The Metaphor of an 'Invisible Hand' in Moral Sentiments

Rick Moniak, a Juneau resident, writes (16 November) in Juneauempire HERE

“Listen to the Invisible Hand”

“I may be taking a lot of liberty with a few random economic statistics to advocate for a socialist agenda. But the truth is I arrived here courtesy of economist Adam Smith’s “invisible hand”. The origin of this oft used term wasn’t an argument against government intervention in the free market as is commonly claimed by many economists. Smith used it first in The Theory of Moral Sentiments. He referred to the wealthy as having naturally selfish intentions, but postulated that they are led by an “invisible hand” to “divide with the poor the produce of all their improvement,” and thus “without knowing it, advance the interest of the society.”

Smith believed that most people gain nothing from their charitable acts aside from the joy of seeing the results firsthand. Similarly, he wrote “we often derive sorrow from the sorrow of others” when we directly witness their pain and suffering. It’s quite possible then that Smith’s “invisible hand” is a reference to the stirring of one’s moral conscience.
But it’s important to consider the fact the economy was almost entirely a local affair when Smith theorized about the invisible hand in 1759. It was hard, if not impossible, to ignore the plight of the poorer people living nearby. Interstate commerce and global trade have changed this. Out of sight and out of mind, the saying goes, and it’s well suited for the global capitalist who wants to keep his moral conscience from interfering with his selfish tendencies.

As Smith pointed out, care for the poor benefits all of society. He confesses he also takes few supply side economists will ever advocate restoring morality of this nature to the free market.”

• Moniak is a Juneau resident.

Comment
Apart from the imaginative attribution to the ‘invisible hand’ having a voice to listen to, there is not much to say about the rest of the piece by Rick Moniak. He seems to be confused between the IH metaphor as noun and as metaphor and, strangely, a noun with many meanings, significantly, those that support Rick’s Moniak’s rose-tinted imaginative attributions to Adam Smith.

Rick Moniak admits “taking a lot of liberty with a few random economic statistics to advocate for a socialist agenda”, which while revealing of his approach to advocacy, also reveals his bad habits in ‘taking liberty’ with Adam Smith’s texts.

At least he had read something of Adam Smith’s use of the IH metaphor in Moral Sentiments, but seems to have squeezed something into it that Adam Smith certainly didn’t. Smith was not just talking about a group of ‘wealthy’ persons (incomparably poor by today’s standards in modern capitalist economies), he referred to that relatively ‘privileged’ order in earlier societies that owned the land and, effectively, the men and women who toiled for him on that land, covering variously, oligarchs, kings, princes, barons and, in time, a ‘proud and unfeeling’ landlord, surveying his ‘extensive fields’ and ‘in imagination consumes himself the whole harvest that grows on them’. (Moral Sentiments, Book IV.ii.10: 184)

But, Smith points out, that in fact the ‘unfeeling landlord’ is ‘obliged to distribute among those who toil in his fields and pamper his whimsical needs in his ‘palace’ a ‘share of the necessaries of life, which they would in vain have expected from his humanity or his justice’.

Smith used the IH metaphor for this absolutely necessary transfer of his produce from his fields to the poor labourers and their families, and in so using the metaphor in this manner, ‘he described in a striking and more interesting manner’ the ‘object’ of the metaphor. This is what metaphors contribute to grammatical literacy, as Adam Smith defined metaphors in his “Lectures on Rhetoric and Belles Lettres” in 1763 at Glasgow University (page 29). For the record that is also how metaphors are described in the Oxford English Dictionary (1983) and as they are taught in every English language lecture and texts today. Smith’s class in Rhetoric was delivered as part of his Moral Philosophy class from 1748-63 (Edinburgh and Glasgow).

The IH metaphor was not a simple noun as suggested by Rick Moniak. The fact that in Smith’s view this ‘advance’ of ‘the interest of the society” was an unintentional consequence of the delusion of the rich landlords (shared with the Pharos of Egypt, the Kings of Babylon, and the Emperors of China) is a key aspect of his philosophy. It had precious little to do with “stirring one’s moral conscience”. Smith’s explicit point was that it was the landlord’s ignorance and delusion, not the ‘stirring of” his ‘moral conscience’ that ‘led’ him to share (for in truth the ‘unfeeling’ landlord had no choice but to do so – if he did not share even the bare minimum, his labourers could not work and would die, and 'no food, no labour'; no labour no 'greatness' to be 'proud and unfeeling about'). Also, that it would be a ‘vain’ hope if the poor relied upon him acquiring a ‘moral conscience’.

It certainly was not “hard, if not impossible, to ignore the plight of the poorer people living nearby”. The “plight of the poorer people living nearby” was ignored for generations to come, and had been since our predecessors left the forest and discovered shepherding and farming from about 11,000 years ago. Also, be clear that Smith meant by ‘necessaries’ the very basic necessities of life – and what was sufficient subsistence was as determined by ‘unfeeling’ landlords, as interpreted by the ‘landlords' ’ overseers, traditionally a set of violent bullies, not given in the main to feelings of humanity towards those at their mercy.

I suggest, politely, that Rick Moniak re-read Adam Smith’s Moral Sentiments on the ‘invisible hand’ (and read his Lectures on Rhetoric and Belles Lettres on metaphors) before imagining what Adam Smith meant by the IH metaphor of 'an invisible hand'.

Markets and Morality from an Unexpected Source

Nelson Jones writes in New Statesman HERE

“Morality and Markets”

“For whatever the virtues of personal relationships the great moral insight of the market economy derives from its very impersonality, which for the first time made possible a kind of objective ethics. And the market is reciprocity in action. As Adam Smith famously said, "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."

The title of the St Paul's report, Value and values, is a reminder of how much of our moral vocabulary consists of metaphors derived from the marketplace. Value is a measure of what something is worth. And a "worthy" person is morally an upright one. If someone does you a favour you are in their debt, you owe them. And there's no such thing as a free lunch. Sooner or later will come payback time. You will be held to account for your actions. Respect, in life, has to be earned. Conversely, we believe that criminals should "pay" for their crimes, that betrayal is a sell-out and that politicians who lecture the rest of us while enjoying the privileges of office are morally bankrupt.

The moral language of the markets is as old as the Bible. The Old Testament reports that a king of Babylon was "weighed in the balance and found wanting", and tells us that the price of a virtuous woman is "far above rubies". In the "parable of the talents" (a talent being a large quantity of silver), Jesus speaks of spiritual capital as a sum of money with which you should speculate to accumulate. As for Muhammad, he worked for most of his life as a trader.

What all this suggests to me is that the trading relationship that developed in the first market economies enabled people to think about ethics and morality in new and interesting ways, and has thus been a source of moral progress.

Before the formalisation of relationships in the marketplace, there were "primitive", intuitive forms of social relationship: parent and child, sexual partnership, the wider kinship systems of the tribe, and the relationship of subordinate to superior in a dominance hierarchy. All such "natural" relationships are mediated by, and encourage, pre-moral forms of reciprocity: bribes, threats, genetic claims, feelings of social solidarity, etc.

Such relationships may contain the seeds of morality, but by themselves are not moral; in fact they can impede morality as we now understand it. We think it's wrong to bribe or threaten others or promote our relatives against better-qualified non-relatives, for example. For most of human history, and in some places even today, this would not have seemed obvious. That it seems obvious to us is one of the moral lessons of the market.

"Personal relationships good, impersonal market forces bad" is thus at best a simplification and probably highly misleading. A properly functioning market will expose and punish underhand behaviour. The main problem with today's financial markets is that they have become dysfunctional.”

Comment
An interesting line of argument from, at least to me, an unexpected source. The New Statesman is a leftish commentator, with a circulation long past its hey days of the 1960s, but still likely to espouse leftish views as if they matter.

The oft-quoted reference to Adam Smith’s, is as often misunderstood. Smith was not downplaying the morality of benevolence (see his Moral Sentiments, 1759), his focus was on the inability of benevolence to feed, clothe, and shelter all those who need these things every day.

Nature is niggardly; it releases its bounties to a degree by toil only. Humankind has spent many millennia slowly discovering how to release Nature’s bounties, with the achievement of complete global success some way off, though the commercial system (later called capitalism in its varied forms) began to achieve this from the 15th century, following its earlier phases that were terminated in the thousand-year interregnum from the Fall of Rome in the 5th century. From the 1800s the spurt in per capita incomes, unequally enjoyed no doubt, began to reach unprecedented levels, first in North West Europe, later across Europe and parts of the globe (see Deirdre McCloskey. Bourgeois Dignity: why economics cannot explain the modern world, 2010).

Taking the age when the Bible’s books started to be written dates vary, but c.6-800 BCE appears to be accepted, i.e. the books that eventually made up the Hebrew Bible commenced about 2,800 years ago, that is, a very long time after humans left the forest for shepherding and farming (Cain and Abel’s supposed time) that commenced in a small segment of South East Europe and the Near East, from c.11,000 BCE. The Hunting and Gathering hundreds of millennia is often somewhat idealised (and sanitised) in moral terms by many anthropologists, using fieldwork among today’s tiny remnants of pre-historic societies. Shepherding and farming commenced to develop their long-existing primitive exchange relationships, which Smith identified as being present from its earliest forms by the faculties of reasoning (not rationality!) and language (WN I.ii.1.2: 25).

