Daniel Klein On Allegories (Part 1)
Daniel Klein is a keen
promoter of the work of young postgraduates at George Mason University. He also devotes some of his time to
older retirees like myself. I
first met Daniel at a conference dinner at Balliol College, Oxford University,
where Smith was a student (1740-46). The International Adam Smith Society
staged the conference in January 2009, to commemorate the 250th year
of the publication of the Theory of Moral Sentiments in 1759.
We exchanged views during
a conference dinner on Adam Smith’s use of the metaphor of “an invisible hand”,
without agreeing, but always politely.
The upshot was that months later, Daniel, as the editor of Econ Journal
Watch, invited me to contribute to a debate with him on the “invisible hand”. He published a long piece from me: “Adam Smith and the
Invisible Hand: From Metaphor to Myth”, Econ Journal Watch, Vol. 6, No. 2, May 2009, pp
239-263 (available HERE).
Daniel published his reply, robustly disagreeing, but well within the
established polite norms of scholarly discourse, for which I remain grateful. I
learned a great deal from him, as I continue to do from his many articles and
papers, which he invariably sends to me on or before publication. Two years
later in 2011, he invited me to continue our debate in Economic Affairs, the
journal of the Institute of Economic Affairs. Daniel Klein, with a young colleague, Brandon Lucas, wrote “In a word or two,
placed in the middle: the invisible hand in Smith's tomes” Klein and Lucas, (Economic Affairs, 2011, March, vol. 31, March 2011:
43-52) and I responded with ”Adam Smith and the role of the metaphor of
an invisible hand” (Economic Affairs, 2011, March, vol. 31, March
2011: 53-55).
Daniel Klein, George Mason
University, Fairfax, Virginia, is a gifted author, who writes both inside
the boundaries of economics and outside those boundaries in the realms of moral
philosophy and literature (always under the “presumption of liberty”). His recent podcast for ‘The Library of
Economics and Liberty’ on Adam Smith’s Theory of Moral Sentiments (1759) HERE http://www.econtalk.org/bookclub.html,
was a tour de force of erudite understanding of Smith’s views, clearly
explained. Too many modern economists do not attempt to read TMS because they
remain unaware of it, or if they are aware, they simply give up trying to read
it.
Hence, we have
form, as they say in police TV dramas, and this is important when I offer
comments today (and tomorrow) on Daniel’s latest paper, “Allegory and Political Economy: Communication and
Cooperation” in ‘The Freeman’ from the Foundation for Economic
Education HERE [Follow the link to read Daniel’s paper in full.]
Comments
This introductory
background sets the tone of our debates about Smith’s meaning when he used the popular
17th-18th-century ‘invisible hand’ metaphor, which I
insist should be treated as a straight forward metaphor, as used regularly in the English
language. It was used in this
context when Smith taught Rhetoric from 1748 to 1763 and it remains today as he
defined it when he used it once only in both in TMS and WN (see his ‘Lectures
in Rhetoric and Belles Lettres’, [1762] 1983, Oxford University Press). Daniel disagrees and considers the IH
metaphor has some special quality within it of importance to the policy agenda
he favours.
Metaphors are
defined in the Oxford English Dictionary, that definitive arbiter of the
English language. Daniel, on the contrary, insists that the IH metaphor for
Smith may have a deeper, quite different meaning, as defined by Leo Strauss, a
mid-20th-century theorist, in his theories of ‘esoteric’ and
‘exoteric’ meanings, in which words can have meanings different from the
ordinary meaning of such words, especially when an author deliberately intends
to mislead censorious authority about his true, private views, supposedly hidden by Smith during his lifetime. This could be true on matters of religion, but not in his
use of language and grammar, where he held and practiced strong views in all of
his Works.
I suggest this
latest article from Daniels is a new example of his proclivity for introducing
original thoughts into modern debates from the views of modern authorities on
18th-century issues. These articles are always illuminating and
provocative in that they make readers think. Daniel’s current paper is no different. In this response, however, I challenge some of its ideas.
