Lost Legacy Prize for April - Simply the Best

Pejman Yousefzadeh in the New Ledger HERE
writes ‘In Praise of Adam Smith’ and introduces me (for which my deepest thanks, to Karen Horn, writing in Standpoint online HERE:

‘Instead, the present global financial crisis has made the godfather of classical economics look strikingly irrelevant in comparison with Keynes, the inventor of modern disequilibrium theory. Even worse, now that bankers are being castigated as the incarnation of greed, blindness and irresponsibility, the man who wrote in his famous Inquiry into the Nature and Causes of the Wealth of Nations that "it is not from the benevolence of the butcher, the brewer, or the baker" - or perhaps the banker in our day - "that we expect our dinner, but from their regard to their own interest" is again accused of being the chief advocate of heartless laissez-faire capitalism, a system that failed and had to fail. In this view, capitalism is nothing but a false religion, with Mammon as its god and Smith as its high priest. Critics worry that markets need a moral foundation that they automatically erode. They ridicule the naïve belief that free markets bring everybody happiness at no cost, a conviction allegedly lacking all philosophical underpinnings.’

From this unpromising start Karen Horn knocks the socks of almost all commentators on the relevance of Adam Smith. I sat up and paid attention when I read her next sentence:

‘His deep persuasion was that simply observing reality enables us to discover the underlying natural principles. The Scottish Enlightenment thinkers aimed at shedding light on the laws governing human behaviour, and on their consequences for life in society.’

She continued amazing me with her understanding of Adam Smith (I am so used to media commentators talking nonsense about him):

‘Absent-minded he may have been, but naïve he wasn't, let alone a cynic. Smith did not tolerate immoral behaviour. It would never have occurred to him that selfishness and greed might be viewed as being just normal - and even less that they might be morally laudable, let alone negligible. This differentiates him from Thomas Hobbes, in whose view man is a wolf to other men, and also from Bernard Mandeville, well-known for his poem "The Fable of the Bees", in which he - half satirically, half seriously - claims that private vices result in public benefits. Smith strongly objected to this view. The proof of this attitude is his first widely recognised book, the Theory of Moral Sentiments, published on April 26, 1759-250 years ago.’

If you have not read, or understood, Smith’s Moral Sentiments, I recommend that you follow the link to Karen’s article. It’s by far the best short summary of Smith’s moral philosophy I have read for quite a while. She explains the ‘impartial spectator’ clearly. She also demolishes the so-called 'Das Adam Smith Problem:

‘It is true that almost two decades elapsed between the first publication of the Theory of Moral Sentiments and the Wealth of Nations. But Adam Smith never left it at the first editions of his works. Both books underwent numerous rewrites and additions until the end of Smith's life. He worked on them continuously and in parallel but never fundamentally changed his mind. His approach and the logical system that he built always stayed the same.’

I would add to this the fact that Smith’s Lectures in Jurisprudence [1762-63] carry verbatim much that was to appear in Wealth Of Nations, emphasising the continuity in his economics from his days at Glasgow before he met the French Physiocrats in 1764-6. These lectures were not available until 1896 when a manuscript of students’ notes were found in Oxford.

‘Smith's major works both take the same methodological route, using parallel premises and leading to analogous results. Smith's approach is typical of the empiricism that was in vogue during the Scottish Enlightenment. He describes meticulously that which is - and not so much that which should be. He looks at people's behaviour and tries to deduce universal laws from what he sees. Since man is a social animal, the observations focus on human interaction.’

Comment
I urge you to read Karen Horn’s article. It is too good to miss. And the sensible comments attached from readers are gems indeed. There is even a mention for a theme relevant something that I am working on at present for my paper on the ‘Alleged religiosity of Adam Smith':

‘Some scholars have attributed Smith's optimism to his alleged Deism. He seems to show a belief in a Creator who has endowed the world with certain natural laws accessible to human reason, but who refrains from intervening in the course of worldly events. True or false, this is no founding pillar of Smith's system. Smith places the individual dispositions and actions of men at the baseline of his analysis. If these dispositions and actions cannot be traced back to providence but are instead triggered by secular social learning or simply sheer evolution, this doesn't invalidate his logical result. The masterpiece that matters is the social co-ordination achieved through interaction, and the generation of useful institutions that channel life in human society.’

I couldn’t put it better myself. I have no hesitation in awarding Karen Horn the Lost Legacy Prize for the best article on Adam Smith for April 2009.

