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1. Economic Enlightenment Revisited: New Results Again Find Little Relationship Between Education and Economic Enlightenment but Vitiate Prior Evidence of the Left Being Worse

   • People believing firmly in free market and voluntary exchange efficiency (just missed some fluctuations in Q.16 and negative externalities in Q17) are wrong and “Unenlightened”.
     People believing after USSR economy TOTAL failure and China transition to market economy that voluntary transactions are inefficient and only Gosplan could succeed to organize it are right and enlightened? Are you sure Q16-17 really helpful?
     BTW, conservatives actually able to count negative externalities.
     Q14: say Farmer A hired 5 immigrants from the country w/o tradition to respect property and human life, dignity etc. Let Farmer A saved for a Seazon $100K his costs (taxation, salary) and shared part of $100K among his product consumers. So, public wealth increased $100K. OK, now, close to the end of the Seazon (game almost over, last move of the gamer could be very unpleasant) this immigrant workers grabbed and killed farmer B and raped farmers’ C daughter and escaped to Mexico.
     Public losses counted say $5 million at least. So, conservatives actually count negative externalities, some libertarians so stubbornly ignore (Caplan vs. Friedman):
     http://econlog.econlib.org/archives/2008/06/milton_friedman_10.html

   • Posted 28 Apr 2012 by Moshe

2. Introduction to Symposium on U.S. Sovereign Debt Crisis: Tipping-Point Scenarios and Crash Dynamics

   • In his introduction, Professor Cowen says that the U.S. has
     10-20 years before a “tipping point.”

     I don’t see anything like that time frame. I am not arguing. It is a
     serious question and it would be great if he iscorrect.

     I would appreciate any explanation as to how things will hold together that long?

     I understand that the question is kind of asking to prove a negative so
     here is my perspective. I would love to be wrong about it as well.

     Mankind’s first attempt at guaranteeing retirement, health care, financial
     security, housing, employment, and sustained economic growth has gone badly
     awry. The attempts at sustained economic growth have already created and
     are maintaining our current economic difficulties.

     The creation of the Euro allowed a number of European countries to sustain
     very destructive economic policies. While most of the media attention is
     focused on debt issues, the underlying structural problems are really what
     will bring the continent down. Europe’s recession/depression will likely
     trigger China and Japan’s underlying structural problems and a
     recession/depression in those countries.

     Obviously, if all that takes place, the U.S. and the rest of the world will
     follow. My assumption has been that the Fed, ECB, BOJ, and Chinese
     authorities would “quantitatively ease” things to get past the U.S.
     elections. I am no longer sure that it will last even that long.

     My number would be 6 – 18 months, not 10-15 years.

     I would strongly prefer to be wrong, so any help in
     straightening out my thinking would be greatly appreciated.

     John Bailey

   • Posted 11 Feb 2012 by John Bailey

3. The Social Science Citation Index: A Black Box—with an Ideological Bias?

   • After a Google keyword search of “Commentary Magazine” and “Social Science Citation Index,” I found this article and was introduced to EJW. The bias Klein and Chiang illuminate, exists not only in the slant of the SSCI journals which make and break careers, but also the themes and questions addressed at major conferences and their panels. (Just take a look at the CfP for next year’s APSA annual.) Now finishing up a PhD and finding the same problem on the job market, the research backgrounds often asked for (my area is IR/ IPE) also come from left field. Rather than become disheartened, this state of affairs increases my resolve to follow and intelligently express my conservative convictions in the face of single minded institutionalized opposition. I love a good fight and know the truth will prevail. I’d rather be right than loved, although it would be nice to be both.

