Friday, March 27, 2015
I am often asked why I describe myself as a “Soft Libertarian” and usually oblige with a couple of pages. Daniel Klein (George Mason University, Virginia) sent it to me the following article (one of five more to come, which I have not seen yet). I recommend it to readers are fairly representative of my views (though I have no views on Obamacare, as I do not vote in the USA or pay much attention to US domestic politics) and bring it to your attention for its exposition of ‘soft’ Libertarian views close to my own. It expresses much of what I agree with and hope it inspires you to read the other parts which are to be published HERE
Paul Mueller introduces a series of posts about Adam Smith, giving a broad overview of his thought and situating him relative to other thinkers. A single blog post can hardly begin parsing Adam Smith’s works and ideas. What would he think about Obamacare or about the Federal Reserve? Would he look favorably on the administrative state or on entitlement programs like Medicare and Social Security? This is the first post in a series exploring Smith’s thought. I hope that the reader will eventually be able to bring Smith’s ideas to bear on these questions. To begin, I should lay out a basic framework for understanding Smith’s views on politics and economics. Traditionally, Smith has been regarded as a staunch advocate of free markets and as a formidable skeptic of government intervention. That is the “traditional view.” Particularly in the last fifty years a “revisionist view” has surfaced and gained a substantial following. The revisionists, or “Left Smithians,” emphasize Smith’s skepticism towards commercial society (especially merchants and manufacturers), his praise of many government interventions, and his concern for the poor and marginalized. From there, they conclude that Smith would be friendly to the modern social-democratic welfare state. Also, they caricature the traditional view as believing that Smith was totally laissez-faire and only concerned with self-interest.Smith falls somewhere between the revisionist view and the caricature. Exactly where he falls has a great deal of bearing on whether Smith can be considered a libertarian.
Let me separate libertarianism into two camps. One camp is heavily based on rights. It includes followers of Murray Rothbard, Robert Nozick, and Ayn Rand. These libertarians start from the premise of self-ownership and the non-aggression axiom: “I can do whatever I want as long as I don’t harm you or infringe on your rights.” In this strand of thought, all government intervention is illegitimate unless it punishes or prevents the violation of others’ rights.The second category of libertarian thought expresses a more organic view of society while maintaining a healthy skepticism of the motives and efficacy of government action. This category includes followers of Friedrich Hayek, Milton Friedman, and James Buchanan. Advocates in this camp argue that markets usually work well and governments usually do not. Government action, however, may be warranted in limited contexts where strong public interests exist. But such contexts are rare. And in such situations we should rely on clearly defined rules to motivate and constrain political actors, not their own sense of altruism or “public-spiritedness.”
George Stigler has suggested that Smith thought advancing one’s material self-interest was the most important human motivation. In his own work, Stigler thought individual self-interest was the most important assumption about political action. As a result, he thought the government should almost never intervene in the market. Yet in The Theory of Moral Sentiments, Smith argued that people have many important motivations besides their material self-interest. Furthermore, he clearly advocated many government interventions in society—interventions that Rothbard and Rand would have ridiculed and that would have made the Nozick of Anarchy, State, and Utopia uncomfortable. So Smith cannot fit in this camp based upon his policy prescriptions. But Smith also doesn’t fit in their camp because he disagrees with their axiom of natural rights. Throughout his works, Smith rarely spoke of rights and certainly never developed an extended argument about the purposes and limits of government based upon rights. Occasionally he talks about how people “own” their labor but that is the closest he gets to rights-theory.
The second camp of libertarian thought—which I prefer to call classical liberalism—is far more welcoming of Smith’s views. They are willing to grant that government should do a variety of things from providing public works to national defense. Smith’s three duties of government, plus a handful of “exceptions” to liberty to restrain egregious negative externalities, can fit in this camp. Smith’s defenses of markets and skepticism of government policy have many similarities with those of Hayek, Friedman, and Buchanan.
The concept of the invisible hand—that individuals justly pursuing their own ends often promote the public interest (“universal benevolence”)—is one of Smith’s more powerful ideas. A system of prices and exchange will generally lead to productive outcomes, even if people are primarily motivated by self-interest. But he also refers to the invisible hand in a moral sense where it leads to a wide distribution of necessary goods in society. Besides generating wealth, commercial society fosters certain virtues and restrains many vices. The “natural system of perfect liberty and justice” was Smith’s ideal.”
I shall stop my extract here for space considerations. Needless to say, I disagree with Paul Mueler’s take on Smith’s use and meaning on the “invisible hand”. My lastest paper on the misue of the “invisible hand” metaphor is nearing completion (first draft) and will be available later in May (readers interested in receiving a copy are invited to write to Lost Legacy should they wish to receive a copy and perhaps offer their comments: firstname.lastname@example.org).
Wednesday, March 25, 2015
FREEDOM WEEK IN CAMBRIDGE (ENGLAND)
FREEDOM WEEK 13 JULY -18 JULY
(AUSPICES OF THE ADAM SMITH INSTITUE AND INSTITURE OF ECONOMIC AFFAIRS)
Applications for Freedom Week 2015 are now open.
