Adam Smith Lives!

Leadership, Carlyle, and the History of Economic Ideas?

On Wednesday, I leave for the International Leadership Association annual meeting in Amsterdam.  This week end I began working on slides for the presentation of some experimental work on leadership.  The research is joint with Dan Houser, David Levy, Kail Padgitt, and Erte Xiao and the experiments are being conducted at George Mason University.  I soon mentioned Thomas Carlyle, the famous proponent of a "great man" theory of leadership.  David Levy and I have examined Carlyle's sustained opposition to Classical economics and economists in Vanity.  We think it is not uncoincidental that Carlyle opposed Classical economics and propounded a "great man" theory of leadership!

Lo and behold!  In an article published in today's US News, David Gergen both asks the question that is central to our research and also mentions Carlyle:

Do leaders really matter? That question has prompted debate for centuries. The Scottish philosopher Thomas Carlyle famously represented one side of the argument. "The history of the world is but the biography of great men," he wrote. Leo Tolstoy spoke for the other side. Great men, the novelist wrote, "are but the labels that serve to give a name to an end and, like labels, they have the least possible connection with the event."

Our take is that leadership matters -- leaders help non-leaders coordinate activities -- leadership is largely a matter of institutions as opposed to "great men," and leadership is carried in language.

Look for the experimental results here once we've got some feedback from our Leadership colleagues!

The Natural and Supernatural...

My kids went trick or treating tonight, one dressed as a headless monster and the other some sort of very bloody ghost.  The supernatural. 

David Levy and I have recently been working on how nineteenth century economists regarded the "natural", lawlike.  We're focusing on Malthus & Mill.  I'll have more to say soon about the role Mill's views played in the trial of Annie Besant and Charles Bradlaugh for publishing a book on birth control. 

Now, I'm thinking about the discussion of laws of nature -- or "uniformities" in W. S. Jevons's Principles of Science.  Jevons closes the work with a discussion of the "limits of scientific method" including a section on "the theory of evolution".  He begins by making the case that, as a matter of logic, lawlike behaviour does not preclude the existence of God or the possibility of intervention (736,766).  Law reigns in mental as well as social phenomena. But Jevons -- who of course is most famous for his calls to introduce mathematical precision into economic theory -- recognized that such lawfulness may well remain beyond the scope of scientific method for some time:

No one will be found to deny that there are certain uniformities of thinking and acting whcih can be detecting in reasoning beings, and so far as we detect such laws we successfully apply scientiic method.  But those who attempt to establish social and moral sciences soon become aware that they are dealing with subjects of enormous perplexity. (759)

Jevons's conclusion in the face of such complexity was not that we should give up the attempt to quantify economic relationships, but instead that we should work hard carefully to untangle the unknown, but knowable with an "ever-increasing approximation to certainty" (736).  

Smith's Man of System

A recent post at a Canadian Econoview suggests that policy makers may sometimes consider their "their ethical standards are far superior to those of the rest of us" and invokes Adam Smith's "man of system".  You can read it here.  At Adam Smith's Lost Legacy, Gavin Kennedy has a wonderful follow up. 

One small addition.  This is the one -- perhaps the last -- heterogeneity that still underscores the economic analysis of some "experts".  Now that public choice has become somewhat mainstream, we routinely allow that policy makers are self interested like the rest of us.  But we still sometimes allow that experts are somehow more public spirited or better than the rest of us at seeing the "truth".  And it's not just specialization but rather a "superior" knowledge of what's good for the rest of us.  In the case of Econoview's post, it's the experts' claim to know (better than the people who would do the transacting) what should and shouldn't be sold at any price and then the  use of legislation to prevent exchange.  David Levy and I have called this the last "vanity of the philosopher".  We've noticed that there's no code of ethics for economists or econometricians, though statisticians have a well-developed code of ethics.  And we argue that, absent a division of labour that may give the expert access to technical details inaccessible to regular people, this vanity is no more credible than the pre-public choice idea that policy makers are to be trusted because they are more public spirited than regular folks.  We now know better when it comes to policy makers.  We should know better when it comes to "experts".      

