I am willing to bet that pretty much all of us in contemporary society will nod in understanding if I referenced the term, invisible hand. We would also be forgiven for feeling fully justified psychologically and morally in pursuing our self-interest and our happiness. The language of markets, the underpinnings of a global commercial society, the prioritization of profits have evidenced unparalleled growth in prosperity in the last 250 years. In aggregate.
We are also willing to credit all of this to the foundations laid by Adam Smith in his Wealth of Nations.
My son heard at his college campus, a political philosopher and Adam Smith expert deliver a lecture on another seminal work by Adam Smith - The Theory of Moral Sentiments. For my birthday in early November, my son gifted me the book written by this expert, Ryan Patrick Hanley titled, Our Great Purpose. This book is a series of aphorisms from the "Theory of Moral Sentiments," explained pithily and using contemporary language.
Various terms of Adam Smith that we are familiar with come to light differently when viewed through the lens of his second book.
Self-interest
In the the very first chapter, the author focuses on the term self-interest. There is nuance, we learn. That is, if you respect your self-interest then by definition you must reflect others’ self-interest. And that there is a difference between self-interest and greed. Self-interest with a layer of morality grafted to it is what Adam Smith is really talking about.
In the 1700s, unlike contemporary usage, the word interest equated more to happiness, rather than narrow interests as in a business or trade negotiation. Also that back then the term self-interest was not necessarily only "mine" as an individual - but rather "ours" and "yours" in the plural.
Interest also implies action. That is, not only do we have an interest in ourselves and others but “act” in our interest and others. It is one thing to say I care about somebody and another thing to do something about it. Also this is without regard to what is in the other persons head.
In other words, if another person is hungry you feed him regardless of whether he or she is a capitalist or otherwise.
Finally, that the accommodation of interests between "ourselves" and "yourselves" is not a zero-sum game. If we win, "you all" don't necessarily lose.
Attention
Smith says as we act in our own self interest and others, we extend sympathy to others and in turn expect attention from those around us. Since this is a contemporary book, the author discusses the attention economy and how in the world of social media we count “likes” on Facebook and Instagram.
Adam Smith does not cast a judgement on this - but observes that we are wired for it. How Smith anticipates today’s “attention economy” is beyond me! Smith postulates that people accumulate wealth for status and attention. The the flip side of this is that the poor do not receive attention and are invisible to society. Thus the foundation of Smith's economics through his Theory of Moral Sentiments is the creation of a market mechanism by which poverty is alleviated.
Behavioral Finance
Adam Smith notes that we value losses more than we value gain. That is, the pain we feel in losing $10 is more than the pleasure we feel in gaining $10. A couple of centuries later, this has been proven by Daniel Kahneman for which he won the Nobel in economics and started the whole field of behavioral economics.
Mind and Tranquility
Adam Smith says that a healthy mind is more important than prosperity. Even though it was he who proposed the division of labor and specialization increases the productivity of the economy that its effect on the worker is deforming, numbing and wretched.
The remedy is education and expansion of the mind. Smith has a paradoxical suggestion in his other great work. There he says, you cannot enjoy what you have acquired if you don’t pause to enjoy it!
So for Adam Smith, being tranquil is neither the strict ascetic in a cave nor the dreamy philosopher in the library. Rather the tranquility that he espouses is the person of action who has by stint of hard work accumulated capital. But without being trapped by the rat race knows when to be tranquil in enjoyment.
The other side of the coin in terms of ignoring the poor, is worshiping the rich. This elevation of the wealthy and powerful in society, could despairingly lead to looking down or even despising those without means. In contemporary society when we cruelly say, it is one’s fault for not having saved enough or too lazy to get a job without taking into account someone’s life circumstances leads to a society with the twin detriments of kissing up and kicking down.
Pleasure and Moderation
In Adam Smith’s view the first action one can take to acquire tranquilly of mind is the company of friends. It is important not to treat this as a transaction. I am your friend, because it is good for me - is the wrong approach. Rather if one visualizes two friends playing tennis, it is clear that if they enjoy this sport, they are bringing joy to each other. Friendship, says Smith is one of the keys to relieving one burden of living in a demanding society and is a key source of tranquility.
In a surprising turn Smith supports the occasional pint of beer. In other words he is not in favor of abstinence. However, temperance is the key attribute that goes with this indulgence of occasional pleasure. (I like Adam Smith!)
Impartial Spectator
Though we are self-interested, we have to work out how to live alongside others without doing them harm. That is an essential minimum for the survival of society. If people go further and do positive good – beneficence – we welcome it, but cannot demand such action as we demand justice. The ideal must be that any impartial person, real or imaginary – what Smith calls an impartial spectator – would fully empathize with our emotions and actions. That requires self-command, and in this lies true virtue.