The deadline for applications is April 3rd, and successful applicants will be notified by the 10th April.
Freedom Week is an annual, one-week seminar which teaches students about classical liberalism and free market economics. It is open to over-18s who are currently attending or about to start university. The week is entirely free to attend: there is no charge whatsoever for accommodation, food, tuition or materials.
Freedom Week is aimed at students who have an interest in — yet are relatively new to — classical liberal ideas. Students who already have a strong grounding in such theory or have attended similar events in the past may instead be interested in the summer seminars hosted by the Insititute for Humane Studies (IHS).
Successful applicants will spend the week immersed in talks from some of Britain's leading thinkers. Seminars will cover the foundations, history and underlying economic principles of classical liberalism, as well as discuss cutting-edge research and contemporary debate from within the movement.
Freedom Week offers a unique chance to network with like-minded peers, academics and think tank representatives — all in a relaxed atmosphere with plenty of free time and nightly social acitivities.
By the end of the week attendees will have the knowledge, confidence and network to go out and make the case for freedom.
Freedom Week 2015 will be held at Sidney Sussex College, Cambridge, from 13th to 18th July.
I attended a week’s summer school at Cambridge University organised by the European Movement in 1965 and became and remain a committed supporter of the European Union and Scotland’s continuing membership (hopefully as an independent member in its own right after the next referendum).
Students taking advantage of the opportunity to attend Freedom Week can be sure to learn a great deal as well as meet several new lifetime friends, whatever their subsequent career paths. That certainly happened to me for most of my post-graduate career years (though at age 75 regular contact has now somewhat declined in recent years!).
[Disclosure: I am a Fellow of the Adam Smith Institute and I remain a soft Libertarian.]
"THEMES FROM SMITH AND ROUSSEAU 2015"
NEWS from University of Glasgow: HERE
"THEMES FROM SMITH AND ROUSSEAU 2015"
The International Adam Smith Society and the Rousseau Association will hold a joint meeting at The University of Glasgow 20-22 July 2015. The meeting aims to bring together scholars with an interest in the work of either or both of these thinkers with a view to stimulating discussion of their shared interests and the relationship between two prominent members of the Enlightenment. The meeting will take the form of a series of panels in a workshop format and is being supported by a grant from the British Academy / Leverhulme Research Grant Scheme.
The intellectual influence of Rousseau on Smith has become a matter of increasing scholarly interest. Smith’s first published work was a letter to the Edinburgh Review (1756) where he discusses contemporary philosophy, the Encyclopédie and Rousseau’s Discours sur l‘origine et les fondemens de l’inégalité parmi les hommes (1755). The discussion comes at a key point in Smith’s intellectual development as he lectured at Glasgow and was engaged in writing the Theory of Moral Sentiments (1759) which emerged to great acclaim and established his international reputation. Moreover Rousseau’s essay deals with themes, perhaps most particularly self-interest, freedom and the division of labour in a commercial society, that would come to dominate Smith’s second great work An Inquiry into the Nature and Causes of the Wealth of Nations (1776). Smith also discusses Rousseau in some of his less well known writings such as the Considerations Concerning the First Formation of Languages (1761) and the essay On the Imitative Arts (1795). Part of what makes the intellectual connection between Rousseau and Smith so interesting is that both Smith and Rousseau were polymaths and Smith seems to both absorb some elements of Rousseau’s views while simultaneously reacting against others. This complex blend of influence and reaction renders Smith and Rousseau a subject ripe for further exploration.
Dr Craig Smith, Conference Organiser
Craig Smith has been preparing this international scholars' conference for a year or more and it promises to be of major importance in the generation of new ideas and new perspectives in the history of economic thought.
I expect many prominent international Smith scholars to be present, as well as post-graduate students from universities all over the world. Glasgow has a large number of Chinese post-grads attending its courses.
[Hat Tip to Daniel Klein for early news of this important event.]
[Hat Tip to Daniel Klein for early news of this important event.]
For more information contact Craig Smith here:
Dr Craig Smith
telephone: +44 (0)141 330 4681
Tuesday, March 24, 2015
Loony Tunes no. 113
patrice karst, geoff stevenson post: HERE
“The Invisible String | novel inspiring life
“Tags: »the invisible man »the invisible woman »the invisible hand »the invisible war »the invisible gorilla »the invisible »the invisible account »the invisible dress »the invisible man sparknotes »the invisible hand refers to »the invisible man ralph ellison »the invisible woman movie »the invisible bridge »the invisible man tv series »the invisible thread »the invisibles »the invisible man summary »the invisible man h g wells »the invisible string pdf »the invisible man 1933 »the invisible man pdf »the invisible boy »the invisible string »the invisible front »the invisible hand play”
What’s it all about? I have not got a clue!
“Can I get the invisible hand of the market to give me a nice back massage?”
Scott Cooney posts on “Inspired Economist” HERE
“It’s so clear that the Invisible Hand will never pick up the check.”