Thought for the Day no 4

I came across this yesterday while checking citation references for a paper in proof. Buckle speaks of Smith’s Moral Sentiments and Wealth Of Nations:

‘No great truth which has once been discovered has ever afterwards been lost; nor has any important discovery yet been made which has not eventually carried everything before it’ (H. T. Buckle, 1867. History of Civilisation in England, 3 vos. vol 1. p 215).

Unfortunately, Buckle went on the miss-describe Smith’s concern with ‘sentiments’ in Moral Sentiments and self-interest in Wealth Of Nations, which started the hares among German Philosopher in the late-19th century, nowadays known as the so-called ‘Das Adam Smith problem’, which was neither Adam Smith's nor a problem.

This prompts me to re-cast Buckle’s sentence:

‘No great misunderstanding which once promulgated has ever afterwards been lost; nor has any trivial metaphor yet been popularised which has not eventually carried everything before it.’

A Conservative MP is Correct

Julian Brazier MP contributes to The Cornerstone Group Blog (HERE)

‘Financial integrity key to stability’

“I’d like to make another point, however. How did we ever allow ourselves to get to a position where bankers could legally bet the house on risky deals? Answering that question is likely to take a long time and solutions may be slow coming, but part of the answer has to be moral. Adam Smith wrote a book about the importance of personal ethics before he wrote the Wealth of Nations. If we continue with the cult of celebrity, where megabucks are worshipped and integrity is sidelined, we will not find our way back to the kind of stability which earlier generations took for granted.”

Comment
Julian Brazier is right, of course. That was Adam Smith's intention when he published Moral Sentiments in 1759 and Wealth Of Nations in 1776. This were publsihed separately but they do not contain separate content.

Smith also lectured on ethics and jurisprudence, which happened to contain large parts of what became Moral Sentiments and Wealth Of Nations (sometimes verbatim). He taught to the same materials to the same students in his same classes at Glasgow University from 1751-64.

The view that Wealth Of Nations was a later construction than Moral Sentiments is not true (see his Lectures in Jurisprudence [1762-63] 1978, Liberty Press, Indianapolis). I discuss this in my: Adam Smith: a moral philosopher and his political economy, Palgrave Macmillan, 2008 and in numerous posts of Lost Legacy.

Smith didn’t change his mind when composing Wealth Of Nations (1764-76), nor did he ‘forget’ what he had published in Moral Sentiments; he didn’t take morality out of political economy.

That incorrectnotion was accomplished by some 19th-century German authors (the so-called “Das Adam Smith problem” – more accurately called ‘Das Deutsch Problem’), and was spread by modern US economists, who hadn’t bothered to read either his Lectures or Moral Sentiments, or, in the latter case if had they read it, they clearly didn’t really understood it, or Adam Smith's philosophy.

'Das Adam Smith Problem' Again

Among the books that I purchased at the Rome conference, one immediately caught my eye: Serge-Christophe Kolm, “Reciprocity: an economics of social relations”, Cambridge University press, 2008. Kolm is Professor of Economics at the Ecole des Hautes Etudes en Science Sociales, Paris; the bibliography contains 35 of his impressive publications in economics, many of them related to themes of reciprocity and justice.

I began reading his extremely interesting and informative study of reciprocity en route home because reciprocity is a theme of my analysis of the ‘Prehistory of Bargaining’. At this early stage I am not yet sure how much Professor Kolm’s in-depth knowledge of reciprocity will influence revisions of my earlier conclusions – ‘good reason perforce must give way to better’ (Shakespeare, Julius Caesar; though, admittedly, the character who says this died in the next Act).

However, I was surprised to read this paragraph on page 39:

“Adam Smith was convinced by Parisian economists, if not to abandon the ‘moral sentiments’ of his first major study (which included reciprocity), at least to propose that if you need meat, you should expect it not from your butcher’s altruism but from his self interest in an exchange.”

There are many non-critical comments that I could make on the rest of this section in Kolm’s book, but these must await later treatment. For the moment I draw attention to something critically wrong with the hypothesis presented by the above paragraph in relation to Adam Smith alledgedly ‘changing his mind’ between the writing of Moral Sentiments, published in 1759, and the writing his famous lines about appealing to the self-interest of the ‘butcher, brewer, and baker’ as published in 1776 in Wealth Of Nations. This misconception is fairly common among economists; in its original form it was known as ‘Das Adam Smith Problem’, from the number of German authors in the late 19th century who believed they had discovered a flaw in Smith’s Works.

