IN TODAY’S DAILY TELEGRAPH (ENGLAND), 31 December 2014:

“Auld Lang Syne: Should old lyrics be forgot…”

(by Alice Vincent, Arts Writer):

“Should auld acquaintance be forgot, 

And never brought to mind?
Should auld acquaintance be forgot,
And auld lang syne!

For auld lang syne, my dear,
For auld lang syne.
We'll tak a cup o' kindness yet,
For auld lang syne.

And surely ye'll be your pint stowp!
And surely I'll be mine!
And we'll tak a cup o'kindness yet,
For auld lang syne.

We twa hae run about the braes, 

And pou'd the gowans fine;
But we've wander'd mony a weary fit,
Sin' auld lang syne.

We twa hae paidl'd in the burn,
Frae morning sun till dine;
But seas between us braid hae roar'd
Sin' auld lang syne.

And there's a hand, my trusty fere!
And gie's a hand o' thine!
And we'll tak a right gude-willie waught,
For auld lang syne.”

[PS: For NORTH AMERICAN READERS: 

“syne”” is pronounced as in: “sign”, NEVER: “zine”.]

Thank you Alice Vincent, 

HOGMANAY HUMOUR FOR WHEN NEW YEAR STRIKES TONIGHT WHERE YOU ARE

Foghorn Leghorn - self described as ‘Member: 3524775’  aged 45, New Jersey, USA) asks (31 December) on ‘Soda Opinions: everybody’s got one’: HERE

“Is the internet an arena where Adam Smith's invisible hand does battle with Karl Marx's oppressive fist?”

To start the “discussion”, Foghorn Leghorn offers a view:

“Adam Smith's invisible hand has an advantage here since it is invisible and the Marxist fist is not. Maybe that is why the fist is so paranoid that it needs to spy on its own people.”

Comment

Beyond parody! 

Marxist ‘fists’ are visible and tyranny cannot function without them. Prices are visible and markets cannot function without them.

Trouble is that believers in actual “invisible hands”, including the very bright people who teach economics - some of whom win Nobel prizes - have created a powerful myth from a metaphor that is out of control and when they start infuencing policies at the highest level, they discredit their profession (and the memory of Adam Smith, who taught Rhetoric for 16 years alongside his moral Philosophy and Political Economy classes) and knew what role a metaphor plays in an English language sentence. Unfortunately modern readers who believe in actual "invisible hands apparently don't.

HAPPY NEW YEAR TO READERS, WHATEVER YOUR OPINIONS OR AFFILIATIONS.

UNWARRANTED CRITICISM OF ADAM SMITH CLAIMS TO BE FACTUAL

Ricardo Hausmann, a former minister of planning of Venezuela and former Chief Economist of the Inter-American Development Bank, is Professor of the Practice of Economic Development at Harvard University, where he is also Director of the Center for International Development. He asks, 29 December HERE 

“Why Are Rich Countries Democratic?”

“When Adam Smith was 22, he famously proclaimed that, “Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice: all the rest being brought about by the natural course of things.” Today, almost 260 years later, we know that nothing could be further from the truth.

Comment

Ricardo Hausman  objects to the young Adam Smith’s youthfull exclamation from a short note that Michael or his son, Dugald Stewart, close family friends, had kept, which was later destroyed by Dugald’s mentally-ill son, without it being seen by anybody else. 

Young Smith’s experience of the 18th-century, systemically corrupt, war debt-ridden, British state, given to long and expensive wars across the then known world, was hardly one characterised by anything like the idealistic interpretation that Ricardo Hausman offers of modern democratic states in his otherwise interesting model of the USA, UK, and many European, richer states (though few of them have managed to avoid wars and their associated debt burdens even today).

However, as a thought experiment, for a Harvard post-graduate seminar, Professor Hausman’s essay fits the bill as an intellectual challenge for his students, once he adds the magic word: “Discuss” and requires his students, when asked by name, to provide their verbal comments to the class.

If I had been present in the class, I would have asked Professor Hausman, in what manner are the USA or Britain today so different, “almost 260 years later” that would lead us to conclude that Smith’s observation was “further from the truth? 

Yes, what became the USA (1776) embarked on a democractic journey lasting until the 1900s, with the demise of racial segregation in the 1960s, and the UK similarly, when universal suffrage male and female was finally achieved in the early 1900s.

Adam Smith’s youthful assertion was partly true and while not the whole truth (he didn’t ever walk on water!) it certainly does not warrant Ricardo’ dismissive proclamation that “260 years later, we know that nothing could be further from the truth” than the quoted assertion.

Are the USA and the UK models of war-making as ‘last resorts’? Has either solved the war-debt burdens of modern states and the crises that go with large-scale debts in all modern economies?  Is either (or any) state actual, as opposed to nominal, models of democratic accountability? Or is it the case that the working of markets is less than what we now imagine as ‘perfect competition’ and that all advanced and undeveloped (e.g. Venezuela) are closely entwined to varying degrees in their state-market economies? 