Jeri Erma posts on You Tube HERE
The Venture Bros S03E03: “The İnvisible Hand Of Fate”
Saturday, March 21, 2015
NEWS FROM KIRKCALDY OF PROGRESS ON THE PROPOSED "ADAM SMITH TRAIL"
Paul McCabe writes in Fife Today:
“A Close encounter with 15th century building”
"Work at 1 Adam Smith Close is set to continue after an unexpected discovery caused a delay in proceedings.
The team converting the former home of Kirkcaldy’s most famous son into a visitor’s centre uncovered a 15th century wall which required specialist treatment.
The find meant a delay - and an increase to the budget.
But Marilyn Livingstone, chief executive of the Adam Smith Global Foundation, said that the project is “progressing really well”.
She said: “We thought the whole building was 18th century but we’ve uncovered a 15th century wall which we’ve had to deal with.
“We’re hopefully going to be in a position within the next two weeks to sign up contractors.”
The work has added an extra £40,000 to the cost of the project but Marilyn says that funding has already been secured.
And the delay has also meant the Adam Smith Festival, scheduled for June, has now been put back until September to coincide with the official opening of the new Adam Smith Visitor Centre. A fundraising dinner for the festival will take place at the Adam Smith College atrium on May 29.
“What I’ve found with this exercise and talking to other people is that this is common practice when working with an old building,” Marilyn said, “We’re now past the worst and ready to progress.”
The close itself is also being re-developed with Caithness granite slabs inscribed with a timeline of Adam Smith’s life. It will stand at the beginning of the ‘Merchant’s Quarter’ of the High Street which the Kirkcaldy’s Ambitions group is looking to re-establish.
Marilyn said: “It will start at the Old Kirk and come down then right along the East End where we’ve had a lot of encouragement from traders.
“We have also now raised the funding for a feasibility study so we hope that in the next few weeks to have a business case and a full brief for the work that we want to take forward at the Merchant’s Quarter. That’s the next big project for us.
“We need to be seen not only as the birthplace of Adam Smith but as the place where he wrote his most famous works. I think this is very exciting for Kirkcaldy.”
To attend the fundraising dinner contact the Foundation via the website www.adamsmithglobalfoundation.com."
The above landed in my Google Alerts this morning and I think it aposite in view of Peter Foster’s post immediately below.
It reports the work they are doing in Kirkcaldy to make available an “Adam Smith” experience for visitors wishing to spend a few hours seeing the sight where he was brought up, where he went to school (now a small carpark), where he went to Church (St Brides) with his mother, and where his lived with his mother when he returned from his French tour in 1767. While his mother’s house was demolished long ago, his mother’s garden and walls are preserved, as well as and 18th-century building (not his house) behind the end wall.
He wrote much of Wealth Of Nations in his mother’s house from 1767-73 and took his bulky manuscript to London in 1773 to finish it (especially on the opening events in the American colonies) and guide its printing and its publication in 1776. Some parts of Wealth Of Nations were from his lecture notes written and delivered at Glasgow University, where he was a Professor (1751-1764). We know this because some copies of his lecture notes were found in the 1890s (his ‘Lectures on Jurisprudence’, 1762-3 - note: before he went to France in 1764) parts of which are reproduced verbatim in Wealth Of Nations, and also a set of his Lectures on Rhetoric and Belles Lettres (1762-3) published in the 1950s. Glasgow University holds other short manscripts of Smith’s other notes that also appeared in shortened or slightly altered form in Wealth Of Nations.
As his mother and aunt lived with him in his house in Professor’s Close on the campus of Glsgow University, it is unlikely that he wrote any part of his first book, Moral Sentiments (1759), in Kirkcaldy. University vacations were not as generous as they are today and with his mother staying with him, and his formidable library to hand in Glasgow, it is unlikely he had reason to travel to Kikcaldy, or spend significant time there. He regularly travelled to his discussion clubs in Edinburgh, however.
In so far as the Adam Smith Trail in Kirkcaldy and associated information for visitors will soon be in operation and build-up thereafter, this initiative is commendable, and all involved deserve all the support they can muster.
Friday, March 20, 2015
WE DON'T HAVE TO AGREE TO APPRECIATE OTHER PEOPLE'S IDEAS
Peter Foster writes on Financial Post (18 March) HERE a somewhat mixed piece on Adam Smith and Gordon Brown (former UK Prime Minister):
“Peter Foster: Saving Adam Smith from leftist fans”
“Mr. Brown is a prominent promoter of the Adam Smith Global Foundation and of its attempts to raise Smith’s profile and make him a local tourist attraction. These include a new heritage centre and “Merchants Quarter,” plus walking tours and numerous government initiatives.
Mr. Brown, who was born in Kirkcaldy, the son of a local minister, has long sought to recruit Smith as the father of the welfare state, repeatedly suggesting that Smith was not only the author of the Invisible Hand but also the “helping hand.”
Gordon Brown’s participation and ‘heavy hand’ on the initiatives of the Global Foundation are to be praised rather than traduced.
