Friday, September 23, 2011

Robert Frank's Book: a Review (continued)

A Review of Robert H. Frank, ‘The Darwin Economy: liberty, competition, and the common good’, Princeton, New Jersey, Princeton University Press. September 2011.


This brings me to a fundamental problem with Frank’s perspective (though I have no political axe to grind). His entire thesis about Adam Smith is based on a set of myths created in the 20th century by modern economists, one ubiquitous example spread notably by Paul Samuelson (Kennedy. G. 2010. ‘Paul Samuelson and the Invention of the Modern Economics of the Invisible Hand’. History of Economic Ideas, xviii/2010/3)

I refer to the modern myths of the use of Adam Smith’s ‘invisible hand’. Frank refers to this myth 32 times on my count, though they may be more. Smith used the IH metaphor twice only in his books published in this lifetime (Moral Sentiments and Wealth Of Nations). The metaphor was quite popular in the 17th-18th centuries (Peter Harrison of Oxford lists over 40 occasions; History of Ideas, 2010) before Smith used it. I have discussed it on Lost Legacy almost every week since 2005. I shall not rehearse Smith’s meaning here (scroll down this year’s posts for my analysis of the IH metaphor; see also Kennedy, G. 2011. “Adam Smith and the Role of the Invisible Hand”, Economic Affairs, Vol. 31, Issue 1, 43-52).

To state it bluntly, Frank and most modern economists purvey a myth of the IH metaphor. Smith’s use was hardly commented on while he lived and during much of the 19th century, and numbered only about a half-dozen mentions from 1875-1900). Even in the early decades of the 20th century, it remained within an oral tradition at Cambridge (UK) and Chicago (US), with less than an handful of published comments (eg., Pigou, Gray, and Lange).

It began its modern journey to ubiquity after Samuelson’s text, Economics, in 1948, and through its 20 editions to 2010 – but Samuelson got it wrong (for details see my two references above). Frank calls it ‘a genuinely revolutionary insight’ (p 17) and ‘an extraordinary narrative’ (p 18). He continues that ‘behind the invisible hand is greed’. Yet Smith never said such a thing. In fact, this suggests that Frank in not familiar with Smith’s views on ‘greed’ (see Moral Sentiments on Bernard Mandeville’s ‘licentious’ philosophy), nor, incidentally with Smith’s qualification of self-interest by the need for bargainers to be ‘other regarding’ and not just self-regarding, as shown, for example, in the very quotation by Frank of Smith’s ‘most widely quoted passage in Wealth Of Nations’ (p 33), which he quotes, but misreads completely (see WM, I.ii.2: p 26-7).

This brings me to recall the ‘prediction’ Frank makes “that economists a hundred years from now will be more likely to name Charles Darwin than Adam Smith as the intellectual founder of their discipline” (xii). I have no particular view on futile modern arguments about Adam Smith’s status as the ‘intellectual founder’ or ‘father of economics’, and such like, nor any axe to grind about other supposed ‘fathers’ or 'grand fathers'. But I am familiar with the work of Charles Darwin and I find Frank’s treatment disappointing.

Natural selection works through the individual, not the group. So when Frank writes: ‘A mutation that codes for keener eyesight in one particular hawk … serves the interests of every individual, but its inevitable spread also makes hawks as a species more successful’ (p 7), showing signs of sloppiness about Darwin on natural selection. Similarly, with his account of the growth of larger antlers (p 21), which make bull elks with the larger antlers likely to win fights for females to the disadvantage of rivals with less powerful antlers. Yes, but the process by which the genes for larger antlers are transferred to others is via a blind and unintentional inter-generational transfer to the descendants of the powerful bulls who mate with more females and sire more descendants, than the bulls with smaller antlers, which is a definite disadvantage to existing bulls with the smaller antlers and their fewer descendants. Likewise with the hawks. The hawk with the sharper eyesight catches more food than those without that advantage, and its descendants spread, to the certain disadvantage (even the expense of) of the descendants of those with less sharp eyesight, which were out-competed for food. The females of this disadvantaged group have fewer surviving off-spring and over time, these differences in eyesight have a noticeable affect eventually on the relative proportions of eyesight quality (minute differences over long periods of time can cause significant quantitative changes). Similarly, for the bull elks. But there is nothing that the Hawks or Bulls can do about it. Truly, in evolution you must play only the cards with which you are dealt, unintentionally by your parents.

For Frank to conclude by asserting that ‘Darwin’s natural selection narrative closely tracks Smith’s invisible hand narrative’ is pure hyperbole in his idea of ‘closely tracks’ (p 20); they are not even related via the IH metaphor, as used by Smith. In fact, the IH metaphor’ was not even a ‘narrative’, it was, well, a metaphor – to understand the difference (see Adam Smith: Lectures on Rhetoric and Belles Lettres’, [1763] 1983, p 29, or the Oxford English Dictionary under metaphor).

Humans are able to make choices about courses of action, though not about natural selection; hawks, bull elks, and throughout all species, are not endowed with choices about their natural characteristics. They are subject to blind natural selection in Darwin’s account. No elk can endow itself with larger antlers, nor can any hawk create for itself sharper eyesight. Neither can humans but humans can adopt conscious behaviours or social arrangements that aim to be advantageous individually, though not necessarily advantageous for the group. Elks cannot stop arms races, though nature might, but humans can stop arms races. That is more than a Darwinian difference.

The entire history for the human species since it emerged from the hominine line is a testament to the outcomes of the choices that some humans made in contrast to that which other humans did not make – a few descendants left Africa for Asia and Europe, a few then went south towards Australia, later a few crossed the land bridge between Siberia and North America, some of those eventually left Alaska for the great plains east, others followed the mountains south. Whether any humans ever got (or have ever gotten, or ever will get) their social arrangements ‘right’ is pure opinion (and possibly a triumph of hope over experience). And we know Frank’s opinion of the current arrangements, because his book is an articulate testament to his dissatisfaction.

Neither the political economy enunciated by the Adam Smith born in 1723 in Kirkcaldy and/or the Charles Darwin of the 19th century can decide whether Frank’s hoped for changes to the world’s social arrangements will ever be realised. I am also sure that the cardboard constructs of the Adam Smith, supposedly ‘alive and well in Chicago’ (George Stigler), will have little to do with whatever happens in a 100 years time when future generations judge the relative merits of these two remarkable scientists. Remember, Adam Smith was not given to predict the future (with one exception, when he predicted that the former British colonies in North America would become richer than Europe by the 1880s).

We should read what Smith actually wrote in his Moral Sentiments and Wealth Of Nations and what Darwin wrote in his Origin of Species and his associated 4 volumes. We should not rely on the claims of modern epigones.

Franks book needs a careful treatment by readers.

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