Wealth of evidence: capitalism makes people less selfish


Wealth of evidence: capitalism makes people less selfish

Invoking great economist Adam Smith's doctrine of sympathy might save libertarians from caricature

Daniel Hannan

When he was three years old, the story goes, Scottish economist, philosopher and author Adam Smith was kidnapped by a band of gypsies near Strathendry. His piteous screams were heard by a passing traveller, who alerted the townsmen.
A mounted posse was despatched and, happily for the cause of freedom, the boy was rescued. Smith lived much of the rest of his life by his mother’s side, never marrying. But his ideas have been repeatedly kidnapped since, often by the unlikeliest of hijackers.
Smith, born in 1723, is without doubt the most important economist to have lived. What is less appreciated, as Jesse Norman reminds us in a magnificent new biography, is the extent of his influence as a sociologist and scientist.
His ideas led, over time, to modern behavioural economics. They inspired the rational optimism of Steven Pinker and Matt Ridley. They even, Norman shows, directly guided the ideas of Charles Darwin.
Margaret Thatcher liked to pray him in aid, and could never understand why his cheerful instinct for liberty had fallen out of fashion in Scotland.
He was also an inspiration to Gordon Brown, a fellow Langtonian (as people from Kirkcaldy are sometimes known). Karl Marx got his teeth into one of Smith’s few stillborn ideas, the labour theory of value: a handful of communist professors are still worrying its carcass.
Why such heterodox popularity? Partly because of the breadth and universality of Smith’s ideas. Whether he is discussing rhetoric or astronomy, his humanity shines through. Even his views on slavery and race, often the touchstone by which our generation judges past ones, were remarkably close to modern sensibilities.
Partly, too, because of his fluent prose. Smith is often called the first economist, but in his own eyes, he was a moral philosopher, seeking to explain complex ideas in everyday language.
He would have deplored the way economics is now written in equations, becoming unintelligible to the layman. (“Mathematics brought rigor to economics”, as the 20th century economist Kenneth Boulding put it. “Unfortunately it also brought mortis.”)
I can’t recommend this biography too highly. As with its predecessor, Norman’s study of Edmund Burke, the book falls open in two halves. The first tells the story of Smith’s life, which becomes pretty uneventful after the gypsy incident. The second puts his ideas into their historical context, and explores their relevance today.
Among other things, Norman uses lecture notes, letters and other clues to reconstruct the uncompleted book on government and law which Smith, recluse that he was, ordered to be destroyed on his death, but which might have been his magnum opus.
Smith despised “that insidious and crafty animal, vulgarly called a statesman or politician, whose councils are directed by the momentary fluctuations of affairs”. He’d have had the number of some current MPs.
On the side of the poor
Many reviewers claim that Norman has demolished the caricature of a “neo-liberal” Adam Smith. The New Statesman magazine talks of Smith’s “rescue from the libertarian right”, a theme echoed by the conservative commentator Tim Montgomerie.
It is certainly true that Smith disliked what we nowadays call crony capitalism. As Norman puts it: “When the interests of rich and poor clash, his instincts and arguments are almost without exception on the side of the poor.”
That, though, is precisely the motive of libertarians.
Classical liberals think that protectionism favours oligarchs at the expense of the global have-nots, and that crony capitalism is exacerbated by interventionist states. Eamonn Butler, who runs the pro-market Adam Smith Institute, told me at Norman’s book launch that he spends half his time trying to explain to people that “neo-liberals” see human sympathy as the starting point of all social interaction, and understand that markets encourage people to behave unselfishly.
The real caricature is not of Adam Smith by his right-wing devotees, but of libertarianism by its detractors. Free-marketeers believe commerce draws people into networks of dependency, elevating the condition of the poorest. They believe, too, that the state’s growth squeezes out private virtue, diminishing people’s capacity for real generosity.
Classical liberals are likewise charged with caring only about material things, rather than intangible values such as friendship, sacrifice or patriotism. But, having spent much of my life in classical liberal circles, I can honestly tell you that I have yet to meet anyone who thinks that a big bank balance gives you more pleasure than, say, playing with your children.
Free-marketeers, following Smith, see the spread of wealth as enabling private happiness. The extraordinary rise of global GDP that followed the adoption of Smith’s free-trade doctrines has ensured that many more children survive infancy, and that many more parents have leisure time to play with them.
Now it would be one thing to weigh and then dismiss these arguments. But leftist critics of libertarianism rarely bother. Instead, assuming a near-monopoly on virtue, they declare that their opponents lack compassion. In fact, Adam Smith made empathy – or “sympathy”, as he called it in the language of his era – the basis of his entire understanding of the human condition.
The paradox of our age is that those who flaunt their own decency often display a total lack of empathy when it comes to understanding why anyone might disagree with them.
Adam Smith would have had their number, too.
– © The Daily Telegraph

This article is reserved for Times Select subscribers.
A subscription gives you full digital access to all Times Select content.

Times Select

Already subscribed? Simply sign in below.

Questions or problems?
Email helpdesk@timeslive.co.za or call 0860 52 52 00.

Next Article

Previous Article