Saturday, April 28, 2012

New Thoughts On The Invisible Hand Metaphor


I receive comments for publication referring to posts I made in 2009 and before 2007 still, suggesting that some readers, especially new readers, are using the old Lost Legacy "dot com" address.  All comments welcome to the new address:




Gavin Kennedy

I have argued for seven years on Lost Legacy against modern interpretations of Adam Smith, which assert, contrary to the evidence in his books, that he ascribed some mystical general quality to his use on only two occasions of the well-known 17th-18th-century metaphor of an invisible hand.
So far I have not had much success – though the exceptions are most welcome and for which I express my thanks for the encouragement they provide.
I now think it is time to take the argument to those lingering on the fringes of accepting the case I have presented on Lost Legacy since 2005.
This means broadening my counter-argument to the modern consensus that Adam Smith’s use was not limited to the confines of a mere metaphor; it was, they claim, a profound statement that shook the world of academe, albeit nearly 200 years after he had died in 1790.
Consider Smith’s first published use of the metaphor of “an invisible hand” in his first book, Moral Sentiments, 1759 (Part IV, chapter 1).  In the course of a philosophical argument about the negative and positive personal experiences by those who make sacrifices in pursuit of riches, Smith refers to the “proud and unfeeling landlord”:
It is to no purpose, that the proud and unfeeling landlord views his extensive fields, and without a thought for the wants of his brethren, in imagination consumes himself the whole harvest that grows upon them. The homely and vulgar proverb, that the eye is larger than the belly, never was more fully verified than with regard to him. The capacity of his stomach bears no proportion to the immensity of his desires, and will receive no more than that of the meanest peasant. The rest he is obliged to distribute among those, who prepare, in the nicest manner, that little which he himself makes use of, among those who fit up the palace in which this little is to be consumed, among those who provide and keep in order all the different baubles and trinkets, which are employed in the oeconomy of greatness; all of whom thus derive from his luxury and caprice, that share of the necessaries of life, which they would in vain have expected from his humanity or his justice. The produce of the soil maintains at all times nearly that number of inhabitants which it is capable of maintaining. The rich only select from the heap what is most precious and agreeable. They consume little more than the poor, and in spite of their natural selfishness and rapacity, though they mean only their own conveniency, though the sole end which they propose from the labours of all the thousands whom they employ, be the gratification of their own vain and insatiable desires, they divide with the poor the produce of all their improvements. They are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society, and afford means to the multiplication of the species. When Providence divided the earth among a few lordly masters, it neither forgot nor abandoned those who seemed to have been left out in the partition. These last too enjoy their share of all that it produces. In what constitutes the real happiness of human life, they are in no respect inferior to those who would seem so much above them. In ease of body and peace of mind, all the different ranks of life are nearly upon a level, and the beggar, who suns himself by the side of the highway, possesses that security which kings are fighting for” (TMS IV.1.10: 183-4).
In the academic literature dealing with this quotation the “invisible hand” is deemed to be variously, “the hand of god”, “Providence”, “the IH of the market”, “a presumption of liberty”, “a metaphor for national defense”, and many others (the latest, from Daniel Klein being it was an “allegory”).
I have argued, in debate with academic colleagues of various persuasions, that the IH metaphor is exactly that, a metaphor following the rules of English grammar. (For example, see Kennedy, G. “Adam Smith and the Role of the Metaphor of an Invisible Hand”, Economic Affairs, vo. 31, no 1. 2011).  In support of this argument, I refer to Adam Smith on metaphors in his “Lectures on Rhetoric and Belles Lettres” [1762] 1983, p. 29, in which he states that a metaphor describes in a “more striking and interesting manner its object”. This corresponds to the modern meaning of a metaphor given in the definitive Oxford English Dictionary.
What is the object of the IH metaphor in the above TMS quotation?  In the answer lies the resolution of this debate turns. To my disappointment, no one has challenged Smith’s interpretation – they have simply ignored it.
I identify the object of the IH metaphor in TMS as the absolute necessity of the landlord to feed his retainers, servants, and serfs (later his tenants).  Why is he compelled to distribute some of his harvests to the “thousands whom he employs”?  If he didn’t feed them how would they be able to work?   And if they didn’t work upon whom would the “proud and unfeeling landlord” depend on to prepare, seed, tend, and harvest his fields?  If they were not fed they could not labour, and if they didn’t labour they, and their families, would not be fed.  This mutual dependence is so obvious that I cannot see why my colleagues, in no way lacking the highest qualifications as senior academics, disregard the obvious in Smith’s meaning of his use of the invisible hand metaphor, to describe this mutual dependence in a “more striking and interesting manner”.