Smith may have been somewhat hasty in his tone but the case he was quoting was a fairly basic, non-developed economy starting from in the ‘lowest barbarism” (or what was referred to elsewhere as “savage” or near “savage”) for which he recommends “peace” - the absence of wars and their associated expenditures for which “easy taxes” would certainly follow in contrast to the experience of war-driven taxation and high borrowing in the UK and the rest of monarchial Europe.

To which he added a “tolerable administration of justice”, ignoring, of course, the vast intolerable mal-administration of justice in all feudal and war-lord economies of Europe, the Mediterranean, India and China over many millennia (since 'Providence divided the Earth'). 

Smith, we note, did not mention markets or the economy in his ‘juvenile’ declamation. So from what does Ricardo justify his dimissal of Smith’s fairly limited statement with the alleged line that “we know that nothing could be further from the truth”? 

I have read many statements from the ‘rightist’ press that laud the above statement of young Smith as it stands and assert that it is a statement favouring their version of what they call the “free market”, as if states should not exist at all. Ricardo comes from the other extreme, minimising the roles of the market as if they can operate without entrepreneurs. They are both wrong-heafed fantasies shown most dramatically in the 19th and 20th centuries. States can operate without markets - they did for 2 or 3 millennia. In their state-managed societies the bulk of their populations lived in poverty (as did the 20th century state dominated versions in Russia, China, and, in the 21st century, as State-run Venezuela seems to be heading. 

Extreme, hard-line libertarians, believe that markets can operate without states.  They haven’t so far, though the proclivity for gun-anarchy in the USA remains a worrying, claimed, so-called ‘right’.  This has been tried in history too in the form of local war-lords and princedoms.

Smithian-minded pragmatists, such as myself, hold to the different perspective of: “markets where possible, the state where necessary”.

Finally, Professor Ricardo Hausman, in chastising Adam Smith for being “furthest from the truth” may want to correct his own errors first, where factually incorrect. He quotes with confidence that when Adam Smith was “22” he proclaimed the “famous quote” about “little else” being necessary”, which is factually incorrect. Smith’s “famous quote” was made in 1755, when he was 32, not 22! (Smith was still at student at Oxford in 1745 and still working on his highly productive 'History of Astronomy' paper, published posthumously in 1795).

Smith was baptised in 1723 (his birth date is unknown but assumed to be when he was born, or close to his baptism date, as was the custom with sickly babies at the time). 

For the very best biography of Adam Smith, you should read Ian Ross, "The Life of Adam Smith”, 1976, 2nd ed. 2010, Oxford University Press and Liberty Fund). I discuss the interesting '1755' paper (now lost) and its background, in my first book, “Adam Smith’s Lost Legacy” 2005, “Appendix: Smith’s ‘1755’ paper”, pp 241-43, Palgrave-Macmillan.

Professor Hausman adds another factual error in his assertion that Smith published The Wealth of Nations, at age “43”. Again, using 1723 as his birth year, he was aged 53, not 43, in 1776 when Wealth Of Nations (first edition of six) was first published.

These errors may be unimportant in themselves, but a knowledge of Adam Smith’s biography is very important when modern professors interpret his moral philosophy, his political economy and also his teachings on Rhetoric and language. Their students are advised to read the originals for themselves and not to accept in reverence or misplaced trust any quotations and paraphrases from their professors of what other professors are alleged to have written before the 21st century (even at Harvard).

[I may return to Professor Hausman's otherwise interesting paper in due course.]

SMITH'S NOT SO 'NOTORIOUS' METAPHOR OF THE INVISIBLE HAND

Wayne Burrows posts ((25 June 2014) commenting on an article, first published in June, 2013): HERE 

Waymes comments are on Blue:

“THE INVISIBLE HAND, PUPAPHOBIA AND THE PUPPET STATE”

“Perhaps it’s significant now, in a way it might not have been in the mid-1960s, when the films were made, that the central justifying metaphor of the neoliberal free market is ‘the invisible hand’, the Enlightenment economist Adam Smith’s coinage for one of the many forces creating disjunctions between the intended and actual consequences of human and social actions in complex systems of the kind his classic study, The Wealth of Nations (1776), explored. Raised to a fetish by the advocates of deregulation and privatisation in the 1970s and 1980s, Smith’s concept of an ‘invisible hand’ at work in an economy, directing money to the deserving while securing the most efficient and beneficial ends for all, has become the free market’s founding catechism and a notion that puppetry fits like the proverbial glove.

If the allegorical point made by Jiří Trnka’s Ruka was largely directed at Stalinist control of cultural production in his own time and place, then, its contemporary resonance may be quite different, since the hand’s controlling powers – most forceful when the hand is that of the puppeteer, concealed from view as it invariably is – ensure that the forces acting on us in our everyday lives pass unnoticed, as somehow ‘natural’. …

The failure to observe or understand the forces that shape us reduces us to the condition of puppets ourselves, a position of superstition and fear as to what purpose the ‘invisible hand’ might have for us. Those who would claim to comprehend these forces on our behalf, to defend us from their worst effects, are, by definition, the powerful: those who ‘lead’, as Jan Švankmajer suggested in 1997, ‘the Great Manipulators’. When Adam Smith first deployed his now notorious image of the ‘invisible hand’ in The History of Astronomy, a work dating from the late 1750s, it was, strangely enough, in precisely this context, a point that flags up a warning about its decontextualisation when quoted from later texts. In the 1750s, Smith noted that, in an age before rational enquiry, “fire burns and water refreshes; heavy bodies descend and lighter substances fly upwards by the necessity of their own nature; nor is the invisible hand of Jupiter ever apprehended to be employed in those matters.” The ‘invisible hand’ is here that of the Gods who must be appeased, regardless of the social and natural forces at work; the Gods whose influences must necessarily disappear once Enlightenment and Reason hold sway and we finally shape our own destinies through the pursuit of new knowledge.”

