Sunday, October 01, 2006

Foley's Fallacy (and Brad Delong's Response]

On Brad Delong’s inimitable Blog there is something of a spat between Brad and a Duncan Foley about the latter’s book, Adam’s Fallacy.

Duncan Foley writes, apropos of his history-of-economic-thought book, Adam's Fallacy:

I use "Adam's Fallacy" in the book to refer to two things. First is Adam Smith's claim that the pursuit of self-interest, which is morally problematic (not necessarily immoral, but in need of examination) in most human interactions, is unambiguously a social good in the context of competitive market interactions.
Second, I take this problem as representing a deeper issue that runs through Adam Smith's writing and the work of all the political economists I discuss in the book. This is the idea that there is an economic sphere of life subject to special laws, either moral or scientific. The book makes an extended case that this "fallacy" (which is not just Adam's) runs through the history of political economy and economics.”

The so-called fallacy of Adam Smith does not belong to him. Foley’s case falls at the first hurdle, and does not recover. However, read Brad Delong’s Blog posting ( for his take on Foley’s fallacy:

[Brad] Department of "Huh!?"

First,, on p. 42 ([from Foley’s book]:

The Wealth of Nations is the product of Adam Smith's teaching of political economy at the University of Glasgow. Smith, as a teacher, was more concerned with introducing key ideas and insights of poitical economy to his students than with constructing a consistent framework for these ideas. At critical points in his argument, he plausibly changes the subject in such a way as to obscure the inconsistency of the various points he is making...

[Brad]: To which one can only say, "Huh!?"

The Wealth of Nations, instead, is a contribution--a game-changing contribution, as Adam Smith intended--to the discourse of what Keith Tribe calls Political Oeconomy, a discourse whose audience vwas composed of the literate landlords who ran the eighteenth-century British Empire and their advisors. There's no truth at all in Foley's claim that the Wealth of Nations is oversimplified because it focuses not on making a consistent argument but on introducing ideas to callow teenagers. No truth. At all. None. Zero.”

[Foley] on page 43:

“[T]he real heart of The Wealth of Nations.... Smith stands out as a philosopher and moral defender of capitalist social relations through his ingenious, if tortured, claim that the ruthless pursuit of self-interest, which can lead people to do bad things to other people, is transmuted by capitalist social relations into a moral good.... Smith sheds his general good sense and moral authority without rigorously establishing the logical basis for his approbation.
A good example of this type of argument in Smith's hands is his famous observation that it is not from the love of goodwill of the butcher or baker that we get our dinner, but from our appeal to their self-interest through our paying for meat and bread.... That is indeed how capitalist society works and reproduces itself. But to support the claim that this pursuit of self-interest is a positive good, Smith would have to show that antagonistic market exchange relations are the only possible way to support the division of labor, and that we have no alternative to accepting the distributional inequities and moral violence that accompany private property relations as the means to securing our dinners. Smith comes no closer to making this argument stick than he does to reconciling the dependence of rent on the value of the commodity with the adding-up theory of value...”

[Brad’s comment]: To which, once again, one can only say, "Huh!?"

“If he [Smiht] were feeling benevolent--did not conclude that you are a complete fool not worth talking to--he might expand on this, and say that in this passage he is making a historical inquiry into why it is humans and humans alone among vertebrate animals who have an extensive social division of labor. He might say that he concludes that humans have this extensive social division of labor because of a long, very slow, and gradual process of historical development that is rooted in a natural human propensity to truck, barter, and exchange. "Only" does not enter into it, he might say. He is telling his readers how this extensive social division of labor came to be, and how it is today supported by market exchange.

If you asked him about "antagonistic market relations," he would say that his relations with the butcher, the baker, his publisher, and his publisher's relations with those who buy the Wealth of Nations are anything but "antagonistic": both parties are happier as a result of the interaction--which is not usually the case when people have non-market interactions with clerics, kings, judges, thieves, party bosses, or members of the local Committee for Defense of the Revolution. Go back half a century and a few miles north to the Highlands of Scotland, Smith might say, where if you are not a clan member than you are either a clan enemy to be killed or a stranger to be robbed--those are the real "antagonistic social relations," and they involve the maldistribution of property, and those three alternatives to market exchange: force, violence, and fraud.”

[Foley’s book]: page 44:

Smith... balanc[es] his glittering vision of a virtuous spiral of economic development with the idea that economics can be constrained within a larger political and social framework. Laissez-faire, yes, but the Navigation Acts too. Free trade modified by the infant industry exception. Unregulated banking, as long as banks strictly follow a "real bills" policy...”

My Comment:
I was tempted to join the ‘debate’ but as I concluded that Foley, described by his publisher as a ‘brilliant theorist’, was completely lost in a Chicago version of Adam Smith (‘invisible hand’; ‘laissez-faire’; ‘capitalist social relations and reproduction’; ‘two theories of value: labour and ‘adding up’ and other atrocities of the truth of which Smith wrote), I shall leave Brad Delong to deal with him.

Those interested can read my articles in the archives here to see what I mean.

One small point. Foley claims he wrote Adam’s Fallacy with a view to replacing Robert Heilbroner's
The Worldly Philosophers: The Lives, Times And Ideas Of The Great Economic Thinkers, a popular version of the theorists of economics from the 18th century during the last half of the 20th century.

Helibroner died just over a year ago, and those who read my 'Adam Smith’s Lost Legacy' (Palgrave, 2005) will know I criticised Heilbroner’s account of Smith’s economics, but if Foleywere to replace Heilbroner with his, er, fallacious analysis of Smith’s political economy, then this would be a disappointing publishing event, though no doubt one that would be financially lucrative for Foley.

‘Tis a pity that Foley will gain his loot from traducing the legacy of Adam Smith in an unforgivable manner.


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