December 24, 2005

James Hoopes Comments

Jim Hoopes of Babson College, who teaches both History and Business Ethics, offers some additional comments on Economic Man: "The idea of rational economic man acting out of his self interest is often mistakenly attributed to Adam Smith and that wonderful 18th-century conception of a moral paradox in human society that allows private vices to become public virtues. So self-interest or, as I believe Smith called it, self-regard leads to the wealth of nations. "There's a passage in Smith's Wealth of Nations that touches on this:
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. We address ourselves not to their humanity but to their self love, and never talk to them of our own necessities but of their advantages.
"What gets forgotten is that contrary to what one might think from the quote, Smith did not dispute the existence of "benevolence" but thought it a real force in human affairs as he made clear in his Theory of Moral Sentiments. In fact it was because of the limitations placed on the behavior of most people by their sentiment of benevolence that Smith believed freedom (including free markets) was morally justifiable. "People on average could be counted on not to be governed solely by self-regard and not to indulge in the utter ruthlessness that would result from single-minded attention to self-interest. Were it not for the sentiment of benevolence a moral society could not tolerate freedom but would require authoritarian princes, priests, etc."


Blogger Lloyd Kurtz said...

I know several thought leaders in social investing who are revisiting Adam Smith. Smith's primary intellectual project, sorting out the respective roles of business and ethics in society, speaks directly to what social investors care about.

In addition to the texts mentioned in Jim's post, I recommend James Buchan's Crowded With Genius: The Scottish Enlightenment: Edinburgh's Moment of the Mind, which offers many insights into Smith's working methods and interests.

Also, the latest issue of The Economist has a good discussion about the lasting impact of evolutionary theory on economic thought. Definitely worth a look.

6:38 PM  

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