Original link: https://www.latepost.com/news/dj_detail?id=1730
“LatePost” launched a weekend edition, hoping to expand its sights to all kinds of creators. To put it simply, we want to know who is creating and using it to influence the surroundings; we not only look at the present, but also look back at the past, looking for the source of shaping today’s world; we pay attention to technology, business, history, humanities, and look at these fields The emergence of the intersection.
What we pay attention to may be a product, a store, a packaging design idea, or a certain work philosophy, product concept, management method, or an interesting and novel way of life, even today. Glorious old thought.
“What has been created is insignificant compared with what is yet to be created.” Those were the words of Victor Hugo – and we hope Late’s coverage over the weekend bears that out.
During the more than 240 years since Watt improved the steam engine, human beings have created more wealth than the sum of the previous thousands of years. Technology and productivity have never stopped advancing, but the wealth and well-being of many people have not increased in years. Today, technology leaders are comparing AI to the “steam engine” of the new era, looking forward to another revolution, which naturally raises concerns about the distribution of jobs and wealth.
Like Watt, Adam Smith was used as a frame of reference.
On June 5, Gita Gopinath, First Deputy Managing Director of the International Monetary Fund, delivered a speech at the University of Glasgow, UK. She asked, what would Adam Smith think of AI if he were alive today? She believed that Smith’s ideal of economic development benefited all, not just a few. The negative impact that AI might have on employment certainly bothers him.
As the man who “invented” economics, Smith was always cited as a sort of banner at turning points. His “The Wealth of Nations” and the Watt steam engine appeared in the same year. The steam engine laid the technical foundation of the Industrial Revolution, and “The Wealth of Nations” explained the underlying logic of economic operation, which was an important reference for British and American governance at that time.
From the “invisible hand” to the division of labor can increase productivity, everyone’s efforts to pursue their own happiness will promote the prosperity of the whole society…Smith’s summary of economic operation has evolved into division of labor, market economy, free trade and other human activities in later generations. The basic rules by which society operates. Anyone’s life is deeply affected by him.
Therefore, when the status quo is not ideal and the future is uncertain, people will look back at the starting point. There have been extensive discussions and reinterpretations of Smith’s writings in the United States following the economic stagnation of the 1970s and the financial crisis of 2008.
Smith’s alma mater, the University of Glasgow, held a series of activities to commemorate the 300th anniversary of Smith’s birth this year[1], revisiting Smith’s theories and examining issues in the 21st century with hundreds of seminars and exhibitions.
At the event, Nobel Laureate in Economics Angus Deaton (Angus Deaton) said that the economic system should help human beings prosper, but today’s capitalism fails this basic test. Material wealth, health and well-being have stagnated for many. Is the problem with the economics that Smith created, or with his interpretation?
Statue of Adam Smith. Image via Marvin Sacdalan of pexels.
era
Along Edinburgh’s Royal Mile, walking towards the Customs House, you will see the Adam Smith statue built with donations from the public. Smith stands outside St. Giles’ Cathedral with an old plow behind him and a beehive beside him, symbolizing the transition from an agricultural society to a commercial society and a market economy. His left hand pinches his robe, implying that he devotes most of his time to academic life, and his inconspicuous right hand, known as the “invisible hand”, is placed on a globe, euphemistically suggesting his intellectual ambition and cosmopolitanism reputation. [2]
Smith was born on an unknown date in 1723 in Kirkcaldy, Fifeshire, Scotland. His father, a customs inspector and lawyer, died five months before Smith was born. Smith grew up surrounded by the attention of his mother, who had an exceptionally close relationship with her son for more than 60 years.
At the age of 3, Smith was abducted by a gypsy woman. A gentleman gave a lead, and Smith’s mother and the police were able to find him in the woods a few miles from home, saving a genius for the world. [3]
Afterwards, Smith’s life had no great ups and downs. He entered Glasgow University at the age of 14 (the normal age for school and work), and was heavily influenced by the moral philosopher Francis Hutcheson. Three years later, he got a scholarship to Oxford, loathing how cramped, decadent, and expensive it was. At 28, he returned to teach philosophy at the University of Glasgow. At that time, the University of Glasgow was the birthplace of new ideas and new ethos. Watt also opened a small repair shop there to make a living, and discussed problems with university professors.