Comment

The “central justifying metaphor of the neoliberal free market is the invisible hand” may well be true and fits to underlying confusion between so-called neo-liberal ideologies that are rampant in US politics” but such views have little connection to “the purported views of “the Enlightenment economist Adam Smith’s coinage for one of the many forces creating disjunctions between the intended and actual consequences of human and social actions”.

Such purported views are completely at odds with Smith’s use of the IH metaphor.  Smith’s did not have a “concept of an ‘invisible hand’ at work in an economy, directing money to the deserving while securing the most efficient and beneficial ends for all”. For Smith metaphors were used to “describe in a more striking and interesting manner” the "object" to which they referred.  I would expect a literate dramatist to know about metaphoric rhetoric in the English language.  Smith lectured annually on Rhetoric in the English language from 1748-63 (15 years).  A near verbatim copy of his Rhetoric lectures was discovered in 1958 and has been available in print since1983 from the Oxford University Press (and in a low-price edition by Liberty Press).  

Wayne Burrows should read Smith's Rhetoric lectures before accepting the neo-liberal fabrication of Smith’s meaning when he used the “invisible hand” metaphor.  He should also read Smith’s biography - I recommend Ian Ross: ‘The Life of Adam Smith’, 2010, 2nd ed. Oxford University Press before making assertions about Smith’s Works.

Smith wrote what became ‘The History of Astronomy” between 1744 and 1758, but until 1795 it remained in manuscript form only.  He kept it in a bureau in his bedroom, showing it to nobody, not even his close friend, David Hume, until he informed him by letter of it and where to find it prior to his trip to London, and should Smith not return, he told him to publish it if he died   On his death bed, in 1790, he told his executors (Joseph Black and James Hutton) to publish it posthumously, which they did in 1795.  

Apart from his account of the history of astronomy up to to Newton, its first part was basically on the history of philosophy from ancient times and throughout pagan theological superstition. "Astronomy" had nothing to do with markets! Its reference in a passing remark to the “invisible hand” was to the Roman classical god, Jupiter, that was widely believed to fire from his invisible finger visible lightening bolts at citizens who were enemies of Rome during Roman storms (a wholly frightening experience I can affirm, having lived in Rome and its storms while working for UNESCO).  Hence, Wayne’s reference to “a point that flags up a warning about its decontextualisation when quoted from later texts”, is more than misleading, to say the least.

Wayne continues: “Smith’s concept of an ‘invisible hand’ at work in an economy, directing money to the deserving while securing the most efficient and beneficial ends for all” is also misleading.

His two other references to the IH are not supported by Smith’s texts. His reference to the IH in Moral Sentiments had nothing to do with market economies; it refers to relations between “proud and unfeeling landlords” in the history of agriculture which covers many millennia from c.10,000 years ago, during which times said landlords fed their slaves, serfs, and labourers in exchange for their forced (to pit it mildly) labours that supported the landlord’s (Emperors, Kings, and Warlords, etc.) “greatness” (“palaces”, Pyramids and etc.).  Without food the labourers and their families would starve to death and without their labour, the landlords would lose their “greatness”.

The “invisible hand” metaphorically described “in a striking and more interesting manner” the exchange relations between “proud and unfeeling” landlords and their unhappy labourers, founded on their separate motivations for acting as they did: no labour, no food; no food production; no Landlord's greatness. In so acting, the said Lords and Labourers intentionally their immediate needs which enabled them to continue their rather one-sided relationship. However, in the very long-term their motivated actions also had unintentional consequence that Smith noted benefitted human societies, which consequence Smith identified as “the propagation of the species”.

Waynes assertion of Smith’s concept of an ‘invisible hand’ at work in an economy” is similarly unfounded. Wealth Of Nations (Book IV) refers to some (not all) “merchants and manufacturers” who are led by their motives to actions that intentionally lowered the perceived risks from foreign trade. By so investing locally they avoided foreign trade. However, such actions to achieve their intended consequences also had unintended consequences, specifically by adding their capital to “domestic revenue and employment”, they added to the amount of domestic employment available and to national wealth creation. This unintended consequence was beneficial to the society. But this had nothing to do with the metaphor of an “invisible hand”. There is no directing “invisible hand”, guiding a comercial economy: the invisible hand is a metaphor for the motives that drives people to take an action to achieve their intended consequence, and in doing so the unintended consequences may be benign socially, or not as the case may be. That is why we describe the unintended consquence as a result of the actions, but not the initial motives for those actions.