Exchange in its full sense (not just as market ‘trade’) depends on the development of crude morality as an alternative to the sharing of the bounties of nature and the fruits of toil (labour) by violence, though the alternatives of plunder or trade existed in parallel in varying degrees for tens of millennia to the present. Exchange in its market forms presumes the existence of property and, increasingly, of justice, as enforced by ruling norms of violence. The early great ‘civilisations’ were also great examples of tyrannical armed-state violence, which, Smith wrote, protected the rich against the poor (WN V.i.b.12: 715), to which we should add by observation and the evidence, also to protect the rich against each other! The proportion of family deaths from dynastic quarrels about primogeniture challenges must have been significant in all civilised societies (e.g., Europe either side of the Roman Republic and Empire).

Market relations composed of long and complex supply changes were fundamental to the formation of moral relationships correctly identified by Nelson Jones. I am not so sure about identifying reciprocity with “bribes, threats, genetic claims, feelings of social solidarity”, but this may just be a matter of brevity. Reciprocity is a fundamental building block for the emergence of bargaining as defined by Adam Smith, and strongly features in pre-history, as it does in signs of reciprocity relationships in some earlier animal species (bats and primates). It certainly existed in early humans that descended from the common ancestor leading to humans and today's chimpanzees. I have called this implicit ‘quasi-bargaining’ (from my unpublished essay: The Prehistory of Bargaining, 2003).

Humans learn their moral standards in society in discovering what behaviours are acceptable/unacceptable to others. Adam Smith develops this theme in his Moral Sentiments (1759). Our predecessors practised the norms of the acceptability/non-acceptability of certain behaviours long before modern religious movements imposed their theological imprints of divine accountabilities and God’s sanctions after death. Workable standards of inter-personal relationships were formed millennia before Bronze-age tribes invented monotheism. After market relations became dominant they did not diminish moral behaviours, contrary to some current assertions in many leftish magazines and newspapers. Pointing to notable counter-examples, as if they are uniquely practised or caused, or congenital to markets (e.g., Karl Polanyi) is fallacious.

That is why I was struck by Nelson’s article in the leftish New Statesman and I congratulate them for that.

Thought For The Day II

Recent exchanges on the meaning Adam Smith attributed to the invisible hand have prompted me to thoughts about how markets work and how they evolve unintentionally over time. To this end, I have been looking at certain texts by Adam Smith.

“They are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society, and afford means to the multiplication of the species. When Providence divided the earth among a few lordly masters, it neither forgot nor abandoned those who seemed to have been left out in the partition. These last too enjoy their share of all that it produces. In what constitutes the real happiness of human life, they are in no respect inferior to those who would seem so much above them. In ease of body and peace of mind, all the different ranks of life are nearly upon a level, and the beggar, who suns himself by the side of the highway, possesses that security which kings are fighting for” (TMS IV.1.10: 186-7).

This passage is more literary than historical. By referring to ‘Providence’ in this manner, Smith executed a nice evasion and did not have to explain the means by which this operation was carried out, and most readers, familiar if only vaguely with language that resorted to providential interventions, would accept Smith’s alusion without questioning it.

In his Lectures On Jurisprudence (6 January, 1762), Smith gives an altogether less Providential gloss to the passivity by which property-less peasants accepted the dictates of a benign Providence:

“The tyranny of the feudal government and the inclination men have to extort all they can from their inferiours, has brought property in some measure into these subjects. By the civil law and the constitutions of most countries in ancient times, game was considered as being free to every one. And this certainly is what is most agreable to reason. For no one can have any power over an animall of this sort, nor can he claim the property of it, because it pastures on his ground just now, for perhaps the next
moment it may be on another mans ground. But when the feudal government was established, which was the foundation and still prevails in some measure in all the governments in Europe, the king and his nobles appropriated to themselves every
thing they could, without great hazard of giving umbrage to an enslaved people" LJ(A) i.55: 23).

War lords, following the Fall of Rome after the 5th century, seized ownership of the land in Western Europe and all that was on it, by violence and the threat of violence, “without great hazard of giving umbrage” from those in no position to resist. Earlier, Roman attempts to divide the land equally among its citizens also suffered from natural pressures of human societies over the ever-present tensions common between the generations, to which, incidentally, he exposed his Glasgow students in his Jurisprudence classes and his readers in Wealth Of Nations. His conclusions about legislating for “equality” are worthy of consideration by those peddling modern idealistic utopias:

“Rome, like most of the other ancient republicks, was originally founded upon an Agrarian law, which divided the publick territory in a certain proportion among the different citizens who composed the state. The course of human affairs, by marriage, by succession, and by alienation, necessarily deranged this original division, and frequently threw the lands, which had been allotted for the maintenance of many different families into the possession of a single person. To remedy this disorder, for such it was supposed to be, a law was made, restricting the quantity of land which any citizen could possess to five hundred jugera, about three hundred and fifty English acres. This law, however, though we read of its having been executed upon one or two occasions, was either neglected or evaded, and the inequality of fortunes went on continually increasing. The greater part of the citizens had no land, and without it the manners and customs of those times rendered it difficult for a freeman to maintain his independency” (WN VII.3: 556-7).

Smith was more candid about the literary niceties when he taught his Jurisprudence students in 1762 and when he published Wealth of Nations in 1776, than about the role of Providence that he expressed in Moral Sentiments (1759), when he taught his Jurisprudence students in 1762 and when he had published Wealth of Nations in 1776. In this approach he was closer to Richard Cantillon’s ([1735] 1755) assessments of the realities of the origins of feudal inequalities than appears from Moral Sentiments, where he was making a different point, namely that the illusion of great power of the feudal lord over his inferiors, nevertheless, meant that the ‘inferiors’ “too enjoy their share of all that it produces. In what constitutes the real happiness of human life, they are in no respect inferior to those who would seem so much above them.”

Cantillon, more realistically noted that:

“...even if the Prince distribute the land equally among all inhabitants it will ultimately be divided among a small number. One man will have several Children and cannot leave to each of them a portion of Land equal to his own; another will die without Children, and will leave his portion to some one who one who has land already rather than to one who has none; a third will be lazy, prodigal, or sickly, and be obliged to sell his portion to another who is frugal and industrious, who will continually add to his Estate by new purchases and will employ upon the Labour of those who having no Land of their own are compelled to offer their labour in order to live” (Cantillon, [1735] Essai Sur La Nature Du Commerce en Generale, p5, ed. and trans. Henry Higgs, Augustus M. Kelly, New York, 1964).

As if to make the general comment on the true source of the Landlords’ status as owners of the land, Cantillon makes a more pointed remark that contrasts with to Smith’s, albeit later, non-historical story about ‘Providence’”

“It does not appear that Providence has given the Right of the Possession of Land to one Man preferably to another: the most ancient Titles are founded on violence and Conquest. … But howsoever people come into the property and possession of Land we have already observed that it always falls into the hands of a few in proportion to the total inhabitants.

“If the Proprietor of a great Estate keeps it in his own hands he will employ Slaves or free men to work upon it. If he have many Slaves he must have Overseers to keep them at work: he must likewise have Slave craftsmen to supply the needs and conveniences of life for himself and his workers, and must have trades taught to others in order to carry on the work.

In this economy he must allow his labouring Slaves their subsistence and the wherewithal to bring up their Children” (Cantillon, p 32-3).

I suggest these extracts from Smith’s Lectures On Jurisprudence and Wealth Of Nations, and the quotes from Cantillon (Smith quoted or was influenced closely from his Essai, WN I.viii.15: p 85, etc.,), demonstrate that the Providence allusion in Moral Sentiments was, well, just a literary allusion; Smith knew perfectly well, and taught, that the earth was divided by men (not 'Providence'), using violence.

Anyway you look at the historical reality, the so-called ‘equality’ they allegedly obtained in Moral Sentiments from 'Providence', was barely enough for biological subsistence, and not apparent at all in the ‘conveniences and the amusements’ of life. This shows that so-called Divine Providence had barely, if at all, moved common labourers and their families much further on than obtained when their ancestors ran in the forests. And War Lordism and Feudalism lasted for over a thousand years, finally being undermined and eradicated in Europe by the re-appearance of the Age of Commerce that led to capitalism.

An MP Talks Sense - shock!

Steve Baker MP speaks, 29 June, (HERE):

“Political economy and the crisis”

“I had the great pleasure last night of speaking to the Economic Research Council on the subject of Political Economy and the Crisis. I argued that:

• Economics should become political economy, embracing the problem of knowledge in the social sciences, morality (think Adam Smith’s Theory of Moral Sentiments) and public choice theory, in particular.
• Classical liberalism is the most robust political economy.
• The Austrian School offers important insights, particularly into business cycles and capital theory.
• The Austrian School predicted and intellectually survived the crisis.
• That reality is, or should be, a challenge to the contemporary paradigm.
• The implications for financial reform are profound.