Peter Foster also needs a fact checker because Gordon Brown was born in Glasgow, not Kirkcaldy, and was taken to Kirkcaldy by his parents as a baby, when his father became a local Minister of St Brides and served there throughout his life, where Gordon was brought-up, educated and later became Kirkcaldy’s MP.
I have attended several of of the annual Adam Smith lectures in Kirkcaldy which are well-attended by locals and also people from all over Scotland, including senior academics. I attended Michael Sandel’s packed lecture on themes from “What Money Can’t Buy: The Moral Limits of Markets”, and while I was and remain critical of some of its themes, I was impressed by his teaching style and, from the participation he encouraged from members of the audience and in Sandel’s invitations of inter-actions with his listeners. It was more like a senior post-graduate seminar than a ‘talk and chalk’ monologue, so often imposed on listeners I would partly agree with Foster that “Sandel’s examples of markets’ corrupting influence are trivial, marginal or ridiculous” but not out of place, if Sandel holds those views - which, of course, he is entitled to do and to express them. Meanwhile, a couple of contributions from the floor challenged him. Judging from comments among those near to where I was sitting, not everyone agreed with his soft theme about the monetisation of everything as a trait of markets.
I have raised Smith’s reference to “perhaps the most famous passage from The Wealth of Nations that “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 interest.” [WN I.ii.2:p. 2] on Lost Legacy several times, often in criticism of modern rightist economists, who express it incorrectly or incompletely as Foster does.
Foster, for example, expresses it half right: “What he was saying was that the main drivers of markets were self-interest and the universal desire to “better our condition” which is a correct representation of Smith's economics, but no so correct when he adds: “guided and regulated by competition and the Invisible Hand. This is what provided a broad social good that was “no part of our intention,” which again did not mean that we were robbed of the desire to do deliberate “good.”
The customers of ‘butchers, brewers, and bakers’ enter into bilateral relationships based, not on pure self-interest, as expressed by rightist theorists of Homo economicus, but, as Adam Smith expressed it, in a bargaining process that mediates the purist self-interests of the partners to their transaction, :
“But man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in his favour, and shew them that it is for their own advantage to do for him what he requires of them. Whoever offers to another a bargain of any kind, proposes to do this. Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages .” (WN I.ii.2: pp. 26-7).
Each bargaining partner attempts to persuade the other to buy/sell by making converging conditional propositions: “I you give me what I want, I shall give this that you want”. When such a conditional proposition emerges acceptable to both partners, they make their exchange, bearing in mind that Smith argued that human exchange was one of the original principles in human nature, and that persuasion in bargaining “propensity” was the necessary consequence of the “propensity to truck, barter and exchange one thing for another” (WN I.II.1” p.25).
Simply demanding that our self-interests are met without dilution of our opening offers is not reflected in the real world. If I had been able to speak at Sandell’s seminar (I was not physically able to do so on that occasion), I would have opened a discussion on Adam Smith's ideas on the moralities of bargaining, which were not reflected in Sandel's lecture.
Nevertheless, I considered the seminar a worthwhile contribution as an event, even though I had disagreements with the Professor’s lines of argument, but which were likely to benefit the audience by hearing Sandel's interpretation of them, many of whom were inclined to agree with his sentiments, after all we were in Kirkcaldy, Gordon Brown’s political territory. (Gordon Brown is well aware of my political sentiments - we have known each other since our student days, and seldom agreed politically, but on a personal level, we have friendly respect for each other). Brown's active work on siting Adam Smith's connections with Kirkcaldy is worthy of our support.
I recommend that if Peter Foster wishes to influence his readers he should refrain from gratuitous insults, such as: “What he [Professor Sandel] never acknowledges – or perhaps just doesn’t know – is that the revival of interest in markets followed so many disastrous experiments in trying to eliminate or improve them.” Critique a person’s ideas, but not the person, for when you do that, you lose your case and the willingness of onlookers to respect your conduct.
Peter Foster is the author of "Why We Bite the Invisible Hand; the psychology of anti-capitalism". (2014) Pleasaunce Press. Toronto. It's a good read on the working of real world markets but somewhat wayward by endorsing standard orthodoxy in misunderstanding Smith's use of the 'invisible hand' metaphor. Smith, as a pragmatist, favoured markets where possible, state action where necessary. He was neither leftist nor rightist.
Wednesday, March 18, 2015
TEN YEARS OF LOST LEGACY
FROM THE ARCHIVES (15 MARCH 2005)
Adam Smith: address by Professor Kennedy in the Raeburn Room, University of Edinburgh, 15 March 2005, for the book launch of “Adam Smith’s Lost Legacy” (Palgrave-Macmillan).
“Adam Smith could not foresee that 215 years after his death in 1790, it would be necessary to welcome a book defending his intellectual legacy in the splendid setting of the Raeburn Room, with its portraits of Professors Robertson and Ferguson, of whom he made sour assessments.
I approached my task as the author of Adam Smith’s Lost legacy with a high degree of humility, though, I must confess, not a little indignation. In it, I criticise distinguished members of my discipline and for that I was angered: how could so many of them get Smith so wrong?
