Monday, February 05, 2007

Duncan Foley Indicts the Wrong Person for his Fallacy

The investigation is honing in on the prosecution charges, led by Duncan Foley, against Adam Smith and as each witness is examined, the case against Smith shows signs of a forthcoming collapse, on grounds that they have indicted the wrong person, creating as blatant a case of mistaken identify as has ever been put before a jury.

Smith is in position to present a ‘cast-iron alibi’ defence: he wasn’t near and has never been to the places where the ‘crime’ of fallacy was committed; it didn’t come from anything he wrote or said; he said nothing to encourage other people to commit the crime of fallacy; he said the exact opposite of the crime of fallacy throughout his life; the defence will corroborate these assertions from the testimony, and sworn affidavits before Notary Publics, of hundreds of prime witnesses; and the so-called ‘exhibits’ that the prosecution relies upon for their flimsy charges will be exposed as crude forgeries from persons known personally to Duncan Foley as he associated with many of them during his long time residence at known haunts of the forgers.

In a thoughtful extract from David Warsh’s review of Mark Foley’s recent book. “Adam’s Fallacy”, discussed here several times, Mark Thoma, of “Economist’s View” heads his piece: “Conscientious Objections to Invisible Hands and Other Moral Sentiments”. It is well worth reading and the URL is below.

Mark Thoma: “David Warsh has a very nice discussion of Adam's Fallacy: A Guide to Economic Theology, the book by Duncan Foley, and the relationship of Adam Smith's The Theory of Moral Sentiments to his work in The Wealth of Nations”:

David Warsh:

“So what exactly is Adam's fallacy? According to Foley, it's "the idea that it is possible to separate an economic sphere of life, in which the pursuit of self-interest is guided by objective laws to a socially beneficent outcome, from the rest of social life, in which the pursuit of self interest is morally problematic and has to be weighed against other ends."

This abstraction of an economic sphere from the messy complexity of real life is indeed the kernel of present-day economics, just as Foley says it is:

[U]nderstanding the logic of capital accumulation does not require us to surrender our moral judgment to the market... The exploitation of any profit opportunity involves a range of consequences, some good and some harmful. There is no escaping the moral relevance of weighing the good and the harm in each case. The fallacy lies in thinking there are universal principles that short-circuit this process.
But Smith isn't responsible for what has happened in the 200+ years since he died, in 1790. He saw the world whole. And, in the first instance, what he saw was that self-interest was an inevitably complicated matter.”

That seems to me to be the problem behind “Foley’s Fallacy”. Adam Smith was not involved in the development of the one-dimensional Home economicus developed and taught in the neoclassical paradigm from 100 years after his death.

If Foley has a beef with Homo economicus he directs his critique at the wrong source of what he calls, perhaps with some justice, its ‘fallacy.’ But it was never Smith’s fallacy to fall into the habit of conceiving of human behaviours as one-dimensional.

In both Wealth of Nations (1776) and Moral Sentiments (1759), and in his lecture series at the University of Glasgow (1751-64) from which they both originated, he recognised and wrote about the multi-faceted exhibition of human behaviour in all of his work, which taken together, cannot possibly be interpreted as separating economic behaviour from moral behaviour.

That is the essence of Foley’s fallacy. He impugns the wrong person. Adam Smith is innocent as charged.

You can get an idea of just how ‘complicated’ ‘self-interest’ was when Smith wrote about it from: Pierre Force, 2003. ‘Self-Interest Before Adam Smith: a genealogy of economics science’, Cambridge University Press.

You could say that self-interest as a subject was a ‘hot topic’ in the 18th century, and Smith was deep inside that debate.

[Read Mark Thoma’s extract from David Warsh’s review at:]


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