We had a lively Q&A covering subjects from the Chinese socio-economic model to the residual role of the state. We agreed that we must not seek a rational reconstruction of society and we left outstanding the key challenge: to determine how to reform the financial system to deliver a free-market monetary regime.

My slides are available as a PDF HERE: For related reading, please see our primer (HERE): and this article (HERE): on the need for a paradigm shift in economics.

[Published on Lost Legacy under Cobden Centre ‘ShareThis’ request.]

[Steve Baker is a professional engineer with a background in the Royal Air Force and entrepreneurial software businesses. Among other things, he has worked with major banks and regulators internationally. His personal and political website is at stevebaker.info. Steve is MP for Wycombe.]

A Newly Discovered Role for the Invisible Hand

Russ Roberts of Café Hayek, writes (HERE):

‘A good week for thinking about Adam Smith’

It connects to video of a lecture by Daniel Klein (Professor at GMU, Fairfax, Virginia) on Adam Smith to a class meeting in Sweden.

Comment
Daniel Klein gives an interesting lecture on Moral Sentiments to an audience of Swedish postgrad students. I have debated with Daniel a couple of times on Adam Smith’s use of the Invisible Hand metaphor (see Econwatch, 2009 and more recently see Economic Affairs, 2010) and he is a well-informed, articulate, and always courteous scholar, who shares my passion for Adam Smith’s Works.

Our different takes on the meaning and significance of the IH metaphor does not mean I respect him less (perish the thought). Any student wanting to undertake research or classes in Adam Smith’s moral philosophy and political economy is recommended to take any opportunity to visit or attend classes at George Mason University. They are building a first-class reputation in Adam Smith studies there (look them up on the Web).

However, my differences with Daniel’s interpretation of Adam Smith’s Works have not diminished my respect for his writings and his participation in the republic of letters. We learn much from our better-informed critics.

Daniel’s account of the impartial spectator is interesting, though his throwaway afterthought of using the simile of the impartial spectator as like a ‘monotheistic god’ caught my attention, and I shall think about it, though my immediate response is to question its credulity.

When in the latter stages of his short lecture he introduced the ‘invisible hand’ in Smith’s moral theory in a major role (without the slightest textual evidence in support of his contentions) I was immediately struck by his querulous assertion.

Daniel links his (not Smith’s) novel interpretation of the IH metaphor in Moral Sentiments to ‘Smith’s presumption of liberty’, yet did not explain how or what the ‘invisible hand’ did exactly in this new role.

In fact the single direct textual reference to the IH metaphor in TMS directly concerned a time when the regime of ‘proud and unfeeling’ landlords ruled in Europe (and even before to there were landlords in pre-historic millennia in the near East when ‘the earth was divided unequally’, through all of which times nothing remotely like ‘natural liberty’ prevailed, or was known).

I found this section of Daniel’s lecture utterly unconvincing, but I wait to be corrected, with textual references from Smith. Where we present our own interpretations (which may have or not have legitimacy) we should not slide them into an account without any notice as if they are the legitimate views of Adam Smith. If we speculate we should say so.

Follow the link and watch Daniel’s lecture.

The Secular Versus The Theological Adam Smith

Adam Smith in The Theory of Moral Sentiments presents what on closer examination reads as a contradictory assertion of the origin of the ‘general rules of morality’ as read below stating that they are ‘justly regarded as the laws of the Deity”, and thereby conforming to Christian theology, and yet from the previous chapter, Smith asserts emphatically, that the origin of the “general rules” are shown to be found “from experience, that all actions of a certain kind, or circumstanced in a certain manner, are approved or disapproved of.”

To the extent that the earlier chapter is clearly secular and devoid of mention of the Deity, the following chapter conforms to orthodox Calvinist doctrine.

Moral Sentiments abounds with such almost contradictory ideas and explanations, as if (and as I believe was the case from reading them all) Adam Smith addressed two audience: secular philosophical readers and the censorious zealots in the Church of Scotland.

What do you make of Adam Smith’s ambivalence?

Chapter 4:
How he presents the “Origin and Use of general Rules” in Chapter 4:

“Nature, however, has not left this weakness, which is of so much importance, altogether without a remedy; nor has she abandoned us entirely to the delusions of self–love. Our continual observations upon the conduct of others, insensibly lead us to form to ourselves certain general rules concerning what is fit and proper either to be done or to be avoided. Some of their actions shock all our natural sentiments. We hear every body about us express the like detestation against them. This still further confirms, and even exasperates our natural sense of their deformity. It satisfies us that we view them in the proper light, when we see other people view them in the same light. We resolve never to be guilty of the like, nor ever, upon any account, to render ourselves in this manner the objects of universal disapprobation. We thus naturally lay down to ourselves a general rule, that all such actions are to be avoided, as tending to render us odious, contemptible, or punishable, the objects of all those sentiments for which we have the greatest dread and aversion. Other actions, on the contrary, call forth our approbation, and we hear every body around us express the same favourable opinion concerning them. Every body is eager to honour and reward them. They excite all those sentiments for which we have by nature the strongest desire; the love, the gratitude, the admiration of mankind. We become ambitious of performing the like; and thus naturally lay down to ourselves a rule of another kind, that every opportunity of acting in this manner is carefully to be sought after.

It is thus that the general rules of morality are formed. They are ultimately founded upon experience of what, in particular instances, our moral faculties, our natural sense of merit and propriety, approve, or disapprove of. We do not originally approve or condemn particular actions; because, upon examination, they appear to be agreeable or inconsistent with a certain general rule. The general rule, on the contrary, is formed, by finding from experience, that all actions of a certain kind, or circumstanced in a certain manner, are approved or disapproved of. To the man who first saw an inhuman murder, committed from avarice, envy, or unjust resentment, and upon one too that loved and trusted the murderer, who beheld the last agonies of the dying person, who heard him, with his expiring breath, complain more of the perfidy and ingratitude of his false friend, than of the violence which had been done to him, there could be no occasion, in order to conceive how horrible such an action was, that he should reflect, that one of the most sacred rules of conduct was what prohibited the taking away the life of an innocent person, that this was a plain violation of that rule, and consequently a very blamable action. His detestation of this crime, it is evident, would arise instantaneously and antecedent to his having formed to himself any such general rule. The general rule, on the contrary, which he might afterwards form, would be founded upon the detestation which he felt necessarily arise in his own breast, at the thought of this, and every other particular action of the same kind. (TMS III.4.7: 158-59).

““When these general rules, indeed, have been formed, when they are universally acknowledged and established, by the concurring sentiments of mankind, we frequently appeal to them as to the standards of mjudgment,min debating concerning the degree of praise or blame that is due to certain actions of a complicated and dubious nature.” (TMS III.411: 160)

How Adam Smith presents the general rules of morality in Chapter 5:

“Of the influence and authority of the general Rules of Morality, and that they are justly regarded as the Laws of the Deity”

“Since these, therefore, were plainly intended to be the governing principles of human nature, the rules which they prescribe are to be regarded as the commands and laws of the Deity, promulgated by those vicegerents which he has thus set up within us. All general rules are commonly denominated laws: thus the general rules which bodies observe in the communication of motion, are called the laws of motion. But those general rules which our moral faculties observe in approving or condemning whatever sentiment or action is subjected to their examination, may much more justly be denominated such. They have a much greater resemblance to what are properly called laws, those general rules which the sovereign lays down to direct the conduct of his subjects. Like them they are rules to direct the free actions of men: they are prescribed most surely by a lawful superior, and are attended too with the sanction of rewards and punishments. Those vicegerents of God within us, never fail to punish the violation of them, by the torments of inward shame, and self–condemnation; and on the contrary, always reward obedience with tranquility of mind, with contentment, and self–satisfaction.

There are innumerable other considerations which serve to confirm the same conclusion. The happiness of mankind, as well as of all other rational creatures, seems to have been the original purpose intended by the Author of nature, when he brought them into existence. No other end seems worthy of that supreme wisdom and divine benignity which we necessarily ascribe to him; and this opinion, which we are led to by the abstract consideration of his infinite perfections, is still more confirmed by the examination of the works of nature, which seem all intended to promote happiness, and to guard against misery. But by acting according to the dictates of our moral faculties, we necessarily pursue the most effectual means for promoting the happiness of mankind, and may therefore be said, in some sense, to co–operate with the Deity, and to advance as far as in our power the plan of Providence. By acting otherways, on the contrary, we seem to obstruct, in some measure, the scheme which the Author of nature has established for the happiness and perfection of the world, and to declare ourselves, if I may say so, in some measure the enemies of God. Hence we are naturally encouraged to hope for his extraordinary favour and reward in the one case, and to dread his vengeance and punishment in the other.” (TMS III.5.6 - 7: 165-6).

