Tuesday, October 10, 2006

On the Preface to Adam's Fallacy

I have just began reading Duncan K. Foley's Adam's Fallacy. I have long been taken by the contrast between popular views on Adam Smith, including those put forth by some economists, and what is said in the bits of Smith and historians of economic thought that I have read. Apparently Duncan Foley is modest about his knowledge of the literature of the history of economic thought, while aware of the popular impression:
"This is not, however, a book on the history of of economic thought proper. It uses a historical perspective as a happy way to organize a complex set of ideas into a coherent and understandable story. It reflects much reading and teaching of particular texts in the history of economic thought, but I am far from an expert or a deep scholar of this extensive and demanding subject. In places I have ventured beyond the texts of the authors in question and pursued my own imaginative reconstructions of debates behind the debates, and the sometimes unconscious ground from which political economic knowledge arose. This is my own take on economics, and exploits the great figures in the history of political economy shamelessly for my own ends. Be warned.

...what do I mean by 'Adam's Fallacy'? Adam Smith says many things in The Wealth of Nations that are not fallacious. For example, it is undoubtedly true that self-interest is a powerful motivating force for human beings (though far from being the only one). It is also true that harnessing the pursuit of self-interest through competitive capitalist markets can be (though it is not invariably) a powerful mechanism for fostering progressive technical change and producing material wealth. It would be far from correct to claim that all pursuit of self-interest through competitive markets is morally bad. By 'Adam's Fallacy' I mean something a little more subtle than those much-debated claims. For me the fallacy lies in the idea that it is possible to separate an economic sphere of life, in which the pursuit of self-interest is guided by objective lawas to a socially beneficent outcome, from the rest of social life, in which the pursuit of self-interest is morally problematic and has to be weighed against other ends. This separation of an economic sphere, with its presumed specific principles of organization, from the much messier, less determinate, and morally more problematic issues of politics, social conflict, and values, is the foundation of political economy and economics as an intellectual discipline. Thus to my mind Adam's Fallacy is the kernel of political economy and economics. A full understanding of the arguments of the great economists requires seeing them in the context of this dubious division. In fact, as I hope this book will demonstrate, political economy and economics is at its heart an attempt to come to terms with this dualistic view of social life.

...is it true that Adam Smith committed this fallacy? A better qualified scholar of Adam Smith could make this case textually on the basis of The Wealth of Nations more persuasively than I can, starting from Smith's discussion of self-love as a powerful motivator of human action (Book I, chapter 2), continuing with his characterization of frugal wealth-owners as public benefactors (Book II, chapter 3), and culminating in his famous invocation of the 'invisible hand' (Book IV, chapter 2). But I would argue that it is more to the point that everyone who reads The Wealth of Nations comes away believing that Smith presents the world through the lens of what I have called his fallacy. Smith is too clever and too wily to present the fallacy in its barest form; his political economic world of self-regulating competitive self-interest actually depends crucially on innumerable value-laden political contingencies and institutions. Smith's qualifications of the principle of laissez-faire, for example, wind up presenting a reasonably balanced view of the interaction of politics and the economy. But the premise of Smith's book is that it makes sense to start with the examination of purely economic principles that arise from the interaction of self-interested individuals in the context of competitive markets for privately owned commodities. As I try to show in this book, his successors' investigations and discoveries are already inherent in Smith's conception of the political economic problem." -- Foley (2006: xii-xiv)
By the way, I read Albert Hirschman's The Passion and the Interests (Princton University Press, 1977) as arguing that Adam Smith brought about a simplification in how humans in society were viewed. I think Hirschman's argument is complementary to Foley's, but I need to read more of Foley's book to be convincing.

One can only be disappointed in Brad DeLong's misrepresentation of Foley's thesis. (See also.)


Anonymous said...

Well DeLong is notorious for misrepresenting the views of those who have perspectives on political economy, international relations etc. to the left of his own views. One need only visit the archives of his blog and lbo-talk to read the utterly deliberate and mendacious misrepresentations/attacks on Chomsky, Paul Sweezy and others whose intellectual capacities far exceed his own. Alas, arrogance is an interminable social pathology amongst many US self-selecting elites...

Robert Vienneau said...

Thanks for the comment. I am aware of DeLong's reputation. You leave out how DeLong never addresses Marx, but only attacks a fantasy of one sort of another.

Anyways, I am not sure how clear I am about DeLong's misrepresentation of Foley. For example, DeLong presents a passage on page 44 as contradicting a passage on page xiii that we both quote. But DeLong does not quote the paragraph in the preface, which immediately introduces qualifications and distinctions ignored by DeLong. (The "premise" of the Wealth, versus where Smith "winds up"; what Smith may have said versus what "everyone" (an exaggeration) "comes away believing that Smith presents.") It seems to me, then, the passage quoted on page 44 is a reiteration of this prefactory passage of Foley's, not a contradiction. This does not seem like honesty on DeLong's part, whatever one may think about Foley's interpretation of Smith.

Some may think that Foley's work is weakened by his failure to discuss the "Adam Smith problem". Foley only once mentions the Theory of Moral Sentiments, in a biographical passage. I only know Smith works, other than the Wealth, through the secondary literature. But I gather some would say where Smith starts in the Wealth has something to do with where he ends up in the Theory. Although Foley is modest about his attainments in the history of economic thought and his book is not a straight history, his work would only have been strengthened if he had addressed these issues.

Anonymous said...

Well, as far as Sweezy and Chomsky go, Brad was right on the money. Sweezy WAS a "party hack", even though a very smart one who made very important contributions in economics (I was rooting for him throughout the Sweezy-Dobbs debate as I read it, though I thought the Japanese guy in that debate had some good points too). And Chomsky is a sleazeball, pure and simple. I remember reading an interview with him that he gave to a leftist newspaper in Poland in, oh, around 1991 or so. He kept insisting to the interviewer, a guy who spent a good deal of time in communist jails with all the beatings and torture that implied (for being the wrong kind of commie mostly, but still) that "you guys were better off under communism" (and he didn't mean this strictly in an economic sense either). The interviewer tried, as politely as possible, to explain, that, well, no, we weren't. Chomsky however insisted that he was right with the arrogance and ignorance that only a western intellectual can muster when speaking to inferior peoples. Sleazeball indeed.