   • Posted 01 Nov 2011 by Alex Littlefield

4. Adam Smith, The Last of the Former Virtue Ethicists

   • Diedre McCloskey writes in her essay, Adam Smith, The Last of the Former Virtue Ethicists, “The point is worth stressing here because Smith’s definite five virtues, and his emphasis on the joint cultivation of the five by the impartial spectator, puts him solidly in the older tradition of virtue ethics” (Page 56) McCloskey gave information on different primary virtues depending on social and religious background. She neglected to fully define what exactly a virtue ethicist is and this definition was assumed. My interpretation of the definition is an approach to logical principles or ethics from a moral analysis. Smith certainly takes this approach in Theory of Moral Sentiments however it may not be enough to fully define him as a virtue ethicist.
     McCloskey briefly talked about Adam Smith’s view on utilitarianism and she stated that he opposed the concept it is unsure as to whether this is relevant because all virtue ethicists oppose utilitarianism or if it is specific to Smith.
     The trouble that virtue ethics has is when analytic philosophers explore ethics; because their analysis is on a completely different spectrum than that of a moral philosopher. The main claim differs when they claim that it is essential to differentiate between the cognitive life and the values in life. In virtue ethics, McCloskey says incorporating the ethical objects of the self, of others, and of the transcendent is how one can conclude to an accurate interpretation of the virtue ethics. This is the most prominent and important reason why Smith is included in the former virtue ethicists. Smith’s contribution was the impartial spectator. This is not just the opinion of McCloskey but she says Smith believed this was his largest contribution as well. She says “The spectator is formed at first by upbringing and social pressure but at last evolves into a conscience—what was much later to be called ‘inner direction.’” (Page 52) The impartial spectator is more than just a conscience; this contribution from Smith was first introduced in Theory of Moral Sentiments and was a major part of why Smith is recognized as a virtue ethicist. The economist specializes in prudence whereas the theologian specializes in love, Smith incorporates both virtues and concludes with an all encompassed concept of the impartial spectator.
     Smith’s five main virtues are courage, temperance, justice, prudence, and benevolence. The last section of McCloskey’s paper explains why Smith decided to not include hope and/or faith and most significantly, love. These virtues had a different connotation in that era and they were specifically used when speaking in religious terms. Smith never asserted his religious position in his novels and that is why it was so important when McCloskey concluded with this idea. He tried to not identify or affiliate with any religious concepts it seemed and maybe one of the best quotes of the paper is on page 68, McCloskey says “Adam Smith’s error was the error, and the glory, of the Enlightenment, trying to liberate us from transcendence”. It was not specific to Smith deciding to not delve into love, hope, and faith it was a characteristic of the time.
     McCloskey’s analysis on why Smith is included as a former virtue is significant but definitely debatable. I would include Smith as a virtue ethicist because of his contribution with the impartial spectator but if you compare his work with the work of the other virtue ethicists such as, Aristotle or Plato the argument may not carry as much validity.

   • Posted 16 Oct 2011 by Rachel Ellis

5. The Invisible Hand of Jupiter

   • In The Invisible Hand of Jupiter (1971), Alexander L. Macfie provides an insight on Adam Smiths conception of the relationship between divine guidance, the system of nature and human behavior. The relationship that Smith conceptualizes as the invisible hand appear thrice in his writing. Macfie tries to explain what lead Smith to the reversal of the meaning while noting that, in fact, there is no inconsistency in Smith. The invisible hand of Jupiter is a capricious, energizing force that metaphorically fits the irregularities people have been observing throughout time. The invisible hand of Christian Deity is the order preserving social force that animates orderly development of societies through social individuals.
     While there is no inconsisteny, Macfie is still not satisfied by Smith’s effort to integrate the theological, jurisprudential, ethical and economic arguments. The invisible hand of Jupiter is the innovative force breaking loose of the status quo, whereas the invisible hand of Christian Deity is the conservative force that gravitates towards natural order disturbed by self interested individuals. The invisible hand of Christian Deity appears both in the Theory of Moral Sentiments (1759) and in the Wealth of Nations (1776). Whereas in the Wealth of Nations Smith is concerned with the economic mechanism of the order preserving force that appears in the obvious and simple system of natural liberty which, if perfect, makes itself out in the correspondence of natural and market prices, in the Theory of Moral Sentiments Smith considers the mechanism of distribution of wealth. Smith’s logic is shaky, however, for in the Theory of Moral Sentiments the economic disparity is met by an ethical answer: “In the essentials all the different ranks should be nearly on a level.” While Macfie is aware that Smith distinguishes between benevolence – distributive and esteem justice – and justice – that is commutative justice – and opposes forcing out the levelling of the distribution of essentials, it is not clear whether and how the integration of theological, ethical and economic aspects of Smith’s doctrine bind together and how and whether the invisible hand leads the “rich only [to] select from the heap what is most precious and agreeable […] to make nearly the same distribution […] which would have been made had the earth been divided among equal portions among all its inhabitants (TMS 1759, p. 184).” For Macfie the invisible-hand passage in the Theory of Moral Sentiments remains only an effort, however excellent, to bind the theological ethical and economic arguments into one comprehensive system of thought.

