Economics as a Moral Science: : The Political Economy of Adam Smith

Citation

McNamara, P. (1999), "Economics as a Moral Science: : The Political Economy of Adam Smith", International Journal of Social Economics, Vol. 26 No. 5, pp. 226-229. https://doi.org/10.1108/ijse.1999.26.5.226.4

In light of the number of new and recent books on Adam Smith, one would have to say that interest in the Scottish political economist and philosopher has never been higher. (For the sake of full disclosure, I should add that I have authored one such book, Political Economy and Statesmanship). The usual ebb and flow of academic scholarship may have something to do with this trend, but let me offer another more substantive suggestion. Smith speaks to those concerned citizens and scholars who are uneasy with the more extreme forms of liberal individualism one finds in mainstream economics or in libertarian thought, but who are unwilling to exchange liberal individualism for some form of philosophically or religiously based communitarianism. Because Smith is a liberal individualist who takes moral questions seriously, he might appear to be the perfect fit for our times.

Jeffery T. Young′s Economics as a Moral Science: The Political Economy of Adam Smith makes a clear and forceful contribution to this current reckoning with Smith. Young′s Smith is a grand systematizer, who continued a tradition of moral philosophy as old as the Greeks, whose thought was consistent across the various fields it traversed, and who was optimistic that the advent of commercial society represented a positive gain in terms of morality. Young′s book is divided into two parts reflecting his contention that the relationship between moral philosophy and economics is a two‐way street. Part One attempts to show the way in which Smith′s “positive” economics was grounded in and shaped by his moral philosophy. Part Two looks to Smith′s “normative” economics in an attempt to illuminate the moral dimensions of Smith′s policy prescriptions. Following Kenneth Boulding, Young believes that economics at its best is a moral science. This consideration argues strongly for the importance of Smith as a thinker. I do not want to take issue with Young′s all too rare sense of the magnitude of Smith′s accomplishment, but I do want to call into question somewhat his account of the nature of that accomplishment. Specifically, I wonder if Young does not oversimplify Smith′s rendering of the costs of commercial society.

Part One begins with a clear and useful summary of Smith′s moral philosophy. Young′s conclusions, though, are open to question. He contends that, while Smith was deeply influenced by Hume′s skepticism, he did not reject the idea that there is a universal basis for moral judgements. Young presents Smith as an “empirical” natural law philosopher whose theory of the impartial spectator constitutes the establishment of a transcendent moral standard applicable at all times and places. These conclusions raise large issues, not least of which is the status of Smith′s various affirmations, chiefly in The Theory of Moral Sentiments, that there is a benevolent natural and/or divine order to the universe. How sincere was Smith in these references? How would he know such an order existed? Without such knowledge, how can one speak of universal standards? One somewhat troubling possibility ‐‐ too quickly rejected by Young ‐‐ is that, in order to avoid unnecessary controversy, Smith downplayed his agreement with Hume regarding the profoundly problematic character of final causes and divine plans.

In the rest of Part One, Young deploys Smith′s moral theory in such ways as to provide a richer picture of the moral dimensions of commercial society. In particular, he attempts to spell out the social elements of market behavior. When explaining Smith′s statement that labor is the measure of value, Young argues that it is societal perceptions rather than some strict notion of labor time or energy expended that determines labor cost and which, therefore, establishes the standard of value. Regarding Smith′s theory of distribution, Young suggests that socially derived expectations of property rights in both land and capital ought to be seen as constituting a legitimate foundation for rewarding each of these factors of production. Thus, while Smith sometimes says that labor is both the measure and the source of value, there is nothing irregular about capitalists and landlords taking a share of the returns from productive activities.

Young′s approach is intriguing and to some degree rewarding, but it is subject to a serious problem. Smith′s argument in the <IT>Wealth of Nations just does not tend in the same direction as Young′s. That argument is constructed in scientific terms of “force” and “motion,” “self‐interest” and “accumulation.” It is notable that absent from Young′s account is any discussion of the notion of “unproductive labor”; that strange and profoundly abstract idea Smith derived from the Physiocrats rather than from any social consensus. The difference cannot simply be dismissed by saying that in the Wealth of Nations Smith was writing chiefly about economics rather than morality. While it is true that social perceptions, including the reactions of spectators, play a role in the market, the important question is whether the market leaves a space for consultations with the impartial spectator which Smith saw as the essence of moral life. The impartial spectator speaks with the voice of informed impartiality rather than from the perspective of the unreflective and interested participants in a scramble for wealth, however well regulated.

Part Two of Economics as a Moral Science is devoted to uncovering the moral implications of Smith′s policy prescriptions. Young attempts to show that Smith′s breakthroughs in political economy did not sever his connections with the grand tradition of moral philosophy. Indeed, it was his economic insights that “set him above previous moralists” (p. 130). Young forwards three main arguments. First, Smith was neither oblivious to the concerns of distributive justice nor did he rule out absolutely the idea that society has the right in certain circumstances to enforce duties on its members. Young wisely does not push this argument too far. Smith, as Young notes, was quick to caution legislators about the grave dangers inherent in both these kinds of activities. Second, Young argues that Smith′s emphasis on the importance of the unintended but beneficial consequences of our actions in the economic sphere does not deprive the economic sphere of moral significance. Commercial society cultivates certain virtues, especially justice, and these virtues characterize the mass of citizens. Herommerce by paying too little attention to the fate of virtues other than justice such as “charity” and “hospitality.”

Young′s third argument concerns the role of the public spirited legislator in bringing about the public good. In this sphere of society, reliance on mere unintended consequences is not enough. Young argues that such a legislator must act with the intention of securing the public good. Moreover, a virtuous legislator must possess “systems knowledge,” that is, knowledge of the entire system of society rather than merely local or “contextual knowledge” of the kind that might be satisfactory for a merchant or tradesman (p. 190.). This is an appealing argument. As Young notes, a virtuous legislator would set in motion a “virtuous sequence” of behavior by establishing laws that promote the common good rather than the good of a particular section of society, as under the “corrupt sequence” of the mercantile system (p. 178). As with Young′s attempt to read moral depth into the market mechanism, there is a problem here in that the tide of Smith′s argument runs in the other direction. The Wealth of Nations in particular paints a very gloomy picture of the moral character of nearly all those who enter into politics. It is likely that Smith was more of a realist than Young contends and for that reason chose to rely on less noble forms of political ambition for the implementation of his system of natural liberty.

As should be clear by now, and even though Young tends to minimize Smith′s view of the moral cost of commercial society, there is much in this book that prompts a reader to serious reflection on Adam Smith. That said, Young′s book ends on a jarring note which casts something of a shadow on what precedes it. Young suggests that Smith′s political economy rests on a “moral imperative” that holds that “all human beings are in some sense equal.” Furthermore, and after eschewing discussions, Young says this moral commitment is “ultimately grounded in Scripture: “There is neither Jew nor Greek, there is neither slave nor free man, there is neither male nor female; for you are all one in Christ Jesus”′ (pp. 206‐7). To say, as he does, that Smith “must have believed” surely calls into question Smith′s status as an empirical natural law theorist (p. 207). Such a claim also throws into confusion any hope that Smith might provide a firm non‐religious foundation for contemporary liberal individualism.