There are many motives for the actions of agents in an economy. Not all are socially beneficial. Smith details many instances (so many that many modern economists, including ideological rightists and leftists) have remarked in puzzlement at his numerous instances of the anti-social behaviours of  “merchants and manufacturers” in Wealth Of Nations that do not secure “the most efficient and beneficial ends for all”.  Tariffs, prohibitions, boycotts, trade wars, pollution, and 'tragedies of the commons', and so on are seldom beneficial; they reduce competition and raise prices, or destroy resources. Also State inspired policies are not necessarily an improvement on doing nothing.

Now what all this has to do with puppets, ‘fitting like a glove”, “puppet states” and so on, I leave readers to make their own minds up…

A CORRESPONDENT ASKS A QUESTION

A Correspondent asks (24 Dec, 2014):

“You've noted in previous posts that "the invisible hand" metaphor was mostly used by theologians prior to Smith. Can you cite some examples? Do you think that Smith was referring to "the invisible hand of God" guiding the worker's self-interest in inadvertently creating a better society?”

Comment

If you consult Peter Harrison’s article: “Adam Smith and the History of the Invisible Hand”, Journal of the History of Ideas, September, 2011, you will find over 40 references to authors in the 16th-18th centuries refering to the “invisible hand”, mainly in a theological context, as the “hand of God” and of divine origin. 

My own paper’s views are different to the theological explanations, see: in the Journal of Economic Thought: Kennedy. “The Hidden Adam Smith in his Alleged Theology”, 2011, Sept., vol. 33, no. 3, pp. 385-402 and Kennedy, 2013:  Chapter 22: ‘Adam Smith on Religion’, pp. 464-84. in Berry, Paganelli, Smith, eds.The Oxford Handbook of Adam Smith. Oxford University Press.

I do not think Smith was referring to "the invisible hand of God" guiding the worker's self-interest in inadvertently creating a better society in his three references to the metaphor of “an invisible hand”. You can scroll down my Blog posts: www.adamsmithslostlegacy.blogspot.co.uk from 2014 back to 2005 to see my many explanations of Smith’s meaning of his use of the IH metaphor. 

I can send to you a recent summary of my views if you want to see them. Reply to: gavink9@gmail.com

Gavin.

SOME BOOK NEWS - MAY BE WORTH A LOOK

Guy Alchon’s book, “The Invisible Hand of PLanning: capitalism, social science, and the state in the 1920s”, Princeton Legacy Library, 2014. HERE 

Comment

Variations on a theme? Blurb: “Guy Alchon examines the mutually supportive efforts of social scientists, business managers, and government officials to create America's first peacetime system of macroeconomic management.”

May be worth a look …

Eric De Groot, posts on his newsletter HERE

“Stocks Driven By The Invisible Hand, Not Fed"

Comment

Oh Dear! Another commercial financial advisor mystifies market processes by calling on an invented illusory entity that only the said advisor understands but potential clients do not. 

Hence punters are willing to pay said advisor to share his claimed insights into said mysterious processes.

However, stock prices are VISIBLE. 

All prices are VISIBLE.

The so-called invisible hand is, well, invisible because it does not exist.  

It was Adam Smith’s metaphor for how people’s SELF-INTERESTED motivations leads them to ACTIONS in pursuit of INTENDED CONSEQUENCES.

Sometimes such actions benefit others as well as themselves. Sometimes they don’t and sometimes its a bit of each. (Markets and legislation can be messy).

Moreover, and separately, following Cardinal du Retz (and Cromwell), people’s motivated actions also can have UNINTENDED CONSEQUENCES both positive and negative.

‘The road to hell is paved with good intentions’ (anon).

EVOLUTIONARY SCIENCE FINDS THE 'INVISIBLE-HAND' DEFICIENT

David Sloan Wilson Departments of Biology and Anthropology, 

Binghamton University, Binghamton, NY, and John M. Gowdy,

Department of Science and Technology Studies, Rensselaer

Polytechnic Institute, Troy, NY, USA (December, 2014) post in the

Journal of Economics HERE

“Human ultrasociality and the invisible hand: foundational developments in evolutionary science alter a foundational concept in economics”

Abstract

“Advances in the study of social behavior require a revision in the economic concept of the invisible hand, which states that self-interested behavior leads to well-functioning societies without individuals having the welfare of the society in mind. Evolutionary theory shows that self-interest does not robustly benefit the common good because behaviors that are “for the good of the group” seldom maximize relative fitness within the group. The evolution of group-level functional organization requires a process of group-level selection. Species that have become highly adaptive at the group level are called ultrasocial. The idea that an invisible hand leads to social harmony is valid primarily for ultrasocial species, where selection at the group level results in individual-level behaviors that produce group-beneficial outcomes. Individuals do not necessarily have the welfare of the group in mind, but neither do their behaviors or underlying proximate mechanisms resemble the economic concept of self-interest. Evolutionary science therefore provides a valid concept of the invisible hand, but one that is different from the received version, with far-reaching implications for economics, politics, and public policy.”

