Tuesday, April 15, 2008

Adam Smith on Sympathy

Irving Wladowsky Berger, prompted by a piece in The Economist on the sale in Edinburgh of Panmure House, Adam Smith’s residence from 1778-90, and joins the debate among ‘right’ and ‘left’ to which side of the political spectrum today would Adam Smith be classed as belonging. Without addressing that question – sometimes discussed on Lost Legacy – I think I. W. Berger’s other comments are worthy of a wider readership.

I don't think that Adam Smith had socialism in mind, but something much deeper - sympathy, that is, the very human ability to have a strong feeling of concern for another person. Experts generally agree that Smith advocated both the self-interest of Wealth of Nations, and the sympathy of Theory of Moral Sentiments, with no contradiction between these two positions. In his view, "individuals in society find it in their self-interest to develop sympathy as they seek approval of what he calls the impartial spectator. The self-interest he speaks of is not a narrow selfishness but something that involves sympathy.

I am very intrigued by this balance that Adam Smith wrote about between the fierce competition inherent in open, free markets and the supportive community behavior found in well functioning human societies.

I am a strong believer in open, free markets - not out ideology, but out of pragmatism. I totally agree with the notion of the invisible hand that while free markets are often chaotic and unrestrained, they generally produce the right results. Even though greed often guides the actions of individuals and groups, the benefit of competition will usually overcome the detriment of greed.

What has caused such breakdown in the human sympathy that Adam Smith believed would temper our most selfish behavior? What has made so many individuals oblivious to the implications of their selfish actions? It would be nice if open-market kinds of controls scaled beyond the relatively local communities Smith had in mind, but apparently, that does not seem to be the case.

Sympathy and feelings of community may work well at the tribe or neighborhood level. But perhaps, when communities reach a certain size, the kind of sympathy for our fellow humans that tempers our actions begins to decline. When we don't know the people getting hurt by our actions, when such people are beyond our lines of sight and our lines of feelings, - across a whole region and country, let alone around the world, - perhaps any notion of sympathy disappears altogether. That is why governments and regulatory bodies are needed to help control our worst excesses.

Achieving the right balance between self-regulated open markets and government-based regulatory controls is very, very tough. You go too far in one direction, and you risk stifling competition and innovation. You go too far in the other direction - as perhaps we have in the recent past - and you risk the kinds of systemic abuses that end up hurting so many people

From this perspective, I. W. Berger draws on the examples of web-based collaboration to argue for ‘community’ based more harmonious relationships, and I shall leave readers to visit the full article ‘Adam Smith 2.0’ and read it for themselves (HERE). http://alwayson.goingon.com/

Adam Smith’s notion of sympathy was fundamental to his theory of moral sentiments. I. W. Berger sees it as expressing ‘supportive community behavior found in well functioning human societies’. He then restricts it to ‘communities’, when in fact for Adam Smith’s ‘theory’ to have validity, it had to function in all societies (historically and contemporary) and not just ‘in well functioning human societies’.

Smith speaks of it applying in a ‘society among robbers and murderers’ too (TMS II.ii.3.3, p 86). The essential characterisation of harmonious society is the absolute necessity of justice, not necessarilly through beneficence. It was the observation that men stand in need of ‘each others assistance’ and each is exposed to the risks of ‘mutual injury’. This is not something only applying today or in the 18th century; it is a universal truth of all ages.

Adam Smith’s point was that ‘where the necessary assistance is reciprocally afforded from love, from gratitude, from friendship, and esteem, the society flourishes and is happy’ but if this was a necessity for happiness, then’society’ would be confined to a small number – it being impossible to know everybody outside of a small community in face-to-face contact.

I. W. Berger may be missing this insight of Adam Smith’s, who further observed that should the ‘necessary assistance’ be not supplied by such ‘generous and disinterested motives’ and absent ‘mutual love and affection’, society, though ‘less happy and agreeable’, society will not necessarily ‘disolve’. Here, Smith states the condition clearly:

Society may subsist among different men, as among different merchants, from a sense of its utility, without any love or affection,; and though no man in it should owe any obligation, or be bound in gratitude to any other, it may be upheld by a mercenary exchange of good offices according to an agreed valuation’ (TMS II.ii.3.2: p 86).

This has been the case among neighbouring tribes of hunter-gatherers, neighbouring ‘civilisations’, and neighbouring and distant traders. Along with the ‘mercenary exchange of good offices’ there has been the ‘vile behaviour of the rulers of mankind’, of which condition throughout all human history he was pessimistic of finding a ‘remedy’. The main part of the remedy, should one be found, was the institution of the negative virtue of justice.

I. W. Berger accepts the invisible hand fallacy as being Adam Smith’s: ‘I totally agree with the notion of the invisible hand that while free markets are often chaotic and unrestrained, they generally produce the right results.’ It is a view of how society operates but it was not Smithian (for reasons which regular readers of Lost Legacy should be familiar).

