Friday, September 08, 2006

Business Week Reviews Buchan's Adam Smith

In Business Week (18 September edition) there is an excellent review of James Buchan’s (US edition title), THE AUTHENTIC ADAM SMITH: His Life and Ideas (Atlas Books/Norton -- 198pp -- $23.95). I have already praised this book on Lost Legacy several times and it is a pleasure to see that Business Week’s (unnamed) reviewer has got the message.

"It would be An Inquiry into the Nature and Causes of the Wealth of Nations (1776) that would make Smith's reputation, selling out five editions in his lifetime. But for Buchan, a previous book is the truest key to Smith's thinking. The Theory of Moral Sentiments (1759) was an inquiry into the psychology of moral judgments. Rather than drawing on divine law or an inherent moral sense, Smith asserted that each of us derives our ethics by evaluating other people's actions. Then, putting ourselves in their position, we make similar judgments about our own deeds. The resulting society was defined by millions of individual choices rooted in "sympathy or fellow-feeling."

Similar concerns about ethics and society impelled The Wealth of Nations, Buchan says, behind which "is the ghost of an old-fashioned inquiry into the moral character of luxury." The world had become prosperous, Smith observed, to the general benefit of mankind. How? The division of labor, combined with freedom of occupational choice, led to increased output and a surplus beyond basic needs. Individual self-interest ended up benefiting all.

The Wealth of Nations is a long and repetitive book that considers a host of topics, from prices and the nature of value to education. A revised 1784 edition had 13 new sections and 24,000 more words. And in 1789, a year prior to his death, Smith made further changes. While tending to justify the world as it was, he had reservations, particularly condemning any "conspiracy against the publick" that arises from the merchant class. He also worried over the "disposition to admire, and almost to worship, the rich and the powerful." It may be inevitable that in such a sprawling work, adherents of a range of views will find sustenance. But Buchan makes a strong case that the just society was ever Smith's main concern.”

The review in the prestigious Business Week is a small step in positively reclaiming the Kirkcaldy Adam Smith from his Chicago cyber shadow. The reviewer is almost convinced that James Buchan’s account is correct (‘a strong case’) and that is a step from the usual nonsense attributed to Adam Smith’s legacy about ‘father of capitalism’, ‘laissez faire’ and ‘night watchman state’, and, worse, the neoclassical assumption of perfect equilibrium, Homo economicus, and the ‘granite foundations of ‘self interest’.


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