Sunday, December 24, 2006

Duncan Foley's Fantasies Exposed by David Warsh

From David Warsh, editor of (an independent weekly: ) in an article ‘On the influence of authority of conscience, and other considerations in any economics textbook’, which reviews Duncan Foley’s, “Adam’s Fallacy: a guide to economic theology”, (reviewed an commented upon here on ‘Lost Legacy’ a couple of month’s back), I find an almost perfect statement of Adam Smith’s philosophy (I have minor quibbles, but it’s always better to be approximately right, than absolutely wrong).

Take these three paragraphs:

“Foley dwells entirely on what economists have managed to make so far of The Wealth of Nations, and gives short shrift to Smith's other book, The Theory of Moral Sentiments, and to the relationship of the one to the other. Published in 1759, seventeen years before the work for which Smith is remembered, Moral Sentiments is a compendium of much that today's economics leaves out -- declares "exogenous," in the argot of the field, "human nature" being quite beyond economists' models present-day ability to address.”

“Few among us will decide to read The Moral Sentiments on the strength of what I argue here. (Should you want a copy, though, the one to have is the beautifully produced volume from the Glasgow Edition of the Works and Correspondence of Adam Smith available at a bargain price from the
Liberty Fund.) A very pleasing alternative is The Authentic Adam Smith, a literate and brisk biography by James Buchan which conveys, in a mere145 pages, the astonishing depth and versatility of the man. The book, says Buchan, is "designed to draw Smith out of the mystifications of the economists and the simplifications of politicians and place him in view of the public."

“Buchan employs no jargon; he relates a good deal of history. And with dash and daring, he rescues Adam Smith from those, including Foley, who would appropriate him as "a sort of shady Romulus," legendary founder of an ideology. Economists are in the thrall of any number of fallacies, small and large. Some of them are downright dangerous if taken seriously. Duncan Foley alerts his readers to the worst of them. But they do not owe their existence to Adam Smith.”

It is important to remember, which Duncan Foley did not, that while 17 years separates the publication of ‘Moral Sentiments’ from ‘Wealth of Nations’ that is not how the main ideas both contain were created by Smith. He taught the moral philosophy syllabus in Glasgow from 1752-64 (his class continued until summer 1764 with the substitute lecturer teaching from his lecture notes from January), and in common with the established practice in Scottish Universities at that time, moral philosophy also included parallel lectures in jurisprudence, which incorporated lectures in political economy, and therefore, his students heard the eventual contents of both books together. We know this from whole sections of students’ notes of his Lectures in Jurisprudence (Liberty Fund) reproduced verbatim in Wealth of Nations.

These verbatim reproductions include those parts dealing with the circumstances that leads the ‘butcher, the brewer, and the baker’ to offer the customer his family’s dinner, not from benevolence, but from ‘regard to their self-interest.
Also the determination of the prices for items of dinner in both his lectures and in Wealth of Nations is exactly parallel to the resolution of conflict in Moral sentiments through the mediation of the self-interest of the parties by each having regard to the self-interest of others (‘a mercenary exchange of good offices’ in ‘Moral Sentiments’ and ‘truck, barter’ and exchange’ in ‘Wealth of Nations’).

Foley’s case for a fallacy falls at a reading of Smith’s works. In short, the basic ideas of Moral sentiments and Wealth of Nations were not separated by 17 years as their publication dates suggest. That Foley does not appear to realize this suggests his accusation of a folly on Adam’s part is wholly misdirected, which is why I have remarked that Foley’s Adam’s Fallacy actually is Foley’s Fallacy (and folly).

The errors of neoclassical economists, based on models of Homo economicus and general mathematical equilibrium models, who read their nostrums into Wealth of Nations inappropriately are not the responsibility of Adam Smith.

Note the deserved praise for James Buchan’s (also reviewed here month’s back), The Authentic Adam Smith: his life and ideas’, (its US title;
Adam Smith and the Pursuit of Liberty, UK title), undoubtedly a gem of a book on Smith, and an excellent comment by Warsh on Smith’s Theory of Moral Sentiments (Liberty Fund).

Having criticized David Warsh earlier for his account of Smith’s views in his Knowledge and the Wealth of Nations (otherwise a good read), I shall re-assess my earlier judgement and move Warsh next to James Buchan on my shelf reserved for modern writers who report Smith’s views accurately.

David Warsh's review can be found at:


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