So let me draw further on Adam Smith to elucidate the nature of the relationship throughout the ages of shepherding and farming, much of it spent under regimes far more tyrannical than anything experienced since the appearance of commercial societies.  I turn to Adam Smith in the little read Book III of Wealth Of Nations. 
This extract gives a more factual historical account of the period covered by the feudal landlordism relevant to the time pictured by Smith when he described the regular behaviour of the “proud and unfeeling landlord” in “Moral Sentiments” of his being “led by an invisible hand” to share part of his harvest with the “thousands he employed”.  It reinforces my assertion that the metaphor describes in a “more striking and interesting manner” the nature of the landlord’s relationship with his serfs.
In a country which has neither foreign commerce, nor any of the finer manufactures, a great proprietor, having nothing for which he can ex-change the greater part of the produce of his lands which is over and above the maintenance of the cultivators, consumes the whole in rustick hospitality at home. If this surplus produce is sufficient to maintain a hundred or a thousand men, he can make use of it in no other way than by maintaining a hundred or a thousand men. He is at all times, therefore, surrounded with a multitude of retainers and dependants, who having no equivalent to give in return for their maintenance, but being fed entirely by his bounty, must obey him, for the same reason that soldiers must obey the prince who pays them. …
…. A tenant at will, who possesses land sufficient to maintain his family for little more than a quit-rent, is as dependent upon the proprietor as any servant or retainer whatever, and must obey him with as little reserve. Such a proprietor, as he feeds his servants and retainers at his own house, so he feeds his tenants at their houses. The subsistence of both is derived from his bounty, and its continuance depends upon his good pleasure. ….
…. But what all the violence of the feudal institutions could never have effected, the silent and insensible operation of foreign commerce and manufactures gradually brought about. These gradually furnished the great proprietors with something for which they could exchange the         whole surplus produce of their lands, and which they could consume themselves without sharing it either with tenants or retainers.         All for ourselves, and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind. As soon, therefore, as they could find a method of consuming the whole value of their rents themselves, they had no disposition to share them with any other persons”  (WN III.iv.10)
The consequence over time, of “the silent and insensible operation of foreign commerce and manufactures gradually brought about”, was the reduction in the manpower base of the landlords.  These people were previously employed about the property; the men were mobilised in time of his need of a military force against rival landlords within the aristocratic orders of the feudal structure at home and abroad, and, on occasion, during regime instability, against the King. Dynastic quarrels were endemic over the millennia. 
But note, Smith described the sharing of the landlord’s harvests with the ‘thousands he employed’ in his service as the landlord being “led by an invisible hand” to do so.  That was an attractive metaphor for the necessity that led him to do so, by describing in a “more striking and interesting manner” the mutual dependence of those involved.  It certainly was not visible.  So the IH metaphor did its work remarkably well, so well that modern economists don’t see what is going on.  They invent other, often mystical quasi-theological explanations (‘there is an actual invisible hand’ at work) beside the clear and simple grammatical role of Smith using a metaphor. 
Yet, here, in Wealth Of Nations, he describes another situation where “the silent and insensible operation of foreign commerce and manufactures gradually brought about” another consequence of immense historic importance for the gradual intrusion of “foreign commerce and manufactures” (i.e., a new, 4th, stage in the history of humans), that caused the decline in the feudal powers of an important older order that acted as a barrier to the revived commercial society that had been destroyed by the decline and fall of Rome in the 5th century. This interregnum lasted through to the 15th century, first as allodial successive war-lords, where tenure lasted to whomsoever could hold it against all challengers, then as  feudal tenures subject to the pleasure of dynastic kings. 
 Smith, I opine, could have used an IH metaphor for this invisible “silent and insensible operation”. However, he chose not to do so, though he did state clearly in his use of the IH metaphor in Wealth Of Nations that the risk-averse merchant “is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention”.  Well, this reference from Book III might be one of those “many other occasions” where the IH metaphor might work if, and only if, it is applied to its identified object, as all metaphors must be under English grammar, and Smith’s own teaching on Rhetoric, for which he was famous in his own day, if not so well known in modern times.
 We tend to see Smith as an economist first, less often as a moral philosopher, and hardly ever as a rhetorician, though he studied and rhetoric as a student at Glasgow (1737-40) and at Oxford (1740-46).  Subsequently, he taught rhetoric and belles letters from 1748-51 in Edinburgh and at Glasgow from 1751 to 1763.  His own notes on rhetoric were used by his successors, who took over his Edinburgh lectures, and by those who took over his professorial lectures in Glasgow. 
 ‘Tis a pity that modern scholars have remained indifferent to, if not ignorant of this major aspect of Adam Smith’s life’s work.