At the age of 36, Smith published his first book, The Theory of Moral Sentiments. In 1764, at the age of 41, Smith resigned from his teaching position and went to Paris, France, where he became the tutor of the Duke of Baclou and got acquainted with Voltaire, Quesnay and others. At the end of his life, he was Commissioner of Customs and Excise for Scotland and died aged 67.
Smith championed a constitutional monarchy, religious toleration, and individual liberty, but kept his political views tight-lipped. He dedicated his life to academics, and his life was unremarkable. Jesse Norman, author of Adam Smith’s Biography, said that Smith was notoriously confused every day, and once he was so focused on talking to people that he fell into a tanning pit. “He never married and had no children. As far as we know, he had no secret love affairs, no hidden vices, no college pranks, no adult blunders: Smith’s life was almost a featureless one. Sahara Desert, nothing to gossip about.” [4]
But Smith caught up with the turbulent times. In 1707, Scotland and England merged, and Scotland bid farewell to feudalism, its economy developed rapidly, and it entered what Smith called a “commercial society”. He believed that “by union with England, the people of the middle and lower classes in Scotland were completely freed from the aristocracy which had been oppressing them”. Between 1759 and 1775 alone, the tonnage of ships clearing customs in Scottish ports doubled. From poverty to wealth, Scotland’s upheaval is similar to the “Asian Tigers” in the 20th century.
Kirkcaldy, where Smith grew up, was a port city, and the nail factory not far from here is considered to have inspired his “division of labor theory”; Glasgow, where he lived for a long time, became the most important tobacco port in the world in the 1730s and 1740s. He witnessed the rapid development of trade and factories, and the change of people’s way of life.
Sailors, fish merchants, nail makers, smugglers, customs officials…the lives and work of these people all appeared in “The Wealth of Nations”, which became his inspiration for summarizing “commercial society” and foreseeing economic modernity. With the commercial society, there was the later industrial revolution and capitalism.
Not only the political and economic changes, but also the Enlightenment movement in Scotland. Smith, his teacher Hutcheson, and his close friend David Hume are all representative thinkers. In Britain, the “club” Smith joined was star-studded, with members including Samuel Johnson, Edmund Burke, and Edward Gibbon. Genius creators inspired each other to start a new era [5].
Previously, people felt that how the world works is determined by gods, and Smith linked individual values with economic operations, society and the rise and fall of nations. He explored “human science” throughout his life, observed human interaction, studied human behavior in the broadest sense, and dabbled in law, history, literature, economics, ethics, etc.
1776 was a special year in history. In this year, Smith published “The Wealth of Nations”; the Watt steam engine was successfully manufactured and applied to actual production; 13 British colonies in North America declared their independence from Britain and established the United States.
Smith died on July 17, 1790, after having his executors burn nearly all of his manuscripts, so that the only published works he bequeathed to the world are two books. They form his modest epitaph: Author of The Theory of Moral Sentiments and The Wealth of Nations.
According to Dugald Stewart, Smith’s friend and author of the first biography of Smith, “Smith seems to wish nothing but his writings to serve as a permanent monument to his genius. Apart from his exemplary private life, no biographer Leave any material behind”.
market
The Wealth of Nations is a misleading shorthand. The full title of this book is “An Inquiry into the Nature and Causes of the Wealth of Nations”. For the first time, Smith put the market at the center of economics. The topics discussed, the methods used, and even the order of various topics are reproduced in modern economics. From mainstream neoclassical economics, to Austrian school, Marxism, to today’s institutional economics, development economics, and behavioral economics, all originated from this book.
The Wealth of Nations, 1819 English edition. Image source: abebooks
According to Eamon Butler, director of the Adam Smith Institute[6], “The most obvious theme of The Wealth of Nations is that business regulation makes no sense and is counterproductive”. The popular view at that time was that national wealth was the amount of gold and silver stored in the treasury, so the government should promote exports and restrict imports to accumulate wealth. Smith rejected this notion, arguing that the true measure of a nation’s wealth is its continual production of goods and services. This is exactly the concept that people are familiar with today – GDP.
