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An Open Source Strategy for Our Financial Mess

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4 Responses

  1. A.W. says:

    I have a variation on that theme, a great way to create an open source solution to all of this.

    See, what we do is, instead of taking money away from people, we let them keep it. Then each person working independantly tries to maximize their wealth. and in doing so, most of us prosper.

    Adam Smith seems to have written a book about it.

  2. Adam Smith in fact wrote a book that few have read, namely, The Theory of Moral Sentiments (1759), which he presumed readers of his next book would have read. Alas, that has not been the case. It was The Theory… that Smith made clear his conception of “moral sentiments” and in particular sympathy and self-discipline, were beholden to Stoic ethics: “As Smith himself puts it, ‘man, according to the Stoics, ought to regard himself, not as something separated and detached, but as a citizen of the world, a member of the vast commonwealth of nature,’ and ‘to the interest of this great community, he ought at all times to be willing that his own little interest should be sacrificed.’ Even though prudence goes well beyond self-interest maximization, Smith saw it in general only as being ‘of all virtues that which is most helpful to the individual,’ whereas ‘humanity, justice, generosity, and public spirit, are the qualities most useful to others.’” It is clear that Smith did not understand the *individual* maximization of wealth from the motives of self-love or prudence broadly construed as adequate or sufficient for a good society, as any careful reading of his writings attests. It is important to recall, with Sen, that the “defense of self-interested behavior comes in specific contexts, particularly related to various contemporary bureaucratic barriers and other restrictions to economic transactions which made trade difficult and hampered production.”

    And those who fondly and selectively cite Smith’s An Inquiry… frequently fail to note that he thought “justice was the ‘main pillar’ of society. He was committed not simply to the natural system of liberty but to ‘the natural system of liberty *and justice.*’ Interest-governed behavior can enhance social stability and security, by an invisible hand, but only if the interests propelling action are just. Madison agreed: ‘Justice is the end of government. It is the end of civil society.’”

    Stephen Holmes rightly points out that Smith appreciated the fact “that public provision can foster priviate initiative,” and he “justified high wages by invoking the well-being of the majority. But he chose the *majority’s* welfare as the criterion to guide public policy because of a prior commitment to distributive justice.” Holmes proceeds to quote a passage from Smith noting the (unwarranted) complaints of “merchants and master-manufacturers” about the economic effects of high wages while, in Smith’s words, “They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those other people.”

    This is the selfsame Adam Smith who was concerned about the pernicious effects of a person’s income relative to others insofar as it may interfere with the ability to take part in the life of the community, in other words, inasmuch as it may lessen or deny those social capabilities necessary to properly interact and mix with others in society. In short, Smith was appreciative of the fact that “a relative deprivation in terms of income can…lead to absolute deprivation in terms of capabilities, and in this sense, the problems of poverty and inequality are closely interlinked” (Amartya Sen).

    “The misrepresentation of Smith’s complex attitude to motivation and markets, and the neglect of his ethical analysis of sentiments and behaviour, fits well into the distancing of economics from ethics that has occurred in the development of modern economics. Smith did, in fact, make pioneering contributions in analysing the nature of mutually advantageous exchanges, and the value of division of labour, and since these contributions are perfectly consistent with human behaviour sans bonhomie and ethics, references to these parts of Smith’s work have been profuse and exuberant. Other parts of Smith’s writings on economics and society, dealing with observations of misery, the need for sympathy, and the role of ethical considerations in human behaviour, particularly the use of behaviour norms, have become relatively neglected as these considerations have themselves become unfashionable in economics.”

  3. Adam Smith in fact wrote a book that few have read, namely, The Theory of Moral Sentiments (1759), which he presumed readers of his next book would have read. Alas, that has not been the case. It was The Theory… that Smith made clear his conception of “moral sentiments” and in particular sympathy and self-discipline, were beholden to Stoic ethics: “As Smith himself puts it, ‘man, according to the Stoics, ought to regard himself, not as something separated and detached, but as a citizen of the world, a member of the vast commonwealth of nature,’ and ‘to the interest of this great community, he ought at all times to be willing that his own little interest should be sacrificed.’ Even though prudence goes well beyond self-interest maximization, Smith saw it in general only as being ‘of all virtues that which is most helpful to the individual,’ whereas ‘humanity, justice, generosity, and public spirit, are the qualities most useful to others.’” It is clear that Smith did not understand the *individual* maximization of wealth from the motives of self-love or prudence broadly construed as adequate or sufficient for a good society, as any careful reading of his writings attests. It is important to recall, with Sen, that the “defense of self-interested behavior comes in specific contexts, particularly related to various contemporary bureaucratic barriers and other restrictions to economic transactions which made trade difficult and hampered production.”

    And those who fondly and selectively cite Smith’s An Inquiry… frequently fail to note that he thought “justice was the ‘main pillar’ of society. He was committed not simply to the natural system of liberty but to ‘the natural system of liberty *and justice.*’ Interest-governed behavior can enhance social stability and security, by an invisible hand, but only if the interests propelling action are just. Madison agreed: ‘Justice is the end of government. It is the end of civil society.’”

    Stephen Holmes rightly points out that Smith appreciated the fact “that public provision can foster priviate initiative,” and he “justified high wages by invoking the well-being of the majority. But he chose the *majority’s* welfare as the criterion to guide public policy because of a prior commitment to distributive justice.” Holmes proceeds to quote a passage from Smith noting the (unwarranted) complaints of “merchants and master-manufacturers” about the economic effects of high wages while, in Smith’s words, “They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those other people.”

    This is the selfsame Adam Smith who was concerned about the pernicious effects of a person’s income relative to others insofar as it may interfere with the ability to take part in the life of the community, in other words, inasmuch as it may lessen or deny those social capabilities necessary to properly interact and mix with others in society. In short, Smith was appreciative of the fact that “a relative deprivation in terms of income can…lead to absolute deprivation in terms of capabilities, and in this sense, the problems of poverty and inequality are closely interlinked” (Amartya Sen).

    “The misrepresentation of Smith’s complex attitude to motivation and markets, and the neglect of his ethical analysis of sentiments and behaviour, fits well into the distancing of economics from ethics that has occurred in the development of modern economics. Smith did, in fact, make pioneering contributions in analysing the nature of mutually advantageous exchanges, and the value of division of labour, and since these contributions are perfectly consistent with human behaviour sans bonhomie and ethics, references to these parts of Smith’s work have been profuse and exuberant. Other parts of Smith’s writings on economics and society, dealing with observations of misery, the need for sympathy, and the role of ethical considerations in human behaviour, particularly the use of behaviour norms, have become relatively neglected as these considerations have themselves become unfashionable in economics.”

  4. A.W. says:

    Patty

    My point (and you were too stupid to get it) is there is something inherently hilarious about using the “marketplace of ideas” to dictate to the marketplace.

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