Thursday, April 26, 2012

New Defence of Modern Inventions of the Existence of Invisible Hands At Work in Society

Daniel Klein, a professor at George Mason University, Fairfax Virginia, is one of those original thinkers that stands him out from the crowd of overly-safe players who dominate in academe on both sides of the Atlantic, and on both sides of the Pacific as far as Australasia.  His recent thinking, expressed in his new book, “Knowledge and Coordination: A Liberal Interpretation”, Cambridge University Press, is typical of his, on and beyond the frontier of accepted doctrine.

This new article is a recent example of his contributions to the discourse among scholars related to Adam Smith’s thinking.  I quote the first few paragraphs as a sample to entice readers to follow the link to read it all.  I shall comment on Daniel’s paper in more detail as soon as I can.
Daniel B. Klein HERE 
Allegory and Political Economy: Communication and Cooperation
The Freeman (“ideas on liberty”) May 2012 • Volume: 62 • Issue: 4 •
“We must look at the price system,” wrote Friedrich Hayek, “as . . . a mechanism for communicating information if we want to understand its real function.” Hayek’s talk of communication was a great advance in economic thinking. Talk of communication is common among market-oriented economists. In their textbook Tyler Cowen and Alexander Tabarrok write: “[P]rice signals and the accompanying profits and losses tell entrepreneurs what areas of the economy consumers want expanded and what areas they want contracted.” Such talk is both illuminating and beautiful.
But the price of eggs communicates, in a literal sense, nothing more than: Yours for $1.89. If we are to be literal, we must mind the element of communion, or community, in communication. Literally, communication is a meeting of minds. The knowledge communicated passes through us as commonly experienced ideas, images, or notions.
For the entrepreneur computing her profit or loss, there really is no communication in the literal sense, no meeting of minds—whose mind would she meet? In no literal sense do prices and other market phenomena tell entrepreneurs what to do. We want to talk of prices as “signals,” but we must recognize that they are not literally signals.
In discussing market forces in The Wealth of Nations, Adam Smith illuminated their marvels by using simile and metaphor. He sketched an aspect of social coordination: “It is the interest of the people that their daily, weekly, and monthly consumption should be proportioned as exactly as possible to the supply of the season.” The grain dealer adjusts his prices and quantities in ways that conduce to such coordination:
Without intending the interest of the people, he is necessarily led, by a regard to his own interest, to treat them, even in years of scarcity, pretty much in the same manner as the prudent master of a vessel is sometimes obliged to treat his crew. When he foresees that provisions are likely to run short, he puts them upon short allowance. Though from excess of caution he should sometimes do this without any real necessity, yet all the inconveniences which his crew can thereby suffer are inconsiderable in comparison of the danger, misery, and ruin to which they might sometimes be exposed by a less provident conduct. [Emphasis added.]
 The simile of the prudent shipmaster is a miniature of the metaphor of the being whose hand is invisible: “[The individual] generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. . . . [A]nd by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.” (Emphasis added.)
When a simile or metaphor is made elaborate, it may become allegory. The dictionary defines allegory as “an expressive style that uses fictional characters and events to describe some subject by suggestive resemblances; an extended metaphor.”
 Daniel Klein’s new emphasis on the role of allegory is a continuation, albeit as a new theme, of his dogged defence of the modern meanings attributed to Adam Smith’s in his use of the metaphor of “an invisible hand”.  I have commented upon, indeed criticized, his stance on metaphors in various debates we have had in print on the “invisible hand” since 2009.   Apart from describing my focus as “too narrow”, his latest contribution attempts to broaden his defence of his own rather orthodox stance by invoking a role for allegories in Smith’s “Moral Sentiments” and his “Wealth Of Nations”.
Daniel shows commendable originality in his theory of the applicability of allegories.  I applaud him for that.  But the issue remains to what extent does the cover of allegories had light to the sometimes laughable extent to which the misattribution of the versions of the invisible hand in economics, philosophy, and general discourse (some of which I try to capture in Lost Legacy’s “Loony Tunes” series from media sources).
I shall return to Daniel’s always interesting thoughts on allegories later this week.

Tuesday, April 24, 2012

Loony Tunes no 44

John Silver in Journal Inquirer HERE 
“Football coaches lord over their players with an invisible hand to guide them to certain results.”