Econlib/OLL

Many of us who work in the history of economic ideas wonder about the future of the subdiscipline.  In the last couple of weeks I've been more optimistic than ever.  This is in part the result of my experience with the Young Scholar Sessions at the History of Economics Society, which have proved to be some of the best sessions I've attended there.  In part, as well, I've been impressed by the quality of the research of young scholars who have taken part in the Summer Institute over the same time period.  Then there's the conference I'm attending this week end ("Liberty, Revenge, and Civic Responsibility" -- I'm qualified to be here only because I went to Hamlet School).  I'm the only economist here and the discussion suggests to me that perhaps non-economists are increasingly willing to discuss economic ideas.  More, the median age is pretty young.  Finally, there's the recent CFP for a session entitled "The Future of the History of Economics: Young scholars' perspective" to be held at the European Society for the History of Economic Thought (ESHET), Porto, Portugal, April 28-30, 2006.

Perhaps most important reason for optimism is the ease with which undergraduate and graduate students in economics and other disciplines can now access extraordinary electronic libraries at Econlib, Online Library of Liberty and elsewhere. 

Homogeneity in Fleeming Jenkin's Exchange Diagram

Time for another picture.  I've posted examples of how homo economicus was attacked visually.  Classical economists recognized the attacks and responded in print.  Supposing they knew of the visual attacks, racial or gendered caricatures of inferiority, was there a visual counter-response as well?  How do we show similarity visually anyway?  Our friend, Dan Hammond, asked that good question years ago when he hosted the HES annual meeting at Wake Forest University. 

Fleeming Jenkin came up with the diagram that answers Dan's question. It's from an explicit attempt to defend economists' theory of exchange from the critics, notably John Ruskin.  Here it is.  It's a drawing of barter exchange.  The participants are the same, there's no hierarchy, no one tells anyone what to consume or what to trade.  Very graceful.  David Levy and I like it so much we had Michigan use it on the cover of Vanity.

   

(From: Fleeming Jenkin, Papers, literary, scientific, &c., London, New York, Longmans, Green, and Co., 1887, volume 2, p. 150.)

Terrific, isn't it? 

Smith's little finger example -- how selfish are we?

There are competing interpretations of Smith on just about everything, including self interest and selfishness.  Though mine may still be a minority view of the earthquake passage, I'd like to revisit it.  First, here is an example of an interpretation that runs counter to mine.  In The Blank State, Steven Pinker quotes the passage from TMS, ending with the famous sentence:  "If he were to lose his little finger tomorrow, he would not sleep tonight; but provided he never saw them, he would snore with the most profound security over the ruin of a hundred million of his brethren." (Pinker, p. 288).

Pinker concludes that Smith's view is one in which our "moral sentiments" "overlie a deeper bedrock of selfishness."  Nothing to do about it; we're hard-wired to be selfish and we keep our fingers.

If Smith had stopped there, this would all be fine.  But he doesn't.  In fact, Smith goes on to make the opposite case.  While our first impulses are "sordid and selfish", we're compelled to overcome our initial sentiments, our high opinion of ourselves and disregard for others, and to sacrifice our interests to theirs.   We're led, not by sentiment or benevolence but by "reason, principle, conscience", to give up the finger. 

Here is the rest of the paragraph, following directly after the sentence above.  It's long, but I'm including it all here because it's important:

Human nature startles with horror at the thought [of not giving up the finger], and the world, in its greatest depravity and corruption, never produced such a villain as could be capable of entertaining it. But what makes this difference? When our passive feelings are almost always so sordid and so selfish, how comes it that our active principles should often be so generous and so noble? When we are always so much more deeply affected by whatever concerns ourselves, than by whatever concerns other men; what is it which prompts the generous, upon all occasions, and the mean upon many, to sacrifice their own interests to the greater interests of others? It is not the soft power of humanity, it is not that feeble spark of benevolence which Nature has lighted up in the human heart, that is thus capable of counteracting the strongest impulses of self-love. It is a stronger power, a more forcible motive, which exerts itself upon such occasions. It is reason, principle, conscience, the inhabitant of the breast, the man within, the great judge and arbiter of our conduct. It is he who, whenever we are about to act so as to affect the happiness of others, calls to us, with a voice capable of astonishing the most presumptuous of our passions, that we are but one of the multitude, in no respect better than any other in it; and that when we prefer ourselves so shamefully and so blindly to others, we become the proper objects of resentment, abhorrence, and execration. It is from him only that we learn the real littleness of ourselves, and of whatever relates to ourselves, and the natural misrepresentations of self-love can be corrected only by the eye of this impartial spectator. It is he who shows us the propriety of generosity and the deformity of injustice; the propriety of resigning the greatest interests of our own, for the yet greater interests of others, and the deformity of doing the smallest injury to another, in order to obtain the greatest benefit to ourselves. It is not the love of our neighbour, it is not the love of mankind, which upon many occasions prompts us to the practice of those divine virtues. It is a stronger love, a more powerful affection, which generally takes place upon such occasions; the love of what is honourable and noble, of the grandeur, and dignity, and superiority of our own characters.