Taking a needle factory as an example, Smith proposed the value of division of labor: one person can only make 20 pins a day, but 10 people can produce 48,000 pins a day. Butler believes that this is another central idea of ”The Wealth of Nations”, “Productive capacity depends on the division of labor and the accumulation of capital, and there can be division of labor with accumulation. If people want to accumulate capital, they must be sure that their capital is safe, will not be stolen”.
The division of labor increases productivity, increases incomes for all, and lowers commodity prices, making goods that were previously out of reach for the poor affordable. Moreover, in the era of high globalization, the division of labor is not only between individuals, but also between countries. This is another important theme of Smith, supporting free trade and opposing subsidies, monopolies, and tariff barriers. He wrote about wine examples:
“By building glasshouses and greenhouses, Scotland can grow fine grapes and make fine wines, but at a cost of at least 30 times the cost of importing wines of the same quality from abroad. Just to encourage Scotland to produce wines like Bordeaux and Burgundy Is it reasonable to have a law that prohibits the import of all foreign wines just for red wine?”
Smith’s most famous metaphor is the “invisible hand”, which is regarded as an image description of “the market economy can automatically adjust, and it is best not for the government to intervene casually”. A running joke was that one store closed for business and put up a sign saying, “Slapped by the fucking invisible hand.”[7]
In fact, the “invisible hand” only appears once in The Wealth of Nations:
“When people choose to support domestic industry over foreign industry, they do so only for their own security; and when they promote industry in the most valuable direction, they do so only for their own benefit. In this case, as in many others, the individual Being led by the nose by a pair of invisible hands imperceptibly promotes the achievement of a goal that has nothing to do with one’s own. …When people pursue their own interests, they often promote the interests of society more than when they directly pursue the public interest.”
Although it occurs only once, the concept of the “invisible hand” runs through The Wealth of Nations, emphasizing that if basic rules like justice are followed, the self-interested actions of individuals can inadvertently create a well-functioning social system , which benefits anyone. For example, another passage from Smith revealed that “private interest is the driving force of public interest”:
“We get dinner not because of the kindness of the butcher, brewer, or baker, but because of their concern for their own interests. We don’t appeal to the humanity of others, but to their self-interest.”
University of Glasgow. Image from: wiki
Morality
“Self-interest” in “The Wealth of Nations” and “sympathy” in “The Theory of Moral Sentiments” (The Theory of Moral Sentiments) have obvious conflicts at first glance, and even form the discussion of “two Smiths”. But at least for Smith, the two are not contradictory. More and more researchers are also explaining its internal consistency.
For example, Butler believes that what Smith calls “self-love” or “self-interest” is not “greed” or “selfishness” in the sense of today, but what these two words meant in the eighteenth century: An unpleasant desire to benefit oneself at the expense of others, but only a perfectly legitimate concern for one’s own interests. When we realize our ideals, we benefit others, and we avoid hurting others in order to avoid the pain caused by others’ contempt.
In layman’s terms, in Smith’s era, the pursuit of virtue was a common consensus, and almost no one dared to declare that they were completely selfish and showed that they only had money in their eyes. As he puts it at the beginning of The Theory of Moral Sentiments:
“Man, however selfish he may be thought, evidently has something in his nature which makes him interested in the fortunes of others, and regards their happiness as his own necessity, although apart from the pleasure he feels in seeing it He has gained nothing. . . . Those heinous men who disregard the laws of society and are obstinate are not entirely devoid of such sentiments.”
