« Fed Watch: Housing and the Fed in 2005 | Main | links for 2011-01-16 »

Sunday, January 16, 2011

Response to "Was Adam Smith Wrong on Rising Real Wages And the Spread of 'Opulence'?"

Yesterday, I reposted Gavin Kennedy's response to Jeff Weintraub's comments on Adam Smith. Via email, here is Jeff Weintraub's counter-response (the email was sent to Gavin Kennedy and cc'ed to me -- I asked if it was okay to post):

Dear Gavin Kennedy,
I just happened to notice your two-part response to my blog post about the theoretical puzzle posed by Adam Smith's theory of wages and "universal opulence":

(Most of your second post was then re-posted, with a bit of further commentary, by Mark Thoma in his Economist's View blog... and someone forwarded that to me.)

I appreciate the friendly and gracious character of your response to my post, which includes many interesting and intelligent points.

On a number of these points we probably agree more than you may have realized—e.g., the richness and complexity of Smith's analysis of the division of labor, and its central role in his whole theory of society and socio-historical development, which certainly cannot be reduced to Smith's discussion of what I like to call the problem of "pinheadism" in Book V of The Wealth of Nations. I also share your evident exasperation with the fact that many people who talk & write about Smith, whether to cite him reverentially or to criticize him, have clearly never taken the trouble to actually understand his arguments in WN ... or even to read the book. Of course, I further agree that Ricardo is a far narrower, less profound, and infinitely less interesting and illuminating thinker than Smith, so that reducing Smith's economic theory to Ricardo's (intentionally or naively, explicitly or in effect) generally leads to confusion ... and that an ahistorical approach to Smith and the issues he addresses (an approach shared by Ricardo and by the vast majority of contemporary economists) distorts both Smith's arguments and socio-economic realities. (My P.S. about Ricardo may have inadvertently given you the wrong impression in that respect.) Smith was, among his other strengths, a brilliant and insightful historical sociologist (along with several of Scottish Enlightenment peers), and ignoring that dimension of Smith's work produces misleading caricatures of his perspective.

Having said all that, however, honesty compels me to add that in my (possibly fallible) opinion, your response fails to address the key theoretical issues raised by my discussion with those two students. Among other things, the central question that both the students and I were addressing in that particular exchange was not whether Smith was or wasn't right historically in expecting that economic growth in a market economy had produced and could continue to produce a broad-based improvement in most people's standard of living, but whether Smith has a satisfactory theoretical explanation for how and why this should happen. I may be wrong, but I don't think your response ever really confronts that question directly or effectively.

And in that connection, by the way, one point I tried to convey (tactfully) to my students was that the problem of pinheadism (which they emphasized, but which I didn't) is of secondary importance. As I said, if we accept Smith's warning in Book V that the "progress of the division of labor" means that the work performed by most workers, "the great body of the people," becomes increasingly narrow, specialized, simple, and mindless (WN pp. 781-782). then that would sharpen the conundrum. But as I also tried to indicate, the theoretical roots of the conundrum go deeper (which explains why Smith tries to address and resolve it in Book I of WN, in the manner I outlined). So even if we dismiss the problem of pinheadism completely (and I'm not sure we want to do that completely, for reasons that would require a separate discussion to explain, but let's assume for the sake of argument that we do), the conundrum wouldn't simply go away.

In short, my considered opinion (which may or may not be entirely fair or correct) is that your response (along with Thoma's additional commentary) largely misses, or talks past, the central theoretical issues I was raising in that particular discussion. Right now I don't have time to spell out my reasons for thinking that beyond the remarks I've already made ... but I'll try to do that more fully and systematically sometime soon.

Meanwhile, I wanted to acknowledge and thank you for your gracious, intelligent, interesting, and usefully thought-provoking response to the item I posted.

Yours for the republic of letters,
Jeff Weintraub

P.S. Speaking of the division of labor ... Smith's analysis of the division of labor is so rich and intellectually significant, and is so crucial to his whole theory of society and socio-historical development in The Wealth of Nations (which, of course, is far more than just a treatise in technical economics) ... that I have often felt that an equally appropriate title for the book might be The Division of Labor in Society (to borrow a title later used by Durkheim).

    Posted by on Sunday, January 16, 2011 at 02:34 PM in Economics, History of Thought | Permalink  Comments (16)


    Feed You can follow this conversation by subscribing to the comment feed for this post.