Semi-Daily Journal Archive

The Blogspot archive of the weblog of J. Bradford DeLong, Professor of Economics and Chair of the PEIS major at U.C. Berkeley, a Research Associate of the National Bureau of Economic Research, and former Deputy Assistant Secretary of the U.S. Treasury.

Friday, September 29, 2006

Department of "Huh!?"

Department of "Huh!?"

A bunch of people have said that I should give Duncan Foley a second chance. So I started back through Duncan Foley's Adam's Fallacy. This time I got to pages 42-44 before the incomprehension meter redlined at I hit three things in rapid succession.

First came, on p. 42:

The Wealth of Nations is the product of Adam Smith's teaching of political economy at the University of Glasgow. Smith, as a teacher, was more concerned with introducing key ideas and insights of poitical economy to his students than with constructing a consistent framework for these ideas. At critical points in his argument, he plausibly changes the subject in such a way as to obscure the inconsistency of the various points he is making...

To which one can only say, "Huh!?"

The Wealth of Nations is not the product of Adam Smith's teaching of political economy at the University of Glasgow. Smith did not teach political economy. He taught moral philosophy and jurisprudence. The Wealth of Nations is not anything like a reworked version of his lecture notes, or his courses, in either logic or moral philosophy. Adam Smith taught courses at Glasgow from 1751 to 1764. He published the Wealth of Nations in 1776, and wrote it in the decade after he left Glasgow.

The Wealth of Nations, instead, is a contribution--a game-changing contribution, as Adam Smith intended--to the discourse of what Keith Tribe calls Political Oeconomy, a discourse whose audience vwas composed of the literate landlords who ran the eighteenth-century British Empire and their advisors. There's no truth at all in Foley's claim that the Wealth of Nations is oversimplified because it focuses not on making a consistent argument but on introducing ideas to callow teenagers. No truth. At all. None. Zero.

Adam Smith is simply not playing hide-the-ball, and I have no idea why Foley accuses him of doing so. The weak points in Smith's arguments are weak points in his argument--he is, after all, trying to do something very new. He is not trying to hide them, or obscure them. He is saying what he thinks, and doing so as straight as he can. He is not pulling the wool over anybody's eyes via misdirection. And I have never heard of anybody, before Foley, accusing him of doing so.

But it got worse, rapidly. Second came, on page 43:

[T]he real heart of The Wealth of Nations.... Smith stands out as a philosopher and moral defender of capitalist social relations through his ingenious, if tortured, claim that the ruthless pursuit of self-interest, which can lead people to do bad things to other people, is transmuted by capitalist social relations into a moral good.... Smith sheds his general good sense and moral authority without rigorously establishing the logical basis for his approbation.

A good example of this type of argument in Smith's hands is his famous observation that it is not from the love of goodwill of the butcher or baker that we get our dinner, but from our appeal to their self-interest through our paying for meat and bread.... That is indeed how capitalist society works and reproduces itself. But to support the claim that this pursuit of self-interest is a positive good, Smith would have to show that antagonistic market exchange relations are the only possible way to support the division of labor, and that we have no alternative to accepting the distributional inequities and moral violence that accompany private property relations as the means to securing our dinners. Smith comes no closer to making this argument stick than he does to reconciling the dependence of rent on the value of the commodity with the adding-up theory of value...

To which, once again, one can only say, "Huh!?"

Let's rewind the videotape back to what Smith actually wrote, at the start of chapter 2 of Book II of the Wealth of Nations:

OF THE PRINCIPLE WHICH GIVES OCCASION TO THE DIVISION OF LABOUR: This division of labour, from which so many advantages are derived, is not... the effect of any... fores[ight of] that general opulence.... It is the necessary, though very slow and gradual, consequence of a certain propensity in human nature... to truck, barter, and exchange one thing for another.... It is common to all men, and to be found in no other race of animals, which seem to know neither this nor any other species of contracts....

Nobody ever saw a dog make a fair and deliberate exchange of one bone for another with another dog.... A puppy fawns upon its dam, and a spaniel endeavours... to engage the attention of its master.... Man sometimes uses the same arts... endeavours by every servile and fawning attention to obtain their good will.

He has not time, however, to do this upon every occasion. In civilized society he stands at all times in need of the co-operation and assistance of great multitudes, while his whole life is scarce sufficient to gain the friendship of a few persons.... But man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in his favour, and shew them that it is for their own advantage to do for him what he requires of them....

[I]t is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. It is not from the benevolence of the butcher the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity, but to their self-love, and never talk to them of our own necessities, but of their advantages....

Even a beggar does not depend upon [the benevolence of others] entirely.... [H]is occasional wants are supplied in the same manner as those of other people, by treaty, by barter, and by purchase. With the money which one man gives him he purchases food. The old clothes which another bestows upon him he exchanges for other clothes which suit him better, or for lodging, or for food, or for money, with which he can buy either food, clothes, or lodging, as he has occasion...

If you were to tell Smith in an unpleasant hectoring voice, "You haven't proven that antagonistic market relations are the only possible way to support the division of labor!" Smith would reply, "Huh!?"

If he were feeling benevolent--did not conclude that you are a complete fool not worth talking to--he might expand on this, and say that in this passage he is making a historical inquiry into why it is humans and humans alone among vertebrate animals who have an extensive social division of labor. He might say that he concludes that humans have this extensive social division of labor because of a long, very slow, and gradual process of historical development that is rooted in a natural human propensity to truck, barter, and exchange. "Only" does not enter into it, he might say. He is telling his readers how this extensive social division of labor came to be, and how it is today supported by market exchange.

Smith might go on to say that yes, there are of course other ways of organizing society that could also support an extensive social division of labor. He might point to the despotism of the Castro brothers in Cuba as a convenient example of one such extensive social division of labor that is primarily supported by things other than market exchange.

If you asked him about "antagonistic market relations," he would say that his relations with the butcher, the baker, his publisher, and his publisher's relations with those who buy the Wealth of Nations are anything but "antagonistic": both parties are happier as a result of the interaction--which is not usually the case when people have non-market interactions with clerics, kings, judges, thieves, party bosses, or members of the local Committee for Defense of the Revolution. Go back half a century and a few miles north to the Highlands of Scotland, Smith might say, where if you are not a clan member than you are either a clan enemy to be killed or a stranger to be robbed--those are the real "antagonistic social relations," and they involve the maldistribution of property, and those three alternatives to market exchange: force, violence, and fraud.

And last came, on page 44:

Smith... balanc[es] his glittering vision of a virtuous spiral of economic development with the idea that economics can be constrained within a larger political and social framework. Laissez-faire, yes, but the Navigation Acts too. Free trade modified by the infant industry exception. Unregulated banking, as long as banks strictly follow a "real bills" policy...

And I thought back to page xiii:

By "Adam's Fallacy" I mean... the idea that it is possible to separate an economic sphere... with its presumed specific principles of organization from... politics, social conflict, and values...

And all I can say is: "Huh!?"


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