Tuesday, February 28, 2006

Smith Looked Backwards, Not Forwards

Following up on my blog on Saturday about Thomas Sullivan (Asheville Citizen Times, NC, USA) and his patriotism, which he believed was shared by Adam Smith in respect of domestic versus foreign markets, I had occasion this last few days to be writing about Smith’s ‘market model’ of society (a theme discussed by Jim Otteson in his excellent book, Adam Smith’s Market Place of Life).

As I developed the theme, it occurred to me that what Thomas Sullivan was contributing to the genre that repeatedly either berates Smith for not anticipating this or that development in economic theory; for example, the assertions of Murray Rothbard, the distinguished Austrian economist, whom I critiqued here during January and February under the title "Murray Rothbard’s Myths", which are also collected together and posted under "Articles" in the left column on the Home Page – or they misappropriate Smith’s ideas to claim that they can be applied to situations two centuries after he died and for which they may no longer be relevant (and often misunderstanding them in the process, too).

Smith wrote his lasting contributions to the history of moral sciences from a distinctive view point. He looked backwards throughout history, not forwards to the future. From the study of history, often beginning with the origins of what he studied, he analysed vast sweeps of human endeavour to seek appropriate generalisations about how the world had worked to arrive at situations prevalent in his day (18th-century Scotland primarily, but also Britain, Europe and the colonies).

He made very few predictions about the future. These can be grouped into those that asserted that unless things changed, his generalisations would continue to work as he outlined, which applied particularly to the behaviours of monopoly, the rulers of mankind and such like, and those few (I can only think of one such at this moment) that asserted a specific outcome for a specific situation.

He did not expect his ideas to be taken as predictions in the common meaning of the word. The one exception I can think of is the one he made about the relative economic strength of the American colonies in one hundred years time (i.e., the 1870s), which he asserted would be ‘perhaps’ (out of habit, his ‘prediction’ was qualified) stronger economically than Britain (Wealth of Nations, IV.vii.c.9: pp 625-6).

If this direction of focus is neglected it leads to errors. Sam Fleischaker puts it well in his new book, On Adam Smith’s Wealth of Nations: a philosophical companion (2004):

Those who make it their business to show how Smith’s principles can explain every

economic phenomenon today may thus not be using Smith’s work as Smith himself
hoped future readers would. They may be betraying their master’s methodological
legacy, rather than preserving it” (p 33).


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