Equality
The frustration with inequality of all sorts is certainly in the zeitgeist today. What does Adam Smith have to say about it?
He says that we are all more or less equally talented. But what makes the difference in the outcome of each of our lives are the three cylinders of “custom, habit and education.” Custom being the society one is born into, habit being how one consistently spends their time and on which actions and education, of course.
The difference between what Jefferson wrote and what Smith wrote is this: Jefferson said everyone was endowed with inalienable and equal rights. Smith states we have equal talents. Rights afford protection. Talents afford opportunities!
Thus when a successful person looks down upon a disadvantaged person - and we attribute that difference to custom, habit and education - there is reason for the elite to be more humble and the disadvantaged to think of themselves more generously.
This view will also allow those in elected office to even the playing field and not allow the elites to corner all the benefits of society and disadvantaged to suffer without a voice.
The Road Not Taken
Smith’s ideas of a purposeful life and its ingredients have been laid out in terms of interest, tranquility, friendship and love.
But we can’t have it all. Life comes down to choices. Smith give us a binary choice. There are two roads and we are at the fork. We can either take the road well traveled or the one less so, thus anticipating Robert Frost.
The first road that is well traveled is by the rich and the great and with it the rewards that the world offers. The other less traveled is the study of wisdom and the practice of virtue. The ingredients of tranquility, friendship, love is to be found in this this road less traveled. Smith does not make it easy in terms of telling us which road to take - after all the road well traveled is so for a reason!
The harmony of sentiments
Smith discusses two virtues that humans possess. One is the hard virtue and the other is a soft virtue. The soft virtue is described by Adam Smith using the word amiability. This word makes quite a bit of appearance in Jane Austen’s works. It is the highest compliment it seems when one Jane Austen character describes another as “amiable”
The hard virtue is taking care of oneself. The soft virtue is concern for others. Adam Smith’s insight is that these go hand in hand. The more you care for others, the more you will take care of yourself and the more you take care of yourself, the more you will care for others.
Markets and Morals
Two major philosophers make their way into Adam Smith’s thinking towards the end of this book.
The first is Socrates and his approach to death upon being served hemlock. And the second is David Hume and his hostile approach to religion. Adam Smith has problems with and admiration for both these figures. For example he does not buy into the hard atheism of David Hume. Yet, upon Hume’s death wrote a famous letter praising his character, drawing much fire from critics of that era who were put off by Hume.
Adam Smith is that rare enlightenment thinker who speaks in a language that fully fits our contemporary ears; i.e those of us who live in a market society and have fully enjoyed its benefits and appreciate what it has done for hundreds of millions around the world.
Yet, in this moment of social and political ferment, we know there is something askew. And in the fine hands of Ryan Patrick Henley, we are deftly and succinctly reminded that the invisible hand operates both in markets and in life. And that if each person pursued his self interest, that society would prosper guided by the invisible hand. And at the same time if each person pursued both kinds of virtues the hard and the amiable, she would cause another kind of invisible hand to make society thrive.
It is this balance that has been lost since Adam Smith’s ideas took our society by storm nearly 250 years ago. Markets can indeed have morals, but not in the way one might imagine it to be - that we inject morals into market considerations.
Rather, the insight that jumps out of this book, is that the people who are enjoying the benefits of the markets can also by employing virtue, temper the imbalance the markets cause. And their virtues act as a balancing “governor” to enable to flywheel of the markets to neither speed up nor slowdown, but chug along at the right speed for the betterment of humanity.
Additional Material:
Wall Street Journal Review of the book: What the invisible hand can't grasp
Video interview with the author Ryan Patrick Hanley: Our great purpose (Adam Smith)
We are also willing to credit all of this to the foundations laid by Adam Smith in his Wealth of Nations.
Various terms of Adam Smith that we are familiar with come to light differently when viewed through the lens of his second book.
Self-interest
In the the very first chapter, the author focuses on the term self-interest. There is nuance, we learn. That is, if you respect your self-interest then by definition you must reflect others’ self-interest. And that there is a difference between self-interest and greed. Self-interest with a layer of morality grafted to it is what Adam Smith is really talking about.
In the 1700s, unlike contemporary usage, the word interest equated more to happiness, rather than narrow interests as in a business or trade negotiation. Also that back then the term self-interest was not necessarily only "mine" as an individual - but rather "ours" and "yours" in the plural.
Interest also implies action. That is, not only do we have an interest in ourselves and others but “act” in our interest and others. It is one thing to say I care about somebody and another thing to do something about it. Also this is without regard to what is in the other persons head.
In other words, if another person is hungry you feed him regardless of whether he or she is a capitalist or otherwise.