Comment

It is not just that the study of social behaviour that requires a revision “in the economic concept of the invisible hand”. It also requires a mandatory revision of the so-called economic concept of the so-called “invisible hand”, because as presented the above absolute statement is in error.  

If the so-called invisibe-hand theory has been challenged by the “study of social behaviour”, it suggests that both disciplines are now widely contaminated with a false at theory.

Self-interested behavior” does not always lead to “well-functioning societies without individuals having the welfare of the society in mind”.  Self-interested behaviour may or may not “lead to well-functioning societies”, which is an uncontestsble fact. Adam Smith is usually quoted confidently (and mistakenly, as it happens) as the author of the metaphor of “an invisible hand” because he used it twice only in two original statements in “Moral Sentiments” (1759) and “Wealth Of Nations” (1776) and once in his posthumous “History of Astronomy” (1795). A careless misreading of what he actually wrote, which he sharply qualified in many other statements throughout both of his main texts led to today's confusion on what he meant. Quite separately, false versions circulated among political economists in the 19th century, first in an oral tradition in  Cambridge (UK), and then in a few books by modern economists in the early 20th century. Then after 1948 Paul Samuelson gave the false theory ‘legs’, so to speak, in the USA, the false theory of the “invisible hand” in print took off across academe and across the media until by the 21st century the “invisible hand” theory was almost unanimous and widely believed.

I am encouraged by the Abstract by David Sloan and John Gowdy that appears to raise appropriate questions about the applicability of the “invisible hand” in evolutionary science.  Exectly the same questions should be asked about exponents of the false notion that it applies in economics.  Moreover, instead of reading short passages from Adam Smith (who remains the innocent victim of academic posterity in these matters), of the invisible hand read all ot his Works instead in which he introduces the metaphor twice only with his references to the “public good”.  Such reading also reveals over 50 cases where he discusses self-interested actions by people that led to what could only be described as “public bads”.  

Moreover, reading Book IV of Wealth Of Nations would do much to correct false notions about what he said on the “invisible hand”. He described Book IV as a “violent” attack on the entire “commercial system”, then operating in Britain in the 18th century and he was repeatedly uncomplimentary, to put it mildly, about “merchants and manufacturers”, and their private self-interested behaviours that were often at the expense of the public good.

That evolutionary science points to errors that challenge a so-called” foundational concept in economics” should surprise no economist who has read Adam Smith closely.  

Scroll down previous posts in ‘Adam Smith’s Lost Legacy’ for detailed discussions of the myths about Adam Smith’s alleged use of the ‘invisible-hand’ metaphor that allegedly states that “self-interested behavior leads to well-functioning societies without individuals having the welfare of the society in mind”.  It is not what Smith wrote or regarded as a general truth.

EXCHANGE BEHAVIOUR: THE UNIVERSAL HABIT OF THE HUMAN SPECIES IN GIFT GIVING AND MARKETS

Kevin Albertson, Reader in Economics at Manchester Metropolitan University posts on The Conversation (‘Academic Rigour, Journalistic Flair’) HERE 

 His post is about Christmas gifts being better value to the recipients than their 

purchases, net of a gift not perfectly matching a person’s preferences (measured

by what she would be inclined to purchase, under the usual neo-classical

assumptions, and the difference in happiness that she feels is more than made

up for from her personal joy at receiving a free gift from somebody she knows

cares about her):

“Priceless: the inefficient, but merry economics of Christmas”: “The value of affection”

“Casual observation indicates many of us appreciate gifts more than those items we require or buy for ourselves: consider the giving of birthday presents, flowers, and such like. This is despite the fact that, according to strict neo-classical economic theory, such giving is inefficient. Waldfogel makes this clear in Deadweight loss of Christmas.

According to Waldfogel, the inefficiency arises because when we give, we might not perfectly match the recipient’s preferences. He estimates that giving “destroys” between 10% and 30% of the value of a gift. However, it strikes me Waldfogel has not figured in how much value is added, even to a simple pair of socks, because of the affection with which it is given.

The extra value imbued in a gift is something with which many economists have difficulty. Adam Smith doesn’t mention it in the Wealth of Nations:

“It is not from the benevolence of the butcher, the brewer or the baker, that we expect our dinner, but from their regard to their own self-interest.”

Comment

I agree with Conversation’s affirmation of ‘academic rigour and Journalistic flair’ and Kevin Albertson exhibits both.

However, I am struck by two things about Kevin Albertson’s arguments.

First, he does not mention until the very end Smith’s “Theory of Moral Sentiments” published in 1759 before he wrote “Wealth Of Nations”, published in 1776.  Both books were linked philosophically and are mutually supportive. (There is no Das Adam Smith Problem!). 

Much of what his readers might take from his piece would be undermined if they confine their reading solely to ‘Wealth Of Nations’ under the mantra of ‘academic rigour’.  Neo-clasical and Rational Utility Maximisation (MaxU) economics (despite their mathematical sophistication) describe an imaginary economy. 

Secondly, he quotes Smith’s exposition on “bargaining” without discussing it, other than by his implied dissatisfaction with it.

