The Scottish Tradition in Economics and the Role of Common Sense in Adam Smith's Thought

This essay examines the notion of a 'Scottish Tradition' and the role of common sense in Adam Smith's thought. It is a contribution to the contemporary literature on the 'Scottish Approach' and on the historical investigation of Adam Smith's intellectual background. It argues that a notion of common sense was behind Smith's view of science and that it may provide an epistemological foundation for the Scottish Tradition. The essay attempts to show how the notion of common sense may be seen as a way of emphasising the role of reason and judgement in the conceptualisation of phenomena with pragmatic and aesthetic content.     

Beyond Utilitarianism and Deontology: Ethics in Economics

Abstract

This article starts from a methodological position that fact and value are mutually related, both in the real world and in economic analysis. It then discusses deontological ethics. This approach is concerned with equality and dignity, as expressed in right and norms, and how these rights and norms constrain individual choices. Deontology is thus different from the utility maximisation of utilitarian ethics, where ethics appears in utility functions as moral preferences. The paper then argues that, although deontology does better than utilitarianism in analysing ethics in economics, it has its own weaknesses. These weaknesses require another theory of ethics for economics, virtue ethics, which emphasises the interrelatedness of agents and commitment to shared values beyond the rules that a society has institutionalised. Virtue ethics internalises morality not as a preference or a constraint, but through the practices in which agents are related in their pursuit of value added.     

The transformations of utility theory: a behavioral perspective

The aim of this paper is threefold. First, it reappraises the major transformations which the utilitarian approach to human behavior has undergone in economics in search for a representation by utility functions and later by preference orders. Second, in the light of today’s behavioral and human sciences, an attempt is made to restore some elements of early utilitarianism that were abandoned in these transformations. Third, in line with the interest of the early utilitarians in both explaining behavior and elaborating on its moral assessment, the present paper also discusses some normative implications of the suggested restoration of utilitarian theory.     

A return to Bentham's felicific calculus: From moral welfarism to technical non-welfarism

Abstract

This paper is a study of Bentham's felicific calculus. Challenging a view that contrasts ‘cardinal’ to ‘ordinal’ calculus, we show that these two forms of calculus constitute instead different phases of a single approach. Bentham sometimes has to rely upon proxy variables because of operational constraints, and consequently upon factors other than utility. As a utilitarian, Bentham is de facto welfarist from an ethical point of view. Surprisingly however, this study shows that Bentham resorts to non-welfare information in the actual application of his calculus. His approach reconciles non-welfarism from the technical standpoint with welfarism as a fundamental moral principle.     

Vernon Smith's Explanation of Moral Sentiments

This paper is a comment on Vernon Smith's paper, Adam Smith: from propriety and sentiments to property and wealth. This paper argues that while Vernon Smith is correct in his analysis that Adam Smith's theory of human nature, as expressed in The Theory of Moral Sentiments, provides a much more accurate model of behavior than does that of utility maximization, Vernon Smith's analysis can be much enriched by including a more complete explanation of Adam Smith's model of human behavior to include an analysis of prudence, justice, beneficence, and self-command.     

Smith's theory of actions and the moral significance of unintended consequences

Abstract

An important clue to the ambiguity in Smith's attitudes towards commercial society may lie in his disaffection with natural distributions; with distributions based on unintended consequences. The absence of proportionality between motives and outcomes dooms the morality of commercial society, not the mere absence of an ethical dimension to human character. Through the analysis of actions, we find correspondence between the three economic states of the Wealth of Nations and the three social states of the Theory of Moral Sentiments. Thus, re-distribution is important in the moral evaluation of commercial systems. Unintended consequences are neither a source of moral strength nor a safeguard against injustice.     

Moral markets: A marginalistic interpretation of Adam Smith

The article is built upon James Otteson's analogy between the structure of moral and economic rules. In Otteson's interpretation of Adam Smith's works both of them develop from an exchange of information of interacting agents. We develop that concept about Adam Smith's Theory of Moral Sentiments, analyzing those exchanges, and considering them Moral Market processes, in the Austrian Tradition of markets as processes. We think that Smith's emphasis on graduality and his metaphor of the Impartial Spectator allows us to propose a marginalistic approach to those markets stating how, in some of them which we call moral exchanges of justice, and through a great number of exchanges, moral rules of justice emerge. Finally, we present the problems that arise when legislation tries to change the results of these exchanges, in what we called a price control in the moral market.     