An hypothesis that Smith’s contact with the Parisian Physiocrats ‘changed his mind’ only has credibility if no account is taken of what Adam Smith was teaching in Glasgow from 1751-64 (perhaps longer if his lectures in Edinburgh from 1748-51 are taken into account).

We have credible evidence for the contents of these from the sets of students’ notes, one set found in Oxford in 1895: Lectures on Justice, Police, Revenue and Arms, delivered in the University of Glasgow by Adam Smith, edited by Professor Edwin Canaan and published in 1896 by Clarendon Press, Oxford, and another set found in Aberdeen in 1958 by Professor John M. Lothian.

Both sets of student notes, with extensive editorial work by R. L. Meek and W. D. D. Raphael and P. D. Steen, were published by Oxford University Press in 1978, Adam Smith, Lectures in Jurisprudence.

Adam Smith visited France in 1764-66 and met many of the French Phsyiocrats, widely known as the economistes. Professor Kolm appears to believe that Adam Smith was ‘convinced’ by his ‘Parisian friends’ to either change his mind or at least to downplay the themes he published in Moral Sentiments in 1759 when he came to write Wealth Of Nations, between 1764 and 1776.

This fairly common assertion is indicative of the unfamiliarity of those who make it with Adam Smith’s Jurisprudence lectures delivered in 1762-3 and read for him in ‘1766’ – more likely in 1764 by his temporary replacement after Smith left Glasgow suddenly in January 1764 to escort the Duke of Buccleauch on his French tour.

The Jurisprudence lectures are not only fairly close to being verbatim; they are also dated by day and month. The example of the ‘butcher, brewer, and baker’ was delivered on Monday, 28 March 1763, more than a year before Smith met some of the Physiocrats (he spent his longest time in Paris in 1765-6).

Smith says to his class:

‘Man continually standing in need of the assistance of others, must fall upon some means to procure their help. This he does not merely by coaxing and courting; he does not expect it unless he can turn it to your advantage or make it appear to be so. Mere love is not sufficient for it, till he applies in some way to your self love. A bargain does this in the easiest manner. When you apply to a butcher or brewer for beer or for beef you do not explain to him how much you stand in need of these, but how much it would be [his] interest to allow you to have them for a certain price. You do not address his humanity, but his self love. – Beggars are the only persons who depend on charity for their subsistence.’ [LJ(A) vi.45-6: P 347-8]

And in ‘1766’ [1764], Thomas Young, his stand-in lecturer reads from Smith’s script, which unknown students took down, saying:

“Man, in the same manner, works on the selflove of his fellows, by setting before them a sufficient temptation to get what he wants; the language of this disposition is, give me what I want, and you shall have what you want. It is not from the benevolence, as the dogs, but from selflove that man expects any thing. The brewer and the baker serve us not from their benevolence, but from selflove. No man but a beggar dependence on benevolence, and even he would die in a week were their entire dependence upon it.’ [LJ 219-20: pp 492-3; see also: Ian S. Ross, 1995. The Life of Adam Smith, p 196, Clarendon Press, Oxford]

Evidence that Smith had taught these doctrines even earlier, perhaps duing 1748-51 in his public classes in Edinburgh, comes from a paper he is reported to have read to the Political Economy Club in Glasgow in 1755 (known as the ‘1775 Paper’), which Professor Dugald Stewart quoted in 1793 in his eulogy to the memory of Adam Smith, who died in 1790:

‘A great part of the opinions [Smith observes] enumerated in this paper is treated of at length in some lectures which I have still by me, and which were written in the hand of a clerk who left my services six years ago [1749]. They have all of them be constant subjects of my lectures since I first taught Mr Craigie’s class, the first winter I spent in Glasgow [1751-2] to this day, without any considerable variation. The had all of them been the subjects of lectures which I read at Edinburgh the winter before I left it, and I can adduce numerous witnesses, both from that place and from this, who will ascertain them sufficiently to be mine’ (D. Stewart, ‘Account of the Life and Writings of Adam Smith’ Transactions of the Royal Society of Edinburgh, 1793, published in Adam Smith, Essays on Philosophical Subjects, [1795] 1982, Oxford University Press, Oxford.

Taken literally, Smith claims to have been delivering the main themes of his political economy as long ago as 1748-51 in Edinburgh and from 1751 in Glasgow. Moreover, we know from his lecture schedules that he delivered his lectures on Ethics (which formed the bulk of the Theory of Moral Sentiments and his lectures on Jurisprudence to the same students in Glasgow who took their ‘AM’ degrees).

