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This article was downloaded by: ["Queen's University Libraries, Kingston"] On: 05 October 2013, At: 07:53 Publisher: Routledge Informa Ltd Registered in England and Wales Registered Number: 1072954 Registered office: Mortimer House, 37-41 Mortimer Street, London W1T 3JH, UK The European Journal of the History of Economic Thought Publication details, including instructions for authors and subscription information: http://www.tandfonline.com/loi/rejh20 Adam Smith: a Moral Philosopher and His Political Economy Tony Aspromourgos a a University of Sydney, Australia Published online: 18 Jun 2009. To cite this article: Tony Aspromourgos (2009) Adam Smith: a Moral Philosopher and His Political Economy, The European Journal of the History of Economic Thought, 16:2, 392-397, DOI: 10.1080/09672560902891390 To link to this article: http://dx.doi.org/10.1080/09672560902891390 PLEASE SCROLL DOWN FOR ARTICLE Taylor & Francis makes every effort to ensure the accuracy of all the information (the “Content”) contained in the publications on our platform. However, Taylor & Francis, our agents, and our licensors make no representations or warranties whatsoever as to the accuracy, completeness, or suitability for any purpose of the Content. Any opinions and views expressed in this publication are the opinions and views of the authors, and are not the views of or endorsed by Taylor & Francis. The accuracy of the Content should not be relied upon and should be independently verified with primary sources of information. Taylor and Francis shall not be liable for any losses, actions, claims, proceedings, demands, costs, expenses, damages, and other liabilities whatsoever or howsoever caused arising directly or indirectly in connection with, in relation to or arising out of the use of the Content. This article may be used for research, teaching, and private study purposes. Any substantial or systematic reproduction, redistribution, reselling, loan, sub- licensing, systematic supply, or distribution in any form to anyone is expressly

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Page 1: Adam Smith: a Moral Philosopher and His Political Economy

This article was downloaded by: ["Queen's University Libraries, Kingston"]On: 05 October 2013, At: 07:53Publisher: RoutledgeInforma Ltd Registered in England and Wales Registered Number: 1072954Registered office: Mortimer House, 37-41 Mortimer Street, London W1T 3JH,UK

The European Journal of theHistory of Economic ThoughtPublication details, including instructions for authorsand subscription information:http://www.tandfonline.com/loi/rejh20

Adam Smith: a Moral Philosopherand His Political EconomyTony Aspromourgos aa University of Sydney, AustraliaPublished online: 18 Jun 2009.

To cite this article: Tony Aspromourgos (2009) Adam Smith: a Moral Philosopher andHis Political Economy, The European Journal of the History of Economic Thought, 16:2,392-397, DOI: 10.1080/09672560902891390

To link to this article: http://dx.doi.org/10.1080/09672560902891390

PLEASE SCROLL DOWN FOR ARTICLE

Taylor & Francis makes every effort to ensure the accuracy of all theinformation (the “Content”) contained in the publications on our platform.However, Taylor & Francis, our agents, and our licensors make norepresentations or warranties whatsoever as to the accuracy, completeness, orsuitability for any purpose of the Content. Any opinions and views expressedin this publication are the opinions and views of the authors, and are not theviews of or endorsed by Taylor & Francis. The accuracy of the Content shouldnot be relied upon and should be independently verified with primary sourcesof information. Taylor and Francis shall not be liable for any losses, actions,claims, proceedings, demands, costs, expenses, damages, and other liabilitieswhatsoever or howsoever caused arising directly or indirectly in connectionwith, in relation to or arising out of the use of the Content.

This article may be used for research, teaching, and private study purposes.Any substantial or systematic reproduction, redistribution, reselling, loan, sub-licensing, systematic supply, or distribution in any form to anyone is expressly

Page 2: Adam Smith: a Moral Philosopher and His Political Economy

forbidden. Terms & Conditions of access and use can be found at http://www.tandfonline.com/page/terms-and-conditions

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Reference

de Vroey, M. and Hoover, K.D. (Eds.) (2003). My Keynesian education. Keynote addressto the 2003 HOPE conference, The IS-LM Model: Its Rise, Fall, and Strange Persistence,Annual supplement to HOPE, vol. 36. Durham, N.C.: Duke University Press.

David LaidlerUniversity of Western Ontario, Canada

E-mail: [email protected]� 2009 David Laidler

Gavin Kennedy, Adam Smith: a Moral Philosopher and His Political Economy.Basingstoke, UK and New York: Palgrave Macmillan, 2008. xivþ 287pp. £60.00 (hardback). ISBN 978-1-4039-9948-1

This book is one volume in a series that has the following stated purpose:

Great Thinkers in Economics is designed to illuminate the economics of some of thegreat historical and contemporary economists by exploring the interactions betweentheir lives and work, and the events surrounding them. The books will be brief andwritten in a style that makes them not only of interest to professional economists, butalso intelligible for students of economics and the interested lay person. (p. i)

This is a laudable if ambitious purpose. It entails elucidating the economicthought, while conveying a sense of the interrelations between theindividual’s life and thought, as well as the person’s larger historicalcontext; doing all this ‘brief[ly]’; and writing for three rather distinctaudiences of readers at the same time.