Reading Adam Smith many years after graduating in economics, I was struck by the uplifting nature of his thinking in Moral Sentiments, and how striking and rich was the Wealth of Nations, compared to what they have been reduced to since 1776.
Of his Moral Sentiments, the profession, with few exceptions, ignored it altogether. In the process, the legatees of a Moral Philosopher became, first, Professors of Political Economy, then Professors of Economics, and finally today, in all but name, devotees of a sub-branch of applied mathematics. What happened to moral sentiments? What happened to Natural Liberty? What happened to the Adam Smith Chair of Political Economy?
Smith warned against arranging people as if they were wooden pieces on a chess board, moved at will by theorists (and fanatics), who forgot that every single person moved through life entirely under their own volition. Modern economists have substituted the arguments of their equations for the very essence of real societies peopled by real individuals.
Smith took the long historical view. That is why Wealth of Nations is so long. Many find it ‘hard going’ and itch to reduce it to a few, albeit, elegant equations. I think of it as a one-man Royal Commission, reporting evidence and conclusions drawn from two thousand years of classical history and from the thousand years it took Europe to recover from the fall of Rome.
This is where the Moral Philosopher, the Constitutional Lawyer and the Political Economist should begin their quest to understand what Smith was about. The growing commercial societies of the 17th and 18th centuries were not something ‘new’ to Smith – they were, and remain, new only to those unversed in the Smithian Long view. For Smith, the ‘new’ commerce was a rebirth of the very old commerce that featured in classical Rome and Greece, and continued in India and China in his day, while, as John Locke expressed it, all of the rest of the world was ‘like the Americas’: savage, primitive, and without even farming or flocks.
Smith knew nothing of ‘capitalism’ (a word not invented until the 19th century);
he did not favour laissez faire; he was suspicious of ‘merchants and manufacturers’;
he held landlords in contempt; he knew nothing of the industrial revolution;
and he raged against the prodigality of governments that fought wars over trifles and passed laws on behalf of special interests that inhibited the growth of the real wealth of nations.
The despoilers of Smith’s legacy have taken bits of his ideas and applied them as if they automatically translated into prescriptions for modern capitalist economies, of which he knew nothing. They dropped everything else in his legacy, which for Smith was an indivisible whole.
Moral Sentiments is about the propensity to the harmonisation of personal relations in society, first within families, then among friends and acquaintances and finally to complete strangers. As the spheres of influence of individual overlap – those who are strangers to each of us are themselves the family and friends of other strangers whose families and friends eventually overlap with ours. The Impartial Spectator within us all sets boundaries to wilful immoral and amoral disorders, and through which we share the ‘gift to gie us, to see ourselves as ithers see us.’
Jurisprudence – from his lectures at the University of Glasgow – is about the emergence of law and personal liberty over many millennia to protect property from the depredations of others through an independent system of justice, monitored by the Impartial Jurist, under the rule of law, Habeas Corpus and representative government.
Wealth of Nations is about the propensity for humans to ‘truck, barter and exchange’ and the benefits that flow in abundance whenever conditions are conducive. Ensuring that conditions are conducive to trade is the key to the growth in wealth and to the spread of opulence to all levels of society, especially those of the labouring poor, the main victims of poverty in 18th century Britain.
For wealth to flourish, you need Impartial Competition, free of monopoly, price rigging, barriers to trade and restrictive practices. Those who read that admonition as a cry for laissez-faire, free of all restraint, no matter how dangerous their processes, nor how they exploit those unable to protect themselves, waste Smith’s legacy.
For wealth to flourish in the long run you need State intervention, paid for either by its beneficiaries (tolls; dare I say from ‘congestion charges’?) or by taxation; local taxes for street lighting, and national taxes for defence, education and health. But be clear. He did not have much faith in the government managing anything other than the collection of the taxes, and he left the issue of who shall manage – public commissioners or private entrepreneurs? – subject only to the Principle of Utility, i.e., whichever system worked best. Those who demand state funded state employment only and whatever the state dictates, waste Smith’s legacy.
It remains to correct an unforgivable lapse in my acknowledgements in the book. That Professor Sir Alan Peacock played a large role in the gestation of my book is well known. I also mention my grateful thanks to Professors Lumsden, Main, O’Farrell, Scott, Skinner, Simpson, Thompson, and, even, to an anonymous referee.
But what I did not do is acknowledge my debts in time and stress to my wife, the real sufferer from life with a grumpy author. So please permit me to make amends here and now by saying that all my books, including this one, like I am, are dedicated to Patricia.”
(15 March, 2005)
In those 10 years, I have posted over 3,250 posts on Lost Legacy covering many examples of the atrocities done to Adam Smith's reputation and to his life's work by scholars who should have known better from their readings of his works and by the larger number of scholars who do not know better because they have never read him in the first place and simply accepted what they were taught by his epigones.
There are some weak signs that wider reading of Smith is slowly gaining pace and that dissenting voices are appearing that are encouraging. I am working on a new book on Adam Smith at present that I hope (intend) to find new numbers of readers willing to re-consider their current stances and thereafter appreciate how the authentic Adam Smith could improve their thinking and teaching of modern problems in economics.
