Thoughts on law, inequality and economic liberty

The selfishness of Adam Smith

27/7/2018

When ideas become established as 'orthodox', that is ideas that almost everyone agrees with, two things follow:

Those who don't follow the orthodox view are assumed to be a bit thick. Because if they were smart they'd follow the rest of the sheep, right?
If they're too smart for anyone to explain their divergence as mere ignorance, the only option left is to try and reinterpret what they said to fit in better with received wisdom. This is called the 'so what you're saying is' approach to twisting people's meaning.

Now, we live in an age where it is accepted that being selfish is very very bad. Everyone should care about other people in society. You should put your neighbour's interests before your own. You should love your neighbour enough to lay down your life for them.

What then should we do about Adam Smith's ideas about self-interest? It's not really possible to argue that he was just thick, so that leaves option two as the only avenue to get rid of the embarrassing nexus between self-interest and selfishness. This is why a huge amount of effort is expended by admirers of Adam Smith's philosophy in trying to explain that actually, he wasn't at all a selfish man and did not spend his entire life trying to persuade other people to be as selfish as possible.

Perhaps this effort is worthwhile, given that the 'invisible hand' metaphor has acquired a life greater than that of its author, and like all cliches it is open to misinterpretation. Presumably, without all the modern caveats about Mr Smith not being a selfish man, people would assume that the whole point of his 'invisible hand' idea is to say 'each man for himself and devil take the hindmost'. Throw the poor and hungry into the open market with no safeguards, and let them eat cake. In other words, it will be assumed that Smith's main lesson in the Wealth of Nations is: be as selfish as possible, look out for your own interests, and stab your neighbour in the back if it helps you to advance yourself.

That would admittedly be a rather nasty way to see the world, and so it is understandable that Mr Smith's admirers are so anxious to explain that really, this is not what the Wealth of Nations is about. Smith was actually quite a smart man, we are told, and a philosopher rather than a philistine. Moreover, it's not as if he was a New Yorker or from some other big city where it's ok to have a grasping personality; he was from Kirkcaldy. This proves that he must have been actually a very humane and likeable sort of person, quite humble, and not at all given to encouraging people to be vicious to one another. And so on it goes.

In writing about Adam Smith today it is therefore customary to begin by saying how personable and indeed admirable he was:

The Smith who emerges from this research is not the narrow-minded apologist of self-interest, but a moral philosopher and social scientist with a rich and complex system of thought, an 18th-century scholar of impressive breadth of knowledge and deeply humanistic convictions.

Lisa Herzog, Inventing the Market, p. 17.

The only problem with the 'Mr Smith was actually a really nice man' modern expositions is that it falls right in with the modern phenomenon known as 'virtue signalling'. This entails making public statements about concern for the wellbeing of others, and loudly voicing noble and worthy sentiments, as a proxy for one's political views. So people who want to champion various social causes are very pleased to hear how nice Adam Smith was, because obviously this means he would have supported their social causes. This is why we are now informed that actually, Adam Smith was a Rawlsian, a progressive and indeed a Marxist.

...all taken as evidence that he was no supporter of laissez-faire. Indeed, some have gone so far as to claim that Smith was a proto-Marxist.

James Otteson, 'Adam Smith on Virtue, Prosperity and Justice', 72.

There's a certain logic to this perspective: if that much energy is expended explaining that Smith wasn't selfish, he cared about the poor, he hated inequality, etc, then yes, he does begin to sound exactly like a Social Justice Warrior:

Much like many progressive critics of current inequality, like Stiglitz, Krugman, Hacker and Pierson and others, Smith targets rentier practices by the rich and powerful as distorting economic outcomes. And although he strongly criticizes some regulation, I show that it is regulation favoring the rich and powerful that he attacks. The concern with the welfare of the laboring poor is palpable throughout the book.

Deborah Boucoyannis, Contrary to popular and academic belief, Adam Smith did not accept inequality as a necessary trade-off for a more prosperous economy.

From this you can reassure yourself that Smith wasn't one of those neoliberals who oppose regulation just because they value freedom - it seems that Smith would be very happy to have more and more regulation, even if it ultimately strangled the market, as long as that regulation was intended to help the poor and was not intended to favour rich conglomerates [editor: with regulation, it's the intentions, not the outcomes, that matter most]. Wow, this is not what you thought the Wealth of Nations was about, is it. Luckily, it has been reinterpreted for you to make Smith's ideas more in keeping with modern tastes. In the modern era, nobody actually reads books, we just read summaries about them off the internet. So this kind of reinterpretation is surprisingly significant.

Thus, to the disappointment of those who would like to see Smithian economics more widely understood, free market principles are now increasingly buried in the homilies about how nice Adam Smith really was and how he didn't really support free markets even though it sounded like he did and he didn't really promote self-interest even though he wrote an entire book about the role self-interest in economics.