   • Posted 15 Oct 2011 by Pavel Kuchař

6. the moral justification of free enterprise

   • One of the first points made by Macfie that I think is noteworthy is that he chose Adam Smith’s Theory of Moral Sentiments because it is, in his view, the most complete and realistic ethical argument for freedom. He points out that although we only deal with the individual aspect, this is appropriate for important reasons. One is that the individual approach ‘puts the spotlight’ on the individual, which is something that economics and ethical studies tend to go around. Questions of human nature are just as important if not more important, in economics as they are in other facets of life; this issue has been lost in economics since the science decided it should not and could not deal with problems of value. He points out that it of course may be replied that this is only due to proper specialization, “[b]ut is there not the risk that the baby is lost between the bath and the water?”

     Macfie reminds us that the problem of human nature is the most important one when it comes to economic behavior. It is, after all, human economic behavior that our science studies. If economists do not deal with it, then who will? Believing that we are only behaving normally (let alone correctly) by doing so and by following this ‘proper specialization’ is incorrect. Critiques of economic behavior from the moral point of view have been made throughout history, and it is abnormal that we dismiss those today as mere issues of value problems while continuing to develop our science without them. I think Macfie has made an important point and it is something that economists should keep in mind when making arguments for freedom. There are many people who want to hear something more than just ‘this way is more efficient’ before they are persuaded by an argument, and there are also people who want to see that the subjects we claim to study are in fact human.

     One of Macfie’s critiques of Smith’s argument says: “Smith is far from his best when he dabbles in theological argument, I think it was just because he was so conscious of the power of self-love, and of actual evil and sin, that he also required this Divine support”. I think Smith was certainly aware of how strong self-love was as a motivator of human behavior, but I also think that Smith saw self-love as productive of good, especially when individuals were freely interacting in the market. It seems to me that whether the natural harmony in human nature observed by Smith was designed by the ‘Author of nature’ (or just ‘Nature’), and whether Smith’s ‘invisible hand’ belongs to an all-wise and benevolent Deity is almost irrelevant to the powerfulness of Smith’s arguments and conclusions. I don’t think Smith intended to give an explanation as to where this natural harmony came from; it seems more likely that he was actually trying to avoid this issue by being vague when it came to mentioning ‘Nature’, ‘the great Architect of the Universe’, or ‘the great Director of Nature’. In fact, I would argue (as Coase does in his article titled “Adam Smith’s View of Man”), it is not clear Adam Smith ascribed this natural harmony in human nature to some Deity. It is likely that he was suspicious of a somewhat different explanation (i.e. natural selection, which was not known to him at the time), and that his attitude about the issue was to defer his opinion about the matter.

     Thus, when Macfie claims “[t]he background of theology seems to me to obscure [Smith’s arguments]”, I would say that it is not so clear that there is a background of theology behind them. What is more, if there was a background of theology, I think it would be irrelevant to the powerfulness and strength of Smith’s arguments and conclusions. The source of the harmony in human nature observed by Smith (which is the basis for his argument) could be life in Mars for all we care, and it still would not change the fact that it is there. It would not change the accuracy of Smith’s description, and it certainly would not change the ethical and economical foundations suggested by Smith as an argument for freedom.