Finally, that the accommodation of interests between "ourselves" and "yourselves" is not a zero-sum game. If we win, "you all" don't necessarily lose.
Attention
Smith says as we act in our own self interest and others, we extend sympathy to others and in turn expect attention from those around us. Since this is a contemporary book, the author discusses the attention economy and how in the world of social media we count “likes” on Facebook and Instagram.
Adam Smith does not cast a judgement on this - but observes that we are wired for it. How Smith anticipates today’s “attention economy” is beyond me! Smith postulates that people accumulate wealth for status and attention. The the flip side of this is that the poor do not receive attention and are invisible to society. Thus the foundation of Smith's economics through his Theory of Moral Sentiments is the creation of a market mechanism by which poverty is alleviated.
Behavioral Finance
Adam Smith notes that we value losses more than we value gain. That is, the pain we feel in losing $10 is more than the pleasure we feel in gaining $10. A couple of centuries later, this has been proven by Daniel Kahneman for which he won the Nobel in economics and started the whole field of behavioral economics.
Mind and Tranquility
Adam Smith says that a healthy mind is more important than prosperity. Even though it was he who proposed the division of labor and specialization increases the productivity of the economy that its effect on the worker is deforming, numbing and wretched.
The remedy is education and expansion of the mind. Smith has a paradoxical suggestion in his other great work. There he says, you cannot enjoy what you have acquired if you don’t pause to enjoy it!
So for Adam Smith, being tranquil is neither the strict ascetic in a cave nor the dreamy philosopher in the library. Rather the tranquility that he espouses is the person of action who has by stint of hard work accumulated capital. But without being trapped by the rat race knows when to be tranquil in enjoyment.
The other side of the coin in terms of ignoring the poor, is worshiping the rich. This elevation of the wealthy and powerful in society, could despairingly lead to looking down or even despising those without means. In contemporary society when we cruelly say, it is one’s fault for not having saved enough or too lazy to get a job without taking into account someone’s life circumstances leads to a society with the twin detriments of kissing up and kicking down.
Pleasure and Moderation
In Adam Smith’s view the first action one can take to acquire tranquilly of mind is the company of friends. It is important not to treat this as a transaction. I am your friend, because it is good for me - is the wrong approach. Rather if one visualizes two friends playing tennis, it is clear that if they enjoy this sport, they are bringing joy to each other. Friendship, says Smith is one of the keys to relieving one burden of living in a demanding society and is a key source of tranquility.
In a surprising turn Smith supports the occasional pint of beer. In other words he is not in favor of abstinence. However, temperance is the key attribute that goes with this indulgence of occasional pleasure. (I like Adam Smith!)
Impartial Spectator
Though we are self-interested, we have to work out how to live alongside others without doing them harm. That is an essential minimum for the survival of society. If people go further and do positive good – beneficence – we welcome it, but cannot demand such action as we demand justice. The ideal must be that any impartial person, real or imaginary – what Smith calls an impartial spectator – would fully empathize with our emotions and actions. That requires self-command, and in this lies true virtue.
Equality
The frustration with inequality of all sorts is certainly in the zeitgeist today. What does Adam Smith have to say about it?
He says that we are all more or less equally talented. But what makes the difference in the outcome of each of our lives are the three cylinders of “custom, habit and education.” Custom being the society one is born into, habit being how one consistently spends their time and on which actions and education, of course.
The difference between what Jefferson wrote and what Smith wrote is this: Jefferson said everyone was endowed with inalienable and equal rights. Smith states we have equal talents. Rights afford protection. Talents afford opportunities!
Thus when a successful person looks down upon a disadvantaged person - and we attribute that difference to custom, habit and education - there is reason for the elite to be more humble and the disadvantaged to think of themselves more generously.
This view will also allow those in elected office to even the playing field and not allow the elites to corner all the benefits of society and disadvantaged to suffer without a voice.
The Road Not Taken
Smith’s ideas of a purposeful life and its ingredients have been laid out in terms of interest, tranquility, friendship and love.
But we can’t have it all. Life comes down to choices. Smith give us a binary choice. There are two roads and we are at the fork. We can either take the road well traveled or the one less so, thus anticipating Robert Frost.
The first road that is well traveled is by the rich and the great and with it the rewards that the world offers. The other less traveled is the study of wisdom and the practice of virtue. The ingredients of tranquility, friendship, love is to be found in this this road less traveled. Smith does not make it easy in terms of telling us which road to take - after all the road well traveled is so for a reason!
