Friday, August 07, 2015

That rumbling sound you hear is Adam Smith turning in his grave

Theo Clifford is winner of the 18-21 category of the Adam Smith Institute’s 'Young Writer on Liberty' competition,

You can find an example of his writing on the Institute's blog. It ends:
Sweeping deregulation is the only way to provide Britain with the slums it is crying out for.
Yes, he is being provocative - he might even grow up to offer contrarian opinions to a deadline for money - but it is annoying to see Adam Smith's name associated with childish opinions like this.

Smith was a great and subtle thinker, and those who recruit him as a champion of the modern corporation fundamentally misunderstand him.

Here is Smith criticism of the joint-stock company in his Wealth of Nations:
The directors of such companies, however, being the managers rather of other people’s money than of their own, it cannot well be expected, that they should watch over it with the same anxious vigilance with which the partners in a private copartnery frequently watch over their own.... Negligence and profusion, therefore, must always prevail, more or less, in the management of the affairs of such a company.
Recent history suggests he was right.

It is even greater mistake to attach Smith's name to views like Clifford's.

Here are the opening words of The Theory of Moral Sentiments - a book that Smith's modern admirers read even less than Wealth of Nations:
How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortunes of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it. Of this kind is pity or compassion, the emotion we feel for the misery of others, when we either see it, or are made to conceive it in a very lively manner. 
That we often derive sorrow from the sorrows of others, is a matter of fact too obvious to require any instances to prove it; for this sentiment, like all the other original passions of human nature, is by no means confined to the virtuous or the humane, though they perhaps may feel it with the most exquisite sensibility. The greatest ruffian, the most hardened violator of the laws of society, is not altogether without it.
So the young and well-connected should not recruit Adam Smith to champion their own selfishness.


Adam Hyde said...

I completely agree! There's nothing that annoys me more than people that just shout the names of economists, knowing often one thing about them, sometimes less.

Adam Smith isn't the only one. Everyone from Marx to Friedman has their half-baked fans. People devoted completely to what they THINK their hero might have said, and use their hero to justify things that no one could properly argue to be true.

Anonymous said...

I'm a bit late posting here because of several days I didn't have a chance to check my RSS feeds. Clifford's call for more 'slums' was needlessly provocative and the ASI should have discussed this with him before publicising his prize, and taken the opportunity to work on some mutually agreed light editing. However, the assumptions in this post are unwarranted. Clifford is not arguing from the point of view of selfishness, he is arguing from the point of view of choosing the policies which he thinks will maximise the availability of housing to those on low incomes. His policy suggestion of allowing less regulation of housing quality on the grounds that poor housing is better than none and that regulation tends to reduce the supply of housing may or may not be good public policy. There is no way in which it is an argument for selfishness and to claim that he does argue from selfishness suggests and underlying assumption that enthusiasts for a more small state free market voluntary action society only argue for this position out of selfishness. If you are making such a claim that you may be opening yourself to the claim that you are lacking in the empathy recommended by Smith in the quotation supplied from The Theory of Moral Sentiments. The quotation of the deficiencies of the joint stock company, which had a much more limited role in the economy in Smith's time (the prime examples he deals with state chartered corporations for foreign trade, most famously the East India Company, than ours is not obviously relevant to Clifford's argument, which does not urge a great role for joint stock companies. Perhaps the point is to suggest that Smith is different from his free market admirers, because he had some criticisms of the way private companies and those with power in them behave. However, free market thinkers often criticise the behaviour of businesses in lobbying for privileges from the state, and Smith was more concerned with showing how the bad aspects of business arise from state favouritism than justifying state intervention as a remedy for bad behaviour, though of course he did not totally exclude such interventions. You are of course correct if you wish to point out that Smith was not an anarcho-captialist or a pure nightwatchman theorist demanding the end of all state activities outside the spheres of national defence and criminal justice, something no one denies who has made a serious reading of Smith, including various free market thinkers.. However, this leaves open a variety of possibilities of how Smith would have regarded Clifford's paper, we simply do not know and the quotes given do not advance our knowledge in this respect.