   • Posted 14 Oct 2011 by Paola Suarez

7. Adam Smith's View of Man

   • Robert Coase explores a side of Adam Smith that was obscured by time and overshadowed by Wealth of Nations. While Coase summarizes The Theory of Moral Sentiments effectively, one of the most interesting parts of his article is his refutation of prior conjecture that Smith believed in an individual god. Because Smith is not explicit when it comes to this matter, we must glean from his readings his religious beliefs. Coase and Viner both recognize the fact that Smith uses some religious allusions in his work (“Nature”, “the Great Director of Nature”, “Architect of the Universe” [538]). Where they differ, however, is in the conclusions that they draw from this wording. Viner myopically concludes that this infers Smith as a deist; Coase widens his view to a quote from WN, in which Smith attempts to devise the source of a process unbeknown to him. This quote, along with Smith’s fervent rejection of casuistry in TMS, indicates that Coase’s theorem is more plausible in this case.

     The ramifications of this realization are two-fold. Smith was unsure about a process that he was curious about, yet he did not speculate in his tome as to the origin of Nature. The genius of Adam Smith is presupposed; therefore it is not quite a stretch to believe that if he had lived longer, or had access to modern science, that a singular deity would have been replaced with “evolution” or “natural selection.” The second observation is that Smith understood to whom he was addressing TMS. His curiosity of the mechanisms of the universe did not lead him to publish anything rash or inappropriate. Had he proclaimed himself as a non-believer, he would have been marginalized as an academic, as well as a social being. By avoiding controversy on a subject he could not support with facts, Smith unknowingly insured his relevance today.

     Another interesting piece of Coase’s article is the attention given to the reduction of the effect of the impartial spectator on individuals. Mutual sympathy is pleasurable to enter into, when our sentiments are in line with another’s. However, self love is also pleasurable. Because of this, there is a balancing act between self love and sympathy. When there is too much self love, an individual has the unfortunate chance of falling into self-deception, which is a distortion of reality. Benevolence, therefore, has to overcome self-interest when outcomes are already distorted by self-deception.

     This theme is particularly relevant today. In a society in which instant gratification is a norm, it is difficult to avoid the trap of overwhelming self-interest. People are surrounded by individuals that drive their self-deception by reaffirming their self-interest as actual beneficence. Institutions have shifted the responsibilities of the individual, who best knows how to care for his self, onto others who can only hold a weak benevolence to the distant principal.

     Coase recognized the magnitude of TMS, and was able to connect it with key passages in WN, in order to construct a smoother interpretation of seemingly divergent ideas. The Coase paper has laid the foundation for modern Smithian scholars, by thoroughly exploring the congruence in TMS and WN.

   • Posted 14 Oct 2011 by Nicholas O'Boyle

8. Adam Smith’s Marketplace of Morals

   • Otteson recognizes a common underlying theme uniting Adam Smith’s Theory of Moral Sentiments (TMS) to his later Wealth of Nations (WN). The uniting theme may resolve the so-called “Adam Smith Problem” that a conflict exists between the mutual sympathy presumption of TMS and the self-interest presumption of WN. As Otteson sees it, moral sentiments and economies are both “systems of unintended order that develop according to and conform to the model of a market.” (211) The marketplace metaphor is slightly strained; nevertheless, it effectively reconciles the two works.

     Both WN and TMS describe processes through which spontaneous orders emerge. In WN, the system of “natural liberty” leads self-interested people to narrow their production to a few goods that satisfy a desire in the rest of society. In a division of labor economy, people modify their production and consumption decisions in response to price signals. In TMS, the motivating desire is to share sentiments with others. It leads people to empathize with others and to moderate their own expressions of emotion so that others may empathize with them in return. The interplay of sentiments lead to what Smith calls the “general rules” of propriety. The price system of WN and the system of propriety of TMS are the unintended orders that result from the respective market mechanisms.

