Liberty Matters
Some Comments Stimulated by the Adam Smith Forum Essays
Caroline Breashears cogently observes that rhetoric is at the foundation of Adam Smith’s larger system: “When we sell bread, defend our characters, or seek the sympathy of our neighbor, we engage in the art of persuasion.”
Indeed, persuasion is central to Smith’s theory of society. The rules we create and follow are consequences of having reached a consensus that is conveyed in the Smithian concepts of propriety, approbation, impropriety, and disapprobation. Without persuasion, there can be no agreement among neighbors in which “Actions of a beneficent tendency, which proceed from proper motives, seem alone to require reward; because such alone are the approved objects of gratitude felt by the spectator” (TMS, 112). The truth of this beneficence proposition is revealed in the common English expression “debt of gratitude” and in the strong form of saying thank you with “I owe you one.” The proposition is general, predictive, and of the mathematical form beneficial action Z, under conditions X, invokes reward response Y, because it is the approved object of gratitude felt by the (fair-play and impartial) spectator. In any application, one identifies (Z, X) then observes whether or not the predicted response Y occurs. (See V. Smith and B. Wilson, Humanomics, Cambridge University, 2019 for some experimental designs and observed results motivated by a few of the many precise propositions in TMS.)
Smith criticizes utilitarianism whose modern form has sought to explain everything, including the selling of bread, the defending of characters, and the seeking of our neighbor's sympathy, as utility yielding consequences of the individual’s action choices. In Smith’s theory of society, everyone is strictly self-interested. Moreover, in the above proposition, it must be common knowledge among the principals that more in quantity or quality of a good thing is desirable or preferred. You and I both like avocados, which are good things for us, but many do not like them. Therefore, if you do me a favor (benefit), I might reward you with a dozen avocados picked off my trees. But, unlike modern main-stream accounts, Smith distinguishes between being self-interested and acting in one’s self-interest.
Thus, explicitly:
“Though it may be true…that every individual…naturally prefers himself to all mankind, yet he dares not look mankind in the face, and avow that he acts according to this principle. He feels that in this preference they can never go along with him, and that how natural soever it may be to him, it must always appear excessive and extravagant to them. When he views himself in the light in which he is conscious that others will view him, he sees that to them he is but one of the multitude, in no respect better than any other in it. If he would act so as that the impartial spectator may enter into the principles of his conduct, which is what of all things he has the greatest desire to do, he must upon this, as upon all other occasions, humble the arrogance of his self-love, and bring it down to something which other men can go along with.” (TMS, 121)
By way of persuading his readers, Smith invokes the phrase “go along with” over 40 times in TMS.
So, in Smith’s model, strictly self-interested individuals are both own- and other-regarding in their actions because of their joint experience of sympathetic fellow-feeling, validated by third party observers who concur. This perspective is fundamentally at odds with independent utility maximization in the absence of just-so extrasensory perception. The “utilitarian” component of Smith’s model is in the little services we do for each other, as predicted in the above proposition: “These affections, that harmony, this commerce, are felt…to be of more importance to happiness than all the little services which could be expected to flow from them” (TMS, 53).
Smith models relationships which motivate the context-dependent flow of “little services,” each of which have utility value. In utilitarianism, it is the other way around. Every chosen action reveals what must have been highest in utility, a theory without predictive content. One searches databases or performs experiments without theoretical design guidance to see what regularities might be discovered. While such exercises can be of immense value in science, I only want to emphasize that their motivation does not stem from a predictive theory. Remarkably, TMS offers a host of predictive propositions still relevant to contemporary socioeconomics, two hundred sixty-four years after their first publication.
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In reading the comprehensive essay by Leonidas Montes, I am reminded of a second fundamental methodological distinction in Smith’s articulation of his theory of society and economy. The first, above, is his distinction between being self-interested and acting self-interestedly. The complementary second distinction is between the origins of human action and the consequences of human action (as noted by Samuel Alexander in Beauty and Other Forms of Value, Thomas Y. Crowell Company, 1968, p 249). Modern utilitarian accounts do not make this second distinction because it is the consequences of action that yield utility and therefore motivate the action. In Smith’s proposition on beneficence, the strong sense of obligation felt by the recipient of a favor to reward the action originates in their emotions of gratitude. A “debt of gratitude” is heavy and can only be removed with a rewarding action taken by the one favored.
In the treasured Chapter II of WN’s Book I, the division of labor is deemed an unintended consequence of trade. But from whence comes the propensity to trade? As is his wont, Smith presses more deeply into the search for origins. Failing to find any, he notes that trade is a unique characteristic of humans. But that failure does not diminish his finding that the wealth of nations is a consequence of the division of labor, itself a consequence of trade, which is a consequence of gains from exchanges unaccompanied by any intention beyond achieving those narrow self-interested gains. Hence, people everywhere engage through markets, causing all to prosper but having no clue as to why. All the while, the vast majority of them imagine, as J. S. Mill did, that, having solved the problem of production, we need to focus on how to better distribute its output, as if we can achieve whatever we may collectively think we want by top-down design—a belief, as Smith might say, that is the source of half the world’s troubles.
It was Smith’s clear-headed distinction between origins and consequences that framed his insight that wealth creation was an entirely unintended consequence of the entirely natural socially driven propensity to trade. The creation of wealth via the division of labor was not a new idea, but Smith gave it a grand comprehensive meaning that accelerated the classical liberal trend.
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Peter Onuf elegantly and accurately summarizes Adam Smith’s intellectual and practical contributions to the understanding of human action. I am grateful to have learned from him.
