed to by Jeff):

to what extent can modern economists attribute to Adam Smith proto-general equilibrium notions (from Arrow an Hahn in General Competitive Analysis (1971) “that a decentralized economy motivated by self-interest and guided by price signals would be compatible with a coherent disposition of economic resources that could be regarded, in a well-defined sense, as superior to a large class of possible alternative dispositions”.

Further, Arrow and Hahn ask: "What will an economy motivated by individual greed and controlled by a very large number of different agents look like?", and students were expected to attempt to address it.

Jeff writes:
“Kenneth Arrow & Frank Hahn put Smith’s theory of the market in perspective”

“This was sent to the students in a seminar on the history of modern economic thought, "Economic Liberalism and Its Critics", that I'm teaching this semester. Right now we're reading & discussing (portions of) Adam Smith's Wealth of Nations. This little item is relevant to that, and it may also be of more general interest. —Jeff Weintraub:

“Nowadays, more than two centuries after Adam Smith published The Wealth of Nations and after so many of his ideas have been absorbed and elaborated by academic disciplines, ideologies, and everyday public discourse, it can sometimes be too easy to take his theory of the market for granted. And doing that can have at least two different kinds of effects, both unfortunate. On the one hand, it may incline people to swallow these ideas too easily and uncritically, as though they were simply common sense, without realizing how controversial and paradoxical many of them are. And on the other hand, it may lead people to underestimate the powerful and startling originality of Smith’s theoretical achievement in WN.”

“The following passage from the Preface to Kenneth Arrow & Frank Hahn’s General Competitive Analysis (1971), which was long one of the most prominent texts in general equilibrium theory, captures something important about the point and significance of Smith’s theory of the market and makes it clear why the central thrust of his theory should remain startling, as well as illuminating, to anyone who takes it seriously.”

“There is by now a long and fairly imposing line of economists from Adam Smith to the present who have sought to show that a decentralized economy motivated by self-interest and guided by price signals would be compatible with a coherent disposition of economic resources that could be regarded, in a well-defined sense, as superior to a large class of possible alternative dispositions. Moreover, the price signals would operate in a way to establish this degree of coherence. It is important to understand how surprising this claim must be to anyone not exposed to the tradition. The immediate "common sense" answer to the question "What will an economy motivated by individual greed and controlled by a very large number of different agents look like?" is probably: There will be chaos. That quite a different answer has long been claimed true and has indeed permeated the economic thinking of a large number of people who are in no way economists is itself sufficient ground for investigating it seriously. The proposition having been put forward and very seriously entertained, it is important to know not only whether it is true, but whether it could be true. A good deal of what follows is concerned with this last question, which seems to us to have considerable claims on the attention of economists
” (pp. vi-vii).”

Comment
There are no details to hand available of what was written by the students.

While open to other ideas, I am not happy either with the notion that “general equilibrium” operates at all in real world economies, nor that mathematical models of a general equilibrium have anything to do with the real world. That markets are the least worst of all possible forms for creating, producing and distributing the “necessaries, convenience, and amusements of life”, is not controversial, except with utopian would-be designers of unrealisible perfection. That is why Jeff’s second question (and his student’s answers) is of considerable interest to me.

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