     Framed this way, Otteson dissolves the Adam Smith Problem. Self-interest motivates economic actors to respond to price signals. It also motivates social actors to respond to the general rules of propriety. The difference between economic interaction and social interactions is the communication mechanism.

     Otteson’s marketplace construction highlights how market prices and social norms are the unintended orders of social interaction. But it is also a strained metaphor that highlights how social interactions fundamentally differ from economic interactions. Prices are quantitative measures of money, the intermediate good common to all market transactions. General rules however, pertain to the sentiments themselves, the final good in transactions. In social interactions, there are no intermediate goods. If Adam Smith described a marketplace of morals in TMS, it is really a barter society.

     The strain in the TMS marketplace model may explain why social markets are less efficient than economic markets. The impersonal character of intermediate money goods is a major factor in globalization. Cultures, languages, and preferences vary across countries, but everyone understands money. Currency exchange (and protectionist trade policy) is the only hurdle to international market clearing prices. Social markets move much more slowly because there is no analogous intermediate good. As a result, Chinese culture is still very different from American culture; So is Mexican culture; And so is Amish culture, despite being part of America!

     Otteson’s marketplace model also highlights the importance of institutions. WN discusses several institutions common to division of labor economies, including private property, contracts, and money. TMS discusses the Impartial Spectator procedure. It is the procedure of placing ourselves in another person’s shoes, then comparing our own reactions with theirs. Everyone participates in the informal Impartial Spectator institution, though few are conscious of it.

     Whether social interactions are perfect analogs to economic interactions is perhaps not as important as the fact that they share the most compelling features. Neither requires a central authority for nearly all aspects of the market, and both create unplanned orders that evolve with repeated participation. Though not a perfectly efficient one, TMS is a marketplace of morals.

   • Posted 13 Oct 2011 by Michael Foley

9. Economic Enlightenment Revisited: New Results Again Find Little Relationship Between Education and Economic Enlightenment but Vitiate Prior Evidence of the Left Being Worse

   • I think many of the questions were worded in a way to elicit the wrong response. In a public policy discussion context I think there is an implicit “to a meaningful degree that in any way justifies the cost” modifier to be understood. If you add such a modifier appropriate to each question the answers become understandable. Conversely if you added “to any degree at all” or some such to each question I would guess you would get a different answer. People understand communication in context to make it make sense which results in their adding an impllicit modifier such as I mention.

   • Posted 06 Jun 2011 by Scott Garren

10. A Life among the Econ, Particularly at UCLA

    • A wonderful remembrance! Although not a major in Economics, I had Alchian for Econ 101 (for non-econ majors?) in the mid 1950s, and a year or two later, a grad seminar with Allen (and someone else) on Internat’l Econ Development. Also, had Hildebrand for K. Marx econ. With the help of Prof Allen’s retrospective, I am now inclined to even greater appreciation than at the time—-partly for their inculcation of an economic perspective but mostly for their character.

    • Posted 17 May 2011 by josil

11. Economic Enlightenment Revisited: New Results Again Find Little Relationship Between Education and Economic Enlightenment but Vitiate Prior Evidence of the Left Being Worse

    • How did you intend the word “purported” to be interpreted, with respect to your article?

    • Posted 17 May 2011 by rihir akidan

12. Economics Professors' Favorite Economic Thinkers, Journals, and Blogs (along with Party and Policy Views)

    • A quality article, though the results are not especially surprising. It makes sense that there is more disagreement about the quality of more recent economists. I was surprised that nearly half of economists read economics blogs.
      One quibble, Paul Romer is incorrectly coded as being over 60.

    • Posted 15 May 2011 by James Bailey

13. Adam Smith and Liberal Economics: Reading the Minimum Wage Debate of 1795-96

    • Dear Chris,

      What a splendid, persuasive piece! I like especially that you have gone over Emma’s evidence so closely.

