Thursday, August 30, 2012

An Important Sentence by Adam Smith from Moral Sentiments

How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it.
"– from The Theory of Moral Sentiments by Adam Smith, "the father of capitalism".
"Says Leon Wieseltier at The New Republic:
“That is the least Galt-like, least Rand-like, least Ryan-like sentence ever written… If there is anything that Adam Smith stands for, it is the reconcilability of capitalism with fellow feeling, of market economics with social decency...”
Adam Smith was not “the father of capitalism”.  He was a moral philosopher who wrote about the commercial society that had existed since the 15th century - and for millennia before the fall of Rome in the 5th century.  I dropped Leon Wieselier's last remark about Paul Ryan (follow the link to read it) because I have no wish to enter US political controversies nor to purvey personal attacks on anybody. The two quotes are OK as representative of Smith and fair comment.  The opening sentence of Smith’s Moral Sentiments deserves wide circulation. 


Blogger Fong Sam said...

Hello, Professor Kennedy. Thanks for referencing my post on Haxbee. Just to be clear, I remember being taught that Adam Smith is widely cited as the father (or founder) of modern economics and capitalism. In fact, Wikipedia also makes this reference. Of course, it is indisputable that he is a social philosopher and a pioneer of political economics. I'm simply curious of the discrepancy between what I was taught and your own academic findings.

12:47 am  
Blogger Gavin Kennedy said...

Thank you for your comment Fong Sam.
Wikipedia on Adam Smith should be treated with caution.
Adam Smith was not "the father of capitalism" (nor its "high Priest", etc.) He did not know of the word 'capitalism' which was first used in English in 1854 by William Thackeray (The Newcomes) and 'Capitalismus' in German in 1857 (Oxford English Dictionary).
Smith wrote about 'commercial society' and the 'age of commerce'. It was linked to the founding of towns following the 'age of farming' and the division of labour i.e., about 11,000 years ago. Even the Bible links towns to the expulsion of Cain from Eden, when he went to the 'land of Nod, east of Eden' Genesis, 4.16).
Smith, as a moral philosopher, 'did nothing, but observed everything'. His perspective was always the past in relation to (his) present. He did not predict the future.
His views on commercial society were not adopted to create capitalism in the 1850s. Much of his advice for his present was ignored and still is ignored.
Societies are not invented - they evolve of their own accord and unintentionally.

3:06 pm  
Blogger Fong Sam said...

Fair enough. Humans like to mark history as a cleanly defined deck of cards. We given Smith the distinction of being the father of capitalism because he laid out the principles in "Wealth of Nation." He may not have intentionally "founded" capitalism (and the word wasn't even coined by him), but the ideas were articulated by him. It's not just Wikipedia, but most historians bestow this title on Adam Smith. Just like Copernicus did not create modern astronomy, but most historian give him the title of the founder of modern astronomy. We know these men's respective ideas were not new, but they are favored by history and so they get the credit.

3:24 pm  
Blogger airth10 said...

Leon Wieselier writes,"He [Ryan] learned from Rand that the road to morality led through economics."

There is a large grain of truth to the idea that society's morality is established and flows with economics. (Ryan got something right.) Economics and commercial activity animates and enshrines our morals. I think Adam Smith, who was more a moralist than an economist, was aware of this and extremely interested in how it transpired.

Common and mutually beneficial morals don't take hold through fiat. They take hold and become meaningful through people engaging each other. And what human endeavor is more active and engaging than economics? But it's not just any economics. It's free market economic, which is entered into voluntarily.

One of our greatest moral principles is the rule of law. Economic life alone didn't give us the rule of law, But the rules of law would been meaningless unless they were put to the test and into practice. I don't think there is any human endeavor that has tested our morals and put them through their paces more than free market economics. More than anything commercial activity has encourage two of our most important moral imperatives, accountability and transparency.

Under communism morals didn't develop naturally. In fact the majority of people mistrusted each other. That is because they couldn't engage each other freely.

3:59 pm  
Blogger Gavin Kennedy said...

