Wednesday, March 28, 2012

"The metaphysics in the theory of Adam Smith compared with modern economics"

A graduate student’s posts his Master’s thesis, which from the abstract is probably of some interest to Lost Legacy. The abstract below summarises the thesis, into which the student has put a lot of work, covering the problems posed by “general equilibrium” ((Kenneth J. Arrow, Frank Hahn, and Gerard Debreu) counter-poised to the “self-organizing economy” (Friedrich A. Hayek, Thomas Schelling, and Paul Krugman).

Copenhagen Business School Student Thesis is HERE “The invisible hand: The metaphysics in the theory of Adam Smith compared with modern economics” by Joakim Kromann Rasmussen.

“This thesis shows how the metaphysical foundation in Adam Smith’s theory is reflected in modern economic theories. It is shown that the question of order is the main economic problem for Smith as well as the modern economists. With this question in focus, Smith’s philosophy is synthesized and reinterpreted. Upon this reading of Smith, a comparison is made to two modern economic positions: general equilibrium theory (Kenneth J. Arrow, Frank Hahn, and Gerard Debreu) and theories on the self-organizing economy (Friedrich A. Hayek, Thomas Schelling, and Paul Krugman). In this regard, the thesis is a philosophical interpretation of Smith’s works emphasizing the idea of the invisible hand and the metaphysical foundation in his theory: an interpretation juxtaposed with two stances in modern economic theory in order to unravel how the metaphysics in Smith’s works still finds an expression in modern economic thinking. The analysis falls into three parts. While the two first parts make up the interpretation of Smith, the third part makes up the comparative analysis. In the first part it is shown how Smith deals with the question of order in his works, as when he argues that humans qualifies epistemologically by organizing the events they meet, that humans at a social level strive for the sympathy of others to stabilize the social life, and how the market organizes resources for the common good. While many Smith scholars have interpreted his theory secularly, within the last fifteen years there have been attempts to interpret his theory nonsecularly. Under the influence from this research, a nonsecularized interpretation of Smith finds its way in the second part of the thesis. This part shows that the secular elements in Smith’s theory stand forth more consistent in light of the theological subject of providence. In the third part, Smith’s basic assumptions are compared with assumptions set forth in the two economic positions. This part shows how the question of order has influenced modern economic theory, and further, how the idea of the invisible hand, in a secularized form, still haunts modern conceptions of economic theory.

I have downloaded Joakim Kromann Rasmussen’s thesis and I shall read it over the next few days (follow the link).

My comments will follow and my emphasis shall be on offering helpful comments, rather than a robust critique. We can always learn something new, so I have an open mind. Many of my posts on Lost Legacy have covered similar ground.

At present, I am reviewing Daniel B. Klein’s new book, “Knowledge and Co-ordination: a liberal interpretation”, Oxford University Press, which is instructive, as well as stretching, taking me into new areas of discourse. It is too early to say whether I agree or am satisfied with Daniel’s theses. In so far as his book provides a glimpse into Daniel’s deeper thinking, I find that prospect tantalizing, because I find his stance in our earlier debates (2009-10) on Adam Smith's use of the invisible hand metaphor baffling, because he ignores how Smith taught about the role of metaphors in the English language in 1763 (Lectures on Rhetoric and Belles Lettres, Oxford and Liberty Fund).



Blogger airth10 said...

Looking forward to your comment on JKR's thesis and his ideas on the metaphysics of the invisible hand, and on equilibrium.

6:21 pm  
Blogger Gavin Kennedy said...


I have now read Joakim Rasmussen's thesis and sent a comment to him. When, if he replies, I shall probably post my comments on Lost Legacy.


3:44 pm  

Post a Comment

<< Home