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Old 08-09-2019, 08:39 AM
Hellestal is online now
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I have personally found it to be especially helpful when I want to talk about a book, to first open its cover and carefully read the contents before I started talking about it. But I suppose there are other philosophies on this matter.
Quote:
Originally Posted by Kobal2 View Post
Oh, trust me, I know. As I said, Adam Smith was a moral philosopher first, an observer of commerce second.... All of his economic theories are predicated on actors being both moral, rational and intelligent, if primarily driven by self-interest.
To say that this is incorrect is an understatement. This is directly contrary to the content of Adam Smith's books. Not slightly, but 180 degrees opposite of what he actually, and repeatedly, says. The fallacies of foibles of man are not a digression, not a side point, not a brief footnote, but rather a special point of emphasis that is continually returned to. This is true in both of his books.





Adam Smith goes on in numerous passages pointing out the ways in which people tend to be short-sighted, unaware of likely outcomes, and insensitive to the rational choices in front of them. He describes people, most especially people with inherited influence and wealth, as vain, stupid, and incapable of understanding the results of their actions. For the most vivid example of this, the entire point of the invisible hand, which he uses once in his first book The Theory of Moral Sentiments and once again in The Wealth of Nations (two times total in his collected work) is that people are simply not aware of the likely results of their actions.
Quote:
Originally Posted by Wealth of Nations
...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.
Quote:
Originally Posted by Theory of Moral Sentiments
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.
Emphasis added.

The entire point of this metaphor is that short-sighted, vain, immoral, rapacious people sometimes end up effecting systemic results that were contrary to their original greedy intentions. A person cannot genuinely read the book (not just mindlessly flipping pages, and trying to mouth out the unfamiliar polysyllabic words, but actually reading and understanding what is written) and believe that Smith's economic and moral systems depended exclusively on moral, reasonable people. Such an interpretation is absurdly contrary to what's actually in the books. His most famous metaphor is a description of a system that works despite the "rapacity" and "caprice" etc. (his words!) of the upper classes, by creating an outcome which was not rationally foreseen or intended by them. His point might be summarized as: People can be selfish and short-sighted, but the system works anyway, occasionally even benefiting from their deficiencies.

This isn't a side point in Smith's thinking. It is a primary driver of history. It's a theme that is hammered, again and again and again, in his books. We might phrase it today as: "The logic of the system is contrary to the logic of the individuals inside the system." When describing the loss of feudal aristocratic power, he describes the same sorts of irrational and immoral people:
Quote:
Originally Posted by Wealth of Nations
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. For a pair of diamond buckles, perhaps, or for something as frivolous and useless, they exchanged the maintenance, or, what is the same thing, the price of the maintenance of 1000 men for a year, and with it the whole weight and authority which it could give them.
Centralization of government power, and the removal of baronial authority and caprice, came as an unintended side-effect of those barons and other feudal lords frittering away the source of their authority for superficial baubles. This meant that rather than local barons ruling capriciously and variously in their sundry demesnes, a more centralized, uniform, and fair rule of law could extend from the developing merchant powers of the city into the country, in order to relieve the serfish dependency that permeated that countryside. (When Marx talked about class struggle in the progression of history, he was actually trying to fill in, and then extend, a framework that Smith had already begun. Marx cites Smith literally hundreds of times.)

Adam Smith simply did not believe in the general sensibility of people. The books are both absolutely brimming full of examples of foibles.
Quote:
Originally Posted by Wealth of Nations
The over-weening conceit which the greater part of men have of their own abilities, is an ancient evil remarked by the philosophers and moralists of all ages. Their absurd presumption in their own good fortune has been less taken notice of. It is, however, if possible, still more universal. There is no man living, who, when in tolerable health and spirits, has not some share of it. The chance of gain is by every man more or less over-valued, and the chance of loss is by most men under-valued, and by scarce any man, who is in tolerable health and spirits, valued more than it is worth.
Economics took its turn to "rational" agents well after the Wealth of Nations. Smith consistently made observations that we might today call "behavioral economics". He made a special focus on errors in judgment, mistakes, fallacies, short-sightedness. The results of his economic system were not the intention of its fallible actors, but quite often the reverse, a happy result that was entirely intended.

This might be the single most significant theme of his work. We can keep going, digging into more and more examples:
Quote:
Originally Posted by Theory of Moral Sentiments
We frequently see the respectful attentions of the world more strongly directed towards the rich and the great, than towards the wise and the virtuous. We see frequently the vices and follies of the powerful much less despised than the poverty and weakness of the innocent.

....

They are the wise and the virtuous chiefly, a select, though, I am afraid, but a small party, who are the real and steady admirers of wisdom and virtue. The great mob of mankind are the admirers and worshippers, and, what may seem more extraordinary, most frequently the disinterested admirers and worshippers, of wealth and greatness.
To believe that Smith is describing ethical and economic systems upon which depend high reasonable, rational, and moral agents, is to be comprehensively unaware of the content of both his books. But it's worth pointing out, too, that the system itself is not infallible. In the right circumstances, human blindness might lead to good outcomes, but in the wrong circumstances, injustice can prevail.
Quote:
Originally Posted by Wealth of Nations
The commodities of Europe were almost all new to America, and many of those of America were new to Europe. A new set of exchanges, therefore, began..and which should naturally have proved as advantageous to the new, as it certainly did to the old continent. The savage injustice of the Europeans rendered an event, which ought to have been beneficial to all, ruinous and destructive to several of those unfortunate countries.
It doesn't always work. Being able to tell the difference between a good system and a bad, when the judgment of so many of us is so flawed, is a key question for a civilization.