Wednesday, December 30, 2015

ASPIRATIONS HAVE TO BE BARGAINED FOR

James Bartholomew posts (30 December) HERE 
“Chocolate that only melts in the mouth - a miracle of capitalism”
Oh, Adam Smith, thou shouldst be living at this hour! Another breakthrough has been made by that "invisible hand" you wrote about.
Businessmen and women whose only thoughts have been profit and self-advancement have, without consciously intending it, bestowed a great blessing on humanity. Chocolate is going to become available to millions of people in hot countries around the world.”
Comment
Surely a new twist to the modern misuse of the metaphor of “an invisible hand”! If only making a “profit” and attaining ’self advancement” was possible by simply intending to achieve them, what a wonderful (if strange) world we could live in. 
It is much more complicated than that. The intended thought requires much more than mere aspiration. We have to consider how to achieve our goal, by which, apart from much else, we have to consider other people’s intentions, who may have similar ideas in which our unmeltable chocalate competes with their other desires. Hence we cannot simply think of our own “profit” and “self advancement”’ we have to think of and negotiate with their desire for “profit” and their goals of “self advancement”. In short, our thoughts are limited by the thoughts of others, causing us to think of more than our just own thoughts.
Adam Smith understood these relationships. James Bartholomew ignores them. Smith wrote about them in Wealth Of Nations (WN I.ii.pp.25-26).. See his reference to the “butcher, brewer and baker” where he sets out the mutual dependence of customers and sellers. In order to realise any of their aspirations they have to address the self interests of each other, and not just their own. That relationship requires bargaining and persuasion through conditional propositions: “IF you give me of what I want THEN I shall give you what you want”. For success the have to findout how much of what they have to give to get back how much of what each wants.
Business men and women must come to understand that ancient truth if they are to realise their aspirations. Exchange behaviour is one of humanity’s oldest forms of relationship. 
For more than thirty years I spent much time in Business Schools teaching managers about Smithian bargaining and writing about everyday examples of practices (see: Everything is Negotiable, 1982, Random House; Kennedy on Negotiation, 1998, Ashgate; The New Negotiating Edge, N. Brealey, Hachette, 1999).

There is no “invisible hand” miraculously guiding them to success and Smith never said there was such an entity. He used a metaphor to describe the unintentional consequences of their actions, which were sometimes beneficial for humanity and sometimes not.

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