There are fourteen chapters following an introduction. Chapter One isearly biography, up to Smith’s appointment as Professor of MoralPhilosophy at the University of Glasgow in 1752. Chapter Two sketchesSmith’s thought on language, philosophy of science, ethics, jurisprudence,and their connections with his economics, deferring particularly to Otteson(2002). Chapter Three considers the moral philosophy in some detail;Chapter Four discusses Smith’s four-stages theory of history; and ChapterFive focuses upon the political dimension of his interpretation of humanhistorical development. Chapters 6–13 then examine Smith’s politicaleconomy ‘proper’, concentrating upon (but by no means exclusivelyrelying on) interpretation of the Wealth of Nations: division of labour andthe propensity to exchange; value and commodity prices; prices and wages;growth and capital accumulation; growth and productive labour; Smith’scritique of mercantilism; the invisible hand; and the role of governmentand public finance. The final chapter assesses two aspects of Smith’s legacy.

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I will offer here some detailed comments on just the ‘economic’ chaptersand the final chapter.

The Chapter Six account of division of labour and exchange is largelyunexceptionable, and the emphasis on the role of bargaining provides auseful perspective. The following chapter on value and prices, verystrangely, takes its bearings from the proposition that ‘Smith put forwardwhat is widely regarded as a labour theory of (exchangeable) value’, and soit addresses the question: ‘to what extent was Adam Smith committed to alabour theory of value?’ (p. 117). Kennedy’s answer is not at all, except inapplication to very early human exchange – and he is right of course. Butthis seems a great deal of misdirected effort to arrive at such a slightconclusion. He quotes no sources that actually state Smith had a labourtheory of value in relation to exchange-value in commercial society; andthat is not surprising, since it is as plain as day that he does not hold anysuch view. It is clearly stated by the seventh paragraph of Book I, ChapterSix of the Wealth of Nations, the first of the two key price theory chapters.Kennedy’s incidental comments on other classical economists here alsogive cause for some alarm (pp. 117–18); for example, ‘a labour theory ofvalue applied to a commercial society’ was ‘put forward by all of his[Smith’s] contemporaries’ (original emphasis). Does this include JamesSteuart; A. R. J. Turgot? Who are these unnamed contemporaneousexponents of the labour theory?

Kennedy’s surprising approach and attitude to Smith’s price theorycontinues into Chapter Eight. He strongly expresses a lack of sympathy forthe conceptualization of price behaviour in terms of natural price andmarket prices. He seems to think that the concept of natural price has someineradicable theological or ethical element (pp. 131–2): natural value issupposedly understood, traditionally, as ‘intrinsic within the good’ (originalemphasis), whatever that could possibly mean when said of a relative price;the natural/market price distinction ‘infected’ political economy until the1870s. Well, if Smith’s natural price is properly understood, as a variant oflong-period competitive supply-price (sort of acknowledged by Kennedy atp. 133), then the concept ‘infected’ economics for a lot longer than that. InSmith it is just the notion of the competitive equilibrium price such thatowners of all collaborating inputs receiving uniform rates of return on likeinputs. It therefore does not seem so ‘remarkable’ as Kennedy suggests,that ‘this imbalanced dual-value theory remained in economics for so long’(p. 133). How else could competitive equilibrium prices be theorized?When he applies bargaining to market price behaviour (pp. 133–4),Kennedy does not bother to tell the reader what would happen if theresulting market prices remained persistently below natural price. Wouldnot production of the commodity entirely cease, as Smith would predict

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(cf. pp. 138 and 157)? This chapter also deals with Smith’s theory of wages,but there is remarkably little, here or anywhere else, on the determinationof rates of profits and rents.

Chapter Nine, which also looks at Smith’s views on banking, usefullyconsiders the topic of capital accumulation historically, and in relation tothe issue of primitive accumulation. Chapter 10 provides an account ofSmith’s growth theory as a whole, although this is unnecessarily dressed upwith anti-theoretical commentary. The latter is especially directed at Lowe(1975) – quite gratuitously, since many other rational reconstructions citedin this chapter would be guilty, in Kennedy’s eyes, of the same charges(pp. 169–71). (There is a kind of anti-equilibrium sentiment frequentlyexpressed throughout the book.) The actual account here of Smith’sgrowth theory is fine, with emphasis on division of labour and productivitygrowth, but with also due deference to capital accumulation, saving and thedesire for material self-betterment (pp. 171–5).