National Journal Amy Harder HERE 
“The invisible hand of politics may have been at work to snatch control from states without causing a backlash.”

GreatFerm HERE 
The invisible hand pumps oil.”

ClickZ McNeil Maddox HERE 
“It suggests an "invisible hand" at work that has assembled, culled, and organized content so that it can tell a compelling story or evoke strong feelings.”

A Source Quoted on 'Loony Tunes' Objects (Politely)

I received a couple of comments (23 April) to my listing a snippet on Loony Tunes no 36 from “UMR Cycling Club”, but unfortunately  “lost” them both temporarily when I pressed “publish”.

I would not like to leave the impression that I censor comments that make polite sense, whether I agree with them or not.

Here is one of UMR’s comments on my listing on Loony Tunes no. 36:

“The Iron Calculator vs. The Invisible Hand” HERE

No longer are uncertain outcomes or risks acceptable, i.e. The Invisible Hand.” …

…“The Invisible Hand leaves it unknown who should go to college, even though someone may not pass The Iron Calculator’s criteria, there might just be some other factor that will cause them to succeed. The Invisible Hand leaves to chance having the potentially ill baby…”

““This newcomer does not seem to grant us the benevolence and unlimited possibilities that chance, or The Invisible Hand granted us.

To which listing, UMR Cycling Club replied:

“As author of 6, I think you took what I wrote a little out of context. But thanks for noticing my post. Also, I'm always interested to learn about economics, so if you'd like to point me to literature (that you personally recommend) explaining why ever increasing regulation/calculation is good versus allowing for randomness, please do.”
My response:
I Thank “UMR” for his comments. First, the regular “Loony Tunes” series is for those published pieces I spot in the Google Alert’s daily service that appear to be using the metaphor of the “invisible hand” in a extraordinary manner, completely at variance to its use by Adam Smith, mostly out of ignorance of the very restricted sense of a metaphor’s grammatical role as used by Adam Smith on the two occasions in which he used it, once each in his to published Works, “Moral Sentiments”, 1759, and “Wealth Of Nations”, 1776.
(I know he used it once on another occasion in his “History of Astronomy”, posthumous, 1795, but that was as a noun, not a metaphor, when describing the pagan superstitious belief about their god Jupiter’s supposed power of firing thunderbolts at enemies of Rome).
However, these historical facts about Adam Smith’s limited use of a metaphor have no connection to the modern invention of a much more general application of the “invisible hand” into a “theory”, “concept”, even a “paradigm”, that came to be applied in economics after the 1940s, and associated with a modern theory of “general equilibrium”, or "Pareto Optima", perhaps best summed up as the assertion that the “self-interests” of individuals (even their “selfishness”) led society “miraculously”, to an optimum, that was “best” for society. 
It is in this context, that “UMR’s” statements about the invisible-hand decides “who goes to college” and “who passes”, and so on, which are extentions of the modern inventions about the ubiquitous role of this invented phenomenon, which I credit to so-called neo-classical economic theory.   It certainly has nothing to do with Adam Smith’s published thinking.
Turning to “UMR’s” request that I explain “why ever increasing regulation/calculation is good versus allowing for randomness”, I can assure “UMR” that I have never argued for such a proposition on Lost Legacy, and it does not reflect Adam Smith’s published views either.
I should make clear that on modern political issues, certainly as presented by “Leftish” or “Rightist” ideologues”, I do not take stances, except in so far as either side claims the authority of Adam Smith for them.  
Adam Smith did make specific references to instances where regulation by government was required and would be beneficial (capping interest rates, for instance).  Smith never argued for laissez-faire; insisted on the rule of law and an effective system of justice as necessary for commerce.  He did not express the view that the state had no role in society (he was not an extreme anarcho-libertarian). 
 He objected to the “sovereign” (which included his self-interested influencers) imposing economic policy decisions that benefitted them but which had deleterious affects on general prosperity and growth, i.e., he opposed what he considered the “wrong” forms of state interventions (tariffs, prohibitions, Guild privileges, apprenticeship Acts, Settlement Acts, Combination Acts, leading to “jealousy of trade” between nations, and colonial wars), and he supported the “right” forms of state intervention, such as support for “little schools” on the Scottish model to end illiteracy and innumeracy among the labouring poor, for civic cleanliness, street lighting, pavements, road works, standard measurement systems, assay and quality offices, defence provisions, banking reforms, lighthouses, canals, toll roads, and harbours.
In short, Smith’s stance was to favour markets where possible, and state intervention where necessary.  This may be contrary to modern perceptions of him, but Smith’s views are well expressed in his two books, Moral Sentiments and Wealth Of Nations. 
‘Tis a pity that most of those who quote him today do not read him, and rely upon his modern epigones instead.