“It is not from the benevolence of the butcher, the brewer or the baker, that we expect our dinner, but from their regard to their own self-interest” (WN I.ii.2p 26-7).

If the whole paragraph is examined more closely - and also Smith’s earlier statements to his class of students, as reported by a Student’s Notes of them in his ‘Lectures on Jurisprudence’ (1761-2), we find an accurate statement of Smith’s views on the positive role of how self-interest in people’s interactions with others in pursuit of their mutual feelings of ‘self-love’, which differs by a mile that by which neo-classical economists describe exchange behaviour (utility-maxisation and all that).

Two self-interested bargainers who pursue their self-interests as egoistic, utility-maximisers, would end up without the ingredients of their dinners or the money value of their exchange prices.

Smith showed they bargain using linked offers in the form: “Give me that which I want, and you shall have this which you want”, which “is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of the good offices which we stand in need of” (WN I.ii.2 p. 26).

Moreover, after the lines quoted by Kevin Albertson, Smith goes on to say, possibly the most important part of the partial paragraph that Kevin quotes:

“We address ourselves, not to their humanity, but from their self-love, and never talk to them of our own necessities, but of their advantages”.

This changes the  context of seeking our self-interests from a competing set of mercenary demands into persuasive, exchanges of what one gives to another for what one gets in exchange. In TMS, he talks throughout about the moral elements of friendly persuasion, of ‘higgling’ and haggling, of exchanging ‘good offices’ and realising ‘mutual dependences’ and the need of every man to co-operate with those with whom he has contacts. 

The gift exchange, universally, is long and deep in human history (and pre-history) as anthropologists have shown, and sociologists confirm. The Gift exchange preceded the monetised exchange by many millennia, as did what we call Barter (goods for goods) and its other exchange forms of labour (including sexual exploitation) for goods (’Truck’). 

Kevin Albertson notes: “Many of the best things in life are not necessarily “free”, but neither can they be bought and sold: they arise from our relationships.”

I heartily agree, only adding that Smith was thinking of human relationships in deep history (though it was much deeper than he, or anybody else, at the time realised) when he wrote that exchange ‘was the necessary consequence of a certain propensity in human nature … the propensity to …exchange one thing for another …it is the faculties of reason and speech … and common to all men”. 

Kevin is right that many of our interpersonal transactions ‘arise from our relationships’ and they contribute to human welfare, even in the most trying of circumstances, such as natural disasters and personal setbacks, which is a personal and poignant experience I have had these past months with my health situation. That is another reason to recall the depth of meaning in Smith’s account of the longevity and multiple reminders of the human proclivity for exchange behaviours.

Hence, I am participating in the current ‘Beardember’ charity campaign by not shaving until December 31 and collecting sponsors and their cash for those experiencing colon cancer.

CALL FOR PAPERS No. 2

The Annual History of Economics Society Conference for 2015 will held at Michigan State University from June 26th to June 29th. Papers dealing with any aspect of the history of economic thought are welcome, including work related to any period or any school of economic thought. Also welcome are papers that situate economics in wider intellectual and cultural contexts or relate it to other disciplines, and work related to the history of closely cognate disciplines (e.g., statistics with economic applications or economic sociology). Essentially, any work that touches the history of economics as a discipline or that would be of interest to scholars working in such an area is encouraged.

Information about travel and accommodation options is now available on the Conference web site at http://econ.msu.edu/hes/index.php. On-line registration for the Conference will be available through the web site starting in early January. 

To propose a paper: 

Please send a title, a paper abstract (not longer than 200 words), and the name and contact information of the paper’s author(s) tohes2015@econ.msu.edu by March 1^st , 2015.

To propose a session: 

I am interested in considering proposals for complete sessions, including sets of papers related to a focused theme, or panel discussions of a well-defined topic. If you would like to propose such a session, or some other type of session that you believe would be of interest to our membership, please include a title for the session, a brief description of the session’s unifying theme, and the names of at least two other scholars who will participate. If the proposed session is a set of papers, please include titles and abstracts of the papers. Submit session proposals to me athes2015@econ.msu.edu by March 1^st .

Young Scholars

The HES provides special support for up to ten Warren J. and Sylvia J. Samuels Young Scholars to present papers at the conference, in the form of free registration, banquet and reception tickets, and a year's membership in the society. Five of the Young Scholars awardees will also receive a  grant of $500 to cover travel and accommodation costs. If you wish to have your paper considered for the Young Scholars program, please provide details of the date of your last degree (or your current graduate student status) when submitting your paper proposal tohes2015@econ.msu.edu, and indicate that you wish to be considered for the Samuels Young Scholars program. A Young Scholar must currently be a PhD candidate, or have been awarded a PhD in the 2 years preceding the conference. The deadline for application is March 1^st .

Jeff Biddle
President-elect, History of Economics Society

Comment

This annual conference is highly recommended to those who can afford, or have time, to go to one one conference a year.  It is held in the USA at a different campus each year.

The presenter's of papers are usually of high quality, and also have strong credentials in their chose subject areas.  Several streams of subject areas run concurrently.  When I was able to travel to attend HES conferences I found them instructive and beneficial in my subject area, Adam Smith scholarship, and I made several friends and acquaintances across the International Academy, some with whom I still correspond.

