Saving Adam Smith from Neoliberalism

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The intellectual heirs of Adam Smith have two battles to fight. The first is to rescue the free market from mercantilism and central planning and the second is to rescue our moral sentiments from intellectuals who think they are inefficient and overly sentimental.

Catallaxy’s Andrew Norton should know better than to enlist Adam Smith in his efforts to reform popular moral sentiments. In a recent post he claims that:

Liberalism is a philosophy of body rather than soul; what you do is more important than why you do it. Still the most famous statement of this stance is Adam Smith’s:

"It is not from the benevolence of the butcher, the brewer, the baker, that we expect our dinner, but from their regard to their own self-interest."

Norton thinks that people should stop making distinctions between charitable donations which are made out of concern for victims of natural disasters and those which are made out of self interest. Presumably self interested donors should also stop making distinctions between sincere praise for their actions and empty flattery designed to encourage them to continue giving.

Adam Smith would not have agreed with Norton’s argument. In The Theory of Moral Sentiments he argued that people want to be loved and respected by others and also want to be worthy of love and respect. Smith would not have been surprised by the way Australians responded to the Indian Ocean tsunami. He would have expected that many people would have made large donations to the Red Cross or Oxfam and not told anyone about it.

But at the same time Smith would not have expected people to give out of compassion or benevolence:

Let us suppose that the great empire of China, with all its myriads of inhabitants, was suddenly swallowed up by an earthquake, and let us consider how a man of humanity in Europe, who had no sort of connexion with that part of the world, would be affected upon receiving intelligence of this dreadful calamity. He would, I imagine, first of all, express very strongly his sorrow for the misfortune of that unhappy people, he would make many melancholy reflections upon the precariousness of human life, and the vanity of all the labours of man, which could thus be annihilated in a moment. He would too, perhaps, if he was a man of speculation, enter into many reasonings concerning the effects which this disaster might produce upon the commerce of Europe, and the trade and business of the world in general. And when all this fine philosophy was over, when all these humane sentiments had been once fairly expressed, he would pursue his business or his pleasure, take his repose or his diversion, with the same ease and tranquillity, as if no such accident had happened. The most frivolous disaster which could befal himself would occasion a more real disturbance. If he was to lose his little finger to-morrow, he would not sleep to-night; but, provided he never saw them, he will snore with the most profound security over the ruin of a hundred millions of his brethren, and the destruction of that immense multitude seems plainly an object less interesting to him, than this paltry misfortune of his own (Part III chapter III).

Smith would expect people to donate after the tsunami – but not out of compassion. He argued that conscience can be more powerful than self-love. As he went on to say: "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."

Conscience, according to Smith, reminds people that a person who puts the greater needs of others above their own less important needs (eg sacrificing a weekend away in order to save the lives of tsunami victims) is more worthy of esteem than a person who acts out of selfishness. By acting according to their consciences people are able to feel pride and avoid shame. A person "desires, not only praise, but praisworthiness; or to be that thing which, though it should be praised by nobody, is, however, the natural and proper object of praise" (Part III chapter II)

Smith also acknowledged that people did want the love and esteem of others. But if people suspect that they are being flattered rather than praised the words lose their value. Just as there is no point in paying someone to say they love you and think you’re attractive, there is little point in donating money in return for flattery (both inferior substitutes for the real thing).

For Smith motives mattered. We shouldn’t praise a celebrity who donates large sums of money in the hope that the extra publicity will help them make it back with interest. Nor should we esteem a business person who donates because appearing stingy or heartless would be bad for sales.

An individual’s conscience may be a powerful motivator but that doesn’t mean it doesn’t need support from the praise and blame of others. Norton thinks we should forget about motives and conscience and focus on self-interest alone. Smith would have argued that this would eventually debase the currency of praise and blame and undermine our moral sentiments.

Norton’s liberalism is a constitution for a society of psychopaths.

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Rafe
2022 years ago

I think that Don’s comments do not do justice to Andrew Norton’s position, as I understand it, namely that good works are good regardless of the motivation of the doer. Andrew quoted Adam Smith to support his case but it does not really matter what Adam Smith thought, his arguments may or may not be sound and they have to be judged on their merits.