Monday, April 23, 2012

Loony Tunes no 43

Sarah Stoner Sunderland Echo HERE 
“More wizardry is on show at The Burrow – the quirky home of the Weasley family – where invisible hands start knitting after you point a wand to make a knife chop vegetables.”

 LAURA HEDLI writes in Wall Street Journal HERE 
“For the final flourish, Mr. Pinkham was lifted into the air, seemingly by an invisible hand.”

 Joystiq HERE 
“It's not possible to precisely measure this difficulty with numbers because the invisible hand of raider choice is not based purely on content difficulty but on the sum of all factors which contribute toward the difficulty of progression.”

The Independent  HERE 
“A wide-eyed dement, waved on by invisible hands, is in the last resort not responsible for his actions.”
[In reference to the Norwegian mass murderer, Breivik’s testimony.]

Sunday, April 22, 2012

Once More On Chomsky

From Lost Legacy (May 2009);

From Noam Chomsky: Education is Ignorance (2 May) in W.E.A.L.L.B.E. here:
“Noam Chomsky: I didn't do any research at all on Smith. I just read him. There's no research. Just read it. He's pre-capitalist, a figure of the Enlightenment. What we would call capitalism he despised. People read snippets of Adam Smith, the few phrases they teach in school. Everybody reads the first paragraph of The Wealth of Nations where he talks about how wonderful the division of labor is. But not many people get to the point hundreds of pages later, where he says that division of labor will destroy human beings and turn people into creatures as stupid and ignorant as it is possible for a human being to be. And therefore in any civilized society the government is going to have to take some measures to prevent division of labor from proceeding to its limits."
I reproduce this quotation from the post I made on Lost Legacy in May 2009, because there is a persistent, and persisting, amount of comment on my comments on Chomsky’s quotation from several people, the most recent a couple of day ago, criticising my challenge to Chomsky, all whom appear to be in contact with Chomsky.  Its as if these exchanges are going the rounds – in a tutor’s class notes?   And this starts off a new exchange regularly.   I am grateful for the attention but would prefer if critics kept up to date with the Blog when posting their repetitive comments, if only to save me looking so far back through the files to find the original.
Here is Chomsky’s quotation as presented by Andrew in 2009:
A reader, “andrew”, kindly offered this quotation:
"Adam Smith, The Wealth of Nations, Chicago: University of Chicago Press, 1976 (original 1776). An excerpt (Book I, ch. X, p. 111):
“The whole of the advantages and disadvantages of the different employments of labour and stock must, in the same neighbourhood, be either perfectly equal or continually tending to equality. If in the same neighbourhood, there was any employment evidently either more or less advantageous than the rest, so many people would crowd into it in the one case, and so many would desert it in the other, that its advantages would soon return to the level of other employments. This at least would be the case in a society where things were left to follow their natural course, where there was perfect liberty, and where every man was perfectly free both to chuse what occupation he thought proper, and to change it as often as he thought proper.
I replied, as did other commentators, that Chomsky confused equality, as in modern distributive justice theories, which was not agenda in mid-18th-century philosophy, nor meant as such by Smith.  The quotation from Wealth Of Nations referred explicitly to equality of incomes from certain types of labour in a locality, compensating for adverse circumstances or types of labour.
“From Noam Chomsky...
’I… took the trouble to check the reference I cited, which says exactly what I said it did. You don’t have to be a Smith scholar to see that my paraphrase of the passage I referenced is exactly accurate. If you read the other comments you’ll see that they are trying to evade the fact by claiming, falsely, that I was confusing differentials with income equality. Nothing of the kind. I simply cited Smith accurately, giving the source so anyone could check.  The rest is just the usual childish slanders that deface the internet."
Well, I checked the source that Chomsky quoted and confirmed it did not confirm Chomsky’s interpretation.
In the other quotation from Chomsky referring to the division of labour and Chomsky’s interpretation of what Smith meant, I have also commented on Lost Legacy that the reference in Book V on the negative affects of the division of labour is at variance with Chomsky’s. 
Basically, Chomsky jumps to a conclusion that Smith was of the view that the government should prevent the division of labour from continuing to “its limits”:
Chomsky notes: ‘But not many people get to the point hundreds of pages later, where he says that division of labor will destroy human beings and turn people into creatures as stupid and ignorant as it is possible for a human being to be.
