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Saturday, August 09, 2008

Moral Sentiments and The Wealth Of Nations

Gavin Kennedy from Adam Smith's Lost Legacy discusses whether Adam Smith's Moral Sentiments and Wealth Of Nations are contradictory:

No Contradictions Between Moral Sentiments and Wealth Of Nations, by Gavin Kennedy: Questions about whether Moral Sentiments and Wealth Of Nations are at odds with each other arise from time to time, even among scholars, and the idea is without plausibility once you look behind the assertion and apply a time-line to when both books were in preparation. In these respects the publication dates (1759 and 1776) are misleading.

Clive Crook takes up the issue of the alleged gap in The Atlantic.com (here) and talks some good sense:

“I agree that Smith is badly served by many of his supposed followers. The idea that "greed is good", which one often sees attributed to him, is a travesty. He was no libertarian either. His idea of "natural liberty" was almost the opposite of what it is usually taken to mean (namely, "do as you wish"). He was at pains in both books to emphasize the importance of self-control, of regard for the opinions of others, and of an expansive role of government in providing security, rule of law, and economic infrastructure. Way ahead of his time, he was even in favor of compulsory schooling.

But I think it is wrong to regard Moral Sentiments as somehow at odds with Wealth of Nations, which seems to be the prevailing view. You quote one or the other, according to taste, but never both. Smith certainly saw no rift. ...

Smith believed that most people are self-interested, sympathetic, and wish to be well thought of. Successful commercial societies, he argued, are built on these traits. The question is, how can they best be combined? In modern terms, how can institutions and incentives shape, channel, and balance these sometimes conflicting instincts to promote greater peace and prosperity? This is the subject of both books.

In Wealth of Nations, addressed to rulers, Smith exalts competition as the way to keep self-interest in check, and to subordinate producers to consumers. That is why the book is so opposed to protected monopolies and, above all, barriers to trade. In Moral Sentiments, he puts less weight on public policy and more on the wellsprings of virtue. He underlines the need for the approval of others, not just as an end in itself but also as a requirement for flourishing in commercial society. In short, competition disciplines producers (Wealth of Nations); commercial interaction nurtures propriety and prudence (Moral Sentiments). These are different perspectives, but by no means contradictory.

What would Smith ... have made of the modern [creative captialism] debate? Hard to say,... but ... I am sure about one thing. He would have disagreed ... that a new kind of capitalism is needed to marry sentiment and self-interest. This is exactly what ordinary profit-seeking commerce achieves, in Smith's telling. This is the over-arching idea in both books.”

Comment I have discussed the “creative capitalism project” before... Clive Crook is aware of the similarities, connectedness and purpose of each of Adam Smith’s books and this alone makes his article worth reading.

The ‘debate’ seems to assume that the two books are quite different. Moral Sentiments is about the history of ethics and Wealth Of Nations is a about the hsitory of economic ideas and a critique of political economy, as it was understood in the 18th century, or, if you like, sympathy and self interest. In these stripped-down, one-word meanings the entire context and purpose of the books is thrown away, and their publication dates lends credence to the charges made by would-be ‘smart’ commentators.

First, Moral Sentiments was not a manifesto of Smith’s ideas. Its contents came from the ethics course he gave at Glasgow University between 1752 and 1764 to young students preparing themselves for the ‘AM’ degree. Hence, before jumping to conclusions about its author’s views on morality, we ought to recognise that preparing a basic course in moral philosophy for 14 to 17-year olds requires that the lecturer cover the whole subject and not just his own views. I have been reminding those who read into Moral Sentiments a strong strain of Christianity/Deism in Smith’s thinking, they may be fooling themselves by attributing to Smith their selective interpretations of the views he identifies belonging to the authors he cites, and not necessarily his own.

It helps in this respect to read Book VII of Moral Sentiments first and then read I-VI, which is the order in which he gave his lectures. Book VII reviews ideas on moral philosophy since Greco-Roman times, and he continually refers to the ideas of earlier moral philosophers throughout. Smith taught the subject as it stood up to mid-18th century, and he did so in an institution in which the prevailing orthodoxy expected its students to become competent in the history of the subject by the time they graduated. This meant covering the ‘names’ and their ideas, with some leeway leftover for the professor to make available his own ideas, as long as they were muted, could be interpreted as no challenge to orthodox Calvinism, and were preceded by prayers in the Protestant tradition at the start of every class. Smith was not comfortable with the requirement to open lectures with prayers, nor with teaching everything in Latin (he asked to be excused from the prayers requirement, but was refused permission).

However, he also taught Jurisprudence to the same class, a subject that contained a fair amount in it that re-appeared verbatim in Wealth Of Nations, including noticeably the sections that covered the ‘Butcher, Brewer, and Baker’ passage which are so popular with those who see mistakenly that it extols the virtues of self-interest. It doesn’t actually do that, because read carefully in its context (a rare occurrence), the entire chapter is about addressing the other party’s interests and not your own.

Quick quote grabbers (most do not read the book at all) jump to the ‘its-all-about selfish self interest’, which elides into selfishness and then to ‘greed’, when it is about neither. Smith was saying, ‘stop thinking about your own needs; think about the other persons’ and persuade them that the exchange of what you have for what you want from them, so they get what they want from you what they give to you, makes you both better off.

It wasn’t that Smith changed his mind when he came to write Wealth Of Nations in 1764 (he already had a written draft in 1763), 5 years after he published Moral Sentiments in 1759 (but not, note, 17 years later in 1776 when he published Wealth Of Nations). He was giving the substance of both Moral Sentiments and Wealth Of Nations simultaneously in the same classroom to the same students for 11years.

If there was a glaring contradiction in the two sets of lectures he (and his brighter students) would have noticed it. The two books are not at odds at all. Clive Crook is right in that respect.

    Posted by on Saturday, August 9, 2008 at 01:17 PM in Economics, History of Thought | Permalink  TrackBack (1)  Comments (34)

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