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.     

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.     

Vanity and the love of system in Theory of Moral Sentiments

Abstract

Some recent writing on Adam Smith's Theory of Moral Sentiments has emphasised the importance of vanity as one of the most important human motivations. This reading leads to a new version of Das Adam Smith Problem, but this is unwarranted. Such a reading tends to conceal the significance that Smith gave to the love of system, which motivates the actions of the philosopher, the man of state, and above all the entrepreneur. This paper shows, by contrast, that by using this conception we can relate Theory of Moral Sentiments to Wealth of Nations, and reject the idea that these works are based upon contradictory assumptions.     

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.     

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.     

In defence of Adam Smith's theory of value

Abstract

This paper defends Adam Smith against his critics on his ‘additive’ theory of value as well as his theory of ‘falling rate of profits’. It argues that Adam Smith did not forget the raw materials, and so forth, in his resolution of the price into wages, profits, and rent, and that the constraint binding on the total income was also taken into account by treating rent as the residual. It further argues that there is no fallacy of composition in Smith's explanation for the ‘falling rate of profits’. It was explained on the basis of rising real wages and the farmers’ inability to shift the burden of the rise in wages from profit to rent in the context of a growing economy.     

Economic Efficiency,the Economics Discipline,and the “Affected-With-A-Public-Interest” Concept

This paper examines Adam Smith's explanation of the stability of a competitive market. An initial hypothesis in the paper holds that the mechanism described in The Wealth of Nations has nothing to do with production costs, longterm, or sympathetic relationships. My proposal draws on the literature that evokes the decisive influence, acknowledged by Adam Smith, of institutions over the behavior of individuals. The argument is that Adam Smith's natural rates are a collective pattern that provides the basis for consistent expectations. Smith proposes this pillar to support the construction of a spontaneous order: Coordination through the market is a stable mechanism because it allows for an adjustment of plans grounded in consistent expectations.     

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.     

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.     

Adam Smith on Monopoly Theory. Making good a lacuna

This article analyses Adam Smith's views on monopoly by focusing on Book IV and V of The Wealth of Nations. It argues that the majority of scholars have assessed Smith's analysis of monopoly starting from premises different from those, actually though implicitly, used by Smith. We show that Smith makes use of the word ‘monopoly’ to refer to a heterogeneous collection of market outcomes, besides that of a single seller market, and that Smith's account of monopolists' behaviour is richer than that provided by later theorists. We also show that Smith was aware of the growth‐retarding effect of monopoly and urged State regulation.     

The Smithian ontology of ‘relative poverty’: revisiting the debate between Amartya Sen and Peter Townsend*

ABSTRACT

Although ‘relative poverty’ is a phrase of immediate recognition, wide circulation and an ever increasing acceptance in the last half century, the concept itself remains surprisingly undertheorised. This paper wishes to try and remedy this discursive deficiency by proposing an ontological elucidation of the nature of our needs. The author re-visits the dispute between Amartya Sen and Peter Townsend — a duel of crossed wires (if not sabres), which can be seen as representative of the various theoretical takes on the nature of relative poverty. While the dispute itself ended with an unfortunate misunderstanding between the two scholars, whose different disciplinary affiliations have done nothing but replicate the rift, the author nonetheless foregrounds the commonality between the two thinkers – their respective identification with Adam Smith. By exploring points of differences and convergence with Adam Smith’s own ontology of needs, which the author reconstructed elsewhere, the paper hopes to offer insights into the ontology of ‘relative poverty’ as well as to suggest that taking this ontology seriously would lead us inevitably to a re-examination of ‘economic methodology’.     

Jeremy Bentham and Adam Smith on the usury laws: a ‘Smithian’ reply to Bentham and a new problem

Adam Smith justified the contemporary usury laws and was severely criticised by Bentham and most modern writers with the important exception of J.M. Keynes. We argue that pace Bentham, Smith did not intend to preclude loan financing of all ‘risky’ ventures and give a ‘monopoly’ to safe investments and did not neglect the potential emergence of black credit markets. Yet Smith ought to have modified his position independently of Bentham's criticism, considering a marked rise in the rate at which governments borrowed in the late 1770s.     

