Adam Smith’s Political Philosophy
Routledge studies in social and political thought
Smith 19 The Reading of Theoretical TextsPeter Ekegren 20 The Nature of CapitalMarx after FoucaultRichard Marsden 21 The Age of ChanceGambling in western cultureGerda Reith 22 Reflexive Historical SociologyArpad Szakolczai 23 Durkheim and RepresentationsEdited by W. No part of this book may be reprinted orreproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, includingphotocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers.
AbbreviationsPrefaceviii ix 1 Spontaneous order in liberal political thought 1 2 The science of man 15 3 The science of morals 34 4 The science of jurisprudence 48 5 The science of political economy 68 6 The evolution of science 97 7 The evolution of morality 118 8 The evolution of law and government 136 9 The evolution of markets 151 10 The invisible hand164 Notes169 Bibliography192 Index204
By identifying the key features of a spontaneous order approach as they appear in the work of thetwo most significant groups of spontaneous order theorists – the ScottishEnlightenment and the twentieth-century classical liberal revival – the book will build a composite model of the application of the approach to the expla-nation of science, morality, law and government and the market. What the analysis depends upon is not so much the strictures of a tradition of direct influence, though we havemade the case for such in selecting our two groups, nor does it depend upon a claim as to the accuracy of one thinker’s reading of the work of a predeces-sor: rather it is concerned with the ‘family resemblances’ (Gissurarson 1987:10) which will allow us to draw out the implications of a spontaneous order13 approach.
The law of the heterogeneity of endsis described in terms of an opposition to the great man theory of history, and indeed to all historical approaches which rely on rationalistic analysis ofhistory in terms of conscious action. By viewing the law of the heterogeneity of ends as a historical methodology, Forbes does indeed leave open the possi-bility of good and bad unintended consequences, just as he does not restrict the law’s field of application to any particular aspect of human action.
Hayek describes an order as:a state of affairs in which a multiplicity of elements of various kinds are so related to each other that we may learn from our acquaintance withsome spatial or temporal part of the whole to form correct expectations concerning the rest, or at least expectations which have a good chance ofproving correct. That is to say order is not considered as a command, as something that is by definition imposed,rather Hayek’s definition allows an order to be either the result of an exter- nal design (exogenous), but equally it may prove to be the result of a sponta-neous adjustment (endogenous).
Whether that result is in the distribution ofsubsistence, or in the support of domestic industry, the process is the same: the whole of society benefits from the actions of individuals who did nothave the good of society as their goal. Should a problem arise here, if the system is unable to explain a phenomena, leaving a ‘gap’, or if the explanation is so convo-luted as to fail to convince and allow the easy passage of the mind, then philosophers will begin a process of immanent criticism which will lead5 eventually to the development of a new system of thought (EPS: 71).
The fact that we cannotidentify the nature of a causal relationship, or in some cases that we cannot from our current experience find a cause to relate to the effect of a specificphenomena, does not for Hume entail that we should abandon our enquiries and attribute that phenomena to chance. (THN: xix)This gives rise to the Scots’ peculiar focus on, and fascination with, historical writings, and to their own specific comparative approach to the study ofhistory – the common pursuit of which is to be found in the work of the whole school of thinkers.
Simple models of understanding
However, population growth itself cannot be the reason behind a change in the stage of the mode of subsis-5 This analysis of social change and of the effect of the mode of subsistence on the nature of society and population is the backdrop to the Scots’ discus-sion of the interactive development of property, justice and government. They also begin to develop an emotionalloyalty to their particular benefactor and his heirs (WN: 715) that is the foundation of a notion of a nation, or the explicit identification with institu- It is in this manner that the ‘habit’ (ECS: 81) of property arises and is adapted in each of the succeeding stages, gradually being refined to dealwith the particular circumstances of each new mode of subsistence and the events that occur in the course of its development.
The origins of government
As Hume would have it: All the laws of nature, which regulate property, as well as all civil laws, are general, and regard alone some essential circumstances of the case,without taking into consideration the characters, situations, and con- nexions of the person concerned, or any particular consequences whichmay result from the determination of these laws in any particular case which offers. This analysis, while awareof the function of utility in the underlying rationale of the process, high- lights how the actual development occurred through a process of evolutionfrom the unintended consequences of the human desire for order and stability of expectations.
In brief, if history is to be viewed as the progress of the species, then that progress is in the exten-sion of human experience and the development and retention of human con- ventions and institutions created to ‘deal’ with that experience. As Smith notes: ‘And from all those volumes we shall in vainattempt to collect that knowledge of its [agriculture] various and compli- cated operations, which is commonly possessed even by the common farmer’ We have already seen that Smith viewed population size as an indication of progress and also that he considered it to be the driving force behind theadvance in modes of subsistence.
The role of government
Their ‘four stages’ schema stresses the significance of the development of different modes of subsistence to the form that the institu-tions of a society are likely to take, while at the same time highlighting the role of the growth of knowledge in the Scots’ conception of social progress. As Smith would have it: the division oflabour ‘is not originally the effect of any human wisdom, which foresees and intends that general opulence to which it gives occasion’ (WN: 23); rather‘it is the necessary, though very slow and gradual consequences’ (WN: 23) of the interaction of human nature with the circumstances in which it findsitself: in brief it is the result of the growth of experiential knowledge (LJP:570–1).