GK (17 March, 2015)
Tuesday, March 17, 2015
LOONY TUNES no 112
Harvey Schachter in The Globe and Mail (Canada) (10 March) HERE
quotes from Henry Mintzberg’s “Re-Balancing”:
“Adam Smith’s invisible hand in the American marketplace has become a visible claw in the American Congress.”
“Goldman or Bust” posts (8 May, 2010) in the Urban Dictionary HERE
“Masturbating With the invisible-Hand”
“When a person becomes sexually excited while discussing economics, especially Adam Smith's traditional economic theory of the invisible hand.
When Cody passionately rambled on about economics, his friends told him to quit masturbating with the invisible hand and learn how to play sports.”
Anon: posts (17 March) HERE
“The invisible hand of the market never texts me back.”
Jeremy Williams, writer, project developer and freelance journalist, posts (10 March) HERE
“THE INVISIBLE HAND AND THE INVISIBLE ELBOW”
Jeremy Williams, writer, project developer and freelance journalist, posts (10 March) HERE
“THE INVISIBLE HAND AND THE INVISIBLE ELBOW”
“… Michael Jacobs in his book The Green Economy. He suggests that attached to the invisible hand is an invisible elbow. “Elbows are sometimes used to push people aside in the desire to get ahead. But more often elbows are not used deliberately at all; they knock things over inadvertently.”
Friday, March 13, 2015
PROFESSOR JONATHAN WIGHT IS RIGHT ON SMITH'S USE OF THE INVISIBLE-HAND METAPHOR
Jonathan B. Wight, Professor of Economics, Robbins School of Business, University of Richmond, Virginia, contributed chapter 12 to “Propriety and Prosperity: new studies on the philosophy of Adam Smith”, edited by David F. Hardwick and Leslie Marsh, Palgrave-Macmillan, 2014: ”Instinct and the Invisible Order: the possibility of Progress”, pp. 223-39. His introduction is reproduced below.
“Instincts and the Invisible Order: The Possibility of Progress”
“The invisible hand means a variety of things to modern writers, who use the phrase loosely to imply the market, the price system, efficiency, laissez-faire, greed is good, and so on (Samuels et. al., 2011; Medema, 2009; Rothschild, 1994). In some circles the invisible hand is referred to with reverence and in others with mockery. What Smith wrote, and meant, is quite different from current constructions. At first reading, Smith’s three references to an invisible hand appear to be unconnected turns of phrase. One can find ample reason for agreeing with Kennedy (2009) that the expression’s current use has been blown out of all proportion to its author’s original intent and any reasonable extrapolation thereof. On the other edge of the spectrum are authors like Klein and Lucas (2011), who argue that the invisible hand is the central concept of Smith’s work and that Smith consciously placed it at the exact physical midpoint of both his books as a rhetorical pièce de résistance, the most nourishing part of the meal. This proposition is implausible on many levels. If there were such an intended dialectical message it is curious that it remained hidden from all of Smith’s friends and closest colleagues. It is possible to argue a middle ground, however, as in this essay, that the concept behind the invisible hand is central to Smith’s work, but that the phrase itself is only one of many spread out through his work, and that the placement, as well as the exact phraseology, are non-issues. In the wider context of Adam Smith’s moral philosophy, the “invisible hand” represents those unseen instincts of human nature that motivate and direct behavior. When channeled through appropriate human institutions, the invisible hand can generate a spontaneous order that in many cases produces a beneficial social outcome.”
Professor Wight’s contribution is closest to mine (chapter 10) that I have come across recently, in particular, I draw your attention to his sentence:
“In the wider context of Adam Smith’s moral philosophy, the “invisible hand” represents those unseen instincts of human nature that motivate and direct behavior.”
I regard Jonathan’s Wight’s statement as the closest I have read on the evident truth of Smith’s conception of the ‘invisible hand’ metaphor and I recommend his chapter to readers of Lost Legacy.
I was fortunate to meet Jonathan Wight in 2009, when I attended a Summer School at the University of Richmond (Virginia) in 2009, where I presented my paper: “The Hidden Adam Smith in his Alleged Theology” (published in the ‘Journal of the History of Economic Thought’, volume 33, no 3, in 2011.
I believe Jonathan Wight is absolutely correct to observe: “This proposition [the common modern view of the invisible hand] is implausible on many levels. If there were such an intended dialectical message it is curious that it remained hidden from all of Smith’s friends and closest colleagues”.
Absolutely right! None of Smith’s Enlightenment colleagues mentioned in correspondence or published anything referring to Smith's use of ‘the invisible hand’ and, excepting Thomas Chalmers, a Church minister, who read into it a theological association, nor did any later scholars, after he died in 1790, publish anything about its supposed signficicance through to 1875. We know there were oral debates at Cambridge University linking ‘laissez-faire’ to the ‘invisible hand’, but in print there was nothing.
Currently, I am writing a summary essay: ““Adam Smith on “Self Betterment, Self-Interest, the Invisible-Hand, Intended and Unintended consequences” that develops my critique of mainstream (and heterodox) opinions and writings on the Adam Smith’s alleged meaning of the “invisible hand” metaphor in his Works.