A considerable amount of misreading is the result of stopping midway through Smith's always-subtle and often-surprising story. 

attacking economic man

Here's one example of the attacks on classical economics along the lines of difference.  In an 1866 article entitled "Race in Legislation and Political Economy", James Hunt, the owner of the Anthropological Review, wrote this about J. S. Mill:

Mr. Mill, who will not admit that the Australian, the Andaman islander, and the Hottentot labour under any inherent incapacity for attaining the highest culture of ancient Greece or modern Europe! (1866, p. 122).

Not surprising, the debate focused in large measure on the capacity to make economic and political choices (to save, to have a family, to educate oneself and one's family, to vote).

IQ, Homogeneity and Classical Economics

A new post on the IQ debate at A Canadian Econoview gets to the heart of the matter, using the wonderful passage from Smith that David Levy and I use for our book title:

Note that bit about the vanity of the philosopher. Smith called 'em like he saw 'em. And as he saw it, most of the observed differences between adults is actually the result of education and training building on small natural differences.

Difference is a matter of the specialization, luck and history.  Less well known than this Smithian perspective on natural homogeneity, is the attack and eventual demise of economic man late in the nineteenth century and well into the 20th.  Our Vanity of the Philosopher tells how social and economic thought came to be infected by notions of racial and other innate differences. 

It wasn't until after WWII that economists like von Mises, Lionel Robbins, and Stigler & Becker returned to the classical economists' argument that economic man is essentially the same.

IQ and social engineering --

Writing on Bryan Caplan's argument at Econlib about the significance of IQ for policy matters, Tyler Cowen notes

The historical correlation between IQ research and anti-egalitarian social engineering is not a complete accident. 

I have the same worry; much of the work that David Levy and I did for The Vanity of the Philosopher is about the anti-egalitarian (we call it hierarchical; sometimes we call it racist) social engineering that became so important in late in the 19th and early in the 20th centuries.  David Levy and I have an article in the European Journal of Political Economy on how prejudice infected statistical much of the statistical analysis that was used to support eugenic policy.  Here's the abstract.

We have so many eugenics images that it's hard to choose what to post.  This one's unusual and speaks volumes for later eugenic policy.  (Sir) Francis Galton, who founded eugenics (along with W. R. Greg), conducted early work on composite photography, trying to identify (say) a "criminal" or a "Jewish" type.  Here's an example:

Where do great ideas come from?

That's the intriguing-sounding title of an article by Dan Falk in the most recent University of Toronto Magazine.  It's about the "eureka moments in history".  Einstein's theory of relativity, Poincare's "Mathematical Creation", McCartney's "Yesterday," Watson and Crick.  UT's John Polanyi is featured.

The research on the article's main question is still wide open.  Falk makes two observations.  First, people who have eureka moments are people who have lots of ideas, good and bad.  What may distinguish them from the rest of us, is that they're better at sifting the good from the bad, ignoring the bad and the mediocre, and focusing on the really good. 

New research suggests the brain of people who are highly creative may function differently from the rest of us.  Our brains are constantly filtering information.  Most information we receive is unimportant; some is very important.  People who have high latent inhibition are good at filtering, ignoring the vast majority of unimportant information -- but they may be less creative.  Creative people have more permeable filters so they let more information through -- all of which may be a mixed blessing.  Falk quotes UT psychology professor, Jordan Peterson:

Imagine you have a hundred ideas.  Ninety of them are probably useless, and eight are probably downright pathological.  You've got to get rid of those and only keep the two or three that might be useful.  ... if you don't, then perhaps you're more prone to psychotic disorders

Those of us who won't win the Nobel Prize can now feel relieved.

Any candidates for "eureka moments" in economics?