Monday, September 20, 2010

Adam Smith: An Enlightened Life

That is the new biography book by Nicholas Phillipson. I am posting full review by V V in the BS for record. Before you read the review article. I want you to know few things. Prof Ronald Coase is the longest living economist with Nobel Prize in Economics and he is going to be 99 by this December! Last year I have read the book Life of Adam Smith by John Rae and its worth to read and ponder the life of great philosopher of life.

V V: The wealth of Adam Smith

V V / New Delhi September 18, 2010, 0:03 IST Business Standard

The main activity of economists since 1776 has been to fill the gaps in Adam Smith’s system, to correct his errors and to make his analysis vastly more exact
Ronald Coase, Nobel Prize Speech, 1991

  • It is now widely accepted that biographies of great writers are interesting only insofar as they illuminate their work, and to do this effectively requires a discursiveness on the part of the biographer which alone would tell you what turned the writer on to do the work she did in her lifetime. Not to emphasise the work would be to reduce the biography to an exercise of hagiography like most of our biographies of the big and famous that tell us of lives too good to be true. Nicholas Phillipson’s Adam Smith: An Enlightened Life (Allen Lane/Penguin, Special Indian Price, Rs 899) places his work, widely regarded as the foundation of modern economics, firmly within the larger scheme to establish a grand “Science of Man” that encompassed law, history, aesthetics, economics and ethics — more a work of philosophy than of pure economics.
  • Possibly because An Inquiry into the Nature and Causes of the Wealth of Nations (1776) was multidisciplinary and broadened the study that Adam Smith began in The Theory of Moral Sentiments nearly 20 years earlier in 1759, there has been no unanimity on what precisely his influence was based on. Was it because he was the masterly advocate of laissez faire? That he was opposed to every effort by a government to control the self-interested activities of individual economic actors, so granting the licence to greed and other vices, and malpractices, and quite content that markets should be the battlefield from which the most oppressive combatants would emerge as “victors”?
  • Should the “Invisible Hand” of the market decide? What does his statement that “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 self-interest” really mean? Quite apart from the fact that these iconic statements can be interpreted in different ways, there is also the sad fact that not many economists have read The Wealth of Nations as a whole; they have snatched bits and pieces and drawn their half-baked conclusions that we have accepted as the truth because they came down to us from experts.
  • The basic question we need to ask is whether Smith wholly approved of a society in which man’s economic activities are actuated by self-interest. In his Theory of Moral Sentiments, Smith had identified human perfection with virtue and virtue of the highest order with altruism. Phillipson’s biography provides a balanced picture of Adam Smith’s work against the background of the Scottish Enlightenment and the influence of his philosopher friend, David Hume. A good biography is itself a kind of a novel. Like the classic novel, a novel believes in the notion of a “life, a story that begins at birth, moves on to a middle part, and ends with the death of the protagonist”. So, it is here but it is primarily “an intellectual biography, one which traces the development of his mind and character through his published and unpublished texts, one that is set in a country that was generating its own form of Enlightenment”. Phillipson succeeds in showing that all of Smith’s writings make up a single coherent whole. He begins by giving a compact account of Smith’s life and times and of the intellectual traditions that he drew on and modified.
  • Given this background, Phillipson turns to his central undertaking, pointing out that, according to Smith, a commercial society tends to promote certain virtues among its members. By eradicating poverty, it reduces incentives for individuals to resort to crime and nations to enrich themselves by wars of aggression.
  • By maintaining a stable Constitution, especially if courts are independent and markets are free, a commercial society enhances individual freedom, which is a precondition of moral choice. Competition in markets compels individuals to exercise self-control, prudence and industriousness, virtues which, though imperfect, are attainable by ordinary people. Although these virtues promote the well-being of the individual rather than the good of others, they unintentionally benefit others. Phillipson suggests that Smith’s practical aim throughout the Theory of Moral Sentiments is “designing the decent society”.
  • The Wealth of Nations, which is a follow-up to Moral Sentiments, shows how men can live and work well together. Accordingly, Smith urged governments to do two things — promulgate justice and foster institutions that improve people’s moral conduct. Basic among such institutions is the family, which lays the foundations of moral conduct by training the child to restrain its will and respect others.
  • Smith’s practical proposals aimed to improve both material and moral conditions of people. Because his books have not been read as a whole, today’s social scientists and proponents of public policy have ignored or distorted his outlook. Above all, they have ignored Smith’s constant theme that unintended consequences of good intentions are often bad. The biography sums up Smith’s intellectual contribution and for this alone, the book needs to be read, and not just by economists.

See also an interesting post in the MR.

No comments:

Post a Comment