Wednesday, March 09, 2011

Error Upon Error is Still In Error

Adrian Pabst writes in the Telos Blog (HERE):

“Moralizing the Market?
Economies of Gift in an Age of Global Finance”

“…in anthropology it is argued that the idea of a purely self-interested homo economicus in pursuit of material wealth (central to Adam Smith's Wealth of Nations) reduces the natural desire for goodness to a series of vague, pre-rational moral feelings (as set out in his Theory of Moral Sentiments)….

… By contrast with the anthropological vision of homo economicus with "a natural propensity of truck, barter and exchange" (Adam Smith) that is central to modern economics, other traditions such as the Neapolitan and the Scottish Enlightenment defend a rival anthropological vision that views humans as "gift-exchanging beings" who form mutual bonds and organize society around the exchange and return of gifts

For the record the idea of Homo economicus was invented a century after Adam Smith’s Wealth Of Nations and bears little resemblance to Adam Smith’s moral philosophy (Moral Sentiments) and his political economy.

Smith’s reference to “a certain propensity of truck, barter and exchange" (he said nothing about it being “natural”, with all that such a word implies). He speculated “whether this propensity be one of the original principles in human nature, of which no further account can be given, or whether, as seems more probable, it be the necessary consequence of the faculties of reason and speech, it belongs not to our present subject to enquire” (WN, page 25; as always on Lost Legacy, I refer to the Glasgow Edition, of 1976, published by Oxford University Press).

The key word is “exchange” and he gave it a far more general application than merely to trade. Indeed, as discussed in my second last post on ‘Smith and the Origins of Language’, the same principle of exchange relations was part of a common methodology used in all of his Works.

Modern economics has run into a side – if not a dead – end of making the whole focus of the ‘individual’ shrouded in the dubious mantle of Homo economicus. Smith was concerned with the relationships implicit and necessary for exchange to operate. It takes at least two individuals to engage in exchange, the root of human nature in societies (mankind has always lived in societies – as did, and still do, the primates, our genetic cousins, since the common ancestor speciated about 6 million years ago (that is, long before the theological fables of the Eden Garden and the Flood supposedly too place– about 4,000 years BCE).

A perfectly self-interested person cannot exchange – ideas, gifts, or items – with another perfectly self-centred individual, where each insists on their own solution to a distribution problem. They have to mediate their different solutions (at least two for each problem) for them to volunteer to accept a common solution. Smith explains this exchange process in Moral Sentiments (1759) and in his Considerations on the Origins of Language (1761), and in his Lectures on Jurisprudence (1762-3) and in Wealth Of Nations (1776).

To conflate conceptual inventions from the 1870s, and the neoclassical period, particularly in theories of General Equilibrium (from the 1960s), with Adam Smith’s philosophical methods is an error of fact, and of scholarship.

Adrian Pabst undermines his theological case by such erroneous assertions.

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