First, let me
assert that when Daniel intellectualises the
“ordinary business of life”, he risks adding confusion to the simple
straightforward meaning of words. One example of Daniel’s approach is provided
by his comments on prices not being signals. Communicating, contrary to Daniel, can take place without ‘communion’,
other than the basic need for a common meaning, as in a common language and common symbolism shared by the sender of a signal and its receiver. We see or receive many signals and may
reject, ignore, or act upon them.
We are not permanently ‘in the market’ like stockbroker addicts.
A signpost at a road junction
pointing east, say, signals where the traveller should go if the place name is
where she wants to go. There is no
communion implied, nor is it necessary; a wooden signpost does not speak or
hear. The message and her response
too, are silent; however, her actions are visible. Daniel is far too restrictive in the
matter of signals. Similarly
for the entrepreneur ‘computing her profit or loss’. To whom must she
communicate with while simply computing the figures? She may prefer not to communicate with anybody about the
figures!
In trying to create
something out of the simple role of prices or directions as non-signals,
requires, he claims, deeper analysis of their nature, Daniel lays the basis for
what he intends to introduce. Why
does Daniel limit price signals to a “meeting of minds”? We see signals and
choose whether and how to react to them – we don’t have to follow all
directions for places we do not wish to visit, nor do we have to buy eggs, nor take a vacation in Florida. Much of the advertising projected at us
is not responded to, other than passively – as when we change channels or turn
over the page.
Daniel’s example of the
non-signal of a price of ‘$1.89’ for eggs may be spoken to those within
earshot, who may or may not understand the language of ‘$1.89’, or it may be written on a sign, and
readers and listeners may or may choose to stay and haggle for a lower price, or may seek
a larger number of eggs for paying $1.89. (The could just pay the price and go home. The speaker or writer can
haggle, disengage, or evaluate the likelihood of selling eggs at the $1.89
price, depending, perhaps, on how many others have bought or refused to buy at
that price earlier in the day. A potential buyer may not know the history of the
outcome of those earlier transactions; the seller may not know the intensity of
the buyer’s need for eggs. Further
communication by bargaining may elucidate such information. Price signals may
end possible transactions; or they may start them. No market in the world functions
without visible known prices or specific speech announcing their offers.
I am not happy with the
idea that “prices and other market phenomena tell entrepreneurs what to do”,
like some sort of instructions that must be obeyed. That is a gross simplification, unfortunately typical of
Economics 101. We can choose to
ignore all or just particular signals. Tyler Cowen and Alexander Tabarrok (two
distinguished senior scholars) in their textbook, quoted by Daniel, are being
too literal, presumably writing for an introductory economics course.
[Part Two in a day or so]
4 Comments:
Gavin,
Do you have a quote on what Leo Strauss said about the invisible hand? I tried to Google it with no success.
However, on Google I can across something strange, an article written by Daniel Klein about Smith's phrase "led by the invisible hand" being found right in the center of his book, The Wealth of Nations. Is that such a big deal?
Smith admired Thucydides. I understand that Thucydides put his central ideas in the center of his works.
Smith writes in The Wealth of Nations ".....and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention."
I think "as in many other cases" is a significant phrase. It implies that the invisible hand has been 'working' in other areas, hence the interpretation that it has also led in other ways, like being a leader of the free market and in self-interest.
airth
Smith also admired Polybius and other classical historians (discussed in detail in his "Lectures on Rhetoric and Belles Lettres" [1762-3]). Daniel Klein is quoting from a passage in styles of part narratives. Thucydides wrote his history as period at a time across the country; Polybius, in the surviving 7 volumes of his works (out of 54), going through each period exhaustively country by country, then passing to the next period, country by country. Elsewhere in his Lectures he praises Polybius for his thoroughness, if pedestrian narrative style. There is nothing significant about Thucydides 'middle' as a 'centre" in his volume. What significance Smith's comment has is not clear, but Klein's detective work is interesting.
Gavin
airth
A metaphor can be used in several places, providing it describes it object, which must be identified.
I suggested another occasion where such a metaphor may be possible in a recent post on Lost Legacy.
It does not mean that an entity called "an invisible hand" exists.
Gavin
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