Comment
The ideas from these and many other instances I am compressing into a short chapter in the forthcoming Handbook on Adam Smith (edited by Chris Berry for Oxford University Press, 2012).

I should make it clear I am reporting on Adam Smith’s alleged religiosity from his expressed views on religion over his lifetime and I am not assessing the truth or otherwise of the theological ideas of the Christian religion (or any other religion). Readers are asked to keep this in mind when (if) they communicate with me.

Just A thought About Rights Via Don Boudreaux

Don Boudreaux (26 Dec) in Cafe Hayek (HERE): http://cafehayek.com/ writes to the Boston Globe and discusses which rights are legitimate and which are not.

“The rights that Americans wisely cherish as being essential for a free society require only the refraining from action. Your right to speak freely requires me simply not to stop you from speaking; it does not require me to supply your megaphone.”

Comment
This is worth thinking about, which I believe is Boudreaux’s intentions in his brilliant, short letters to US media.

In Moral Sentiments Adam Smith, discusses theories of moral sentiments from many predecessors, which often confuses commentators who do not (or cannot) distinguish between what were Smith’s views and what were somebody else’s from the many brilliant philosophers he considered his students should know about.

Remember, his Theory of Moral Sentiments was based on his Glasgow University lectures. Those who forget this sometimes attribute to him ideas that were not necessarily his own. There are many dialogues flowing through TMS.

Here is one of them:

‘In one sense we are said to do justice to our neighbour when we abstain from doing him positive harm, and do not directly hurt him, either in his person, or in his estate, or in his reputation” (TMS VII.ii.1.9: 269).

The virtue of justice is a negative virtue that is practised by avoiding its breaches, unlike positive virtues, like the behaviours of beneficence and benevolence, which should be practised.

Just a thought.

Be Wary of Philosophers With a Self-Licensed 'Duty'

Larry Arnhart writes in Darwinian Conservatism 6 April HERE:

[The Left has traditionally assumed that human nature is so malleable, so perfectible, that it can be shaped in almost any direction. Conservatives object, arguing that social order arises not from rational planning but from the spontaneous order of instincts and habits. Darwinian biology sustains conservative social thought by showing how the human capacity for spontaneous order arises from social instincts and a moral sense shaped by natural selection in human evolutionary history.]

“Aristotelian Liberalism (5): Adam Smith's "Moral Sociology"

“Since Rasmussen and Den Uyl argue for an Aristotelian defense of liberalism, one might expect that they would find common ground with Adam Smith, who promoted liberalism and developed a theory of the moral sentiments that he thought largely coincided with Aristotle's moral theory.

Contrary to this expectation, Rasmussen and Den Uyl criticize Smith's Theory of Moral Sentiments. They write:

". . . Although this work appears to offer a moral theory, that theory is marred by an insoluble dilemma: the 'impartial spectator' who makes the final judgment about moral propriety must either make that judgment on the basis of his sentiment or not. If so, what justifies that sentiment over the others being observed in the actions considered? If not, a standard other than sentiment is being used, which seems disallowed by the theory itself and would require its own justification. Nevertheless, it is possible to ignore this problem and treat this work as expressing a theory of moral sociology. If we do this, the actions of the impartial spectator can be considered as descriptive of moral attitudes rather than justificatory, and the work as a whole could be regarded as an account of how moral attitudes and norms are generated in a free society.”

“Philosophers have a duty to shape popular culture to conform to their rational understanding of the truth. Philosophers must take responsibility for shaping the souls of their fellow citizens (LAN, 218-29)”.


Comment
I found this discussion by Larry Arnhart informative and interesting and commend it to readers of Lost Legacy. Not many readers may be interested in such philosophical jousts but reading them often helps understanding of what Adam Smith’s Moral Sentiments was about. Smith did not write the last word on moral sentiments and the ‘impartial spectator’, but understanding more about what he did write, especially through the perspectives of critics is a fine way to sharpen your own perspectives.

For a ‘justificatory” moral sentiments the idea of moral sentiments moves away from Smith’s idea of a description from within the person, based on observed experience from living in a society, towards some external mode arising from where? I am relaxed about “moral attitudes” being “descriptive” rather “than justificatory”. The impartial spectator “as a whole could be regarded as an account of how moral attitudes and norms are generated in a free society”, which I think is Smith’s point.

I remain suspicious of the claim that:

“Philosophers have a duty to shape popular culture to conform to their rational understanding of the truth. Philosophers must take responsibility for shaping the souls of their fellow citizens (LAN, 218-29)”.

That is tellingly dictatorial. Smith, after all declared that the ‘philosopher does nothing, but observes everything’. It was Marx who claimed that it was not the duty of philosophers' to understand the world but to change it', which was a self-written license to impose a tyranny.

Follow the link and see what you think.

High Quality Letter in the FT

Raymond S. Franklin,
Queens College,
City University of New York writes to the Financial Times (29 March) HERE


"Self-interest motive has won the war"

“There has been a running debate over the years about the relationship between Adam Smith's Moral Sentiments and his Wealth of Nations , the former published before the latter. The debate has been identified as the “Smith Problem”. My conclusion related to this debate – empathy derived from Moral Sentiments versus self-interest derived from the Wealth of Nations – is as follows: Pure empathy, the ability to identify with the “other” – even at the expense of self – is rooted in family, friendship and community, that is, in the social sphere that is outside the commodification of relations that define the market. The economy, cut loose from the social and moral sphere, involves individuals producing, buying and selling for material gain without seeking to imagine the consequences of the individual’s self-interested actions. Such actions may end up being virtuous to the whole society, but the virtue was unintended.

It is possible to hope that the two spheres of Smith, the moral (empathic) and economic (self-interest driven) could co-exist in some form of equilibrium. But, in my view, this was never demonstrated adequately and constitutes the “Smith Problem”.
Jumping forward to the present, it is clear in my judgment that the economic self-interest motive, dominant in the economic sphere of life, won the war. The institutions of the market have overwhelmed and penetrated the social spheres of life. Even the nuclear family, via, is viewed as a production unit with a division of labour and implicit prices in the way husbands, wives and children relate to each other.

Although I wish Mr Rifkin success, the idea of establishing an “empathic civilisation” at this juncture in history is singularly utopian”.

Comment
Raymond Franklin’s short letter is of remarkably high quality. The separation of the social from the economic sphere was well stated elsewhere by Karl Polanyi (1944: The Great Transformation), who rooted the separation in ‘capitalism’ and ‘markets’.

Smith did not separate them in this manner. In both sectors (in so far as for the sake of argument, I accept this distinction) the immediate awareness of individuals of others follows a similar pattern. We are closest to our immediate household kin (‘family, friendship and community’ – though Smith put it as family, friends and acquaintances, and the rest as strangers), whereas in markets we are directly involved in direct transactions with sellers/buyers and then with untold numbers of anonymous people in demand-and-supply linked chains. In both cases, we are dependent in many ways with the anonymous strangers, whom we know not, nor need to do so, and because of society we walk amidst strangers without flinching.

Franklin asserts that our social relationships are “outside the commodification of relations that define the market” (a Polanyi-type expression, hinting at a Marxist vocabulary), yet they share similar degrees of anonymity. We do not know nor need to know, from whom our daily, monthly, annual sustenance – material or emotional – comes from, yet each is equally important. Where family, friendly and acquaintances, and economic relationships break down they cause similar crises in personal circumstances.

We are sustained by normality in relationships in 'both' spheres, including the fact that in both the anonymity of distant participants is an essential (and productive) contributory factor in normal life (without it we would back in the wood-age). The market has not changed essentially the empathetic part of personal life – it has existed as long as humans lived in social groupings (in common with other primates). The elevation of the market to a separate entity is an invention of the imagination. It is not unique in history (see Morris Silver’s 1995 rebuttal of Polanyi’s thesis in ‘Economic Structures in Antiquity’).

There were anonymous ‘strangers’ even in a small tribe; more so in nearby tribes, and extremely so when unhappy events unfold from anonymous invading strangers from unknown lands, few of whom sought "to imagine the consequences of the individual’s self-interested actions’ upon those they visited with their ‘rapine and violence’.

The fact that “Nobel Prize-winning Gary Becker” advanced views about the “nuclear family”, while interesting as a scholarly exercise, does not in itself mean that the ‘market’ has in fact invaded the relationships between a husband and wife, and others.

There is no “Adam Smith problem” in English or German.

Unfair to Adam Smith: his philosophy accords with modern psychology

I return to another article in Psychology Today (HERE), this time written by Darcia Narvaez, Associate Professor of Psychology and Director of the Collaborative for Ethical Education at the University of Notre Dame:

“Moral Landscapes Living the life that is good for one to live: The Cultural Airspace of Harmony Morality, Which emotions does your cultural airspace promote?

“Although the philosophers David Hume (1751/1998) and Adam Smith (1759/2002) considered concern for others to be fundamental to human character, empathy turns out to be highly influenced by one's upbringing. Parents and culture shape which moral emotions we dwell on and which morality we favor. Emphasizing anger, hate, fear, contempt leads to Bunker morality; emphasizing compassion, concern, love, forgiveness leads to Harmony morality.”

