武汉大学博士英语课文电子版

Unit-3 Adam Smith Right and Wrong

1 Even though more than 200 years have passed and the world has changed radically, a version of Adam Smith’s ideas is revered by millions of prosperous and influential individuals who don’t know what Smith’s ideas were. Jerry Z. Muller’s book is an exercise in historical excavation and as an excavator he succeeds very well. But I am dubious about Muller’s claim that Smith is still the most cogent defender of capitalism. Too much has changed in the last 200 years for that to be the case. He---Muller---must be absolved from responsibility for the opinions expressed here; they are mine, not his.

2 We start with the excavation of the first of Adam Smith’s two books, The Theory of Moral Sentiments, published in 1759, to Smith’ s evident dissatisfaction, since he revised it six times until his death in 1790. The subject is the unraveling of a mystery: What holds society together? Why do innately self-seeking humans usually act decently to one another? Our credulity is strained to think that the fear of punishment explains it all. The question is nothing less than the origin of morality.

3 Smith observed that each normal person is born with the capacity to imagine how it feels to be in someone else’ s place. He or she feels a need for the approval of others. This need is directly related to the passion (as Smith called it) to seek one’ s self-interest. A normal child learns to mold his behavior in a way that will win recognition and approval and avoid scorn and disapproval. The molding starts in the family, extends to the neighborhood, church, and school, and ultimately to the wider society.

4 In the course of this tutelage, a human being internalizes social norms develops a conscience---an impartial observer--- which is able to measure the behavior of the person observing himself and the behavior of others by the same standards. A social being emerges from this hitherto mysterious process, as one who possesses self-command, who is able to rule his or her own passions and thus be fit to live with others.

5 Some indeterminate number of men and women, due to exceptional endowments or circumstance, are able to take a further step and, rather than guiding their actions according to the praise of others, guide them by standards they themselves consider praiseworthy. Among these moral exemplars is a small party concerned with improving the institutions that serve the general interest. As man of the Enlightenment who placed hope in the power of reason to sweep unreason before it, Smith looked to this small party to gain the attention of statesmen and in due time en lighten them. In this capacity he himself was unexcelled.

6 There is a strange here. Smith believed that it was not reason that ruled but human passions. Yet it was necessary for reason to discover and support the institutions that directed the passions to universally beneficial ends to be said about this as long as we keep clearly in mind whether the subject is the invisible hand or the visible hand.

7 The only question that Smith could not answer was: Why people are moral, other than

assuming that God made us that way. In The Descent of Man (1871), Charles Darwin provide the most widely accepted explanation: Cooperation is adaptive in social species; cognitively advanced social species take pleasure in the company of others and language gives Homo sapiens the ability to generalize from shared experiences about fairness and duty. This degree of intelligence makes it possible to extend moral behavior from kin to non-kin; to a village, a religion, a class, a nation, or the entire world. The history of social institutions, a subject on which Smith wrote with erudition, shows that exclusion or inclusion of those for whom we feel moral sentiments is not fixed once and for all but depends on how we define “us and them”. Nothing in Darwin contradicts Smith.

8 We can be sure that Smith was aware of this issue because of his comments on the conflict between the British establishment and the American colonies, about which he learned a great deal from his friend Benjamin Franklin. Smith considered taxation of the colonists without representation in Parliament to be folly. The outcome leaves no doubt that Smith knew moral sentiments cannot survive the effects of alienation.

9 Now we come to Jerry Z. Muller’s excavation of Adam Smith’s great unread book, The Wealth of Nations, published in 1776. Many readers may think this excavation unnecessary, the ideas of that treatise being so well known. Perhaps. The invisible hand ranks as one of the most successful academic metaphors of all time. In the market, people are strangers to one another. They may be acquainted or even friendly. But their interests are opposed. Self-interest rather than moral interest prevail except on the rules of the game: no coercion, fraud, contracting away third parties’ rights, and so forth. But the single-minded pursuit of self-interest nevertheless results in the general good, as we all know, because free competition forces prices to the lowest level compatible with the costs of land, labor, and capital. It induces enterprisers to move their resources out of markets where supply exceeds demand into markets where demand exceeds supply, so that the goods and services they produce correspond to the wants of consumers. No one planned these results, and no one intended them to come to pass: free competition is self-regulating.

10 The mercantilists, against whom Smith polemicized, believed that the wealth of nations depended on the accumulation of gold and silver obtained by countries which export more than they import, a result enhanced by monopolies in trade bestowed by the state. The rise in the standard of living during the 18th century underlined Smith’s counter-argument that the wealth of nations depends on the growth of the market, which encourages an increasing division of labor, more specialization, and consequently greater productivity. Monopolies increase the wealth of monopolies; free competition increases the wealth of the entire country.