I don’t know what Don is trying to prove from his quote from Smith, in those days there was nothing useful that a person in England could do to alleviate a catastrophe in China. Now that we have the resources to mount massive aid efforts it is a different ballgame.

“Norton thinks we should forget about motives and conscience and focus on self-interest alone.”

Where did that come from?

Rafe
2022 years ago

“Adam Smith would not have agreed with Norton’s argument. In The Theory of Moral Sentiments he argued that people want to be loved and respected by others and also want to be worthy of love and respect. Smith would not have been surprised by the way Australians responded to the Indian Ocean tsunami. He would have expected that many people would have made large donations to the Red Cross or Oxfam and not told anyone about it.”

“But at the same time Smith would not have expected people to give out of compassion or benevolence”.

Do we know what motivation Smith would have attributed to people who give to help people overseas?

What are the options: compassion and benevolence, a sense of duty, trying to impress people, establishing a sense of moral superiority, putting the recipients under some kind of obligation to help in some other venture…?

James Farrell
James Farrell
2022 years ago

‘I don’t know what Don is trying to prove from his quote from Smith…’

Pretty straightforward, Rafe. The strength of our empathy or ‘sympathy’ is a function of proximity to our own place and context. It’s natural that we don’t feel much pain and horror at suffering that’s very remote. But that doesn’t mean that charity to those remote victims needs to be self-interested. Charity can be spurred by a third motive, an abstract moral sense.

What changes matters since Smith’s day is travel and television. I don’t think a newspaper account has quite the same effect as TV coverage of a father carrying his drowned child, in a place where you yourself holidayed only last year.

Fyodor
2022 years ago

“Norton’s liberalism is a constitution for a society of psychopaths.”

Uncharacteristically harsh and unfair to Norton.

The key point I took away from his post was the following:

“Self-interest properly guided by good norms and incentives does great things, and too much concern with motives could make things worse. It is the old paradox that fascinated Smith, that good things come of bad motives, and bad things come of good motives.”

Norton’s point was NOT that we should focus on self-interest alone. His point was that self-interest can do good, as in the recent example of competitive giving.

Personally, I think Thorstein Veblen was more applicable to the issue of conspicuous compassion. The US example should indicate that ostentatious philanthropism seems to be a favoured luxury good for the leisure class.

Andrew Norton
Andrew Norton
2022 years ago

Don – As Fyodor said, my point – in that post or in anything else I have written – is not that we should focus on self-interest alone. It was more about the disconnect between motives and outcomes (relevant too to the debates in several blogs about communism) and how we can use what is often seen as bad part of human nature for good ends.

Self-interest is useful because it is a common attribute and relatively easy to access as a policy tool; it is far easier for policymakers (or culture makers, in this case) to take someone as they are and change their incentives than to try to make them someone else.

Nic White
2022 years ago

I agree with Andrew’s point that good can come from actions or the motives of said actions that are considered to be undesireable. Another example would be the bombing of a German city in WW2 by a lost Allied bomber which resulted in the deaths of many Germans, and subsequently the deaths of many Britons when Hitler was enraged and retaliated, but ultimately saved Britain from being overrun by the German war machine. The are many examples around.

However I do not think deeds that are commited with a solely self-centered motive but happen to have good reprocussions should be held as equal to selfless acts. It sickened me to the point where I had to leave the room when at the charity cricket match Eddie MacGuire openly praised ad nauseum the overwhelming generousity of the Packer family in donating $3 million, portraying them as kind charitable people – when relaly they just wanted praise and increased revenue from their dontatin.

Good may come from bad or selfish acts, yes, but this should not mean they should be held on an equal plateau.

Andrew Norton
Andrew Norton
2022 years ago

Nic – I wouldn’t disagree; I think we can still make many moral distinctions. My argument in the post that triggered Don’s little outburst was only against demanding purity of motive.

Mark Bahnisch
2022 years ago

Andrew, I doubt there’s any such thing as “purity of motive”. If you read T.S. Eliot’s “Murder in the Cathedral” you get a nice case study of a saint being tempted to martyrdom by the desire to be a saint. People always have simultaneous motives for doing most things.

Andrew Norton
Andrew Norton
2022 years ago

There can be multiple motives, sure – what seems to upset people are self-regarding motives, especially when combined with (apparent) other-regarding motives.