Comment
Darcia Navaez, PhD, has, in my view, a similar problem to that of Jim Taylor, PhD (Lost Legacy, 23 October): neither of whom is really up-to-speed on the works of Adam Smith, but by citing them in support of their otherwise most readable articles, I assume they felt that it would make their pieces publishable in Psychology Today, whose sub-editors would note that a well-known name makes their pieces reader-recognisable.

Smith did not believe that human characters or behaviours were, to quote a fashionable but incorrect metaphor, "hard wired", or 'inherent', or 'instinctive' (that was a view of Francis Hutcheson, Smith's Glasgow tutor). These behaviours and sentiments are learned and can vary widely according to upbringing and context.

Smith’s (and Hume’s) understanding of human nature – the sympathetic “concern for others” – was supported by a lengthy discussion in “Moral Sentiments” (1759) on how these “concerns” were generated, and they are not much different from Darcia’s elaboration of “Parents and culture shape which moral emotions we dwell on and which morality we favor”.

I refer readers to Moral Sentiments from which I could quote extensively from Smith’s early chapters, but feel on this occasion, his simple illustration is sufficient to make his point:

“Were it possible that a human creature could grow up to manhood in some solitary place, without any communication with his own species, he could no more think of his own character, of the propriety or demerit of his own sentiments and conduct, of the beauty or deformity of his own mind, than of the beauty or deformity of his own face. All these are objects which he cannot easily see, which naturally he does not look at, and with regard to which he is provided with no mirror which can present them to his view. Bring him into society, and he is immediately provided with the mirror which he wanted before. It is placed in the countenance and behaviour of those he lives with, which always mark when they enter into, and when they disapprove of his sentiments; and it is here that he first views the propriety and impropriety of his own passions, the beauty and deformity of his own mind. To a man who from his birth was a stranger to society, the objects of his passions, the external bodies which either pleased or hurt him, would occupy his whole attention. The passions themselves, the desires or aversions, the joys or sorrows, which those objects excited, though of all things the most immediately present to him, could scarce ever be the objects of his thoughts. The idea of them could never interest him so much as to call upon his attentive consideration. The consideration of his joy could in him excite no new joy, nor that of his sorrow any new sorrow, though the consideration of the causes of those passions might often excite both. Bring him into society, and all his own passions will immediately become the causes of new passions. He will observe that mankind approve of some of them, and are disgusted by others. He will be elevated in the one case, and cast down in the other; his desires and aversions, his joys and sorrows, will now often become the causes of new desires and new aversions, new joys and new sorrows: they will now, therefore, interest him deeply, and often call upon his most attentive consideration.” (TMS III.1.3: 110)

Smith discusses this process as dependent on contact with others, sequentially, first with parents (and other adults), then in the company of other children (school, playground, street games, etc., the great 'school of self-command'), through to entering adulthood.

How one treats others influences how they treat us; and from long sequences of complex interactions among humans in society, we are subsumed in the interdependent outcomes known as the ‘way we live’. He uses the metaphors of the “looking glass” and the “mirror” to emphasise the two-way nature of the what today we call the socialization of humans in society.

I recommend that readers either read Moral Sentiments directly or, for a short introduction to Smith’s moral philosophy, try my book, Chapter 2: “so weak and imperfect a creature as man”, pp 47-61, in Adam Smith: a moral philosopher and his political economy, 2008, Palgrave Macmillan.

Adam Smith and Religous Beliefs

Rev. Allen M Baker, Pastor of Christ Community Presbyterian Church in West Hartford, Connecticut, writes in Banner of Truth HERE

“Which will you choose?”

“By the sweat of your face you will eat bread (Genesis 3:19)”

In 1776 Adam Smith, a Scottish economist and Deist, a good friend of David Hume the sceptic, wrote his famous book Inquiry into the Nature and Causes of the Wealth of Nations that has profoundly affected the capitalist system in our world. Smith taught that an 'invisible hand of nature' guides the law of supply and demand and that if left alone will continue the increase in the wealth of nations equitably for all people. Smith failed, however, to heed the words of Genesis 3 concerning the implications of the fall into sin — namely that man is innately selfish and greedy, given to avarice.”

Comment
“Smith taught that an 'invisible hand of nature' guides the law of supply and demand and that if left alone will continue the increase in the wealth of nations equitably for all people.”

News to me, and I am sure it would have been news to Adam Smith. He never taught or wrote anything in the same sentence or paragraph about “the law of supply and demand” (Books I and II) and the “invisible hand of nature” (Book IV) (even the phrase “of nature” on this context is invented).

“the wealth of nations equitably for all people”.

Well, he wrote a book called (short title) the “Wealth Of Nations”, but did not refer in it to “equitably”. Distribution in its modern sense was not a topic in political economy in the 18th century. He said “progress to opulence” was a good thing – employment of labourers was good in the sense that it was better than destitution and the average life-span of 25 years.

Whether Smith failed “to heed the words of Genesis 3 concerning the implications of the fall into sin” is not documented. Being brought up in a Presbyterian household – his mother was very religious – he would know his Bible, but whether he took revealed religion seriously after his early 20s is another matter. It was unlikely that he was a Deist, at least after his mother died. In 18th-century Scotland, to be thought to be an atheist was not socially possible; Deism was also condemned but by the 1770s it was less so.

See my paper: The Hidden Adam Smith in his Alleged Theology”, presented to the History of Economics Annual Conference, University of Colorado, Denver, June 2009. Available from the address at the top of Lost Legacy’s Home Page.

“man is innately selfish and greedy, given to avarice”

“Innately” means it is within man from birth. What a low opinion Rev. Allen M Baker has of mankind. Some people are “selfish and greedy, given to avarice”, but many more are not. If we all were malformed that way we would “enter an assembly of men as [we] enter a den of lions” (Adam Smith, Moral Sentiments, 1759: TMS II.ii.3.4: 86).

It’s Rev. Allen M Baker’s kind of Presbyterianism that drove most Scots from the Church once the “Holy Willies” (as Robert Burns put it) no longer were able to force everybody into conformity with its oppressive doctrines (young Thomas Aitkenhead, a theology(!) student was hanged in Edinburgh in 1697 for so-called blasphemy).

What kind of loveless people were these men?

Smithian Competition Confirmed

Laura Fitzpatrick asks: “Are Humans Actually Selfish?” in
TIME (HERE)

“In his new book The Age of Empathy: Nature's Lessons for a Kinder Society, primatologist Frans de Waal uses a variety of studies on empathy in animals to debunk the idea that humans are competitive to the core.

Given all the science that tells us about empathy in animals and in ourselves, why do you think the idea persists that at bottom we're competitive backstabbers?

It was established at the beginning of the Industrial Revolution, when probably it was useful to have a picture of humans as competitive and to base the capitalist system on that image. And in doing so, a lot of political ideologues and economists started to forget that we are also a highly social species. The founder of economics, Adam Smith — to his credit — did realize that if you build a system completely on competitive principles it would not work very well.

What happened a year ago on Wall Street is exactly an example of what Smith was warning [about]. Society is not really made to be a purely competitive operation. And I think we have learned that lesson, but I don't know for how long. The whole argument that nature is red in tooth and claw, and for that reason society ought to be like that, is flawed. Because nature is not like that. If you look at our close relatives, you see animals who survive by cooperating. Yes, there is competition; there is dominance, hierarchy. They sometimes fight. They sometimes even kill each other. But they stick together because they survive together much better than alone.”

Comment
I’ve already commented this week on Frans De Waals’ new book this week, but it occurs to me that I have something to add in a comment on the context of ‘competitive’ in human relationships.

It has long been projected that Adam Smith favoured competition, as if he had written nothing about co-operation. Yet, in the first chapter of Wealth Of Nations he describes the long, and complex supply chain that eventually produced a common labourer’s woolen coat. Nobody was in charge of the supply chain – members of it may not have known, nor did they need to do so, anybody a link or two ahead or behind their place in it. Yet it functioned, if not effortlessly, well enough to provide the consumer with a woolen coat. This required, if not conscious co-operation, at least effective and consequential co-operation.

Buyers along the chain are not in competition with their suppliers; they are in competition with the set of other buyers, as are the set of all suppliers in competition with the set of other suppliers. The failure to appreciate this simple fact misleads many, including, too many, economists who mistakenly attribute to competition vices it never had.

Take the parable of the buyer in contact with the “butcher, the brewer, and the baker”. Most readers of the paragraph containing the parable, who have not read and understood Adam Smith in his books, Moral Sentiments and Wealth Of Nations, go hopelessly adrift in concluding that there is a clash of self-interest between the buyer of his dinner and his suppliers. They even quote it as evidence of their error in not understanding self-interst in Smith's lexicon!

Bargainers make and receive offers, which Smith states clearly as a conditional proposition:

“Give me that which I want, and you shall have this which you want” (WN I.ii.2: 26).