An Archaeology of Adam Smith's Epistemic Context

Abstract

Adam Smith played a key role in Foucault's archaeology of political economy. This archaeology, which Foucault accomplished in The Order of Things, is the focus of this article. Foucault may have disagreed with the writings of the classical political economists but he widens our perspective through new possibilities of understanding. It is very illuminating to understand Smith's thinking as following a discursive practice that economic thought shared with the knowledge of living beings (natural history) and language (grammar). Foucault's archaeology highlights some ontological and epistemological conditions that shed light on some of the pillars of Smith's thinking: the centrality of exchange, the division of labour and the labour theory of value. The proximity between Newton and Smith is also examined in ontological and epistemological terms which can be understood through an investigation of that interdiscursivity practice. Beyond testing Foucault's considerations, our aim is to demonstrate their potential for the current scholarship of Smith's works. Foucault's archaeology of knowledge offers a range of elements that warrants greater analysis by historians of economic thought.     

How did it all begin? Adam Smith on the early and rude state of society and the age of hunters

Abstract

Scholars tend to examine Smith's historical approach as a whole from the perspective of the four stages theory. This leads to a neglect of Smith's ability to use history in different ways as his different purposes require. This article distinguishes Smith's recourse to primitive society with respect to his purposes in Wealth of Nations and in Lectures on Jurisprudence. In the former, Smith analyses the capitalist economy, thereby laying emphasis on capital and the division of labour in his account of wealth. In the latter, he explains the evolution of institutions in order to challenge contractarian accounts of government.     

Wealth and sensibility. The historical outcome of better living conditions for all according to Adam Smith

In this paper, I argue that Smith's commercial society is characterised more by restraint of self-command than by restraint of emotions through self-command, as usually stated. According to Smith, the appropriate degree of self-command varies with historical circumstances: better living conditions for all favour relaxation of self-command and lead people to express their sentiments more freely. I thus highlight a crucial link in Smith's thought between variations in general economic conditions and variations in moral judgement on the expression of emotions, or, in other words, between The Theory of Moral Sentiments and the Wealth of Nations.     

Alfred Marshall's use of Adam Smith: Coming to grips with an aspect of Alfred Marshall's citation practice

Abstract

This paper outlines Marshall's use of Smith's writings in his own published work as an aspect of Marshall's citation practice and to demonstrate Marshall's great admiration for Smith as economist. Section 2 reviews the Smith citations in Marshall's Principles of Economics', section 3 those in Marshall's other published work. The conclusion notes that this citation practice matches Marshall's great admiration Smith the economist, because of Smith's great ability to blend fact and theory, for drawing measured conclusions and, above all, for constructing useful arguments in a field of imprecise knowledge.     

Adam Smith on the subordination of wage-earners in the commercial society

Abstract

Adam Smith's discourse on wage labour is both original for its time and complex. While Smith indisputably considered the substitution of serfdom by wage labour as an improvement in both opulence and independence, we argue that he nevertheless saw the wage relationship as one founded on subordination. We then cast light on the material factors and symbolic mechanisms which, in his writings, explain how and why the worker agrees to this subordination. Finally, we endeavour to show that Smith's praise for the system of natural liberty as well as his repeated criticisms of merchants and capital owners aimed to transcend this issue.     

Sympathy and its discontents: ‘Greatest happiness’ versus the ‘general good’

The paper explicates the utilitarian principle of sympathy in terms of the shape of what has been called the ‘sympathetic gradient’, which determines the allocation of goods to those close by and afar. It examines challenges to the utilitarian impartial weighting scheme that emerged in the literary community, and from evolutionary biology. As sympathy came to be seen as an impediment to evolutionary perfection, voices urged that sympathy be suppressed. Darwin's Descent of Man explicitly countenanced the suppression of sympathy in a trade-off of happiness for the perfection of the race. A post-Darwinian argument concerning a different capacity for pleasure accompanied the demise of sympathy in utilitarian economic analysis. Utilitarians then moved from the early presumption of ‘everyone to count for one’ to counting ‘every equal increment of pleasure’ equally.     

Pleasure and belief in Hume's Decision Process

Abstract

The purpose of this paper is to introduce explicitly pleasure and belief in what aims at being a Humean theory of decision, like the one developed in Diaye and Lapidus (2005a). Although we support the idea that Hume was in some way a hedonist – evidently different from Bentham's or Jevons' way – we lay emphasis less on continuity than on the specific kind of hedonism encountered in Hume's writings (chiefly the Treatise, the second Enquiry, the Dissertation, or some of his Essays). Such hedonism clearly contrasts to its standard modern inheritance, expressed by the relation between preferences and utility.