      Regards,

      Deirdre McCloskey

    • Posted 14 May 2011 by Deirdre McCloskey

14. "The Two Faces of Adam Smith"

    • The Adam Smith Problem has beset philosophers and economists since the time of the man who is its source. What is the best way to integrate the insights of the Wealth of Nations with the ethical theory of the Theory of Moral Sentiments? While consensus has not yet been reached authors still try to resolve the tension. Vernon Smith, the father of experimental economics, attempted to resolve the problem by making an appeal to Adam Smith’s description of the propensity to truck, barter, and exchange.

      The propensity that Vernon Smith points to is certainly a component of Adam’s system, but in attempting to resolve the Adam Smith Problem by simply highlighting this propensity seems to ask forces other questions into focus. Assuming that Adam Smith had a singular vision of human nature in some sense, where does the individual’s propensity to exchange emerge? According to David Hume reason is a slave to the passions, which Adam Smith would have been familiar with as it affected the development of his own moral theory. Here a problem arises, if the propensity to exchange is simply the result of an innate principle of action, as Vernon Smith implies, then one needs to determine if this action falls under ethical scrutiny or not. If Adam Smith does not consider natural and uncontrolled actions of the individual, e.g. sneezing, twitching, worthy of ethical consideration as they fall outside of the realm of the individual’s control and thereby are incapable of being done in sympathy with the Impartial Spectator, then how does one square a natural principle with ethical analysis? Perhaps if Vernon Smith had described the propensity to exchange as some type of irreducible good then we could see that it could then serve as a reason for action that would first be described by and ethical system, i.e. it would be fitting to discuss in the Theory of Moral Sentiments, and then followed by sound advice on instantiating the good in ones affairs, i.e. the Wealth of Nations would give advice on making it a reality. The point of all this is to say that while Vernon Smith seems to be making a contribution to solving the Adam Smith Question, we are left with further questions that need to be answered.

    • Posted 06 May 2011 by Steve Kunath

15. The Liberty of the Ancients Compared with that of the Moderns

    • In an 1819 lecture, Constant calls on his listeners to realize that there is a fundamental difference between what people of antiquity considered liberty and what the concept means for the modern person. For the former, liberty consists of taking full advantage of collective political rights; liberty to the latter is the conducting of his private affairs without interference. He argues that the liberty of the moderns must be carefully guarded and not forgotten for the sake of political rights. In the course of his argument, Constant also defends the French Revolution as beginning with the right perspective on liberty but later confusing the liberty of ancients with that of moderns, which contributed to the disastrous results. Surprisingly, he praises Rousseau as a lover of liberty who was led into error by the confusion over ancient liberty as opposed to modern liberty.
      Constant offers a point-by-point comparison of the two concepts of liberty that is very illuminating. His main concern is that people would unwisely sacrifice modern liberty as the ancients often did, when in a modern nation, political rights are much less significant and valuable than in a small city-state. His contention that political rights used to be the more valuable of the two in ancient times because people were limited in their economic activity is one of his most striking points. It most clearly highlights the rationale behind people trying to acquire political power at the cost of personal and economic freedoms but also leads to a slightly conflicting message. Constant asserts that private activity is more important and valuable than public activity in modern society yet urges people not to ignore the political process. He anticipates the concept of the rationally ignorant voter by noting that many people will prefer to attend to matters that benefit them most and argues for citizens to be informed and watchful instead.
      It is worth noting that Constant often seems to be sanctioning the liberty of the ancients, where the society had the moral authority to control people’s private behavior, as morally acceptable for that time and the particular conditions. It weakens his argument, since his own concept of modern liberty could become dated in the same way unless it were justified by something other than the current political and economic systems being too large and complex for it to be otherwise.