Now, some parts of this sentence are fine, some parts woefully wrong, and almost all of it out of historical context. I have no idea how Chomsky concludes what he does.
The relevant section reference is ‘Article ii’, ‘Of the Expense of the Institutions for the Education of Youth’, pages 758-88, of Book V of Wealth Of Nations, and the relevant page is 782 (from the Glasgow Edition, Oxford University Press):
 In the progress of the division of labour, the employment of the far greater part of those who live by labour, that is, of the great body of the people, comes to be confined to a few very simple operations, frequently to one or two. But the understandings of the greater part of men are necessarily formed by their ordinary employments. The man whose whole life is spent in performing a few simple operations, of which the effects are perhaps always the same, or very nearly the same, has no occasion to exert his understanding or to exercise his invention in finding out expedients for removing difficulties which never occur. He naturally loses, therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is possible for a human creature to become. The torpor of his mind renders him not only incapable of relishing or bearing a part in any rational conversation, but of conceiving any generous, noble, or tender sentiment, and consequently of forming any just judgment concerning many even of the ordinary duties of private life. Of the great and extensive interests of his country he is altogether incapable of judging, and unless very particular pains have been taken to render him otherwise, he is equally incapable of defending his country in war. The uniformity of his stationary life naturally corrupts the courage of his mind, and makes him regard with abhorrence the irregular, uncertain, and adventurous life of a soldier. It corrupts even the activity of his body, and renders him incapable of exerting his strength with vigour and perseverance in any other employment than that to which he has been bred. His dexterity at his own particular trade seems, in this manner, to be acquired at the expence of his intellectual, social, and martial virtues. But in every improved and civilized society this is the state into which the labouring poor, that is, the great body of the people, must necessarily fall, unless government takes some pains to prevent it.” (WN V.i.f: 782).
The education of youth is a long and important part of Wealth Of Nations. In it Adam Smith presents a detailed description of the history of education from classical times to its then state in Britain. The first notable feature was that only boys were formally educated for a few years, if at all; girls were left to their parents to ‘home educate’, which for the majority meant no education at all (the majority of parents were likely to be illiterate and general ignorant).
Across Britain the picture was patchy. England was backward educationally. It had two universities, Oxford and Cambridge, but local schools were rare except for some charity schools.  In Scotland, there were four universities, Edinburgh, Glasgow, St Andrews and 'Aberdeen'. Local provision for education since the 17th century was managed by ‘little schools’ in most parishes, paid for by a mixture of charitable sources, local parental contributions and donations. Most male children spent a year or more, some ‘bright’ children up to age of 14. Middle class boys tended to stay longer than the children of the poor, most of which were sent to work from about 8, their parents being near destitute.
Smith describes this in Book V. In fact, he offers the ‘little school’ system in Scotland as suitable for England too (a much larger country in population and wealth than Scotland). He envisages all children spending some time learning the ‘read, write and account’ to extend literacy and numeracy across the majority of children (he left open the question of education for girls, but clearly they could be accommodated in the ‘little school’ system).
Book V is about government expenditure and revenue. How was education to be funded? The government would have to play a serious role in such a project, which meant taxation of a relatively narrow taxation base. At the time taxation was a sensitive subject (it was ever thus) and the people who would have to consent to such an additional expense (‘little schools’ would need to be built, which with 60,000 parishes was no mean line item in a budget) where the legislators, mainly representative of the agricultural aristocracy and few ‘improving’ landlords.
If Chomsky re-reads the paragraph quoted above he will note two themes in his argument. The first, which Chomsky has focused upon, is that of the deleterious effects of the division of labour, which were of longstanding antiquity (the division of labour preceded commerce by many millennia back into pre-history).