The reason for such a difference with the usual approach lies in the mental process that Hume puts to the fore in order to explain the way pleasure determines desires and volition. Whereas pleasure is primarily, in Hume's words, an impression of sensation, it takes place in the birth of passions as reflecting an idea of pleasure, whose “force and vivacity” is precisely a “belief”, transferred to the direct passions of desire or volition that come immediately before action. As a result, from a Humean point of view, “belief” deals with decision under risk or uncertainty, as well as with intertemporal decision and indiscrimination problems.

The latter are explored within a formal framework, and it is shown that the relation of pleasure is transformed by belief into a non-empty class of relations of desire, among which at least one is a preorder.     

Visible and invisible order. The theoretical duality of Smith's political economy

The aim of the paper is to show that Adam Smith elaborated a distinctive image of nature related to economic discourse. In Smith, visible events (or interdependencies) must be connected to invisible principles which, in particular, should provide an explanation of the self-coordination processes (especially that of market). In a broad sense, this approach was adopted by a number of disciplines in Smith's time (especially the sciences of life), which focused the analysis of the organization of complex systems. Moreover, the conceptual pair (visibility and invisibility) is connoted in terms of theoretical duality, and the paper attempts to demonstrate how such duality is reproduced in Smith's economic categories.     

Adam Smith's Ethics and the “Noble Arts” 1

Adam Smith's character-based ethical system lays the foundation for his vision of the social and economic good. Within this system, the arts perform a critical role. Smith's essays “Of the Imitative Arts” and his Lectures on Rhetoric and Belles Lettres are useful companions to The Theory of Moral Sentiments in analyzing the mechanisms whereby literature and the arts excite moral development. The arts stretch the boundaries of imagination and perspective, stimulating self-awareness and self-reflective growth. When combined with rational thought, decision-making takes place through an internal dialogue in which this wider perspective weighs upon one's “impartial spectator” and becomes the background for action. According to this view, the arts provide positive externalities for society and should be encouraged through public policy. The arts promote a conversation that becomes part of the common goods of society, including that of science.     

From bounties on exportation to the natural and market price of labour: Smith versus Ricardo

Abstract

The scope of this article is to examine the foundations of Smith's arguments and of Ricardo's criticisms on the issue of bounties on exportation. These criticisms are examined in the light of the counter-criticisms provided by a fictitious subject called Smith redivivus. These counter-criticisms highlight Ricardo's neglect of the differences between vérité de raison and vérité de fait and between the points of view of an individual and of society behind Smith's treatment of money vs. real, temporary vs. permanent and natural vs. market price of labour as labour and of commodities as products of labour.     

Father Knows Best: Using Adam Smith to Teach Transactions Costs

Adam Smith's moral philosophy can be used to introduce economics students to the important idea of transactions costs. The author provides a brief background in this article to Smith's moral philosophy and connects it to the costs of transacting in a way that fits easily into the standard principles of microeconomics classroom. By doing so, instructors can also demonstrate to students that there are connections between ethical behavior and market outcomes.     

Adam Smith's use of multiple references for his pin making example∗

Abstract

At the beginning of The Wealth of Nations Adam Smith describes a pin factory. It is widely accepted that this example comes from Diderot's Encyclopaedia, published in France in the 18th century. The details in the text together with the conferences previously given in Glasgow clearly show that this one reference cannot be the only source. Three other French publications on pin making may also have been used as references for Adam Smith's text. Phrase by phrase these texts are compared to Smith's to support the assertion that he based his work on four previous French publications. The Wealth of Nations unites and synthesizes these different sources and excerpts those parts that confirm his theory. Smith should have listed his sources.     

Jacob Viner on Adam Smith: Development and reception of a theological reading

Abstract

Jacob Viner was one of the most important interpreters of Adam Smith's work, particularly for his emphasis in a classic 1927 article on Smith's theological framework, his discussion of the relationship between the Theory of Moral Sentiments and the Wealth of Nations and dismantling of a popular view of Smith as a doctrinaire advocate of laissez-faire. What is less well known is that Viner's theological reading of Smith developed over the next 40 years through intense study of eighteenth century natural theology, and some of his views changed. This article traces the development of Viner's interpretation of Smith. It assesses the suggestion of D.D. Raphael that Smith moved away from a theological framework over time and that Viner repudiated his theological reading of Smith. I argue instead that Viner's mature work broadened and strengthened the theological reading. Much of the literature on Smith and Viner wrongly assumes that naturalistic explanation and theological frameworks are mutually exclusive. This may be the dominant twentieth century view, but it was not so in the eighteenth century, as Viner well understood.