James Otteson on Socialism and China

Angela Acton writes for the Current (St Louis University) Here

“The end of socialism: James Otteson”

“A small group attended a presentation by James R. Otteson, joint professor of philosophy and economics and chair of the philosophy department, Yeshiva University, New York. His third book, is titled “The End of Socialism.”

“Otteson thinks that capitalism is quite unnatural [reports Angela Acton]. Society sees capitalism as a way of getting what we need or what we want, but in itself, could socialism be morally superior to capitalism? Every time capitalism has been attempted, it has succeeded. Every time socialism has been tried, it has failed.

Yet Otteson [reports Angela Acton] still believes that people want socialism. He believes that society’s indecision explains why we have an instinctive suspicion of the system. “And the reason for [our suspicion] is because I think it is contrary to some of our deeply held and fundamentally natural ways of thinking. In fact, I think it is so strange and unnatural that when it succeeds at its goal of increasing material prosperity, it still faces an instinctive distrust. What I would like to suggest is that the [feelings] we have toward capitalism [are] at least partly a result of it being contrary to some of our deeply held natural information,” Otteson said.

Otteson believes there is a missing piece to the puzzle. He raises the question of whether or not legal institutions are enough. There have been institutions in history that were very similar, but we did not see the industrial revolution then, or an explosion of wealth.

“If you were alive in the year 1000, surveying the world, and someone said to you [that] there is a place in the world that in 1000 years will have unprecedented levels of wealth, what would you have guessed it would be? You would not have said the tiny little island of England or Scotland. That would not have even been on the radar. It would have been China,” Otteson said.
He went on to say that China already had a sophisticated culture in many ways. They had extensive trade routes, inventions and technological innovations, yet the average level of wealth did not really budge. It did not push the needle and that had surprised him. So there must be something else going on.

Otteson talked a little about the Occupy movement. He believes this is an instance of people worrying because some people are getting wealthy at significantly different rates than others. “We live in something like a capitalistic society, with enormous wealth, but the comparisons of wealth are not the same. All aspects of our lives are different than what they were in revolutionary times. Nevertheless, when we see someone who has a lot more than us, the first thought is that there is something wrong,” Otteson said.

Comment
It would be unfair to draw any conclusions from a report of Jim Otteson’s speech, “The End of Socialism”, in a student publication. Hence I won’t.

It must be a fairly selective audience of people who “believes that people want socialism”. That is not to say that nobody “wants socialism”. Remnants of the Cold-War broad left might still hanker after something called “socialism”, and some who have a residual, if romantic, hankering after Karl Marx, but among broad swathes of the population it is a decisive ‘no’.

Of course, recent shocks to the banking system, deficit crises in public accounts, and media labels of “austerity’, all contribute to prompting public anxiety, at least among opinion formers, and legitimizes chatter like: ‘Marx Was Right”. But that’s a long way from showing a road to socialism. And regular media images of North Korea (a socialist system of real austerity), or tv reports of striking Chinese workers and of dispossessing peasants from their small-holdings to make way for Hydro dams, factories and luxury apartments, remind the poor in capitalist countries of the dead-end of the supposed socialist alternative as offered by grey-haired, former Marxists.

I wonder about the parable of someone “alive in the year 1000, surveying the world, and another someone saying that “there is a place in the world that in 1000 years will have unprecedented levels of wealth, what would you have guessed it would be? You would not have said the tiny little island of England or Scotland. That would not have even been on the radar. It would have been China”. Now, I have great respect for Jim Otteson and his standing, which I share, among historians of Adam Smith’s works, but in the year 1000, not much was known in Europe about China – it took a couple of years to get there from Venice (Marco Polo), and the same to get back, and the country was so vast it would take a couple of years or more to travel round it, assuming the various authorities would let you do so. Even in Adam Smith’s times, China was still not too well known (it still took a year to sail from Europe to India, and longer still to visit China).

We know now that China was a great power – an empire dominating the region from East Africa and much of the Pacific – and that its governing elite was of long pedigree. Chinese peasantry were 'down trodden" to a high degree and chronically in debt servitude in small plots or landless. Its technology and its science, its early inventions of much that was unknown, as yet, in Europe, and its distance to travel as an economy to the industrial revolution, then only decades away from England and Scotland, was so close and had been for centuries. So what went wrong?

The answer lay in its lack of the social mores (freedom to do so) of commercial society and the incentives to apply innovations. These mores were almost totally absent, and indeed were repressed in the choking political system of Chinese totalitarianism. Sad. For China, and for the backward world, by delaying the earlier spread cross the world to today’s remarkable advances, the history we know took its slower course. Imagine, the impact on the world of four or more centuries of the industrial revolution and the inevitable democratic political revolution, if it had started and had revolutionized old China from the 12-15th century!