Farm labourers were marginally ‘better off’ than the fewer primitive factory labourers, hauliers, seamen, servants and soldiers, and etc. But be clear, outdoor farm labourers were not all dancing around May Poles and living as ‘happy families on the prairy’. Theirs was a hard life, short too, with infirmities and early deaths from disease, incapacity, accidents and starvation.
Into this background Smith identifies the ‘man whose whole life is spent performing a few simple operations’ and the consequences in his stupidity and ignorance. He does not raise the spectre of millions living their awful rural lives in similar terms – his appeal is to the support of  the few rich men who owned the farms and dominated parliament.
He also turns his argument neatly as his second theme. If the sources of finance for education (mainly the aristocrats) were not inclined to support the ‘little schools’ from their usual selfish inclinations to prodigality, then it would be prudent to appeal to their fears of disturbances to their sheltered lives – also, to the steady decline in martial prowess of the uneducated mass of poorer men (Smith knew how to write persuasively for his intended audience – he lectured in rhetoric).
For the indigent labourer whose ‘torpor of his mind renders him not only incapable of relishing or bearing a part in any rational conversation, but of conceiving any generous, noble, or tender sentiment, and consequently of forming any just judgment concerning many even of the ordinary duties of private life' could be written as a major threat lurking everywhere. Moreover, ‘Of the great and extensive interests of his country he is altogether incapable of judging, and unless very particular pains have been taken to render him otherwise, he is equally incapable of defending his country in war. Of the great and extensive interests of his country he is altogether incapable of judging, and unless very particular pains have been taken to render him otherwise, he is equally incapable of defending his country in war.’ If not inclined to rebellion, his services in defence of the island country could be useless.
These concerns were meant to strike a chord with that class of taxpayers who were fearful of weak armies and of easily misled labourers who might become rebellious (such rebel ‘mobs’ were forcing the British army out of the American colonies, by later editions of Wealth Of Nations).
In short, Smith was 'spinning', as we say today, a case for increased taxation to pay for public institutions regarded as deficient in 18th-century Britain. That he was doing so 768 pages after the ‘pin factory’ was deliberate, Few of his readers would have the faintest idea of what went on in a factory (Marx never visited one) and his prose was powerful because it pushed all the right buttons to rouse the rich readers from their complacency – and not a little hostility to more taxes – about the plight of the children of labourers.
Chomsky has not considered this context. Hence, he can decry the division of labour and assert with conviction that it ‘will destroy human beings and turn people into creatures as stupid and ignorant as it is possible for a human being to be’, but not with much credibility. He apparently has no idea of how ignorant were the members of the majority of ordinary labouring families in the 17th and 18th centuries, let alone the millennia before then.
Empirical evidence beats speculation. Was the result of the division of labour, even through the horrors of the industrial revolution of the 19th century, a nation of people who were turned into ‘creatures as stupid and ignorant as it is possible for a human being to be?’ The division of labour did not cause the lack of education, but the lack of education risked, deleterious consequences unless the government took measures to remedy the lack of education.  Realistically, no government could prevent the division of labour.  Smith didn’t advocate that they did.  He identified a problem and suggested that “little schools” were the appropriate response.
Moreover, the division of labour continued unabated.   Productivity continued as pin making, for example, became mechanised.   By the 19th century, thousands of pin-making  firms were consolidated, and by the 20th century, one or two manufacturers undertook the entire national output of pins in fully automated batteries of machines both in the UK and the USA. Working men commonly do a lot more than basic  ‘reading, writing, and accounting’.  The horror of worker zombies drawn by Chomsky from these passages in Wealth Of Nations never happened. But the Education Acts implied in Book V were passed eventually, as were Technical Schools for employed workers, on of which, the Edinburgh School of Arts, founded in 1822, eventually became Heriot-Watt University in 1966, a few hundred yards from where Smith lived from 1788-90 in Panmure House.
By exaggerating his case with colourful prose, few facts, and no history, Chomsky undermines those parts of his case that are worthy of our attention. 