Everyone has compassion, but everyone’s “self-interest” is different. Smith himself is the best example, wealth was not his only pursuit, and he never became rich. On the other hand, when we sympathize with others, we are actually seeking sympathy from others. We desire fame, respect, and praise as a good person. We are sympathetic, able to understand the situation of others, and hope that others will understand and affirm us. This is not inconsistent with the idea of seeking private gain to achieve the public good. If the pursuit of “self-interest” implies the purpose of wanting others to respect and recognize oneself, then this “self-interest” must contain the concept of being kind to others. [8]
In “The Theory of Moral Sentiments”, Smith also has a “impartial spectator” hypothesis:
“When we are always so deeply selfish about caring for ourselves more than others, what is it that can, under all circumstances, always outweigh the good so many times, make us To sacrifice a small one to a great one?… This is reason, nature, conscience, the inhabitant, the inner man, the great judge and arbiter of our actions…. Only from him do we learn: ourselves, and What matters to us is really small; the natural misdirection of the narcissistic complex is corrected by the discerning eye of the impartial spectator.”
Simply put, each person has an inner self. You’re doing it, he’s watching, and he’ll sometimes say to you, “You did something wrong, it wasn’t right.” Some people’s inner “impartial bystanders” are so weak that their conscience never calls the police, and it’s hard to be honest Mistakes, always blaming others when things go wrong. It also means they have moral issues. [9] When we care about others, we know that the “impartial spectator” will praise us, and we derive pleasure from it. Slowly, we develop a set of behavioral standards that promote good social order.
Smith believed that the best arbiter of personal interests was the individual, not any political ordinance or legislator. People should judge for themselves what they need, and the government should not impose their will on the people.
Nobel laureate Coase (Ronald Coase) felt that, “Usually, people mistakenly believe that Adam Smith regards man as an abstract ‘economic man’ who only pursues his own interests…. He believes that man is actually influenced by self-love. Dominating, but not disregarding others… If we are willing to take with a grain of salt what Smith was right about most, if not all the truth, about human nature, realizing that his thought had a broader foundation than is commonly given, it will make his arguments about economic freedom stronger and his conclusions more convincing”. [10]
symbol
When an idea becomes a classic, it is bound to encounter different interpretations. These interpretations also became a source of richness and influence for Smith’s theory. In different eras, whenever someone felt that the real world deviated from the ideal track in their minds, they would move out of Smith and interpret it into an image that fit their needs.
Not long after “The Wealth of Nations” was published, the then British Prime Minister William Pitt was its reader, and had the opportunity to discuss it with Smith, and later implemented his ideas in legislation. For example, Pitt signed a treaty with France in 1786 that eliminated tariffs and opened up new markets for both parties; in 1787, Pitt swept away the complex tariffs that were then payable to 103 different government accounts and established a unified fund.
Smith and Pitt met several times. Once Smith arrived late, everyone rose from their seats to greet him. “Sit down, gentlemen,” said Smith. And Pete replied, “No, we will stand until you sit down first, because we are all your students”. [11]
The UK’s £20 note, introduced in 2007, features a portrait of Adam Smith and his illustration of the division of labor through a needle factory. Image source: numista
On the other side of the Atlantic in England, Smith experienced the process of being “Americanized”. In a new book, Glory M. Liu of Harvard University retraces the history of the Scottish philosopher as a symbol of American capitalism. [12]
In the early days, the founders of the United States “take what they need” from Smith, and his ideas became the source of national construction. For example, Alexander Hamilton used Smith’s economic logic to oppose Physiocracy and encourage the development of manufacturing. In the 19th century, in order to demonstrate political and economic legitimacy, defenders of free trade in the American South portrayed Smith as the “father of economics” and an authority that “supported free trade”. With educational reforms, Smith’s ideas became embedded in American perceptions and actions. [13]
After the 20th century, under the shaping of the Chicago School who advocated free markets, Smith became a universal and powerful symbol: only the invisible hand of the market can guarantee personal freedom and political freedom.
In 1976, on the 200th anniversary of the publication of The Wealth of Nations, the most famous economist at that time, Milton Friedman (Milton Friedman) wrote the article “Adam Smith and Today’s Relevance” [14], Es Miley opposed the government’s intervention in the economy and personal life at the time.