The harmony of sentiments
Smith discusses two virtues that humans possess. One is the hard virtue and the other is a soft virtue. The soft virtue is described by Adam Smith using the word amiability. This word makes quite a bit of appearance in Jane Austen’s works. It is the highest compliment it seems when one Jane Austen character describes another as “amiable”
The hard virtue is taking care of oneself. The soft virtue is concern for others. Adam Smith’s insight is that these go hand in hand. The more you care for others, the more you will take care of yourself and the more you take care of yourself, the more you will care for others.
Markets and Morals
Two major philosophers make their way into Adam Smith’s thinking towards the end of this book.
The first is Socrates and his approach to death upon being served hemlock. And the second is David Hume and his hostile approach to religion. Adam Smith has problems with and admiration for both these figures. For example he does not buy into the hard atheism of David Hume. Yet, upon Hume’s death wrote a famous letter praising his character, drawing much fire from critics of that era who were put off by Hume.
Adam Smith is that rare enlightenment thinker who speaks in a language that fully fits our contemporary ears; i.e those of us who live in a market society and have fully enjoyed its benefits and appreciate what it has done for hundreds of millions around the world.
Yet, in this moment of social and political ferment, we know there is something askew. And in the fine hands of Ryan Patrick Henley, we are deftly and succinctly reminded that the invisible hand operates both in markets and in life. And that if each person pursued his self interest, that society would prosper guided by the invisible hand. And at the same time if each person pursued both kinds of virtues the hard and the amiable, she would cause another kind of invisible hand to make society thrive.
It is this balance that has been lost since Adam Smith’s ideas took our society by storm nearly 250 years ago. Markets can indeed have morals, but not in the way one might imagine it to be - that we inject morals into market considerations.
Rather, the insight that jumps out of this book, is that the people who are enjoying the benefits of the markets can also by employing virtue, temper the imbalance the markets cause. And their virtues act as a balancing “governor” to enable to flywheel of the markets to neither speed up nor slowdown, but chug along at the right speed for the betterment of humanity.
Additional Material:
Wall Street Journal Review of the book: What the invisible hand can't grasp
Video interview with the author Ryan Patrick Hanley: Our great purpose (Adam Smith)
6 comments:
Great read this morning, prompting me to take out that “other book” again.
In the matter of self-interest, markets and morality, you’d love a short essay by Michael Novak, “The American Vision: An Essay on the Future of Democratic Capitalism” written when he was a scholar at American Enterprise Institute in 1978.
It was an earlier time (pre-Reagan, Thatcher and the Fall of Communism) when there was an equally robust debate between the virtues of socialism and capitalism. Novak, who became a public policy scholar/writer was an ordained Minister; he left the cloth, but always thought and wrote about morality and ethics as much as practical public policy.
He was also a professor of Religion at Syracuse. His basic thesis related to your points this morning – articulated in this short essay -- was that self-interest practiced through democratic capitalism led to a better overall “good” for society than the expressed socialism, which claims but never works out to be for a “higher good”.
Novak argued in democratic capitalist society, these collections of self-interest through the market ultimately lead to outcomes that people would want, especially if there were some modulated lever of government (unlike the more pure market approach espoused by the likes of Milton Friedman, for example).
Have you seen The Laundromat? We watched it last night. Perhaps you know all about it--but for us --quite a revelation.
Given such corruption, can we ever recover?
A great write-up!
And a great service to ‘enlightening’ readers to what makes the Scottish Enlightenment so different from the French one. Unlike the French Enlightenment, which focused on rationality and reason (to the point of scientism), the Scottish Enlightenment focused on the emotions. As Hume famously said, “Reason is the slave of the passions” and should be. Practical reason alone cannot give rise to moral motivation; it is altogether dependent on pre-existing desires that furnish motivational force. For Hume, this is not a fact we should lament (as many rational moralists do) but a basic fact about our psychology.
Because what most people associate with Adam Smith is the ‘invisible hand’ metaphor, they assume that he was a hard-nosed ‘market fundamentalist’ in today’s argot. When they learn that he was a moral philosopher of the ‘sentiments’ school (they don’t know that economics wasn’t a field yet and he was subsequently dropped in that field after his death, much to his consternation, I’ guessing, if he were to know that) and that Wealth of Nations was also a philosophical tract. So this helps to set the record straight.
This is very good. Thanks!
I wonder what Smith would say about laws that made it difficult for blacks and women to get the education he rightly says is key to development.
I wonder what he would say about the need to rectify the damage that was done by the terror used by whites to keep blacks from voting and/or going to the best schools as well as Jim Crow laws that persisted until 1964 and 65? Or the caste system in India or the class system in England or the colonial rules around the world?
Fascinating!! Adam Smith even a larger giant than I realized! Thank you for sending this........
Popular culture does have a way of making every famous person one dimensional, doesn’t it?
I enjoyed the review.
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