The remainder of Chapter 10 is mainly concerned with Smith’s notion ofproductive versus unproductive labour (pp. 176–83). The discussion openswith the suggestion that ‘[n]eoclassical’ economics dropped the distinction‘by aggregating all labour of any kind into a single factor’ (p. 176). Thereare much deeper issues involved than that I am afraid, connected with theclassical concept of surplus and the disappearance of that notion inmarginalist economics. (For pro and contra views of the classical approach inrelation to this issue see, on the one hand, Aspromourgos 2009: 147–60 and196–202; and on the other, Boss 1990: 15–62.) Nor is it the case that theBacon and Eltis (1976) distinction between employment in private-sectormarketed production and in public-sector non-marketed productionapproximates Smith’s distinction (p. 177).1 Suffice it to note that, forSmith, accumulated labour skills are capital (as Kennedy notes: p. 156), andeducation therefore, at least in part, is a productive activity. (The pointKennedy makes about education at page 179 is not the same point as this.)

In short, the analysis here is too shallow. Nevertheless, I think Kennedy isright when, at some points (pp. 177 and 180), he identifies productivelabour with labour that produces capital goods, keeping in mind thatnecessary consumption by productive labour is also capital for Smith. Butthe ambiguities in his treatment of productive labour, which Kennedyaddresses (p. 179), means that this resolution of its meaning is a kind of

1 Kennedy cites this work as ‘Eltis . . . 1976’, omitting the co-author (pp. 177, 186and 268). The only other typographical errors I have noticed also pertain tocitations. A chap called ‘Samuel Holland’ apparently wrote a very good 1973 bookon Smith (pp. 188 and 209). Marx is cited as having written the theories ofsurplus-value manuscripts in ‘1762’ (pp. 167 and 272), which if true, would makehis comments on Smith one of his more successful prophecies.

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rational reconstruction, inconsistent with some of Smith’s propositionsabout productive and unproductive labour (see Aspromourgos 2009: 164–73). Finally on this topic, in relation to commodities consumed byproductive labour being capital, Kennedy’s discussion of consumptionand productive labour at page 180 appears to ignore or overlook thisproductive consumption: ‘[a]ll consumption expenditure out of revenue isunproductive’; ‘[a] minimum amount of unproductive expenditure onconsumption is inevitable (we have to eat)’. That saving or accumulationfunds consumption of productive labour is acknowledged at page 182.

The discussion of Smith and mercantilism in Chapter 11 correctlyemphasizes his moderateness and non-doctrinaire approach to policy, atheme Kennedy raises regularly throughout the book. The next chapter onthe invisible hand joins the recent fashion to downplay its significance, bothfor Smith’s self-understanding and for our latter-day understanding of histhought. That is to say, Kennedy’s view is that it is not important for Smithand it is not important as such. I am inclined to agree, although one shouldnot go too far in that direction: if Smith’s invisible-hand metaphor isunderstood as expressing a notion of unintended system-consequences ofindividuals’ behaviours (where those system-effects are usually sociallybeneficial, but need not be in all cases), then the idea has much widerprovenance in his thought than the mere two or three explicit references tothe phrase. I think Kennedy is wrong to suppose that if there are ‘malign’instances of ‘unintended consequences’, this ‘eradicates the metaphor’sgenerality’ (p. 222). His agenda here is more directed at disassociatingSmith from latter-day ideas Kennedy evidently does not like; for example,‘that self-interested actions’ are ‘always socially benign’ (p. 223). But whooutside a lunatic asylum could embrace such an unconditional statement?

The penultimate chapter of the book covers the three heads ofgovernment responsibility as Smith laid them out in Book V of the Wealthof Nations. Kennedy plays down Smith’s famous or infamous argumentsconcerning the debilitating effects of division of labour on the labouringclasses, for which he offers education as a solution (p. 234). Kennedy alsonotices (pp. 235–36) that Smith opens up scope for a public health role forgovernment, although without acknowledging that this very good point wasmade a long time ago by Viner (1928: 150).