Friedman believes that the two eras are highly related: Smith felt that his society was “over-governed”, so he opposed state intervention; and the United States at that time was also dragged down by government interference, lack of freedom, and economic development stagnated. He reduced the “invisible hand” to the principle he believes in: only the free market can bring happiness to mankind.
Those who supported the free market economy and opposed government intervention at that time would cite him as their endorsement. Prime Minister Margaret Thatcher, who promoted economic reforms in the UK and broke the monopoly of state-owned enterprises, said, “The Scots invented Thatcherism long before me.” The same period was the Reagan era in the United States, and conservatives celebrated their political victories by wearing ties with Smith’s portrait. A report in The New York Times in 1982[15] stated that about 10,000 Smith ties were sold in one store at that time.
Friedman wears an Adam Smith tie. Credit: University of Chicago Press
Symbolization also means simplification. After the 2008 U.S. financial crisis, critics of free market flaws pointed to Smith, or, reinterpreted Smith. Amartya Sen, a left-wing economist who won the Nobel Prize, believes that Smith did not leave everything in society to the market mechanism, “He not only supported the role of the state in providing public services, such as education and poverty Relief, and he was deeply concerned about the possible existence of abject poverty and injustice (unless they are eliminated, a market economy cannot succeed)”. [16]
When the economy is failing, people often expect to be “right” to give entrepreneurs more room to display; when the gap between rich and poor is too large, people usually expect to be “left” to encourage more equal distribution. Specific to the interpretation of Smith, it lies in the emphasis on “The Wealth of Nations” or “The Theory of Moral Sentiments”.
After 2008, the rediscovery of “The Theory of Moral Sentiments” broke the image of “the Chicago School version of Smith”. At this time, Gordon Brown, the former Prime Minister of the British Labor Party, and former President Obama of the Democratic Party of the United States will also quote Smith, but they emphasize that he cares about the poor and supports limited government intervention. He became the banner of another faction.
When Smith was alive, the word “capitalism” did not exist. Two years after his death, the French Revolution—the origin of the terms “left” and “right”—came into existence. Smith was not an extremist, so both left and right could find arguments in their favour. As Friedman’s teacher Jacob Viner commented on “The Wealth of Nations”: “In that all-encompassing book, every kind of theory that one can think of can be found in it.” Find the traces. An economist who fails to cite, or deliberately does not cite, The Wealth of Nations to support his thesis must have very special theories.”
Wiener’s view shows that even if later generations do not agree with Smith, it is almost impossible to bypass him. The ideas he laid down more than 200 years ago have influenced the world to this day. GDP and the division of labor are the consensus of the modern economy; free trade and globalization, which were considered to have ended during the epidemic, still show vigorous vitality. People continue to debate how to deal with market failures, whether the government should intervene in the market, and where is the boundary of limited intervention, but no economy with a small scale denies the central role of the market in economic operations.
future
When “The Wealth of Nations” was published, China was in the heyday of Qianlong, and the military conflict between China and Britain would take half a century. In his book, Smith criticized the Chinese government at that time for valuing agriculture rather than industry and trade, so although it was rich, it had stagnated. He feels that this market has unlimited possibilities. And this judgment has also been verified in the past few decades [17].
“The area of China’s domestic market is almost equivalent to the market area of all European countries. Its vast domestic market is enough to support the development of the country’s large manufacturing industry, and its degree of division of labor is very high. If the vast domestic market plus If there is a vast foreign market, this large-scale foreign trade must greatly promote the increase of Chinese manufactured products, thereby promoting the development of manufacturing productivity. Especially when China conducts most of this foreign trade, the result is even more It is impressive. After many voyages, the Chinese will definitely master the technology of using and manufacturing foreign machinery, and will be able to quickly master the technology and industrial improvement methods of various countries in the world.”
Political scientist Tang Shiping said in an interview before: “Reform and opening up is to return to Adam Smith. Unfortunately, Adam Smith published his book in 1776, and Mr. Deng Xiaoping was only published in 1978. China realizes market economy.”[18]
Nine years before the fall of the imperial system of the Qing Dynasty, Enlightenment thinker Yan Fu translated “The Wealth of Nations” for the first time and named it “Yuanfu”, but his influence on China was only at the conceptual level. During the period of the Republic of China, the weak market economy had a short-term development opportunity, the so-called “golden decade” (1927-1937), but then the Anti-Japanese War broke out, and economic development stagnated again.