If there was a major contradiction between the two subjects as taught by Adam Smith it would have been obvious to him at the time (and his students, some of whom went on to become academics of note; for example Professor John Millar, reported by Dugald Stewart, op cit. ESP I.17, p 274-5). On the basis of this evidence, I think that Professor Serge-Christophe Kolm’s assertion that:

“Adam Smith was convinced by Parisian economists, if not to abandon the ‘moral sentiments’ of his first major study (which included reciprocity), at least to propose that if you need meat, you should expect it not from your butcher’s altruism but from his self interest in an exchange,”
is fatally challenged.

For the record I do not think there is any inconsistency in Smith’s treatment of self interest in Moral Sentiments and Wealth Of Nations. In other words, there is no ‘Das Adam Smith Problem’.

Adam Smith and 'Das Adam Smith Problem'

Ed Kaitz writes (1 November) in American Thinker (HERE):

“… Adam Smith Problem”

[Please note I only discuss Ed Kaitz’s ideas on ‘Das Adam Smith Problem’ here and shall not comment on the views of presidential candidates in line with the long-standing Lost Legacy’s self-denying ordinance to only discuss the political policies of people in the country in which I vote (Scotland, UK)]

‘German scholars in the nineteenth-century exercised a good amount of frustration over something they dubbed "das Adam Smith Problem." To the consistency-minded Germans the brilliant yet humble Scottish economist and "father of capitalism" had nevertheless left a rather dubious literary legacy: two monumental and influential books that seem to argue in radically divergent and quite insurmountable directions.

…in the first of Smith's books, The Theory of Moral Sentiments (1759), Smith makes a quite humane and often beautiful case for the power of human sentiment in the practice of social virtue. He binds humanity together at an extraordinarily deep level and demonstrates why "we sympathize with the natural resentment of the injured" when, for example, greedy industrialists "violate fair play" and "throw down" their competitors "in the race for wealth and honors." Indeed, Smith seems to foreshadow the bleak finale expertly captured by Orson Wells in his Citizen Kane when he argues that the twilight years of greedy men will be filled with thoughts of "terror and amazement" at their prior conduct and make them outcasts from "the affections of mankind".

Conversely, in his magisterial The Wealth of Nations (1776), Smith relentlessly drives another point: that our darker and asocial instincts of self-preservation, retaliation and competition nevertheless provide the potent and necessary ingredients to "rouse the industry of mankind." In short, in his commanding treatise on capitalism it is self-interest and utility, not benevolence and sympathy that can solve the problem of economic scarcity: "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest." Indeed, what mystified German scholars was the quite sensitive and touching portrayal of human community in Smith's first book and statements like the following in his second: "It is his own advantage, indeed, and not that of society, which he has in view."

Similarly, to Smith, the only way to produce the public good is to not think of the public good! In his words: "By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good." Self-interest then produces the public good through what Smith famously called "the invisible hand." More wealth is created for everyone when each thinks about his own interest. To Marx and Rousseau however this doesn't cut it since the very definition of morality is to think of others first, not yourself.

As a sentimentalist philosopher, Smith also noticed something quite remarkable about the human condition: we're all hard-wired with common sentiments concerning what constitutes fair competition and what appears to us as fraud or greed. We universally condemn the behavior of rapacious capitalists who "throw down" their competitors - they appear "detestable" to us. He recognized in his Theory of Moral Sentiments that the virtue of "justice" was required to keep these people in line with proper legislation. The danger however is that the lawgiver might "push" this legislation "too far" and "destroy liberty, security, and justice."

Why was Smith so concerned with preserving freedom? Because he understood that human sentiments like "beneficence" were only possible in a free society. In short, unlike justice, which can be extorted by force (threat of punishment), moral virtues like beneficence or fellow-feeling would completely disappear under something like socialism or communism: "Beneficence is always free, it cannot be extorted by force, the mere want of it exposes to no punishment; because the mere want of beneficence tends to do no real positive evil." Our common sentiment, in short, "approves" of fellow-feeling only if it has not been extorted by force. No one, says Smith, can force you to be a good neighbor - this has to be done freely.

