RON BAKER REALLY KNOWS AND UNDERSTANDS ADAM SMITH ON THE INVISIBLE HAND AND MORE

Ron Baker posted (1 September) this excellent,and welcome article on Linked In HERE 

Ron Baker started his CPA career in 1984 with KPMG’s Private Business Advisory Services in San Francisco. Today, he is the founder of VeraSage Institute, a think tank dedicated to educating professionals internationally.

 He writes: 

“The Invisible Handshake”

“In Oliver Stone’s 1987 movie Wall Street, the Nietzschean anti-hero Gordon Gekko proclaims, “greed, for lack of a better word, is good,” as if greed is the pinnacle of virtue for businesspeople.

This view is commonly attributed to Adam Smith’s famous invisible hand; but like most conventional wisdom, it is more conventional than actual wisdom, since Adam Smith never claimed that greed was good.

In fact, the term is properly credited to Bernard Mandeville (1670-1733), a Dutch psychiatrist and pamphleteer. In his work The Fable of the Bees [1714], Mandeville claims that “private vices are public benefits.” Adam Smith, in his mostly forgotten book The Theory of Moral Sentiments, disagreed with this, calling it “wholly pernicious” and the thesis “erroneous.”

Yet, who subscribes to the view that greed is good? Taken to the extreme, it would prevent anyone from starting a family––indeed, it would be a dagger in the heart of family life, marriage, friendship, partnership, entrepreneurship, and brotherhood.

Helplessness may be the only truly universal human experience, since all of us pass through infancy. The human race would not have survived one generation if every person acted as if he were unconnected to any other person. Most parents would die for their children, and this is not even considered heroic behavior but rather ordinary.

The Forgotten Adam Smith

Long before economics became a formal discipline, economists were known as moral philosophers. Smith wrote The Theory of Moral Sentiments, published in 1759––seventeen years before his more famous Wealth of Nations––wherein he theorized that moral sentiments are emotions or feelings––as opposed to pure logic––about right and wrong.

Taken together, these works attempted to integrate economics and moral behavior, since Smith thought there is no conflict between economic thought and moral philosophy. In the long run, the public interest depends on private virtue.

While many cite the writings of Smith as proof of capitalism’s selfishness and greed, his views were much deeper and more nuanced than simple self-interest. He dealt with human nature and psychology in The Theory of Moral Sentiments, which also studied human feelings and acts of benevolence. In the opening paragraph he wrote:

How selfish sovereign 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. …The greatest ruffian, the most hardened violator of the laws of society, is not altogether without it."  ....

 [Plus so much more ... follow the link]

Comment

That is all I feel able to post in order not to trepass on Ron Baker’s copyright or risk my reputation for fair dealing.   However, I would love to publish it on Lost Legacy because it is so close to what Lost Legacy has been arguing, almost alone, for 13 years that I am resisting shouting out loud that “We are not alone”! 

If we ran a competition for the best article on Adam Smith and what he was about in the whole of that time since Adam Smith’s Lost Legacy, Ron Baker would win it hands down.

So I urge readers to follow the link above (it worked 15 minutes ago) and see how close Ron Baker is to my interpretations of Adam Smith.

Naturally, I have some small caveats (I’m an incureable scholar on details!) but they do not alter my judgement of Ron’s achievement.