Lecture on Adam Smith

In this lecture we went through the basic timeline surrounding the publishing of Adam Smith's"Thoery of Moral Sentiments" and "The Wealth of Nations" as well as Jonathon Swifts's "A Model Proposal" which is a satire on the common beliefs of the time, especially those of economists such as Smith.

Smith's thoughts can be summarised as being empiricist and materialist, purely analysing without feeling or sentimentality. He thought that morality was a matter of vanity and self-regard, rather than simple doing good to help others, he saw all acts of kindness as being done in order to either feel better about yourself or have others see you in a better light. Because of this, Smith said, laws that try to restrict people from seeking self interest will fail or create the opposite effect. This theory is known as "the law of unintended consequences", meaning that an action will create unpredictable knock on effects so there is no point in economic planning. Smith said that to be economically succesful (and therefore have a successful society), people must be left to their own devices as they will naturally look for a niche in the market from which to make money.

Along these same lines is Smith's idea that in the natural order of things, there is no such thing as unemployment because the natural instinct of people is to find something to do so that they can make a living. Smith thought that trends towards economic growth and increasing wealth were part of "natural law" and should not be meddled in by the government. He saw society as a machine which naturally evolves into the creation of wealth and the "hidden hand" will naturally encourage this in society. As part of the "hidden hand" theory, Smith saw trade as an innate pleasure and a defining characteristic of humans. This means that by laws of nature, humans want to trade so that they can make a living and a profit, this backs up the idea that organised economies are no good and the government should not try to control them. Smith also says that trade "promotes peace, civility, moderation, toleration, innovation, science and - generally - concern for others" (Chris Horrie) thereby bringing out many positive traits and it is therefore very beneficial.

Unlike a lot of the poeple at the time, Smith recognised slavery as innefficient as the slave can only earn his subsistence and so has no incentive to work hard. However, he saw this as a matter of conformity to universal human nature rather than morality. Despite this, he thought that efficiency could be increased by a division of labour, like a production line, where people work together to make up the parts of the whole and put them together, rather than just one person making all the parts and putting them together.

Smith also said that governments and states are not beneficial to society and in fact often do more harm than good because it holds back economic, and therefore social, progress. He thought that the state's job should be to maintain "peace, easy taxes and a tolerable administration of justice" and let the "hidden hand" take care of the economy and social gains needed.

As we will go on to discuss in next week's seminar, Jonathon Swift wrote a satire on economists like Smith which shows, in an understated, moderate and sarcastic way, a very intellectual approach, logically trying to sort out the problem of too many poor children, and going through all the logical reasons why they should and shouldn't become a comodity in the form of meat and leather goods, to the point of absurdity. It shows economists such as Smith as "soulless calculating machines" (Chris Horrie) and is very effective in pointing out the ridiculous nature that Smith's strict empiricism could develop.