Deirdre McCloskey shows in her brilliant two volumes, The Bourgeois Virtues and Bourgeois Dignity (Chicago, 2006, and 2010) the vital missing elements preventing marketing economies from turning localized markets into national and international industialised markets that were ever present in China. So despite China's remarkable advances technologically, for the clear reasons that the Chinese (and much of 16th-18th century Europe), its political systems would not allow the necessary lower-level work of enterprising entrepreneurs to flourish. But in self-sustaining and self-reproducing that would make the difference, it happened, however, in the ‘little island” of Britain, off Northwestern Europe, from the 16th century onwards.

Now, Jim Otteson knows that, but the student reporter may not have appreciated their significance to report it, so I would not dream of implying that Jim should be criticized as if he didn’t know. I am sure the students got a lot out of attending Jim Otteson’s talk.

An Original Thinker Who Is Worthy of a Closer Look

James Otteson, professor of philosophy and economics at Yeshiva University (New York), interviewed on Adam Smith
HERE:

‘Adam Smith: Philosopher and Political Economist’

Misconceptions of Smith come from both political directions, as it were. Some have portrayed Smith as a doctrinaire laissez-faire libertarian, while others, more recently, have portrayed him as something like a contemporary progressive liberal. Neither is accurate. His review of the available historical and economic evidence led him to conclude that, after providing protection for people’s lives, liberty, and property, minimal government interference in people’s lives led to prosperity for all—including especially the poor. So he was genuinely concerned about the least among us, and his policy recommendations were based primarily on concerns about their welfare. Yet his recommendation of limited government was presumptive, not absolute: It served as a default to which exceptions could be made if the evidence for the particular case warranted it. I call his position “pragmatic classical liberalism.”

Smith accounts for the generation of shared moral standards in the Theory of Moral Sentiments by recourse to something he calls the “desire for mutual sympathy of sentiments.” In this case, “sympathy” does not mean pity: It means a “correspondence” or “harmony” of sentiments. His claim is that we all desire to see our own sentiments echoed in others, and we are chagrined and even pained when we realize our sentiments are not shared by others. Because this desire is mutual, it acts as a centripetal force drawing people into society and community with one another. It also acts as a regulative force disciplining us through rewards and punishments (achieving or failing to achieve mutual sympathy of sentiments, respectively), thereby generating—spontaneously—a moral order that is the product of human action but not of human design.

Smith employs a similar “invisible hand” explanatory mechanism in the Wealth of Nations, though there the fundamental driving motivation is not the desire for mutual sympathy of sentiments but the desire of everyone “to better his condition.” The difference is explained by the fact that in the Wealth of Nations Smith is describing our exchanges and transactions with people most of whom we do not know. Unlike our moral communities, people in the marketplace are typically strangers to us; a different set of motivations is therefore appropriate. Smith argues that we are still required to fulfill the rules of justice, but that among strangers the special affections we develop for our friends and loved ones are neither expected nor, therefore, usually appropriate. In both works Smith is trying to understand the creation and development of human social institutions—moral community in TMS and commercial society in WN—and what I call his “marketplace model” applies in both. Because of the different circumstances of interaction among family and friends, on the one hand, and traders in the marketplace, on the other, different motivations are appropriate; the analyses in the books nevertheless integrate into a coherent whole.

In part three of your Adam Smith book you explain what “Smith got wrong” (chapter 8). One of the mistakes Smith made in the Wealth of Nations was in thinking that human labor was a constant that could be universally measured and that it was the central determining factor of value. He seemed to believe that when a person is evaluating whether the price for a good or service is worth it, he will measure the price against the amount of his own labor that he estimates would be required to produce the good or service in question. This makes his view, I think, a “subjective-labor theory of value,” which is a step in the right direction. Nevertheless, the consensus of modern economics is that an attempt to base value on labor is a mistake. …

In chapter 9 of your book you make a case for what “Smith got right.”
It turns out that Smith got a lot right—both in his moral psychology and in his political economy. Perhaps two that bear mentioning are his claims regarding (a) mutual sympathy of sentiments and (b) the prosperity promised by commercial society. Modern psychology has discovered that human beings do, in fact, desire a “sympathy of sentiments” with one another, and many different studies from several different disciplines have discovered not only the importance of this desire but also its regulative effect on human behavior. Moreover, in the two-and-a-half centuries since Smith wrote the Wealth of Nations, those societies that approximated Smith’s recommendation of rule of law, free trade, and limited government have produced unprecedented levels of wealth and rises in standards of living, including for their poor. Smith believed this would happen, but not even he could have imagined the astounding productive powers of markets that subsequent history demonstrated.