    • Posted 06 May 2011 by Stephanie Myla Helmick

16. Individualism: True and False

    • Using the contrast between two philosophies that both have been referred to as individualism, Hayek outlines many of the usual justifications for a government and an economic system built around precepts of individual liberty. He tracks the intellectual history of the word “individualism”, claiming that what he calls false individualism leads inevitably to socialism and collectivism. He praises true individualism as worthy because it produces the most desirable results; false individualism has been wrongly associated with it and thus usurped its meaning.
      Hayek argues that the basic principle dividing the two philosophies is their differing conceptions of human nature. False individualism is more or less an overconfident humanism, while true individualism freely admits to human foibles and limitations. Thus, people who subscribe to false individualism have inflated expectations that men can rationally design the perfect society. Hayek argues for property rights, limited government, free exchange of goods and services, and the price mechanism built on the idea that men are fallible. The order in society develops unintentionally from the choices that free people make. Hayek’s defense of a classical liberal society on these grounds is utilitarian and compelling.
      It is somewhat surprising the particular battle lines Hayek drew. He equates true individualism with the Anglo-American culture and its associated thinkers, like Adam Smith and Hume, while pointing to French thinkers following in the tradition of Descartes as the primary source of false individualism. Hayek claims that German culture has yet another sense of the word individualism, which is the rejection of historical tradition as a source of authority over one’s behavior. It is an interesting division but a little difficult to believe that nationality follows the divisions between the intellectual traditions so simply.
      The most surprising point in the essay is Hayek’s effort to demonstrate that liberty and cultural traditions are consistently compatible. Cultural norms develop from a spontaneous order that reflects the process of the market. Hayek argues that respect for naturally evolving norms, rather than designed ones, encourages respect for the power of spontaneous order to produce the most desirable outcomes. His assertions seem to match the historical outcomes of the French Revolution, which ended with a military dictatorship, and the American Revolution, which resulted in a system of government with a strong presumption of liberty. The former tried to radically remake the society but the latter was simply an assertion of principles deeply ingrained culturally.

    • Posted 06 May 2011 by Stephanie Myla Helmick

17. "The Two Faces of Adam Smith"

    • Echo’s critique is insightful, and touches on Hanley’s recent appraisal of the article. I would like to suggest that while Vernon Smith’s experiments are very interesting, that his jumping off point misses a better way to reconcile Adam Smith’s two works.

      Although Adam Smith does attribute the propensity to truck, barter, and exchange to man as one of his most innate qualities, it is not the most obvious bridge between the two books. As a method of operation in the world, the propensity is important; as an explanation of the origin of our behavior, less so. The Adam Smith of the Theory of Moral Sentiments proposes a picture of man who receives input from the world around him about how he ought to behave. The man wants to be loved and to be loveable out of a concern for his self-interest. Both works address the content of self-interested behavior. The content which makes up self-interest in each book is explained differently, but they both amount to an exploration of self-interest in different frames. Paganelli (2008) even suggests that self-interest is judged with a more friendly result in the Theory of Moral Sentiments than in The Wealth of Nations.

      Self-interest, rather than the propensity to truck and barter, is perhaps the real tie between the two works. In the Theory of Moral Sentiments Smith addresses humanity in the full context of human interactions, while in the Wealth of Nations he addresses that part of society most affected by the virtue of prudence. The method of approach is therefore different, but the starting point for each is not so far apart as is often assumed.

    • Posted 29 Apr 2011 by John Robinson

18. "The Two Faces of Adam Smith"

    • Vernon Smith seeks to solve the Adam Smith problem and reconcile what seem to be two inconsistent views of human nature in Wealth of Nations and The Theory of Moral Sentiments. In Wealth of Nations, Smith’s invisible hand theorem proposes that it is not from benevolence, but rather “the propensity to truck, barter, and exchange one thing for another” which drives our behavior (1776; 1909: 19-20). In The Theory of Moral Sentiments, Smith declares that there are “some principles in… [human] nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it” (1759; 1976: 9). Vernon Smith asserts that these two views are consistent if we recognize a “universal propensity for social exchange” (3). He proposes the following behavioral axiom: ““the propensity to truck, barter, and exchange one thing for another,” where the objects of trade I will interpret to include not only goods, but also gifts, assistance, and favors out of sympathy, that is, “generosity, humanity, kindness, compassion, mutual friendship and esteem” (Smith 1759; 1976, p. 38)” (3). Vernon Smith then proceeds through historical, psychological, and experimental evidence to support this theory. Vernon Smith offers a very convincing and creative solution to the supposed Adam Smith problem. He makes crucial distinctions between reciprocated and non-reciprocated exchange. However, Vernon Smith seems to neglect the importance of non-reciprocated ethical behavior in Adam Smith’s work. Hanley (2010) elaborates on the distinctions between Adam Smith and Vernon Smith. He also points to divergences in opinion on intended beneficence and social vs. unsocial behavior. Vernon Smith asserts that Adam Smith’s explanation of beneficence is “utilitarian” and argues that it arises “from the expectation of reciprocal benefits” (17). This egoistic view of man may not fit neatly into Adam Smith’s conception which encompasses broader views on ethics and virtue.