Smith’s “stages of historical development” serve as a metaphor for adapting property, from rights of hot pursuit in a world of abundant game and gathering products, to domesticated animals, to domesticated plants, to appropriated land, to capital accumulation above subsistence needs in the new commercial classes. Smith’s clarity assured avoidance of the errors in Ricardo’s labor theory of value.
I believe that Adam Smith saw North America as a testing laboratory for his simple system of natural liberty. He could sympathize with the growing aspirations of the colonists, yet remained a loyal British citizen in dissent because he believed that Britain could only be free if dissent was part of national learning. Liberty was a natural product of Hume-Smith’s “experimental reasoning.” Ben Franklin symbolized their counterpart in America. He was the grand old man of the slave-owning founders, who shared Adam Smith’s view that slavery was a moral abomination but also entertained no racial exceptions to the principle “that all men are created equal” in the Declaration of Independence and the Constitution, clearing the way for the eventual expansion of freedom to all men, and even to women and children.
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I turn finally to the informative essay by Brianne Wolf. I call it informative because I am a consumer of Smith’s works, not a scholar of literature about his thoughts and those of his followers. It was only late in my career that I could appreciate my work as part of the Hume-Smith method of experimental reasoning. Her essay, like those of the other responders to my original piece, represents a learning opportunity for me.
Brianne Wolf raises important questions about my discussion of Smith’s concept of justice as negative. As she notes, and I agree, justice as negative is what Adam Smith refers to as “mere justice.” But she further states:
“V. Smith argues that justice for Smith is primarily negative. ‘It [Justice] is negative because the way we get more justice is by reducing injustice, that is, hurtful actions. Smith certainly describes mere justice in this way. But he also suggests that one would not likely be approved of, or well-liked by one’s fellows if they exercised only this sort of justice. He [Adam Smith] writes, ‘The man who is barely innocent, who only observes the laws of justice with regard to others, and merely abstains from hurting his neighbors, can merit only that his neighbors in their turn should respect his innocence, and that the same laws should be religiously observed with regard to him.’” (Wolf, 5)
My reading of this quotation from TMS differs in that the man who observes the laws of justice cannot expect to be rewarded for doing this. Rather he “can merit only that his neighbors in their turn should respect his innocence, and that the same laws should be religiously observed with regard to him” (TMS, 76).
I interpret TMS this way because the quotation is an elaboration of what he says in the previous paragraph:
“Though the mere want of beneficence seems to merit no punishment from equals, the greater exertions of that virtue appear to deserve the highest reward. By being productive of the greatest good, they are the natural and approved objects of the liveliest gratitude. Though the breach of justice, on the contrary, exposes to punishment, the observance of the rules of that virtue seems scarce to deserve any reward. There is, no doubt, a propriety in the practice of justice, and it merits, upon that account, all the approbation which is due to propriety. But as it does no real positive good, it is entitled to very little gratitude. Mere justice is, upon most occasions, but a negative virtue, and only hinders us from hurting our neighbour. The man who barely abstains from violating either the person or the estate, or the reputation, of his neighbours, has surely very little positive merit.” (TMS, 117, Stewart edition, italics added)
The claim that “the mere want of beneficence seems to merit no punishment” refers back to Smith’s second beneficence proposition: “Beneficence is always free, it cannot be extorted by force, the mere want of it exposes to no punishment; because the mere want of beneficence tends to do no real positive evil” (TMS, 112).
Adam Smith is saying that society treats beneficence and justice symmetrically. Just as we do not punish “want of beneficence,” we do not reward “want of breaking the law.” There is no reward for driving through a green light, only a punishment for failing to stop at a red light. His impeccable precision in articulating the theory is matched only by the rigor of his applications to life.
Near the close of TMS, Smith records his critical assessment of positive law:
“Every system of positive law may be regarded as a more or less imperfect attempt towards a system of natural jurisprudence, or towards an enumeration of the particular rules of justice….To prevent the confusion which would attend upon every man’s doing justice to himself, the magistrate, in all governments that have acquired any considerable authority, undertakes to do justice to all, and promises to hear and to redress every complaint of injury. In all well-governed states too, not only judges are appointed for determining the controversies of individuals, but rules are prescribed for regulating the decisions of those judges; and these rules are, in general, intended to coincide with those of natural justice. It does not, indeed, always happen that they do so…Sometimes…the interest of the government; sometimes the interest of particular orders of men who tyrannize the government, warp the positive laws of the country from what natural justice would prescribe….In no country do the decisions of positive law coincide exactly…with the rules which the natural sense of justice would dictate. Systems of positive law, therefore, though they deserve the greatest authority, as the records of the sentiments of mankind in different ages and nations, yet can never be regarded as accurate systems of the rules of natural justice….It might have been expected that the reasonings of lawyers, upon the different imperfections and improvements of the laws of different countries, should have given occasion to an inquiry into what were the natural rules of justice, independent of all positive institution….But though the reasonings of lawyers did produce something of this kind…it was very late in the world before any such general system was thought of…In the laws of Cicero and Plato, where we might naturally have expected some attempts towards an enumeration of those rules of natural equity which ought to be enforced by the positive laws of every country, there is, however, nothing of this kind. Their laws are laws of police, not of justice…” (TMS, pp 501-5)
I want to close by thanking the four distinguished Smith scholars for their responses to one who is a deeply respectful consumer and beneficiary of Smith’s work. We are fortunate to live in a free country; a country that survives factionalism; a country where it is possible for dissent to overcome oppressive narrow-minded forms of populism; a country still predominantly influenced by bottom-up principles of government despite scary recurring threats to those principles. The widespread celebration of the 300th year anniversary of the birth of Adam Smith gives evidence that these principles continue to matter. May our descendants never fail to honor this path-finding tradition.
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