Self-interest and trade
The invisible hand here is the efficient exploitation of local knowledge28 In the Introduction we noted that MacFie distinguishes between the first use of the term invisible hand, in the History of Astronomy where it appears as the‘invisible hand of Jupiter’ (EPS: 490), and its later appearances in The Theory of Moral Sentiments and The Wealth of Nations. As Smith would have it: They consume little more than the poor, and in spite of their natural self- ishness and rapacity, though they mean only their own conveniency,though the sole end which they propose from the labours of all the thou- sands whom they employ, be the gratification of their own vain and insa-tiable desires, they divide with the poor the produce of all their improvements.
Markets and prices
It comes to be an indication of the value of goods, having a subjective value of The market price [Smith writes] of every particular commodity is regu- lated by the proportion between the quantity which is actually broughtto market, and the demand of those who are willing to pay the natural price of the commodity, or the whole value of the rent, labour andprofit, which must be paid in order to bring it thither. As Smith writes of his system of natural liberty: The sovereign is completely discharged from a duty, in the attempting to perform which he must always be exposed to innumerable delusions,and for the proper performance of which no human wisdom or know- ledge could ever be sufficient; the duty of superintending the industryof private people, and of directing it towards the employment most suitable to the interest of the society.
The division of labour and public goods
Edu-cation becomes a method of enlightenment and social control, preventing the possibility of disputes that may arise from the susceptibility of a dead-ened workforce to the forces of religious enthusiasm, by socializing them and providing them with a degree of understanding that they would not47 gain from their everyday employment. Smith’s system of education isto be subsidized by the government: he argues in favour of private teachers whose wages are paid partly by the government and partly by the parents ofthe pupils in an attempt to ensure the provision of incentives which encour-48 Athens and Sparta is qualified by the realization, as Hume and Smith note, that such institutions were only possible because of the prevalence of slavery51 in the ancient world.
The impetus to science
Beginning from the assertion that our responses to the environment are the basis of enquiry, and grounded in the importance and centrality of Science is not the collection of observed data; it is in reality the collection of theories about phenomena. However, Popper stresses the point that this process ofordering is a mental phenomenon: we do not passively wait for an order to One feature of this approach of Hayek and Popper is that it leads them to stress the point that such mental classifications are necessarily abstract inthat they reflect the mind’s ‘construction’ of classes of phenomena rather than any essential physical similarity of those phenomena.
Hayek also stresses that we are compelledto observe society from the inside; as social beings humans can never remove themselves wholly from a society or its classificatory order if they are to Hayek argues that the confusion of thought which he calls ‘scientism’ is based on a failure to grasp this subjectivism in the methodology of socialscience and on a desire to extend the methodological assumptions of natural science into the social sphere. The compositive method of social science that Hayek and Popper identify is predicated on the notion of the centrality of the unintended consequencesof human action in the formation of those practices that the social scientist seeks to analyse by the reconstruction of critical models of explanation.
Natural science represents the ordering through classification of our experience of the natural world, while social sciencefollows a similar process with the vital qualification that in social science our classifications refer not to concrete physical phenomena but rather to mental19 The eighteenth century’s growing admiration for science, the very essence of the term Enlightenment, led to a worship of scientists. On this way of looking at things the ‘social’ is necessarily a human product, but not a conscious or deliberately designed product: rather it is the The practical political manifestation of the errors of constructivist ratio- nalism is to be found in the phenomena of socialist planning.
Popper picks up this argument about the crucially limited nature of reason and uses it as the basis of his two theses of the core of the critical (Popper 1972: 265)Reasoning is immanent criticism: it is a process of trial and error, conjecture and refutation (Popper 1989: 51), based on the notion that we learn fromour mistakes. As general rules – or social phenomena that operate through the forma- tion of general rules – reason and habit react to the complexity of social situ-ations and the limited knowledge of individuals, in order to facilitate the mutual adjustment of individuals to their circumstances and to each other.
Habit, custom and tradition
The order of the mind is shaped by a process of classification of the environment throughwhich new events are interpreted in the light of past experiences. Hayek notes: the fact that the tradition of moral rules contains adaptations to circum-stances in our environment which are not accessible by individual obser- vation or not perceptible by reason, and that our morals are therefore ahuman equipment that is not only a creation of reason, but even in some respects superior to it because it contains guides to human action whichreason alone could never have discovered or justified.
Cultural evolution is about the transmission and adaptation of knowledge, beliefs and customs: it refers to the evolution of the cultural heritage of apeople especially in relation to habits and customs, which, as we have seen, are characterized by the human propensity to classify experience according torules. The child willacquire unconsciously from the example of the parent skills which the latter may have learnt through a long process of trial and error, butwhich with the child become the starting point from which he can proceed to greater perfection.9 (Hayek 1978: 292) Cultural evolution is the ‘selective evolution of rules and practices’ (LLL vol.
Knowledge and morality
The function of the human propensity to praise and blame, to pass moral judgement, is oftento affect a change in the behaviour of the subject judged and to preserve the conventional mode of behaviour that is part of the order-inducing practices24 of the society. Ulrich Witt has described Hayek’s theory of cultural evolution as ‘sketchy and unfinished’ (Witt 1994: 187) and while it is true that the theory is not as developed as we might wish it to be, it appears that Hayekhas provided us with the outline of a conjectural history of the origins of morality that approaches the generation of norms of behaviour in functionalterms.