    • Posted 25 Apr 2011 by Echo Keif

19. The Liberty of the Ancients Compared with that of the Moderns

    • Constant’s speech flows effortlessly, enumerating the distinctions between ancient and modern conceptions of liberty. Ancient liberty “consisted in exercising collectively, but not directly, several parts of the sovereignty” and “with this collective freedom [came] the complete subjection of the individual to the authority of the community” (66). Under ancient liberty, “[a]ll private actions were submitted to a severe surveillance” and “[n]o importance was given to individual independence” (66). Modern liberty exists in a system of representative government, rather than direct participation. Modern liberty is “the right to be subjected only to the laws” (66). Constant summaries the key distinction nicely: “[A]mong the ancients the individual, almost always sovereign in public affairs, was a slave in all his private relations” (67). “Among the moderns, on the contrary, the individual, independent in his private life, is, even in the freest of states, sovereign only in appearance” (67). A paradox seems to emerge with respect to ancient and modern liberty. While we want modern liberty, it is still necessary to keep ancient liberty in the background. “The danger of modern liberty is that, absorbed in the enjoyment of our private independence, and in the pursuit of our particular interests, we should surrender our right to share in political power too easily” (70). Constant warns against putting too much faith in authority figures. He pleads that “we must not leave it to them. No matter how touching such a tender commitment may be, let us ask the authorities to keep within their limits. Let them confine themselves to being just. We shall assume the responsibility of being happy for ourselves” (70). It seems that the dangers of modern liberty are very real and present today. Individuals often look for the government to be more than just. The government is regulating personal happiness through various policies that go against liberty. It’s a slippery slope and Constant would call for us to take responsibility.

    • Posted 25 Apr 2011 by Echo Keif

20. The Liberty of the Ancients Compared with that of the Moderns

    • Constant provides an enlightening look at the concept of liberty in ancient western civilizations. For the ancients, liberty came through collective and direct participation in the polity. Life was affirmed through the polity: the alternative was to live as a barbarian. Freedom came collectively and was a privilege that could be taken away by the polity. Constant doesn’t mention that in some way such privileged liberty is similar to that of the towns and burghs that developed during the Medieval period, where citizens faced returning to manor life should they not temper themselves to the rules of the city (to be sure, the liberty that emerged in Medieval burghs resembled more closely individual modern liberty).

      Constant delivered his lecture in 1819, but his insistence on affirming that modern liberty is individual – as opposed to the collectivized liberty of the ancients – is as important today as it was then. He criticizes Rousseau , de Mably, and Montesquieu for conflating ancient and modern liberty in an attempt to assert the power of the state – and those at its helm. Still today – though perhaps without reference to ancient philosophy – illiberal thinkers assert that liberty comes through the state and is not held individually. In a very nice small section on commerce, Constant talks about ‘owning’ being merely a use-right to a piece of land; something we see today in the bundle theory of rights.

      He ends with a beautiful call for institutions to carry out the moral education of their citizens, not by forcing upon them some interpretation of morality, but by respecting their individual rights and creating proper incentives for moral behavior and civic participation. He mentions institutions in the context of the work of the legislature, but doesn’t say explicitly that all such institutions must come from the state, leaving one to think he refers not only to institutions of government but also those created by the culture and the market.

    • Posted 24 Apr 2011 by Brandon Holmes