Your award-winning 2002 book, Adam Smith’s Marketplace of Life (Cambridge), offers a systematic reinterpretation of Smith’s moral philosophy. Specifically, you argue that Smith provides a single “marketplace model” to make sense of various human social institutions. Can you explain what is the “marketplace model” and why is it a “reinterpretation” in light of the relevant literature?

… In my Adam Smith’s Marketplace of Life, I argue that both books can be seen as part of a larger social-scientific project, namely, the attempt to explain the creation and maintenance of large-scale human social institutions. I argue that in TMS Smith develops what I call the “marketplace” model of social institutions, in which exchanges and interactions of moral sentiments and judgments give rise over time to shared standards of morality. I lay out in detail how Smith’s account of morality is a version of an “invisible hand” argument. I then argue that the same model is present and at work in his Wealth of Nations, though here he is accounting for not moral community but economic markets.

I think Smith’s “marketplace model” for him enjoys a general application to human sociality, making it a kind of “grand unification theory” of human social phenomena. (© 2011 Evangelical Philosophical Society www.epsociety.org)

Comment

I regard James Otteson’s work on Adam Smith particularly invigorating and worthy of the attention of scholars, particularly his Market Place of Life (Cambridge University Press, 2002), an original interpretation of Smith’s common method of analysis that has been neglected by too many scholars.

In the first edition of my ‘Adam Smith: a moral philosopher and his political economy, in the Great Thinker in Economics series from Palgrave, 2008, I extended James Otteson’s market place model from the original applications that he used to demonstrate his model from Moral Sentiments, Wealth Of Nations, and Smith’s Essay on the origins of Language (figure 2.1, p 42), by applying it to Smith’s Essay on Astronomy and his Lectures On Jurisprudence (figure 2.2, p. 43).

Jim’s common model across all of Smith’s Works has four elements, ‘Motivating Desire’, ‘Rules Developed’, ‘Currency’ and ‘Resulting Unintended System of Order’. The hint that Smith used a common system of analysis was first made, without explanation or illustration by Dugald Stewart in his eulogy to Adam Smith delivered to the Royal Society of Edinburgh in 1793.

Otteson is the first to have attempted to uncover the common rules, and did so remarkably well. I found that that they work for all five of Smith’s works. Unfortunately the economic exigencies of modern publishing required that the second edition of my book had to lose 8-10,000 words, and I was forced to sacrifice the details of Jim’s ‘market place’ model in the general cut back.

I offer my application of Otteson’s market-place model to Smith’s Essay on Astronomy ([1744-c.50) 1795 p 31-105):

Motivating desire (through intercourse with others):
To discover the connecting chains of intermediate events;

Rules developed (‘to assess and judge’ diverse actions and motivations):
For the testing and debate of successive explanatory systems;

Currency (that which is exchanged to solidify and test principles):
Hypotheses, idea, and speculation:

Resulting unintended system of order (to give a firm foundation to the rules, standards and protocols that bring these associations into being’):
‘Introduction of order into the chaos of discordant appearances.’

Readers are urged to follow the link and consider James Otteson’s insightful work, especially his Market Place of Life. They do not have to accept his theological ideas to appreciate an original thinker.

New Book On Smith by Ryan Hanley

James Otteson, professor of philosophy and economics at Yeshiva University in New York, writes (9 July) in his personal Blog, James R. Otteson, PHD HERE:

“This Just In: An Excellent New Book on Adam Smith”

"I just received my advance copy of Ryan Patrick Hanley's excellent new Adam Smith and the Character of Virtue . I know it's excellent because I had an opportunity to read it in manuscript. In fact, the back cover of the dust jacket leads off with a blurb from me, which reads, in part, that Hanley's book is "one of the most important books on Smith in more than a decade."

Believe me, praise like that does not come easily from me. Everyone interested in Smith scholarship should read the book.”

Comment
I have had the pleasure of listening to a couple of lectures by Ryan Hanley on themes from Smith's Moral Sentiments. He is an authority and a very clear one at that. And Jim Otteson is a good judge of Smithian scholarship too.

Some people obfuscate Smith’s remarkably clear Moral Sentiments behind a veil of deep philosophical jargon, but Ryan is not one of them. He speaks at a brisk, but clear, pace, adding in short quotes from Moral Sentiments or pithy references, always with a page number attached from his memory. It is a performance to watch and listen to and audience members to whom I have spoken all remark on his high quality and authority which is a pleasure to listen to and learn from.

My order for his book will be in the post as soon as an address is available. I recommend that yours is too.

NB: I do not agree with all of Ryan’s conclusions about all aspects of his presentation of Smith’s ideas. Heaven forbid – we are good-natured scholars and I recognise polished talent when I come across it – so read and learn!