In short, the offers each makes are statements of potential exchanges they would accept. Until they find an offer acceptable to both of them, there is no deal.

The negotiation process is ubiquitous in commercial markets. Demanding everything for yourself and ignoring the demands of the other party is self-defeating.

In fact, Smith identifies how they reach a bargain a few lines further on:

“We address ourselves, not to their humanity but to their self-love, and never talk of our own necessities, but of their advantages.” (WN I.ii.2: 27)

In short, we have to persuade them (not force them), which is an entirely different image in practice to that of high-energy competition.

Over many years, I have extolled the virtue of competing with our rivals, not our customers.

Humans are not “competitive to the core” (a blatant misunderstanding among too many Homo-economicus thinking economists); we are social animals and, because of language, more so than our primate cousins.

The Wall Street Journal, which carried a similar report (thanks Brian) on Frans de Wall’s work, (“Tracing the Origins of Human Empathy” by Robert Lee Hotz HERE
ends with:

"They crossed the bridge with empathy, to realize something that is completely exotic to them," says Dr. Danziger. "True empathy is the ability to imagine how others are feeling, especially people who are not the same as you."

Most humans will recognise themselves in this observation. Smith also would appreciate the conclusion as confirming his 18th-century assertion Moral Sentiments.

A Wild Goose Chase; Another Disappointment

In another debate elsewhere on the invisible hand in Adam Smith, which I am engaged in lightly, a contributor identified not three uses by Smith of the popular 18th-century metaphor, but four.

That sent me to the library to search out the source of the 4th use. When examined, I find the claim is in History of Political Economy in January 1990, nearly 20 years ago.

I was surprised by the revelation of a fourth invisible hand in Adam Smith that I had missed, but my surprise soon became wonder – how did I miss it? - which, however, was soon dampened when I located and read it. The article, by Syed Ahmad, at the time of the Department of Economics at McMaster University, Hamilton, Canada, boldly titled “Adam Smith’s four invisible hands” (HOPE, 22:1 (137-44).

It discusses the three well-known instances, somewhat inadequately in my view, and achieves the four count by asserting that the reference to ‘an invisible hand’ in Moral Sentiments has two distinct meanings, adding a fourth meaning to the original three. Yes, I agree the claim is close to tentative in the extreme, but, to be fair, if Syed’s reasoning had worked he would have made a major discovery. Unfortunately, it doesn’t and he didn’t.

Syed asserts that the first invisible hand appears in Moral Sentiments in the guise of the “size of the landlord’s stomach” (139). You can read the quotation in full at: TMS IV.ii.10: 184-85. I must ask why does the physical limits of a human stomach – and all other stomachs in nature - need “an invisible hand”?

Syed adds the comment: “Without this limitation ‘all the thousands’ would have perished through his selfishness” (139). But the stomach’s limit is physical, not psychological. Moreover, if the landlords' stomach was without limits, so would every other human’s stomach be without limits too – the problem of starvation would then be exacerbated without limit.

Syed notes correctly that the “selfishness of the landlord is constrained for human survival”, but this has nothing to do with the invisible hand. He also accepts that “it was not man’s prudence or reasonableness or any other mental attitude which prevents catastrophe; it is the physical limitation of his stomach.”

But wait. Syed introduces the ‘second’ invisible hand ‘in the form of the residual selfishness of the landlord”. He notes that the size of the stomach prevents the landlord from ‘eating all the food he has” but “he could still let the rest go to waste” (a view implied by W. D. Grammp (2000. 'What did Adam Smith means by the invisible hand?' Journal of Political Economy, 108: 3, 441-65)in his weird account of the invisible hand). Syed calls this a “positive role” for “selfishness”.

He joins this muddle to Bernard Mandeville’s “Private vices, publick benefits” (“Whilst Luxury/ employ’s a Million of the Poor”). This sidesteps Smith’s concerns with the “thousands whom they employ” on their land producing the acres of food for consumption, before we take up the the issue of the landlord’s consumption of the luxuries supplied by the town’s artisans and producers of foreign imports.

Like the physical limitations of the stomach – an attribute of all humans long before the first landlords appeared from the agricultural ‘revolution’ 8-11,000 years ago – the absolute, inescapable necessity of feeding the labourers (and their families) who prepared the land, sowed the seeds from last season’s harvest, tended the crops (and the farm animals), and harvested and stored the products of the land is fully explainable without an invisible hand metaphor. If the labourers received nothing from a season’s harvest, they would starve and, if it was a general rule across all of society, who would undertake the labourers’ roles in the following spring?

Syed describes the limited stomach’s of the landlords as the first ‘invisible hand’ and the second role of distributing a share of the harvest to the farm labourers, the second invisible hand. Both roles are spurious as examples of an invisible hand explanation. In both examples, the parties to these transactions had no choice but to do what they did; there was no role for an invisible hand to lead them to do what they had to do anyway.

The only meaning that Smith could have meant was the singular role of the landlords in doing what they did as an example of unintentional outcomes, despite their delusions of greatness as the owners of their great estates and the employers of the thousands, who tended their fields and their domestic luxuries, plus, as trade between the country and the town (and foreign towns too) grew, their supply to landlords effective employed the skilled artisans and merchants who supplied luxury items (fine clothes, jewels, gold and silver plate, tapestries, and furniture).

Syed Ahmad did not discover a fourth invisible hand, and the two he elaborated upon in his article were contrived and, therefore, spurious.

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!

Promising Abstract on Adam Smith's Stance on Religion

Ross B. Emmett (James Madison College), write in First Amendment Scholarship Update HERE: in Man and Society in Adam Smith’s Natural Morality: The Impartial Spectator, the Man of System, and the Invisible Hand .

An abstract states (in part):

“One often hears the argument that Adam Smith’s Theory of Moral Sentiments provides a basis for the construction of a morality independent of a religion based on revelation. Central to this argument is Smith’s impartial spectator, whose study of human motivation through observation of the diversity of our actions shapes our capacity to both judge the motives of our present actions and inform our future ones. To the extent that one’s moral imagination attends to the impartial spectator, one’s judgment of actions will conform to a moral standard founded on human experience rather religious revelation.”

Comment
I picked out this paragraph (ignoring for this purpose some other remarks in the abstract on an ‘invisible hand’, having said plenty about The Metaphor recently) because it states something with which I completely agree.

It is absolutely right in my view that “in Adam Smith’s Theory of Moral Sentiments provides a basis for the construction of a morality independent of a religion based on revelation”.

Smith is clear that experience is the forming force of infants learning about appropriate moral behaviour – defined as those behaviours acceptable to others – and that such learning is not ‘innate’ in a God- implanted moral faculty (Francis Hutcheson).

A society of thieves and murderer refrain from stealing for or murdering each other; a society of Jews follows the Mosaic code; Mormons follow Joseph Smith’s code and Presbyterians follow their code (similarly with Muslims, Hindu's, and so on).

It is not clear if Ross agrees with this notion from his opening words: “One often hears the argument”, which usually is a prelude to disagreeing with the statement that follows.

It is also a phraseology similar to that used by Adam Smith throughout Moral Sentiments when he makes statements about religious doctrine and beliefs to the effect that he dilutes their religious undertones.

Ross’s statement that “one’s judgment of actions will conform to a moral standard founded on human experience rather religious revelation” is similar to that which I noted from my reading of Moral Sentiments for my paper: ‘The Hidden Adam Smith in his Alleged Religiosity’, available from the address at the head of this page.

Nicholas Gruen on Intellectual Property

Nicholas Gruen, an Australian economist, who has featured several times on Lost Legacy, posts at Club Troppo HERE and his recent paper:

“Adam Smith 2.0: Emergent Public Goods, Intellectual Property and the Rhetoric of Remix”, presented to the Copyright Future: Copyright Freedom Conference, Canberra (27th May) is now available (follow the link). Here is his introduction:

“I put quite a bit of effort into my two pieces on Adam Smith in Ross Gittins’ column while he was on leave and got quite a lot of positive feedback about them. So when I was asked to talk to an excellent conference organised by the indefatigable Fitzgerald siblings of QUT - Professors Brian and Anne - entitled Copyright Future: Copyright Freedom about the law of copyright in the age of the internet I decided to try to turn those columns, particularly the latter one, into a more substantial paper. Some academic stars were in attendance from around the world including Lawrence Lessig and it was a great conference. Plaudits to the Fitzgeralds and others associated with it.

One thing I really liked was the terrific way in which PhD students were involved, giving five minute talks on their research, being involved as discussants. They’re doing interesting things, and we were interested to hear what they were. Still, I christened Brian “Brother Didactica” because boy did we have a meal to chew through - full on papers, comments, discussants, questions, slide shows, from 8j.30 am till 6.30 at night. Seventeen people wheeled on and off the stage efficiently before lunch! And on it went.

