Attacking Adam Smith For Neoclassical Assertions About Self-Interest is To Miss the Point

“The Collectivistic Premise” by Eli Merchant

HERE  Eli Merchant lives in New York City and he has taught at a number of colleges.

“The Collectivistic Premise views economics from a new perspective, acknowledging the influence of art, philosophy, history, psychology, ethics and other factors not often looked at, and challenges the premises on which economic thought has been conventionally based. According to Adam Smith and many subsequent economists, self-interest is the only motive driving human beings in the economic sphere, and consequently the only true guarantor of human productivity and wealth creation. Government regulation and ethical considerations are irrelevant and counterproductive in this regard, however high principled and noble their motivation.

While this explanation may account for some aspects of economic behavior in the market place that can be labeled as “utilitarian” and “individualistic,” this book takes note of a new principle, the “collectivistic” premise, whether reflected in consumption, work, and trade, that has not received its merited attention. Human beings act not only of self-serving motives but also out of communal ones so that the market place assumes a character and personality larger than its constituent parts. Far from being irrelevant, ethical, political and communal considerations are central to comprehending its nature and function. The role of the emerging global economy and advances in technology provide even stronger incentives to examine in detail this neglected aspect of human motivation and conduct.”
Comment

“According to Adam Smith and many subsequent economists, self-interest is the only motive driving human beings in the economic sphere, and consequently the only true guarantor of human productivity and wealth creation.”

At the very least this absolutist view if applied to Adam Smith is contentious.   It may have resonance with those economists applying the neoclassical paradigm in the past half-a-century or so, especially those unfamiliar with Smith’s “Moral Sentiments”, but it does not reflect self-interest in Smithian political economy, especially if it assumes that self-interest takes a singular form, nor that of more modern economic ideas associated with some (but not all) Austrians and people such as Hayek.

Neoclassical economists separate economics not just from societies as they operate and have long operated in the real world, but also from actual human behaviours generally.  The monolithic self-interest of the mathematical mind is fitted into a one-dimensional theory of human behaviour (brilliantly identified as'MaxU" by Deirdre McCloskey).  One-dimensional is the only way that the complex shades of human motivations can work in calculus and produce basic curves so wonderfully illustrated in basic textbook diagrams and memorised by brigades of students.  Once these familiar Economics 101 diagrams are etched in the visual memories of graduates, the implications of much in postgraduate minds becomes Jesuit-like irremovable, especially those who have never studied Smithian political economy, which just about covers most of them.

“Far from being irrelevant, ethical, political and communal considerations are central to comprehending its nature and function.”

Adam Smith would agree with that statement, which kind of limits the relevance of Eli Merchant’s supposed “new perspective” for so long as he includes his false idea of Adam Smith's ideas in it.

For Smith, man is and always was a social animal.  He has never been a lone figure facing an utterly hostile world.  Hobbes’s assertion of a solitary life of man ”as poor, nasty, brutish, and short” is imaginative to suit his subsequent thesis and never was a description of mankind (it does not even correspond to the lives of our nearest cousins, the chimpanzees, who like us share a common ancestor).  Man has always lived in societies with other men (and, of course, women) and mostly lived long enough to breed feed the group and thereby propagate the species for the past 200,000 years (and h=our predecessors for several millions years before then, whatever bronze-age tribes after 800 BCE wandering around the near-East imagined.  At the minimum, all human societies involved degrees of co-operation, the basis for Eli Merchant’s “new collectivist premise”.

I have not read the whole of his short book but it is on order and I shall return to it in due course.