Saturday, April 21, 2012

An Illiterate Bad Essay is Much Worse than No Essay

‘Oxbridge Writers’, complete with silhouette with representative 'dreaming spires', (part of the “ group”) demonstrate their on-line services to students who face a re-sit or want “guaranteed better grades” at “undergraduate, masters, and PHD” levels, for a price, with a paper entitled “The Invisible hand and Economic Progress”, apparently written by “students”.

Invisible hand”
In free market economics, due to the fact that there is no government control, all decisions are made by individual enterprise. Individual firm decides what goods to produce and how many this goods need to be produced more that all depend on the interactions of supply and demand in the market. Gillespie (2007) pointed out that the market is a "invisible hand" that advocates a free market economic system, everyone is allowed freely access to the market in which people enable to act as a role of buyer or seller to purchase or sell goods or service at the given price. In free-market economies, where the invisible hand was shaped by combining with principle of supply and demand. That is to say that, the interaction of supply and demand in free market could be frequently defined as the "invisible hand" which adjusts the market and forms the market price of goods or services. … As Randall (2001) states, the invisible hand contributes to market to allocate resources efficiently; the most significant feature of invisible hand is the ability to allow the market place to be self-regulating.
Nevertheless, due to the changes in market trends under the negative influence of economic crises, the invisible hand sometimes does not work. The theory of invisible hand in a Capitalist country, for example, since a serious blow from economic crises, the market mechanism has been influenced to a large extent and leads to people begin to realize that the invisible hand almost lost its unique ability of controlling this market. …
The mixed economics
The real world is one of the mixed economic. The definition of the mixed economics is explained by Gillespie (2007); a mixed economy is set in the middle of free market economy and command economy. That means that in mixed economics, where half business decisions are carried out by private firms through the market and the rest of the decisions are made by the government. …In mixed economics, government intervention affects business decision and management in various ways. Lipsey (2007) indicates that governments are more likely to adjust the present market by levying taxes or directly controlling the price of products even controlling the pattern of production and consumption to balance supply- demand in the market. From an economics perspective, the government intervention is regarded as "visible hand". As noted by Sloman (2007), it is necessary to introduce a visible hand to make up defects of the invisible hand in the mixed economic. …
Apart from questions that could arise for students if more than one of them in the same class uses these services and it is noticed by a grader reading the same or similar essays twice, or more, there is the problem that the “answer” essay is barely literate, at least by the standards of any University (let alone Oxford and Cambridge).   That alone should provoke faculty questions to the student passing it off as his/her own work about how they got into the University.  If they are sitting degree exams at postgraduate master or PhD level, an external examiner would enquire about the suitability of faculty to be employed there.
Judging by the quality of the content of the essay on display, I shall say nothing; it’s too poor to be worthy of comment.  Follow the link and read it all.  Caution your students about resorting to such desperate measures (and there are many examples worse than this one).  Tell those who ignore your advice to go into politics, where standards matter less.

Facts, Facts, Stick to the Facts

Peter Smaill, writes in The Scotsman, 21 April, HERE 
“Take a look through the holy smokescreen”
“In 1723, Adam Smith was kidnapped by tinkers.”
Should the “kidnapping” anecdote be true, it did not happen in 1723, the year Adam Smith was born!
The story refers to him being 3-years old, i.e., from June 1726, while on a visit to his mother’s cousin at Strathendry, a few miles from Kirkcaldy, Fife.
What has happened to the once legendary facts checkers, once common in Journalism?

Friday, April 20, 2012

The Past is a Better Guide to the Present Than Hopes for the Future

Sandwichman’ writes EconoSpeak (19 April) (‘Anals of the Economically Incorrect) HERE

What's the Economy For, Anyway?: Why it's time to stop chasing growth and start pursuing happiness, by John de Graaf and David K. Batker, 2011. Bloomsbury Press.
“Here's something Sandwichman didn't know: "Hoover and Roosevelt (and their predecessors) had one thing in common. None entered office with a model or theory of how a national economy works.
Poor Adam Smith and the whole of political economy back unto the time of William Petty, when the enterprise was known as political arithmetick! Dr. Smith may have called his book Wealth of Nations but apparently it made no impression on the leaders of nations -- or at least on the presidents of one nation, the United States of America. They had no theory of how a national economy works. Not even an incorrect or misleading theory. None whatsoever.”

Authors of books who expect to impress ‘leaders of nations’ are likely to be disappointed, whatever the title of their books.  Adam Smith wrote his two books, 'Moral Sentiments', 1759, and ‘Wealth Of Nations’, 1776, for young students, some of whom might have aspired to become leaders of nations, and some of them certainly became politicians of some influence, but most did not reach such status.
 His books went through several editions up to his death in 1790, though both are still in print in various languages.  This looks impressive on one level, but far too few owners actually read what is in them, and most rely on quotations only, or not even that much.  Despite his non-readership, Adam Smith is a widely recognized name across the world.
I am surprised that Sandwichman expects “leaders of nations” to know something about “how a national economy works”.  I would be more than surprised that a leader of any nation knew how ‘a national economy works’.  I would be as surprised if any economist actually knew “how an economy worked”.  I would be beyond surprise if John de Graaf and David K. Batker knew how an economy works, especially given their focus on “happiness” as the appropriate objective for an economy, not GNP.
 I suppose these thoughts qualify me as “economically incorrect” though probably not in the sense meant by “Sandwichman”.  Economics is not a finished science; it’s an opinion, one of many opinions competing for attention.
Smith’s approach was more likely to produce better results than its alternatives.  It involved an historical method, called by his first biographer Dugald Stewart “conjectural history” (1793).  It studies the past, using the best information available, to form conjectures about how past events led to the present.  What happens is that each passing present provides knowledge about the approximate validity of earlier conjectures, thus sharpening better tools to arrive at better conjectures about successive presents.