I was one of the very few economists there, and was alarmed at how much of a meal lawyers can make of things that economists see as non-issues (like how to get the last penny of royalties to the copyright holders of ’orphan works’ - that is works that are not ‘public domain’ but for which rightful owners of copyright can’t be found.) I was sitting in a lengthy session about this and other not dissimilar problems in amazement that no-one reached for an economic perspective on this stuff (even if they didn’t want to treat it as the final word). I hope to blog about this. I wanted to say that there should have been more economists at the conference - which there should have been. But I didn’t want to say that if only economists were in attendance it would all be sorted. So if I get round to the post I have in mind I’ll spell out a little more about what I mean and explain where I think economists’ reasoning is strongest (something I’ve already forshadowed above) and where I think economists don’t think particularly well, and where lawyers do a better job.

In the meantime, I thought I’d post my talk which is the ‘paper’ of the ‘column‘ as it were, which I was pleased to find Mark Thoma thought worthy of his fantastic site Economists’ view. Likewise Gavin Kennedy liked my earlier column about Adam Smith and mirror neurons. Gavin and Mark Thoma have also picked up Don Arthur’s post on Adam Smith on poverty.”

Comments
(Excuse the shameless plug.) Nicholas is not just an economist; he is also a talented writer and he understands Adam Smith better than most who claim to quote him authoritatively. In short Nicholas has read Smith’s books, joining a very small elite among economists, and an even smaller elite of those who write about him with false confidence in the mainstream media.

Currently, I am in correspondence with Nicholas over his use of the phrase ‘hard wired’ in relation to human capacities for sympathy. His use fits the themes of ‘Web 2.0’ - it sounds ‘ITish’ – and therefore possibly legitimate on poetic grounds, but I am not so sure that it is appropriate for Adam Smith’s thinking.

Innate capacities in some sort of moral faculty, as asserted by Francis Hutcheson, Smith’s tutor and mentor, were rejected by Smith when he wrote Moral Sentiments, and presumably in the lectures he delivered on Ethics at Glasgow University (1751-1764) – and possibly during his public lectures at Edinburgh (1748-51) – in favour of the firm idea that humans acquire their capacities for sympathy from social experiences, first as infants and youth from their contact with others (the ‘great school of self command’).

Without that social contact, a human would have no notion of sympathy for others. Fortunately, humans have always been born into social contact (as were the primates before them). Absent their parents and contact only with non-human animals (a case was reported this week of a child growing up only with dogs and behaving like a dog) the person would be bereft of any notion of human behaviour. Smith asserted that because they had no mirror on their behaviour they would have to learn how to behave when they did come into society, which is where normal human beings learn about moral behaviour (whether they practice it or not).

I conclude that our moral capacities are not ‘hard-wired’; they are not placed there by God or Nature. This is also seen in the different behaviour sets practiced by humans living in different social cultures and how behaviour sets can clash remarkably clearly when in contact. Smith noted in Moral Sentiments how people in groups living off murder and theft would have to desist from murdering and stealing from each other if their society were to function – though they may happily murder and steal from people in other societies.

Our discussions continue… Meanwhile, follow the link and enjoy Nicholas' great writing and thinking talent - there ain’t a lot of it about and much of what there is available you will find in Nicholas Gruen’s short articles.

Great Article on Adam Smith's Moral Sentiments

Nicholas Gruen (my web buddy in Australia) has given me permission to reproduce his Web 2.0 article on Adam Smith's Moral Sentiments, which I mentioned on Lost Legacy a few days ago.

I consider Nick's articles are excellent introductions to Smith's Moral Sentiments, Smith's least understood book (which is a characteristic it shares with better known, but still very poorly understood other book, Wealth Of Nations:

"When Ross Gittins (presumably a famous Oz MSM columnist),asked me to write a couple of columns in his place as he went on leave I agreed and realised shortly afterwards that they would coincide more or less with the 250th anniversary of the publication of The Theory of Moral Sentiments. So I decided I’d try to write two columns as bookends on Smith and his theory of moral sentiments.

The first one was published a couple of weeks ago second one is in today’s [Sydney Morning Herald] and Age (Melbourne).

Adam Smith and Web 2.0

HISTORY plays tricks on us. The real internet revolution picked up after the internet bubble had burst. And the economist whose framework helps most in thinking about the internet revolution is none other than Adam Smith, who kicked off economics more than 200 years ago.

The internet boom involved companies using the net to broadcast to customers — like ads on TV — or to automate the sales process: for instance, with customers booking their own airline tickets or ordering books. Today Web 2.0, or collaborative web, is enabling armies of volunteers to build a better world. Some are building and giving away public goods such as open-source software (Linux and Firefox) and reference resources (Wikipedia). Others provide expert analysis and commentary on blogs, often surpassing professional journalists. Others, such as Facebook, connect people with something in common.

These phenomena can’t be easily explained within economists’ standard framework, in which economic decision-makers are reduced to the ideal type known in the trade as homo economicus. Homo economicus is a pure, calculating egoist optimising his profit or “utility” without regard for others’ views or conduct (except where they’re useful to his ends).

Homo economicus might not explain which films we see or with whom we socialise. But a theory’s job is to highlight some aspects of reality — by leaving out others. When you make investments or haggle for a car or house, you’re probably doing the best homo economicus impression you can.

Even here, however, something’s seriously wrong. We’re socially comparative beings. We care deeply about the conduct, opinions and values of our peers, using comparisons with them to orient our own ideas about what we need or value and how wealthy we want or need to be. As for the subtler aspects of our economy, from the motivation of employees to those amazing things Web 2.0 is bringing forth, well, homo economicus doesn’t seem to get close to what’s going on.

Enter Adam Smith’s Theory of Moral Sentiments, published 250 years ago last month, a book he intended partly as a theoretical foundation for his later economics. As Smith sees it, we begin our lives as blobs of infantile egoism — infans economicus, if you like. But from then on Smith sees the process that we now call socialisation deepening and transforming us.

We learn from our immediate family, on whom we are utterly dependent, that some things win their approval and admiration, others their disapproval and even disgust. Our craving of approval and dread of disapproval and our ability to understand others by imagining ourselves in their shoes draw us into a lifelong dialectical social drama.

In modern economics, the attraction of great power, fame or wealth is simple greed for more. Smith’s richer psychology offers a more plausible explanation. “(T)o what purpose is all the toil and bustle of this world?” Smith asks. What human drive lies behind avarice and ambition?

Is it to supply the necessities of nature? The wages of the meanest labourer can supply them. To be observed, to be attended to, to be taken notice of with sympathy, complacency, and approbation, are all the advantages which we can propose to derive from it. It is the vanity, not the ease or the pleasure, which interests us.

Smith was an advocate of self-interest in human affairs, but in a much richer, more interesting way than is usually thought. In advocating a larger role for self-interest, Smith identified the public goods that are prerequisites for self-interest becoming socially constructive. Within economics the invisible hand only works in a peaceful, lawful society, and with strong, free competition.

Within society more generally, self-interest becomes a rich ethical meal, not the morally anorectic egoism of homo economicus. Our natural sociality enriches and educates our self-interest. Craving esteem and imagining ourselves as others see us, we gain some objective appreciation of our own moral worth. And this is ultimately a spur towards virtue as we strive to be worthy of the esteem we crave (although, of course, as we are mere mortals there is much stumbling on our journey).

Web 2.0 is scaling up the scope for human sociality and opening up new vistas for the expression of self-interest. And yet profit-seeking is only a small part of how that self-interest is manifesting itself.

The way we express our self-interest on Web 2.0 is something new, and also as old as humanity itself. Why do millions of us blog? For the same reason we talk and write emails, text messages, instant messages and letters (remember them?). We do it to communicate feelings, ideas, needs and experiences with others who might understand us. They might even write back! Whether it’s the evolution of language itself or the evolution of culture and social mores, people’s interaction like this builds communities of shared meaning and understanding.

Even Smith’s description of a market was inherently social — he toyed with the idea that the fundamental human drive behind bargaining was the desire we each have to persuade others to see it our way. Smith would have understood the foundational proposition of an early Web 2.0 credo, “the cluetrain manifesto” — “Markets are conversations”.

As Web 2.0 burgeons, its denizens pursue their interests like the merchants in Smith’s Wealth of Nations, posting and commenting on blogs, making and exchanging programming code and mash-ups of each other’s content, making connections based on social or practical needs. Some serve practical needs — perhaps they need some software bug fixed. Others are “know-alls” proving their superior knowledge. Some express their love of a subject.

And just as the miracle of a healthy market enables the merchant’s self-interest to serve the common good, so this new alchemy of the web aggregates individual efforts into freely available public goods. Likewise this unruly mix of motives gives us glimpses of our better selves. To use Smith’s description of the psychology of ambition, it lures us on our quest for an “easy empire over the affections of mankind”, which is a hint, a tease calling us on a quest for a more distant and difficult destination — virtue itself."

[You can access a printed version of Nick's article HERE: http://clubtroppo.com.au/2009/05/01/adam-smith-and-web-20/ and contact him should you wish.]