Fong Sam
That's just it: Smith did not lay out the "principles of capitalism". He wrote about the mercantile political economy that claimed to represent "principles", but these principles of the time (and practice) were fundamentally flawed. The existing economy did not operate as claimed. Commerce had existed for many millennia long before the 18th century (and that includes the 'dark ages' millennium of 500 CE to c. 1500 CE). By the 18th century, Britain and parts of Europe were experiencing the beginning of long- term sustained growth, raising real income above the subsistence minimum of all previous millennia.
Smith suggested dismantling the mercantile state-run economy, This was not capitalism - large-scale capital accumulation, the characteristic of post-1850s 'capitalism' - did not yet exist. Smith slammed the East India Company for massive fraud, mismanagement, and outright theft - India was 2- years sailing there and back at the time.
The division of labour (both in productivity and in long supply chains (the common labourer's woolen coat example) grew organically by the anonymous activity of people who never read, or heard of, Adam Smith. He reported it and it carried out whatever philosophers said about it.
Wikipedia and such like, may like to personalise the great social trends of history, but this does not mean anything to students of history. Smith wrote about the 'History of Astronomy' in his essay (1744-c.58) and available among his works. It presents a different version of its history than you may imagine, in the conquest of what he called "pusillanimous superstition" by science - attempts to explain unusual worldly events by successively better explanations.
Popular explanations - often contrary to the known facts - are not science, and detract from understanding the great social forces of history.
I repeat: "Societies are not invented - they evolve of their own accord and unintentionally".
Darwin did not invent or father "evolution" - he produced a better explanation than the then existing explanations of the world being 6004 years old, the common view of tribes of Arab/Jewish bronze-age nomads and those they influenced into the 18th century.

5:18 pm  
Blogger Fong Sam said...

No one is disputing what you are saying about societies and their development. All I'm implying is that history (and human nature) likes to assign landmarks. Darwin didn't invent evolution (common sense)--he just wrote about it, and so he gets to be called the father of evolution or whatever title is bestowed upon him. Same
With Adam Smith (clearly commerce existed before him), but yet he still widely gets the credit. Perhaps a thousand years from now he loses favor. Right now, however, he's all the rage, in the same way Einstein is important, or Newton, or even Marx or Freud or Jung.

5:45 pm  
Blogger Gavin Kennedy said...

Thank you for your comment. I shall not comment on Paul Ryan from my long-established policy of not commenting on foreign country’s politics.
However, I shall comment on your ideas about the establishment of morality and economics.
Like Smith, I take a longer, historical view. Morality and societies (in all societies) go together. As Smith expressed: "a society of murderers and robbers must abstain from murdering and robbing each other".
Moral norms are established from the interaction of people in small social groups (originally, the small social group was the whole and only society people knew).
When humans were in the forest in small groups, their moral norms were established by how others behaved towards them as individuals who made up the group. As humans have existed for something close to 200,000 years as a separate, and ultimately successful new species that outlived other surviving pre-human species (the last of them about 30,000 years ago), the scope of economics in them was very narrow. They lived off what they found close by in their traditional hunting/gathering areas of the forests, and shared what they found in arrangements that suited their climate, terrain, and acquired knowledge, or they perished. Even in these conditions, their morality mainly included treating women badly.
Law, as Smith showed, evolved and became established by the power element imposed and enforced by those people who could do so in those societies. Smith expressed this as the law was to protect the (relatively) rich from the poor, which I suggest was a trifle narrow – a greater threat to the rich in any society came from the other rich (including within the same family) who covet what some other rich, usually relatives) possessed.
Markets did not change these relationships; they added complexity to them. Hence, the evolution of what we have often discussed before, that is Liberty. First, in England’s case, that of the rich Barons against the King at Runnymede (12 century) then progressively in time, wider extentions of rights to an evolving wider franchise (supremacy of parliament, etc., eventually adult male voting; then women, lastly in the US, Black Americans). The expansion of the democratic franchise under Liberty matches the expansion and intensity of market economies.

10:26 am  
Blogger airth10 said...

Fong Sam, I understand your point, in having Smith as a point of reference when speaking about modern economics and capitalism. Smith discovered a trend that would later be known as capitalism. One could say that Smith anticipated capitalism.

Perhaps it was more an event, the Industrial Revolution, that gave rise to capitalism and the talk of it. The Industrial revolution needed explanation and containment, which gave rise to the language and study of capitalism, since it was fed by capital.

12:30 pm  

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