Tuesday, February 07, 2012

An Evolutionist's View on Adam Smith

Jason Collins (including his quotes from Robert Trivers) writes (7 February) in Evolving Economics HERE

“Trivers on biology in economics”

In The Folly of Fools: The Logic of Deceit and Self-Deception in Human Life (my earlier review here), Robert Trivers asks “Is economics a science?” He answers:

The short answer is no. Economics acts like a science and quacks like one – it has developed an impressive mathematical apparatus and awards itself a Nobel Prize each year – but it is not yet a science. It fails to ground itself in underlying knowledge (in this case, biology).

Trivers notes the cost of this:
[T]he first piece of reality they should pay attention to – and this has been obvious for some thirty years now – is biology, in particular evolutionary theory. If only thirty years ago economists had built a theory of economic utility on a theory of biological self-interest – forget the beautiful math and pay attention to the relevant math – we might have been spared some of the extravagances of economic thought regarding, for example, built-in anti-deception mechanisms kicking in to protect us from the harmful effects of unrestrained economic egotism by those already at the top.

Trivers also has a short shot at the invisible hand metaphor. He notes that biology has hundreds of examples of where the pursuit of self-interest can have dramatic negative effects on group wellbeing. This reflects the recent arguments of Robert Frank.”

Jason may be relying entirely on modern representations of the co-called Invisible hand, which readers of Lost Legacy will know is (a) attributed to Adam Smith (a fallacy, invented by the same modern economists from the 1940s and now widely believed), and (b) is usually accompanied by another invention that self-interest has the remarkable quality that it always operates to the benefit of the society, irrespective of the other motives of economic agents, including selfishness.

Neither of these beliefs is accurate. Indeed, Adam Smith was never so unworldly as to assert such a ridiculous notion. In Wealth Of Nations (Books I, II, and III) he identifies over 70 instances of malign outcomes from the personal self-interest of certain individuals, which were detrimental to those affected (to which I could add how in Books IV and V, Smith excoriates European powers for their brutal imposition of colonial rule on the Americas and India).

There was never any question of Adam Smith being starry-eyed about the possible detrimental affect of self-interest on others, themselves and the group.

If Jason Collins and Robert Trivers (and, of course, Robert Frank) believe something to the contrary, I would be interested in where Smith expressed such naïve views; certainly not in his Moral Sentiments or in Wealth Of Nations.

As for possible inexcusable assertions to the contrary, there is no direct lineage of view from Adam Smith to modern neoclassical economics.

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