Unlike most of my published writngs since 2005 on the ‘invisible hand’ controversy, my new paper is not a polemic against the standard majority’s erroneous opinions on the ‘invisible hand’; instead I ignore them and concentrate on the actual views of Adam Smith as they related to his general scholarship and I ignore the views of his epigones. It develops from Smith’s writings and lectures the core ideas encapsulated in the invisible-hand metaphor, basically that it was a metaphor (as defined in his “Lectures on Rhetoric and Belles Lettres”, 1763) for the relationship between universal human motives of “self-betterment” (with us from “cradle to grave”, see Wealth Of Nations) and the consequential actions which were intended to resolve the immediate problems driving their motives. In turn, their actions could also have unintended consequences which may or may not prove subsequently beneficial to humanity.
[I expect his essay in draft will be available in late March or early April and readers wishing to receive an early copy of the draft when ready should drop me note: email@example.com
Sunday, March 08, 2015
MORE NONSENSE ON STILTS
Callum Newman, editor, interviewed George Friedman, author of “Flashpoints: The Emerging Crisis in Europe””, who says (28 Feb) in “Daily Reckoning" (Australia edition) HERE
“We pay very little attention to what political leaders want, because when they actually get power, they discover they have much fewer choices. This is like, in economics, the invisible hand. You may want all sorts of things, but to be successful you are compelled by the invisible hand to behave in a certain way. Adam Smith didn’t invent that idea, Machiavelli did.”
How does this compulsion work? How does it manifest itself? How does Callum Newman or David Freeman know its an invisible entity if its invisible? Are they just making it up to appear beneficiaries of inside knowledge?
If everybody is compelled in this manner, everybody must choose the same thing, which does not correspond to everybody being successful in any markets we known of.
What a twisted mind they must possess if they set out to us impress!
Saturday, March 07, 2015
GRAVITY IS NOT A FORCE ANALOGOUS TO MARKET PRICES
Peter Alexander Meyers Professor of American Studies at the Sorbonne Nouvelle in Paris. publishes a review (3 February) in Huffington Post HERE http://www.huffingtonpost.com/peter-alexander-meyers/the-invisible-hand-conver_b_6590420.html
“For one side, the Invisible Hand is the first bad idea of economics. For the other, as Blinder puts it, "the invisible hand is one of the great thoughts of the human mind" and adds that "every mainstream economist" sees things this way. Of course, this is easily proven wrong. So he calls forward another familiar line of defense. Behind a bit of coy hesitation, economics is made out to be a "real" science. The Invisible Hand is compared to the law of gravity. Of course, this too is absurd. But it does re-open a perennial discussion.
When is our knowledge true? We know that the law of gravity operates wherever physical mass is present. The Invisible Hand cannot refer back to any such singular and general condition. It can have predictive value only in a much more limited domain. Insofar as any such domain exists in the real world today, it arose from a particular convergence of social and historical facts that only came into existence in the early 19th century. Even if no one creates it or controls it, the Invisible Hand is an outgrowth from human history and action.
So any analogy between gravity and market forces is not simply wrong. It misleads by suggesting that we look for the wrong kind of knowledge and do so in the wrong place.”
The above is an extract from a long article posted on Hufffington Post, discussing Alan Blinder’s review of Jeff Madrick's book, Seven Bad Ideas: How Mainstream Economists Have Damaged America and the World. This is receiving much attantion in the review media at present and has been in a pile of pieces I noted for ASLL but have been too busy to post.The reference to the alleged similarity, even an analogous property, between gravity and market forces is so often quoted that I find it incredible that obviously literate and numerate senior economists can find grounds to argue about it. There is no gravitational force analogously operating in markets.
Coincidently, this week I received a confirmation from the editors of Economic Thought that my paper “Adam Smith’s Use of the ‘Gravitation’ Metaphor” is to appear in the March issue (Economic Thought 4.1: x-xx, 2015), in which I address the kind of contentions of relevance to the debate between Profs Binder and Madrick and, in effect, dismiss their takes on gravity as analagous to “invisible hands” head-on. While I was discuss in my paper a mother and quite separate debate from a different author who linked his idea that linked gravity to Smith's on Natural and Market prices, i reject such ideas in paragraphs in my paper such as:
“All bodies with mass exert gravitational pull on all others, but not all of them have the same mass or exert the same degree of mutual attraction that draws them physically towards each other or holds them in regular orbits. It does not follow that Smith’s use of gravity as a metaphor described an observed or plausible [Newton's, Aristotle's or Empedocles'] gravitational relationship between market and natural prices, either of which were sometimes above or sometimes below the other’s prices, as described in WN.”
Gravitation is rule bound, absolutely predictable long into the future, while relationships between Natural and Market prices, for example, are unpredictable, rhetoric bounded exchanges, between people. Smith spoke of gravity in a purely metaphoric sense, analogously to how he spoke of "an invisible hand".
When my paper is published later this month I shall provide details of how to obtain it on-line.