It is particularly good at integrating your scholars into the HES community.

CALL FOR PAPERS NO 1

International Academic Conference

Economics of Vices and Virtues
May 15–16, 2015

While accepting the assumption about the rationality of economic agents as a starting point of analysis, economists still cannot afford to ignore that rational choice in any case is made within a framework of specific beliefs, values and behavioral patterns. Some of these behavioral patterns are traditionally considered to represent virtues, and some — passions and vices, and in different cultures and subcultures the interpretation may vary. Is this kind of assessment relevant for economic science and economic policy? In order to understand this, we propose to discuss (from the point of view of economics and culture) such phenomena as addictions and habits in consumption of certain products, the specifics of policy — making in such cases, problems of interpretation of consumer addictions and habits in culture and social science, as well as the problem of prohibitions. This topic is supposed to come back to the discussion of the provocative thesis of Bernard de Mandeville in his “The Fable of the Bees” (1714) that the private vices tend to form the public benefit.

The Conference topics will include:
• Virtues and Vices: criteria and interpretations;
• Economy and culture of production and consumption of alcohol (beer, wine and strong spirits);
• Economics on Virtues and Vices;
• Formation of attachments and addictions, as a business strategy;
• Overcoming attachments and addictions, as a state policy target;
• Economics of prohibitions, Temperance movements and Public Policy;
• Economy and culture of smoking/ of gambling/ of Internet addiction;
• “Green lifestyle” — the Virtues or Vices?

The specific issues to be discussed will be the examination of the different aspects of the economics, historical facts and culture of alcohol production, consumption and regulation. We invite economists, sociologists, anthropologists, historians and the scholars from other spheres in the social sciences and humanities for the dialogue.
Conference languages: English and Russian
Center for the Study of Economic Culture
St. Petersburg State University, Russia

The deadline for the submission of an abstract of about 500 words is January 10, 2015.
The conference organizers welcome proposals of sessions with a description. Please send abstracts and proposals  to maidachenko09@gmail.com
Authors will be informed about acceptance or rejection of the paper for presentation by February 2.

Organizing Committee:
Aleksei Kudrin, St. Petersburg State University
Danila Raskov, St. Petersburg State University
Eline Poelmans, Leuven University and Beeronomics
Deirdre McCloskey, University of Illinois at Chicago
Denis Kadochnikov, St. Petersburg State University
Alexander Pogrebnyak, St. Petersburg State University
Viktor Rjazanov, St. Petersburg State University
Alexander Nemtzov, Moscow Research Institute of Psychiatry
Vladimir Ignatiev, Novosibirsk State Technical University
Alexander Skorobogatov, Higher School of Economics

LOONY TUNES NO. 104

1

Bryant McGill, best-selling author, speaker and activist in the fields of self-development, personal freedom and human rights, posts HERE 

“There is an invisible hand at work in the making of beautiful lives”.

2

Donna Rachel Edmunds posts HERE 

“LEGO ROBOT WITH MIND OF A WORM OFFERS TANTALISING GLIMPSE INTO THE FUTURE” 

“Independent developers are actively encouraged to run simulations based upon the work already done by existing teams and participants and to make their own modifications, resulting in a situation in which a number of competing models are developed simultaneously. As a result, the best models are harvested to go into the finished product. It is Adam Smith’s invisible hand at work in the field of science.” 

3

In-A-Gist posts HERE  “Adam Smith defined the invisible hand of the market as having "cool power flames," and "a snake tattoo, also made of fire, so I can see it"

NEW COLLECTION OF ESSAYS ON ADAM SMITH ANNOUNCED

Propriety and Prosperity

New Studies on the Philosophy of Adam Smith

Edited by David Hardwick, Leslie Marsh

$115.00

ISBN 9781137320681

Publication Date December 2014

Palgrave Macmillan

This book is a collection of specially commissioned chapters from philosophers, economists and political scientists, focusing on Adam Smith's two main works Theory of Moral Sentiments and Wealth of Nations. It examines the duality which manifests itself as an apparent contradiction: that is, how does one reconcile the view of human nature expounded in Theory of Moral Sentiments (sympathy and benevolence) and the view of human nature expounded in Wealth of Nations (self-interest)? New work by philosophers has uncovered the complex and nuanced connections between Smith's account of economic and moral motivation. His economic theory has presented conceptual challenges: the famous 'invisible hand' has proved an elusive concept much in need of scrutiny.
'Prosperity' in the title captures the economic side of Smith's thought. 'Propriety' points to his ethics. In recent philosophical scholarship two major shifts have occurred. One is that the originality of Smith's moral theory has been rediscovered and recognised. His account of sympathy is significantly different from Hume's: his idea of the 'impartial spectator' is independent, rich and complex and he is alert to the phenomenon of self-deception. The second shift is that Smith's image as an economic liberal has been drastically revised, reclaiming him from current ideological use in defence of free markets and the minimal state. Smith links economics, politics and ethics through notions of justice and utility in subtle ways that make the labels 'economic liberal' and 'laissez-faire theorist' at best inadequate and at worst misleading.
This collection was put together with a view to bringing Smith to a mainstream philosophy audience while simultaneously informing Smith's traditional constituency (political economy) with philosophically finessed interpretations.

