Wednesday, September 13, 2006

Last Words on Beinhocker's 'Origins of Wealth'

I have now completed my reading of Eric D. Beinocker’s 527-page, ‘The Origin of Wealth: evolution, complexity, and the radical remaking of economics’, Harvard Business School Press, 2006. It held my attention throughout and covered a lot of ground that is interesting in its own right, especially on the coming confrontation between neo-classical economics and a new paradigm based on complex adaptive systems.

Some of his comprehensive survey of management material is heavily influenced by McKinsey-speak, the leading consultancy that holds the copyright to Beinhocker’s book (he worked there as a senior consultant, and it shows). But Beinocker presents his material with clarity and style. In so far as an author’s personality is revealed in his writing (a viewpoint Smith advanced in his lectures on Rhetoric and Belles Lettres), Beinhocker comes across as an enthusiastic, straight talking and perspicuous (another favourite word of Smith’s) writer, neither patronising nor out to show how ‘smart’ he is at the reader’s expense. He marshals his evidence efficiently – and it is a real a tour de force across the widest spectrum of current ideas and findings – and the reference notes cover 34 pages, plus 16 pages of bibliography.

When I first commented on the book on Lost Legacy on 8th, 17th, 25th August, I had occasion to criticise Beinhocker’s treatment of Adam Smith’s ideas, which I gather from his references came second-hand and not from a strong acquaintance with Wealth of Nations or Moral Sentiments. This, of course is not a ‘moral’ crime – the fact that Smith is read is always a welcome sign.

However, my criticisms of August aside, I am glad I purchased The Origins of Wealth, especially as by the time I reached page 418 I found a compensating summary of Smith’s actual views that made up for the ‘errors’ (obviously imported in from earlier secondary sources) of pages 25 and 26. Here is what Beinhocker writes nearer the end of Origins of Wealth:

The Right claims, however, that if people pursue their self-interest through the mechanism of markets, then the general interests of society will be served as well. The lineage of this view descends from Hume, John Locke and Thomas Hobbes.

One might be surprised not to see Adam Smith’s name on this list. But as the economists Herbert Gintis, Samuel Bowes, and Ernst Fehr, and the anthropologist Robert Boyd point out, Smith actually took a more nuanced view. In his Wealth of Nations, Smith indeed showed how self-interest, mediated by markets, can lead to social benefit. But in his other great work, The Theory of Moral Sentiments, Smith also said, “How selfish soever man may be supposed, there are evidently some principles in his nature, which interests him in the fortunes of others.” In other words, Smith took a more rounded view of human behaviour, one that acknowledged the coexistence of both the self-interested and altruistic sides of human nature.”
(p 418)

Now that is much better. The attribution to Smith of ideas that ignore the ‘nuances’ of his views comes from mixing his work up with ‘Traditional Economics’, or ‘neoclassical economics’ that were developed from 1870, 80 years after he had died in 1790.

So, read Eric Beinhocker’s 'Origins of Wealth'; it gives you lots to think about.


Blogger doctormark said...

In less than 400 pages, what does Beinhocker say are the origins of wealth?

It's got to be knowledge. This is what Smith said, if implicitly.

The only problem with Smith's book is that he failed to write it in modern English. It's a difficult read. I have in mind a project that would spread the task of creating a more accessible edition of the version on Project Gutenburg over a few hundred undergraduates, then giving away the result. I can't think of anything that would do more to advance the understanding of economics, along with math and writing, the worst taught subjects in the curriculum.

3:18 pm  

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