Sen after Putnam

Modern classical economic theory, originally austere and minimalist (as in Sraffa and Neumann), has entered a second, more enriched phase. Inspired by Adam Smith, Amartya Sen has drawn out the moral implications of formal classical models. But Sen remains open to neoclassical attack on the grounds that science must be value free. In his book The Collapse of the Fact/Value Dichotomy and Other Essays , Hilary Putnam rebuts the view that "fact is fact and value is value and never the twain shall meet". This paper explores consequences of this argument for classical theory. It explains the nature and significance of the entanglement of facts, analysis and values; and the impact of this entanglement on the concept of rationality, on capability theory, on the relationship between human needs and Sraffa basics, on Pasinetti's transformational growth, and on Sen's analysis of the disabled and most wretched. Supporting Sen's approach to human development, it opens the possibility of an enriched classical analysis, which can absorb Martha Nussbaum's analysis of tragedy using a logically and morally coherent political economy.     

Sentiments and Motivations in Adam Smith and Vernon Smith

Vernon Smith (VS) discovered Adam Smith (AS) late in his professional career, and has adopted ideas from The Theory of Moral Sentiments to explain findings in experimental economics. Most important is the theorized link between moral sentiments and the evolution of property rights and law as foundations for commerce. VS's encounter with AS, while not new, provides a compelling look at the modern laboratory of social science through the lens of the Enlightenment, and cannot easily be encapsulated within a utilitarian framework. This paper provides an overview and commentary on VS's approach.     

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.     

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.     

The Treatment of Smith's Invisible Hand

Adam Smith used the metaphor of an invisible hand to represent the instincts of human nature that direct behavior. Moderated by self-control and guided by proper institutional incentives, actions grounded in instincts can be shown to generate a beneficial social order even if not intended. Smith's concept, however, has been diluted and distorted over time through extension and misuse. Common misperceptions are that Smith unconditionally endorsed laissez-faire markets, selfish individualism, and Pareto efficiency. The author draws upon recent literature to clarify Smith's meaning and to discuss ways of improving its classroom presentation. The author argues that the invisible hand operates within a variety of institutional settings and that a number of arrangements are compatible with economic progress.     

Reconciling the Invisible Hand and innovation

It is generally agreed that Adam Smith invoked the Invisible Hand to send the message to posterity that a free-market economy is the best form of economic organization. Strictly speaking, the Invisible Hand of Adam Smith is a conjecture about the virtues of a free-market economy. There are three claims in this paper concerning the interpretation of the Invisible Hand conjecture. First, the neoclassical interpretation engenders a conceptual confusion – identified here as the ‘double paradox’ of the Invisible Hand. Second, the interpretation of Adam Smith's conjecture on the beneficial effects of the free-market economy cannot – and should not – be confined to the production and consumption of existing products. Failure to distinguish the Invisible Hand Theorem from the Invisible Hand Doctrine distorts thinking about Adam Smith's message, creating the misconception that the Invisible Hand passage excludes business innovation. Third, the central message conveyed by Invisible Hand is to be read in the context of modern evolutionary economics.     

Smith After Sen

This paper makes the claim that it is possible to distinguish two phases in the revival of classical theory during the twentieth century. The first phase was severely minimalist, and looked back to David Ricardo for inspiration, reinterpreting his work in terms of present day concepts and formal methods. The second phase, on the other hand, seeks an enriched present day classicism, and is appropriately inspired by the work of Adam Smith. It is argued that already, before the beginning of the new millenium, deeply significant work has been done which, once examined from the present point of view, can be seen to herald the arrival of elements of second stage classical theory. Thus certain contributions of Amartya Sen can be seen to cast new light on the work of Adam Smith, and to link up with the ideas of other theorists like Luigi Pasinetti whose work has had features characteristic of second phase classical theory.     

Smith on Ancient Egypt and the Arab Islamic World: A Tale of Two Statist Models

This paper endeavors to portray Egypt, the Arab, and Islamic worlds in the eyes of Adam Smith as implied in his work An Inquiry into the Nature and Causes of the Wealth of Nations from the perspective of the extent and desirability of state intervention in the economy. In other words, the paper attempts to analyze why Smith's stance on ancient Egypt changed from an example of opulence to an eighteenth-century Egypt that—together with other Arab and Islamic countries—represents a model with many challengeable aspects, although the extent of the state action was remarkable in both models, the ancient and the contemporary. Our premise is that Smith did not defend or attack the models based on the extent of state intervention in the economy, but on whether its intervention was conducive to, first, raising the person's well-being and, second, promoting the morals of Smith's “commercial” society.