The first Chinese translation of The Wealth of Nations, translated by Yan Fu, 1902.
In 1978, China implemented reform and opening up, and transformed from a planned economy to a market economy. The role of the market in resource allocation has been increasingly affirmed by the government. “Play a fundamental role”, and now “play a decisive role”.
In Smith’s ideal, if everyone contributed to increased productivity, the “poor” could improve their lives and be upwardly mobile. This can only be achieved in a market economy. Only in a market economy, where “capital” participates in the distribution is legitimate and property rights are protected by the government, can private enterprises have confidence.
The world’s major economies once took the market economy and globalization as their recipes, and achieved material prosperity after World War II, especially after the Cold War. However, there are new problems in the new stage of development—unlimited growth of enterprises under unlimited freedom can also distort the competitive environment; the original moral guidance fails, and people have no consensus on what is the new standard, and even fierce conflicts.
The new generation also has new requirements for fairness and happiness. After 2008, more people began to doubt whether the pendulum had stayed on one side for too long, began to doubt whether there was another possibility, and sometimes even doubted whether there was an alternative to the market economy.
Smith could not have given a direct answer. He may not be able to imagine how rich the material world is today, and how much the moral world has changed. But his warnings for the future apply today.
“No society can remain prosperous and happy if the majority of its members are poor and miserable.”
–“Wealth of Nations”
“Justice is the main pillar supporting this magnificent edifice of human society. If it is lost, human society will inevitably collapse in an instant.”
– “The Theory of Moral Sentiments”
Title image portrait source: Scottish National Gallery “The Muir Portrait” (Unknown artist, c. 1800)
References:
[1] 300th Anniversary of the Birth of Adam Smith, University of Glasgow
https://ift.tt/CRLUoPv
[2][11] “Adam Smith Biography”, written by Jesse Norman, translated by Li Ye, CITIC Publishing Group, February 2021 edition.
[3] “Adam Smith Biography”, written by John Ray, translated by Hu Qilin and Chen Yingnian, December 2014 edition of the Commercial Press.
[4] How Adam Smith would fix capitalism, Financial Times, 5 July 2018.
https://ift.tt/LA8YaPh
[5] “Returning to the World of Yesterday: From Samuel Johnson to Adam Smith, A Group of People Who Shaped the Times”, written by Leo Damrosch, translated by Ye Lixian, Guangxi Normal University Press · 1 page 2022 June edition.
[6] “Adam Smith Thought Interpretation”, written by Eamon Butler, translated by Zhao Genzong, Commercial Press (Hong Kong), March 2014 edition.
[7] The success, crisis and reform of capitalism in Yale University Open Course
https://ift.tt/ZkSNuy1
[8][9] Adam Smith, Yale University Open Class
https://ift.tt/FEJx6a3
[10] “On Economics and Economists”, written by Ronald H. Coase, translated by Luo Junli and Ru Yucong, Gezhi Publishing House, September 2014.
[12] Adam Smith’s America: How a Scottish Philosopher Became an Icon of American Capitalism, by Glory M. Liu, Princeton University Press, November 2022.
[13] Adam Smith 300 years︱Who was he? Who has he become in America?
https://ift.tt/uapHqZR
[14]Adam Smith’s Relevance for Today
https://ift.tt/520z1Oj
[15]Neckties with an economics lesson
https://ift.tt/ybUwe5i
[16]Capitalism Beyond the Crisis
https://ift.tt/R8xFeXB
[17] Adam Smith and China in the History of Economic Thought of Fudan University
https://ift.tt/8F3DCfJ
[18] Scholar Tang Shiping: When we are confident and proud, how do we clearly understand the world’s evaluation of us?
https://ift.tt/CfMl7dr
This article is transferred from: https://www.latepost.com/news/dj_detail?id=1730
This site is only for collection, and the copyright belongs to the original author.