In the final chapter of the book on Smith’s legacy, Kennedy limitshimself to two themes: was Smith an exponent of ‘laissez faire’; andsomewhat related, what were his views on economic inequality andredistribution? Kennedy’s answer to the first is unsurprising, given thathe has broached this theme often throughout the previous chapters. He isright to disassociate Smith from doctrinaire and mechanical application ofeconomic-liberal principles to policy, although these pages are largely

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about Smith rather than ‘legacy’ (pp. 245–55). On the second, Kennedycorrectly makes plain that Smith has (virtually) no room in his thought toallow for redistributive policies. General opulence, importantly includinghigher real wages, will come from growth and competition (both groundedin human nature), not any more active or interventionist governmenteconomic policies. (Kennedy seems to acquiesce,: ‘And so it was proved inthe history of the 19th and 20th centuries [p. 259]; however, in relation tothe experience of rising real wages, there is the little matter of the rise oflabour unions to take into account – not part of Smith’s vision.) Here again,the discussion is largely about Smith, not legacy (pp. 255–61). There is onesmall but perhaps significant slip in Kennedy’s argument here: Smith’sfavouring higher real wages does not mean that he favoured ‘a higher shareof the annual wealth [i.e., income] of society going to the poorer majority’(pp. 260–1, emphasis added; see Aspromourgos 2009: 334, n. 2). Suffice itto conclude that much more could be (and has been!) said about equalityand inequality in Smith.

An economist colleague of mine, with no professional interest in thehistory of the discipline, asked me some time ago to recommend a singlebook that best provides a balanced, overall account of Smith’s economicsand wider thought. It is a testament to how far specialization hasextended in this field, that it is not easy to give a response. In the end,Skinner (1996) seemed to me the best work to fill that bill, even though itis not exactly a singular, unified monograph. It is a collection I muchadmire, not least for its balance and very Smithian (interpretive)moderation – no outrageous claims or over-interpretation merely toattract attention there! It would be unfair to employ that book as abenchmark for Kennedy’s: Skinner’s is couched at a much higher level ofscholarship. But does the book under review meet that kind of purpose ata more accessible, introductory level?

Much of the book is a reasonable and accessible account of the mainthemes and issues in the thought or texts of the great man. But theaccounts of income distribution and prices, and of productive labour andgrowth, are very unsatisfactory. At least the first of these is not at all anelement separable from or incidental to Smith’s political economy as awhole: the tendency of market prices to gravitate towards natural pricesunder competitive conditions is an essential underpinning of the benefitsof commercial society, and the distribution of those benefits. Perhaps it is inthese the most analytical parts of his book – the theories of incomedistribution and prices (including their application to tax incidence), andof growth and productive labour – that the character of Smith’s politicaleconomy is most clearly revealed. A book that does not capture andcommunicate their meaning and significance has a substantial weakness.

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References

Aspromourgos, T. (2009). The Science of Wealth: Adam Smith and the Framing of PoliticalEconomy. London: Routledge.

Bacon, R. and Eltis, W. (1976). Britain’s Economic Problem: Too Few Producers. London:Macmillan.

Boss, H. (1990). Theories of Surplus and Transfer: Parasites and Producers in Economic Thought.Boston, Mass.: Unwin Hyman.

Lowe, A. (1975). Adam Smith’s system of equilibrium growth. In A.S. Skinner andT. Wilson (Eds.), Essays on Adam Smith. Oxford: Clarendon.

Otteson, J.R. (2002). Adam Smith’s Marketplace of Life. Cambridge: Cambridge UniversityPress.

Skinner, A.S. (1996). A System of Social Science: Papers Relating to Adam Smith, 2nd ed.Oxford: Clarendon.

Viner, J. (1928). Adam Smith and laissez faire. In J.M. Clark et al. (Eds.), Adam Smith,1776–1926: Lectures to Commemorate the Sesquicentennial of the Publication of ‘The Wealth ofNations’. Chicago, Ill.: University of Chicago Press.

Tony AspromourgosUniversity of Sydney, Australia

E-mail: [email protected]� 2009 Tony Aspromourgos

Jean-Baptiste Say, Traite d‘economie politique ou simple exposition de la manieredont se forment, se distribuent et se consomment les richesses, variorum edition insix editions, edited by Claude Mouchot, Paris: Economica, 2006. Pp.LXXXVIþ1165þCIX in two volumes. e70. ISBN 2 7178 5318 9

The Centre Auguste et Leon Walras, today the Centre de RechercheTriangle, has now turned its attention to the work of Jean-Baptiste Say,employing the same editorial techniques that were so outstandinglysuccessful with the writings of Auguste and Leon Walras. In this new editionof Say, the Traite has a central place. This is certainly the most important ofSay’s works, although for the lack of a variorum edition it has hitherto beendifficult to analyse the successive modifications that Say introduced throughthe six editions which he prepared. The resulting text is quite remarkable. Apriori, it would seem very difficult to produce a satisfactory variorum editionthat would properly reflect the scope of the changes that Say made tosuccessive editions of the Traite. Claude Mouchot has however managed topresent the work in such a way that it is possible to follow, without too muchdifficulty, the evolution of Say’s thinking. In addition, the notes that Mouchothas added are both concise and precise. The index of authors is particularlyuseful, since it is not limited to recording those pages on which each name is

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