Society exists in time and space, not in abstract equations of narrow elements of its constituent parts. ‘Mercenary exchange according to an agreed valuation’ covers a wide range of possible behaviours; humans have a long history and continuing present of exchange by plunder, fraud, force, and violence. The institution of justice is a counter-force to these behaviours. The arrest, imprisonment and heavy fines of those who breach necessary laws to preserve voluntary exchange against fraud, and such like, is evidence of a healthy society (or as healthy as it is reasonable to expect any human society, given the impossibilty of utopia) and not one that is terminally beyond repair.

Within distant societies (beyond the neighbourhood) the same conditions of sympathy operate within them. It is not a question, as implied in I. W. Berger’s understanding of Adam Smith, that our community exudes sympathy and there is a chasm between us and the rest of humanity, even the most distant.

In Moral Sentiments, Adam Smith discusses the parable of a ‘man of humanity in Europe’ and an ‘Earthquake in China’ (in Smith’s day the longest journey he knew of – a round trip by sea of a couple of years). I will not quote it all (read it TMS III.3.4: pp 136-8 – you can consult it online via the Adam Smith Institute at: www.adamsmith.org - righthand sidebar for Moral Sentiments and Wealth Of Nations, downloadable – go to Book III, chapter 3, scroll down until you find ‘China’).

In this parable Smith discusses a distant earthquake and whether a man of humanity in Britain hearing of it sleeps soundly at night without a care even if 100 million of his brethren are killed in it, and noting that the European would care much more about hurting his finger than the deaths in China. This is as far as most readers get, and they draw the wrong conclusion which roughly corresponds to I. W. Berger’s restrictive view of sympathy not getting far beyond his immediate community.

But please read on (carefully) because Smith then raises the question of what would the European do if he was offered the chosie between losing his little finger and the earthquake killing 100 million distant Chinese. The first reaction is as expected by I. W. Berger – the European prefers to keep his little finger! But again read on (carefully).

Adam Smith responds:

To prevent, therefore, this paltry misfortune to himself, would a man of humanity be willing to sacrifice the lives of a hundred millions of his brethren, provided he had never seen them? Human nature startles with horror at the thought, and the world, in its greatest depravity and corruption, never produced such a villain as could be capable of entertaining it. But what makes this difference? When our passive feelings are almost always so sordid and so selfish, how comes it that our active principles should often be so generous and so noble? When we are always so much more deeply affected by whatever concerns ourselves, than by whatever concerns other men; what is it which prompts the generous, upon all occasions, and the mean upon many, to sacrifice their own interests to the greater interests of others? It is not the soft power of humanity, it is not that feeble spark of benevolence which Nature has lighted up in the human heart, that is thus capable of counteracting the strongest impulses of self-love. It is a stronger power, a more forcible motive, which exerts itself upon such occasions. It is reason, principle, conscience, the inhabitant of the breast, the man within, the great judge and arbiter of our conduct. It is he who, whenever we are about to act so as to affect the happiness of others, calls to us, with a voice capable of astonishing the most presumptuous of our passions, that we are but one of the multitude, in no respect better than any other in it; and that when we prefer ourselves so shamefully and so blindly to others, we become the proper objects of resentment, abhorrence, and execration. It is from him only that we learn the real littleness of ourselves, and of whatever relates to ourselves, and the natural misrepresentations of self-love can be corrected only by the eye of this impartial spectator. It is he who shows us the propriety of generosity and the deformity of injustice; the propriety of resigning the greatest interests of our own, for the yet greater interests of others, and the deformity of doing the smallest injury to another, in order to obtain the greatest benefit to ourselves. It is not the love of our neighbour, it is not the love of mankind, which upon many occasions prompts us to the practice of those divine virtues. It is a stronger love, a more powerful affection, which generally takes place upon such occasions; the love of what is honourable and noble, of the grandeur, and dignity, and superiority of our own characters.”

In short, Smithian sympathy is of far wider applicability than merely our own personal interests and does extend to distant communities. This theme is elaborated throughout Moral Sentiments and sits at the core of Wealth Of Nations. China is no longer a distant country from anywhere else on earth. Every country is right in our homes via tv and the Internet. We see distant people in their homes too (U-tube, etc.,) and they are not abstractions. International travel abounds and we supply and consume distant products (according to mercenary valuations) and we may not even know our neighbours in the manner of our grandparents’ generations.

Of course we quarrels – sometimes violently – because humanity was ever thus, and not just with distant anonymous people – check out the tyrannies and injustice within families and neighbourhoods. We also live in relative harmony – even in celebration - with distant people. How many fans of ‘Manchester United’ have even been near Manchester? and how many weep when a distant person among celebrities, leaders, and popular figures that they do not know personally falls ill or dies? Human tragedies to distant others move millions to sympathy.

It’s not more regulation and government we need – we need better, because fewer, of both. We need fewer and better laws and certainty of punishment. We need incentives to increase participation in markets, not protection for producers in some of them and damn the consumers. Retreating to ideal communities from an imaginary past is no solution, though it may be part of the search.


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