Smith is interested in taking stock of human beings and finding out how to both preserve freedom and benefit society within the bounds of our given nature. Justice is there to force good behavior "to a degree" in a capitalist economy but we also need to recognize that the self-preservation instinct is the only dynamic engine for increasing wealth and avoiding poverty. But beneficence, freely given and not forced, serves as another check in the "race for wealth and honors." It is our common human sentiment says Smith that keeps us from looking "mankind in the face" and claiming that we prefer ourselves to all others.”

Comment
Ed Kaitz is a gifted writer and college teacher (I can’t give more details as there appear to be several 'Edward Kaitz’s' in US universities and all are plausible candidates as authors of the American Thinker article, which appears to be right of centre in tone).

He does a reasonable job in his discussion of the issues involved in ‘Das Adam Smith Problem’, to which I make some observations for readers who may not be aware of the missing links in Ed Kaitz’s exposition.

The German origins of the ‘Das Adam Smith’s Problem’ in the last quarter of the 19th century come from a misunderstanding occasioned by the different dates of publication of Moral Sentiments (1759) and Wealth Of Nations 1776) and is often presented today as Smith having ‘changed his mind’ in the 17 years between publishing his two books. This is a wrong inference from the separated publication dates.

Students’ notes of Smith’s lectures (1762-3 and ‘1764’) at Glasgow University were discovered in 1895 and 1958 and show that he taught his classes both from lectures that became Moral Sentiments and lectures that became Wealth Of Nations to students in the same classes. Large sections of his Lectures in Jurisprudence (1762-4; published in 1978 by Oxford University Press) were taken verbatim into Wealth Of Nations, as were taken his classes in Ethics into Moral Sentiments. The ideas matured together, first as lectures to students and then as prose for his two books, and there were no contradictions between the two books despite the different dates of their publication.

Moreover, Smith revised both books in the different editions published after their publication: Moral Sentiments' editions: 1759; 1761; 1767; 1774; 1781; 1790) and Wealth Of Nations editions: 1776; 1778; 1784; 1786; 1789. These co-terminus editions, together with the fact that his lectures in the 1750s-60s were delivered to the same classes of students each year, show conclusively that there is no question of Adam Smith ‘changing his mind’ about moral motives and economic behaviours.

If his students had not noticed that ‘he seem[ed] to argue in radically divergent and quite insurmountable directions’ in his lectures, contemporary faculty colleagues would have noticed and commented, and more importantly, he would have noticed too. The imagined ‘problem’ was noticed by nobody until misinformed
faculty in Germany a hundred years later jumped to the wrong conclusions, by which time philosophy and political economy were quite separate disciplines, though for Scottish moral philosophers a hundred years earlier they were part of the same discipline.

Ed Kaitz explains why "we sympathize with the natural resentment of the injured" when, for example, greedy industrialists "violate fair play" and "throw down" their competitors "in the race for wealth and honors" and then neatly implies a switch from Smith’s discussion ‘Of the sense of Justice, of Remorse, and of the consciousness of Merit’ in Moral Sentiments (TMS II.ii: p 82) to what a casual reader would suppose is Wealth Of Nations, because Ed Kaitz continues ‘for example, greedy industrialists’, when in fact Kaitz is still quoting from Moral Sentiments. The fuller quotation below illuminates the distinction (not that Smith would probably have meant the same thing as Kaitz in introducing ‘greedy industrialists’as we know some of them from 19th -20th-century history today:

“Though it may be true, therefore, that every individual, in his own breast, naturally prefers himself to all mankind, yet he dares not look mankind in the face, and avow that he acts according to this principle. He feels that in this preference they can never go along with him, and that how natural soever it may be to him, it must always appear excessive and extravagant to them. When he views himself in the light in which he is conscious that others will view him, he sees that to them he is but one of the multitude in no respect better than any other in it. If he would act so as that the impartial spectator may enter into the principles of his conduct, which is what of all things he has the greatest desire to do, he must, upon this, as upon all other occasions, humble the arrogance of his self-love, and bring it down to something which other men can go along with. They will indulge it so far as to allow him to be more anxious about, and to pursue with more earnest assiduity, his own happiness than that of any other person. Thus far, whenever they place themselves in his situation, they will readily go along with him. In the race for wealth, and honours, and preferments, he may run as hard as he can, and strain every nerve and every muscle, in order to outstrip all his competitors. But if he should justle, or throw down any of them, the indulgence of the spectators is entirely at an end. It is a violation of fair play, which they cannot admit of.” (TMS II.ii.2.1: p 83)

That there are examples of ‘greedy industrialists’ in the recent past behaving in reprehensible manners, has nothing to do with Smith’s point about people who ‘justle’ and forego the patience of the ‘impartial spectator’. For an account of Smith’s theory of the ‘impartial spectator, see my Adam Smith: a moral philosopher and his political economy, 2008, Palgrave Macmillan).