There is a lot more I could say about Professor Madrick’s views on Adam Smith, but my unfinished paper awaits my attention …
ONCE MORE ON THE VISIBILITY OF PRICES - LOOK AND YE SHALL SEE
Helenic Shipping News (28 Jan) here
“The Best Indicator That Oil Prices Will Rise — Quickly”
“No matter what the “experts” say, no one really knows whether oil prices are going higher or lower over the next year. But the invisible hand of the market is definitely making a guess that looks very bullish for energy companies and investors.”
This typical commercial bulletin from “expert market watchers”, of which there are many making a living from dressing up their claims to their expensive expertise in modern jargon waffle that baffles their subscribers.
First the blindingly obvious: “no one really knows whether oil prices are going higher or lower over the next year.” True!
“But the invisible hand of the market is definitely making a guess that looks very bullish for energy companies and investors.” False!
Next the Jargon waffle: “contango”, in contrast to “backwardation”, supported by trends in “oil futures”.
Well you need expertise to help you and, fortunately, you can benefit from “a brand-new investigative report on this significant investment topic and the company helping fuel its boom”…
But what about “the invisible hand of the market” that supposedly “is definitely making a guess”? Well nothing more is said about it!
Just as well because it doesn’t exist. Markets operate through visible prices, not “invisible hands”. If future contract prices appear to be rising this has nothing to do with any entity that is invisible - the rising prices of futures contracts reports that their rising visible prices are driven by market players apparent belief that prices will rise; if visible prices of futures contracts are falling then market players believe oil prices in future will fall.
Current and would-be players are making guesses as to what will happen in the near and distant future. Their bets reflect their sentiments, not their specialised, insider’s special knowledge.
As we say in Scotland, the future price game is a bogey, much like horse-racing (the latter of which industry also has its share of people selling their “insider” knowledge…
Friday, March 06, 2015
WEE TASTER PARAGRAPHS FROM MY RECENT CHAPTER PUBLISHED IN DECEMBER
Three introductory paragraphs of mine from the new book: “Propriety and Prosperity: new studies on the philosophy of Adam Smith”, edited by David Hardwick and Leslie Marsh (Palgrave-Macmillan, are posted on the “Man Without Qualities” Blog HERE http://manwithoutqualities.com/2015/03/06/the-invisible-hand-phenomenon-in-philosophy-and-economics/
“The ‘Invisible Hand’ Phenomenon in Philosophy and Economics” by Gavin Kennedy
"This chapter discusses Adam Smith’s rhetorical use of the ‘invisible hand’ in the context of his teachings on metaphors as figures of speech in his lectures on Rhetoric (Edinburgh, 1748-51; Glasgow, 1752-64 (LRBL). After Smith died (1790), a strikingly long-period of silence about his three references to an ‘invisible hand’ followed until 1875, when traces emerged of a Cambridge University oral tradition of debate about ‘Laissez-faire’ and the ‘invisible hand’ that were closer to its modern, ‘selfish’ versions than those used by Adam Smith. That oral tradition eventually leached into print (Pigou, 1922; Gray, 1931). Paul Samuelson (1948), transmuted Smith’s ‘self-interest’ into ‘selfishness’, which flooded across the discipline from the 1960s.
Much of modern analysis of the ‘invisible hand’ remains tenuously connected to Adam Smith’s more modest rhetorical purposes (Nozick, 1974; Grampp, 2000; Petsoulas, 2001; Aydinonat, 2008; Klein, 2009, and Tieffenbach, 2011). Few recent references are close to Adam Smith’s intentions, except, notably and exceptionally, Emma Rothschild (2001) on Smith’s ‘ironic joke’. Moreover, after 1875, intermittent references continued until the 1940s, when the trickle became a flood.
This chapter does not take sides on ideological debates about the merits of free-markets versus government interventions. Its focus is on the variance between Smith’s ideas and modern attributions of them in philosophical ideas and policies widely variant from Smith’s limited use of the ‘invisible hand’ metaphor. The consequential dragging deadlock and failures of unsound policies has heavy social costs in economic performance and public welfare.”
Tuesday, March 03, 2015
LOONY TUNES no. 111
“Adam Smith hit a lot of big shots with an invisible hand in his face.”
Alula Berhe Kidani posts on Sudan Vision Daily (2March) HERE
“After formal political independence, Adam Smith’s famous ‘invisible hand’ simply did not govern African agricultural production and trade.”
Valentin Schipfer posts (2 March) HERE
“The Invisible Hand of the City Srikes Back”
“It seems as if an invisible hand of the city enthusiastically seeks to not let any square centimeter equal each other – similar to the uncoordinated interaction between citizens of my above examples but on a different scale.”
Paul Krugman posts (2 March) on Salon HERE
“Krugman summarizes that old illusion thusly: “The law of supply and demand, they say, determines the level of wages, and the invisible hand of the market will punish anyone who tries to defy this law.”
Helen Razer in Daily Review (3 March) Review of new House of Cards” HERE
“And, all the while, millions of Australians are goosed by the Invisible Hand.”