The Wealth of Nations, we are assured, is really a study on how wealth can be redistributed so that it's equal and fair for everyone. The point about redistribution through the market is completely lost in the fulsome joy of discovering that Adam Smith favoured wealth redistribution, just like any self-respecting Marxist. After all, if he favoured redistribution of wealth then surely he'd be happy that we finally figured out a whole raft of tax laws and other punitive measures designed to redistribute the wealth quite nicely? He surely wouldn't be too bothered about the methods involved, as long as the poor were intended to end up on top. In that way his ideas have been interpreted to give a meaning exactly opposite from what he wrote.

It's easy to see why Ayn Rand was keen to avoid that fate. She dealt decisively with the risk of being accused of selfishness by writing a book called The Virtue of Selfishness. Of course, she had to begin by defining selfishness, and it could be said that what she described as 'selfishness' is nothing more than Smith's notion of self-interest.

Rand acknowledged in the book's introduction that the term 'selfishness' was not typically used to describe virtuous behavior, but insisted that her usage was consistent with a more precise meaning of the term as simply "concern with one's own interests".

Wikipedia.

We all want to be concerned with our own interests. After all, you can't follow the biblical edict to love your neighbour as you love yourself, if you don't bother loving yourself in the first place.

So the notion of self-interest is not really controversial. It all depends on what you're being self-interested about, and what outcomes your self-interest leads to. Self-interest in working hard to improve your material conditions, yes. Self-interest in stabbing your neighbour so you can steal his stuff and thereby improve your material conditions, no.

Besides, all natural passions and psychological traits are, from a moral point of view, ambiguous and mixed. Some virtues or affectations, such as benevolence, may come close to being considered an unqualified good, but others, equally natural, although not an unqualified good, are equally necessary.

The worth of any of these passions, principally what Smith calls the unsocial and selfish passions, such as resentment, indignation, and self-love, cannot be determined simply from a description of the passions themselves but only from an account of their appropriateness to specific occasions. For Smith, each passion was distinct, and to redescribe the vast range of human motivation in terms of self-interest obscures its nature.

Self-interest is just one among a whole range of motives, and it varies in its applications.

Pratab Bhanu Mehta, 'Self-Interest and Other Interests', in The Cambridge Companion to Adam Smith, at 248, 249.

If benevolence is close to being an unqualified good in the general perception, then selfishness is close to being an unqualified evil in the sense that most people would not like to be thought of as selfish. So, for the avoidance of doubt, why didn't Ayn Rand just call her book 'The Virtue of Self-Interest'? She would have had less chance of problems that way, specifically less chance of being accused of being an evil witch.

From witnessing the fate that befell Mr Smith - nobody is thinking about his ideas, they are just debating whether he was for or against selfishness - you can see that if Ms Rand had spoken of self-interest she would have had to spend the rest of her life explaining how self-interest is not really the same thing as selfishness, in order to mollify those who are deathly afraid of being found to have traces of selfishness within their virtuous souls.

So by using the word 'selfishness' she achieved a situation where you can either read her work or not, but either way you wouldn't waste your time accusing her of promoting selfishness because she obviously didn't care if people called her selfish. Ooooh, brave lady.

Since she already grabbed that old 'selfishness' bull by the horns, the only thing left to do is read what she said about why being rational is better than being irrational. So you won't find anybody trying to argue that really she was a closet progressive and a rather nice lady when you get to understand her better and not selfish at all. She shifted the debate away from whether she's a nice lady or not, to a debate about the meaning of rationality. Love her or loathe her, but is what she said true? That should be the question.

Selfishness — a virtue? Ayn Rand chose this book’s provocative title because she was on a mission to overcome centuries of demonization. “In popular usage,” Rand writes, “the word ‘selfishness’ is a synonym of evil; the image it conjures is of a murderous brute who tramples over piles of corpses to achieve his own ends . . . and pursues nothing but the gratification of the mindless whims of any immediate moment.

“Yet the exact meaning and dictionary definition of the word ‘selfishness’ is: concern with one’s own interests.

“This concept does not include a moral evaluation; it does not tell us whether concern with one’s own interests is good or evil; nor does it tell us what constitutes man’s actual interests. It is the task of ethics to answer such questions.”

Selfishness, however, does not mean “doing whatever you please.” Moral principles are not a matter of personal opinion — they are based in the facts of reality, in man’s nature as a rational being, who must think and act successfully in order to live and be happy. Morality’s task is to identify the kinds of action that in fact benefit oneself. These virtues (productivity, independence, integrity, honesty, justice, pride) are all applications of the basic virtue, rationality. Rand’s moral ideal is a life of reason, purpose and self-esteem.

'The Virtue of Selfishness', Novels and Works of Ayn Rand, at Aynrand.org

It seems therefore that arguing about the selfishness of Adam Smith is nothing more than an entertaining modern past-time, in an age when we are more obsessed with classifying people into ideological and political boxes than with the pursuit of truth.

But the only way to know what the Wealth of Nations is trying to say is to...well, read the Wealth of Nations. And remember that truth is what it is, regardless of whether it fits in nicely with what the majority of sheeple profess.

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