Ed Kaitz states ‘we're all hard-wired with common sentiments’, which may express Kaitz' view but it isn’t Adam Smith’s. The notion that we are born with a moral sense was that of Smith’s tutor, Professor France Hutcheson, among others, which Smith explicitly rejects in Moral Sentiments.

People learn about what others will go along with as part of their socialization (as we term it today), starting with the chastisement from parents and other adults, and then in the ‘great school of self command’, our school fellows, and on throughout our experience until we become mature adults. Other people set the boundaries of our behaviour, as we do theirs, which is Smith's very point about impartial spectators.

Hence, the notion that “what constitutes fair competition and what appears to us as fraud or greed” and that “We universally condemn the behavior of rapacious capitalists who "throw down" their competitors - they appear "detestable" is Ed Kaitz’s interpretation (to which he is entitled) but it was never an assertion of Adam Smith in either of his books.

Similarly to assert that Smith believed that ‘moral virtues like beneficence or fellow-feeling would completely disappear under something like socialism or communism’, is a construction too far if meant as a belief of Smith’s. Neither ‘socialism or communism’ had any meaning for Smith in the 18th century; these horrors were a long away ahead, which Ed Kaitz is perfectly entitled to articulate but not to enroll Adam Smith (who died in 1790) into his beliefs, though I agree with Ed’s sentiments.

Ed Kaitz quotes from Moral Sentiments that each man “naturally prefers himself to all mankind, yet he dares not look mankind in the face, and avow that he acts according to this principle”. If the immediately preceding sentences from the same section of Moral Sentiments are read we can see Ed's spin on these words is unjustified:

“There can be no proper motive for hurting our neighbour, there can be no incitement to do evil to another, which mankind will go along with, except just indignation for evil which that other has done to us. To disturb his happiness merely because it stands in the way of our own, to take from him what is of real use to him merely because it may be of equal or of more use to us, or to indulge, in this manner, at the expence of other people, the natural preference which every man has for his own happiness above that of other people, is what no impartial spectator can go along with. Every man is, no doubt, by nature, first and principally recommended to his own care; and as he is fitter to take care of himself than of any other person, it is fit and right that it should be so. Every man, therefore, is much more deeply interested in whatever immediately concerns himself, than in what concerns any other man: and to hear, perhaps, of the death of another person, with whom we have no particular connexion, will give us less concern, will spoil our stomach, or break our rest much less than a very insignificant disaster which has befallen ourselves. But though the ruin of our neighbour may affect us much less than a very small misfortune of our own, we must not ruin him to prevent that small misfortune, nor even to prevent our own ruin. We must, here, as in all other cases, view ourselves not so much according to that light in which we may naturally appear to ourselves, as according to that in which we naturally appear to others. Though every man may, according to the proverb, be the whole world to himself, to the rest of mankind he is a most insignificant part of it.” (TMS II.ii2.1: pp 82-83)

Finally, Ed Keitz asserts:

“Conversely, in his magisterial The Wealth of Nations (1776), Smith relentlessly drives another point: that our darker and asocial instincts of self-preservation, retaliation and competition nevertheless provide the potent and necessary ingredients to "rouse the industry of mankind." In short, in his commanding treatise on capitalism it is self-interest and utility, not benevolence and sympathy that can solve the problem of economic scarcity: "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest."

This is a misreading of the paragraph in Wealth Of Nations (WN I.ii: pp 26-7) – a misreading widely shared by the majority of economists (and philosophers) who quote it. Smith actually enjoins readers to serve the self interests of others, in this case the ‘butcher, brewer, and baker’, in order to serve their own self interests (food for themselves and their families). Be other-directed and not self–directed!

The ultimate selfishness is to expect our necessary sustenance from others, free, gratis, and for nothing! Who will give the butcher, the brewer, and the baker things that they and their families need in food, clothing and shelter, let alone the objects considered necessary for a decent living standard? Smith observed, he did not preach.

If Ed Kaitz reads Adam Smith’s books as he wrote them and as he taught his students for years before, he will really understand why ‘das Adam Smith problem’ is a fantasy created by some talented people who didn’t understand his ideas, nor did they know about the context from which they were generated.