11 Many of Smith’s present-day epigones, who have not followed Professor Muller’s excavation deeper, conclude that Smith was a particular friend of business. He was not. He scorned the frequent practice of merchants who conspire behind closed doors to raise prices and depress wages, and warned that they bear watching. He was no more a friend of workers, who combined to raise wages, although he recognized that the repetitiveness of manufacturing jobs made factory hands as dull as they possibly could be. But he expected the salutary effects of commerce to raise wages in the long run, increase leisure time, and create revenues for public

elementary education to offset the misery of simple-minded, numbing work.

12 Dose Sm ith’s championship of free markets mean that he was hostile to the state? It does not. He expected the responsibilities and size of the state to grow as commercial society grew and the revenues of the state to increase commensurately, contrary to the views of his modern apostles. The state must spend for defense; for public works; for the enforcement of law; for public education; and for creating a structure to protect every member of society from the oppression of every other member by, as he wrote, “promo ting the prosperity of the commonwealth, by establishing good discipline, and by discouraging every sort of vice and impropriety; it may prescribe rules, therefore which not only prohibit mutual injuries among fellow-citizens, but command mutual good offic es to a certain degree ”(quoted on p.148).

13 But Smith had no illusions about the impartiality of government. He did not trust the landowners, the capitalists, or the workers. He recognized that laws reflect the power of those who make them and codify the shared standards of the dominant orders of society. Universal suffrage was not ever a topic of conversation, and deference to the higher orders was taken for granted.

14 Like most men of the Enlightenment, he was dazzled by Newton’s model of a self-regulating universe, which astonished the world in 1687, an used it as an inspiration to create a self-regulating social universe where class power is controlled by an invisible hand much as the heavenly bodies are controlled by gravity.

15 Looking back, we can see that Smith was both right and wrong. He was right about the power of moral sentiments in civilizing society, but he knew the limits to the impartiality of the impartial observer an he knew that moral sentiments stop at many borders unless the strongest incentives exist to extend them.

16 He was right about the effectiveness of the free market in prodigiously increasing the wealth of nations, but he knew that men were constantly trying to find ways to circumvent it. He could know nothing lf the inventions that brought about the Industrial Revolution, the huge concentrations of business, the emergence of trade unions, the periodic waves of unemployment, and the “bads” produced along with the “goods”, externalities as Arthur Pigou called t hem, the costs of which had to be paid by somebody. With all these exacerbating tensions of the 19th and 20th centuries, it was too much to expect that lawmakers, prime ministers, and presidents could understand, much less agree on, how to contain this explosive mixture.

17 Almost everything that could go wrong with Smith’s civilizing project did go wrong. We can no more expect Smith to be right about the 200 years between his time and ours than we can expect ourselves to be right about the next 200 ye ars. The great problem with Smith’s system is that it is driven down the middle by two invisible hands at war with one another. One invisible hand guides the moral sentiments of civil society; the other guides the self-interest of commercial society. And many visible hands are grasping at their wrists to turn them in this direction or that. The two invisible hands are ghostly apparitions of two spheres they represent: the capitalist market and the civil society. The separation of the two is the fatal flaw of modern conservatism. How to

bring morality into the market is the central issue of capitalism.

18 As I said at the beginning, Smith is not the most cogent defender of capitalism; we live in

a different capitalism; If I wanted to sketch a defense of modern capitalism, and it is the only practical thing to do, I would start with the fact that we live in a society of conflicting interests, and that the only alternative to going to hell together is compromise between the conflicting interests. The best defense of modern capitalism is a social contract between the two classes of markedly unequal power. Only the reorganization of countervailing power by labor and its supporters can lead to a compromise of mutual benefit.

19 I say reorganization because countervailing power and a social contract exist after World WarⅡ. But in the last 25 years Europe and we have decivilized into high unemployment, rising poverty, and an increasingly unequal distribution of income.

20 I am describing a possible capitalism, one where there is concurrence in minimum standards of life for all and concern for the common good. Those who write about the free market as being triumphant and social democracy being left in the dust are premature. A one-class society—pluralistic, democratic, with common rather than antagonistic interests: let us not be too hasty to say finis, as the present situation becomes increasingly unteriable.

21 The greatest unforeseen and unintended consequence of Adam Smith’s doctrine is its use as an ideology of the privileged. His means are naively or hypocritically supported, for we have no free market in the sense that Smith defined it. But the ends of fairness for which he proposed the means are ignored.

22 We have it on the authority of Sir Walter Scott that when Adam Smith and Samuel Johnson first met, they fell into an argument, with Johnson saying to Smith, “You lie?” and Smith replying: “You are a son of bitch!” This colloquy seems out of character, since Smith was widely respected for his learning and humanity by contemporaries as diverse as Edmund Burke and V oltaire, both of whom he counted as friends. But it does give us an idea of what he would have to say to some of his present-day admirers.