Wednesday, March 11, 2009

Friends Like Richard Are No Help At All

Richard Bernstein writes in the International Herald Tribune (11 March) HERE:

'Responsible middle' gets no help in crisis’

'So, what's in this for me?" my friend wanted to know. He was asking in good Adam Smith fashion - whose theory was that the common good emerges when everybody works for their own selfish interest - how he could benefit from the current financial crisis.’

I would advise ‘Zach’ (Richard Bernstein’s friend) not to ask said Richard anything about what’s going on (or not, as the case maybe) in the house-finance markets, because anybody who does not know what Adam Smith’s ‘theory’ (indeed, moral philosophy) was about, and who makes such a ridiculous tabloid hash of it, is not the person to trust on such matters.

Adam Smith never said anything like: ‘the common good emerges when everybody works for their own selfish interest’. And this is not just a quibble.

Smith gives over 50 instances of people working for their ‘own selfish interest’, under the guise of working for their ‘self interests’ (a quite different idea, but that will only confuse Richard), which worked against the ‘common good’ in Books I and II of Wealth Of Nations. Clearly, Smith would not have been so inconsistent as Richard claims him to have been.

In fact, Smith never spoke favourably of selfishness. Richard confuses him with Ayn Rand (1960s) or even Bernard Mandeville (1734). They both lauded selfishness (Rand by making it a virtue and Mandeville by making it a social compulsion – ‘private vice, public benefits’). But not Adam Smith; he called Mandeville's theory 'licentious'.

I’m sorry for Zach having a ‘friend’ like Richard.

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Blogger Andres said...

One interesting instance: The pursuit of "selfish" interest by merchants and manufactures might be, and indeed often is, against the common good.

3:55 pm  
Blogger Gavin Kennedy said...


Yes, Adam Smith made that point many times; he warned against legislating on their behalf; he exhibited deep suspicion of their motives; and this trend is consistent across Wealth Of Nations.

Exponents of the view that business left alone always produces social benefits defy the evidence since Smith's time.

Competitive markets, acting under the vigilence of justice (not the vigilence of politicans), are the antidote to illusions about 'selfish' people causing social benefits.

5:02 pm  

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