1. Introduction; David F. Hardwick and Leslie Marsh
PART I: CONTEXT

2. Adam Smith as a Scottish Philosopher; Gordon Graham
3. Friendship in Commercial Society Revisited: Adam Smith on Commercial Friendship; Spyridon Tegos
4. Adam Smith and French Political Economy: Parallels and Differences; Laurent Dobuzinskis
5. Adam Smith: 18th Century Polymath; Roger Frantz
PART II: PROPRIETY
6. Indulgent Sympathy and the Impartial Spectator; Joshua Rust
7. Adam Smith on Sensory Perception: A Sympathetic Account; Brian Glenney
8. Adam Smith on Sympathy: From Self-Interest to Empathy; Gloria Zúñiga y Postigo
9 . What My Dog Can Do: On the Effect of The Wealth of Nations I.ii.2; Jack Weinstein
PART III: PROSPERITY
10. Metaphor Made Manifest: Taking Seriously Smith's 'Invisible Hand'; Eugene Heath
11. The 'Invisible Hand' Phenomenon in Philosophy and Economics; Gavin Kennedy
12. Instincts and the Invisible Order: The Possibility of Progress; Jonathan B. Wight
13. The Spontaneous Order and the Family; Lauren K. Hall
14. Smith, Justice and the Scope of the Political; Craig Smith

Contributing Authors (In bold: scholars whom I know)

Laurent Dobuzinskis, Simon Fraser University, Canada
Roger Frantz, San Diego State University, USA
Brian Glenney, Gordon College, Massachusetts, USA
Gordon Graham, Princeton Theological Seminary, USA
Lauren K. Hall, Rochester Institute of Technology, USA
David F. Hardwick, The University of British Columbia, Canada
Eugene Heath, State University of New York at New Paltz, USA
Gavin Kennedy Heriot-Watt University, UK
Leslie Marsh, The University of British Columbia, Canada
Joshua Rust, Stetson University, USA
Craig Smith, University of Glasgow, UK
Vernon L. Smith, Chapman University, USA
Spyridon Tegos, The University of Crete, Greece
Jack Weinstein, University of North Dakota, USA
Jonathan Wight, University of Richmond, USA
Gloria Zúñiga y Postigo, Ashford University, USA

Comment

This volume has been a long time in preparation. Palgrave-Macmillan is the publisher of my two books on Adam Smith:

‘Adam Smith’s Lost Legacy’ (2005) and Adam Smith: a moral philosopher and his political economy (2008, 2nd ed. 2010).

MR WONG INVERTS ADAM SMITH'S ADVICE FOR ADDRESSING ONE'S OWN SELF INTERESTS IN TRANSACTIONS WITH OTHER PEOPLE

Speaking at a plenary session at the Global Social Innovators Forum held at Institute of Technical Education College Centre, Mr Wong noted how the economy is built on economist Adam Smith’s principle, where maximising an individual’s interests and profits would see the marketplace work and function better.

“But if you use that principle to organise our society, and if we each go on our self-interests, there would (not be a) common ground to build a society and you will not have a strong and cohesive society,” said Mr Wong.

He added: “The society needs to operate on a different principle. It almost needs to operate on a reverse Adam Smith’s principle — that we need to look after the interests of others first.”

Comment

Mr Wong starts from a false premiss.  What motivates an individual to engage in actions is not the same as those actions succeeding in making society, either in the ‘market place’ or ‘the society’, ‘function better’.  Smith was well aware of the limitations of peoples’ motives and consequences of the actions that follow from them. 

Many references in Wealth Of Nations refer to the negative consequences of motivated actions that do not make society ‘function better’. The whole of Book IV is a ‘violent attack’ (Smith’s own phrase) on the motivated actions of ‘merchants and manufacturers that were in his mind, detremental to the the broader interests of society in general and to the individuals affected by them (tarrifs, prohibitions, restrictive legislative devices and government policies, monopolies, low-wage policies, and the ambitions of princes).

Moreover, “maximising an individual’s interests” neglects to consider that an individual can only serve his or her self-interests in concert with others in markets which can only be achieved by that person also serving the self-interests of the others they transact with.

‘Self-centred’ egotists would face a declining number of potential parties to their transactions, even supposing they could find partners willing to transact with them. 

This precept of Smith's appears in Paragraphs 2 and 3, Chapter 2, of Book 1, of Wealth Of Nations, where Smith describes the ‘bargaining process’ where he advises persons searching for their dinner from sellers of meat, beer, and bread to address the seller’s (not their own!) self-interests when in pursuit of their own self-interests.  

Mr Wong has missed Adam Smith’s central point, which may be understandable because Mr Wong merely repeats modern distortions of Adam Smith’s moral philosophy and political economy. 

I would render Adam Smith’s actual policy prescription as: “The society needs to operate on the same principle by operating precisely on Adam Smith’s principle by realising that we best serve our own self-interests by serving the interests of others.”