Lost Legacy Prize for April - Simply the Best

Pejman Yousefzadeh in the New Ledger HERE
writes ‘In Praise of Adam Smith’ and introduces me (for which my deepest thanks, to Karen Horn, writing in Standpoint online HERE:

‘Instead, the present global financial crisis has made the godfather of classical economics look strikingly irrelevant in comparison with Keynes, the inventor of modern disequilibrium theory. Even worse, now that bankers are being castigated as the incarnation of greed, blindness and irresponsibility, the man who wrote in his famous Inquiry into the Nature and Causes of the Wealth of Nations that "it is not from the benevolence of the butcher, the brewer, or the baker" - or perhaps the banker in our day - "that we expect our dinner, but from their regard to their own interest" is again accused of being the chief advocate of heartless laissez-faire capitalism, a system that failed and had to fail. In this view, capitalism is nothing but a false religion, with Mammon as its god and Smith as its high priest. Critics worry that markets need a moral foundation that they automatically erode. They ridicule the naïve belief that free markets bring everybody happiness at no cost, a conviction allegedly lacking all philosophical underpinnings.’

From this unpromising start Karen Horn knocks the socks of almost all commentators on the relevance of Adam Smith. I sat up and paid attention when I read her next sentence:

‘His deep persuasion was that simply observing reality enables us to discover the underlying natural principles. The Scottish Enlightenment thinkers aimed at shedding light on the laws governing human behaviour, and on their consequences for life in society.’

She continued amazing me with her understanding of Adam Smith (I am so used to media commentators talking nonsense about him):

‘Absent-minded he may have been, but naïve he wasn't, let alone a cynic. Smith did not tolerate immoral behaviour. It would never have occurred to him that selfishness and greed might be viewed as being just normal - and even less that they might be morally laudable, let alone negligible. This differentiates him from Thomas Hobbes, in whose view man is a wolf to other men, and also from Bernard Mandeville, well-known for his poem "The Fable of the Bees", in which he - half satirically, half seriously - claims that private vices result in public benefits. Smith strongly objected to this view. The proof of this attitude is his first widely recognised book, the Theory of Moral Sentiments, published on April 26, 1759-250 years ago.’

If you have not read, or understood, Smith’s Moral Sentiments, I recommend that you follow the link to Karen’s article. It’s by far the best short summary of Smith’s moral philosophy I have read for quite a while. She explains the ‘impartial spectator’ clearly. She also demolishes the so-called 'Das Adam Smith Problem:

‘It is true that almost two decades elapsed between the first publication of the Theory of Moral Sentiments and the Wealth of Nations. But Adam Smith never left it at the first editions of his works. Both books underwent numerous rewrites and additions until the end of Smith's life. He worked on them continuously and in parallel but never fundamentally changed his mind. His approach and the logical system that he built always stayed the same.’

I would add to this the fact that Smith’s Lectures in Jurisprudence [1762-63] carry verbatim much that was to appear in Wealth Of Nations, emphasising the continuity in his economics from his days at Glasgow before he met the French Physiocrats in 1764-6. These lectures were not available until 1896 when a manuscript of students’ notes were found in Oxford.

‘Smith's major works both take the same methodological route, using parallel premises and leading to analogous results. Smith's approach is typical of the empiricism that was in vogue during the Scottish Enlightenment. He describes meticulously that which is - and not so much that which should be. He looks at people's behaviour and tries to deduce universal laws from what he sees. Since man is a social animal, the observations focus on human interaction.’

Comment
I urge you to read Karen Horn’s article. It is too good to miss. And the sensible comments attached from readers are gems indeed. There is even a mention for a theme relevant something that I am working on at present for my paper on the ‘Alleged religiosity of Adam Smith':

‘Some scholars have attributed Smith's optimism to his alleged Deism. He seems to show a belief in a Creator who has endowed the world with certain natural laws accessible to human reason, but who refrains from intervening in the course of worldly events. True or false, this is no founding pillar of Smith's system. Smith places the individual dispositions and actions of men at the baseline of his analysis. If these dispositions and actions cannot be traced back to providence but are instead triggered by secular social learning or simply sheer evolution, this doesn't invalidate his logical result. The masterpiece that matters is the social co-ordination achieved through interaction, and the generation of useful institutions that channel life in human society.’

I couldn’t put it better myself. I have no hesitation in awarding Karen Horn the Lost Legacy Prize for the best article on Adam Smith for April 2009.

Thought For the Day, no 8

It is often preached (a not inappropriate word in this context) that Adam Smith was a believer in what became known in the later 19th century as Homo eonomicus, or the perfectly rational person, driven by manic self-interest to maximise his personal utility.

In Moral Sentiments (1759), Adam Smith presents a different perspective to the uni-dimensional automaton that modern economists since the 19th century created, and which their successors in the 20th century increasingly refined, so to speak, to make this creature (for surely it was never intended to be regarded as human) fit into the determinate convenient mathematics of general equilibrium.

Smith on a richer, more complex, and more realistic vision of man in society is worth reading – and thinking about:

‘There can be no proper motive for hurting our neighbour, there can be no incitement to do evil to another, which mankind will go along with, except just indignation for evil which that other has done to us. To disturb his happiness merely because it stands in the way of our own, to take from him what is of real use to him merely because it may be of equal or of more use to us, or to indulge, in this manner, at the expence of other people, the natural preference which every man has for his own happiness above that of other people, is what no impartial spectator can go along with. Every man is, no doubt, by nature, first and principally recommended to his own care; and as he is fitter to take care of himself than of any other person, it is fit and right that it should be so. Every man, therefore, is much more deeply interested in whatever immediately concerns himself, than in what concerns any other man: and to hear, perhaps, of the death of another person, with whom we have no particular connexion, will give us less concern, will spoil our stomach, or break our rest much less than a very insignificant disaster which has befallen ourselves. But though the ruin of our neighbour may affect us much less than a very small misfortune of our own, we must not ruin him to prevent that small misfortune, nor even to prevent our own ruin. We must, here, as in all other cases, view ourselves not so much according to that light in which we may naturally appear to ourselves, as according to that in which we naturally appear to others. Though every man may, according to the proverb, be the whole world to himself, to the rest of mankind he is a most insignificant part of it. Though his own happiness may be of more importance to him than that of all the world besides, to every other person it is of no more consequence than that of any other man. Though it may be true, therefore, that every individual, in his own breast, naturally prefers himself to all mankind, yet he dares not look mankind in the face, and avow that he acts according to this principle. He feels that in this preference they can never go along with him, and that how natural soever it may be to him, it must always appear excessive and extravagant to them. When he views himself in the light in which he is conscious that others will view him, he sees that to them he is but one of the multitude in no respect better than any other in it. If he would act so as that the impartial spectator may enter into the principles of his conduct, which is what of all things he has the greatest desire to do, he must, upon this, as upon all other occasions, humble the arrogance of his self-love, and bring it down to something which other men can go along with. They will indulge it so far as to allow him to be more anxious about, and to pursue with more earnest assiduity, his own happiness than that of any other person. Thus far, whenever they place themselves in his situation, they will readily go along with him. In the race for wealth, and honours, and preferments, he may run as hard as he can, and strain every nerve and every muscle, in order to outstrip all his competitors. But if he should justle, or throw down any of them, the indulgence of the spectators is entirely at an end. It is a violation of fair play, which they cannot admit of. This man is to them, in every respect, as good as he: they do not enter into that self-love by which he prefers himself so much to this other, and cannot go along with the motive from which he hurt him. They readily, therefore, sympathize with the natural resentment of the injured, and the offender becomes the object of their hatred and indignation. He is sensible that he becomes so, and feels that those sentiments are ready to burst out from all sides against him.’ (TMS II.ii.2.1: 82-83)

Great Correspondents in Our Time no. 1

Two interesting letters to the Wall Street Journal (HERE):

“The Moral Hazards of Managing Other People's Money"

“John C. Bogle in "A Crisis of Ethic Proportions" (op-ed, April 21) proposes that we try harder to be more moral, and in that misses the point of Adam Smith. Mr. Bogle cites Adam Smith's statement, "[M]anagers of other people's money [rarely] watch over it with the same anxious vigilance with which . . . [they] watch over their own" which is an indictment of human nature. Smith's position is that man's essential nature is a given, not something which can be altered. It is from this base that the invisible hand is derived. Setting up structures which rely on what man ought to be, compared to what he is, is like building a house on sand.” Adam Freund, Oak Park, Mich.

“Mr. Bogle cites Adam Smith's prescient words about the frailty and the faults of managers who manage other people's money. But this tension between the owners and the overseers of commercial activities goes back much further. Consider these words from John 10:11-13 ". . . the good shepherd giveth his life for the sheep. But he that is an hireling, and not the shepherd, whose own the sheep are not, seeth the wolf coming, and leaveth the sheep, and fleeth: and the wolf catcheth them, and scattereth the sheep. The hireling fleeth, because he is an hireling, and careth not for the sheep." Paul O. Gaddis, Franklin, Tenn.

Comment
What intelligent and informed correspondents write to the Wall Street Journal!
I have no time just yet for a comment - will try later.