The Catholic University of America
Aug 25 2012

Paul Ryan’s Adam Smith Problem

Posted by Stephen J. McKenna at 11:17 AM Economy

With a hurricane bearing down in the direction of Miami, Republicans can at least be glad that they’ve already survived one, at least as measured in media coverage of Romney’s running mate pick.  In distracting from other things about the Republican presidential candidate—his reversals on many issues over the years, his undisclosed tax returns, his seemingly inscrutable character—the entry of the handsome, earnest young congressman from Wisconsin seems a success, at least in the short term.  The dominant narrative has been that Ryan is a man of substantial intellect and political courage, and possessed of a wizardly acumen for interpreting the entrails of the Federal budget.   Even the Romney campaign has played it this way, surprisingly oblivious to what it may suggest about the first man on the ticket.  

Major news outlets and partisan media have certainly run with this picture, right and left sometimes parroting each other with only slightly different inflections, at other moments more seriously if haphazardly drilling down into the famed (or notorious) Ryan plan, in order to get a better understanding of what the Republican ticket would promise in terms of economic policy.  Pre-Ryan, this was a fairly non-specific and nice-sounding set of platitudes from Romney about job creation, fixing the economy, believing in America, and so on—with promises of many brass tacks to come.  Journalists, TV news hosts and pundits alike have largely acted as if the Ryan pick marks, at long last, the arrival of the thus-far missing details.  A peculiar effect of this has been to deflect attention from the radically unphilosophical underpinnings of Ryan’s plan, so as to make it appear that those underpinnings were well-synthesized, and all that is left to do is debate the finer points.  Even a powerful critic like Paul Krugman, who dismisses Ryan as “unserious” when it comes to economics, pays the congressman’s plan a backhanded compliment by taking on its core prongs, giving them continued media presence. 

Debate over the details is inevitable, but what is more needed is a frank discussion of Ryan’s libertarian beliefs (and Romney’s likeminded alignment with them), whether they have any intellectual or moral integrity, and whether they will serve Americans well in the long run.  One would hope, in the name of fostering substantive political discourse, that President Obama will be able to steer some debate back to economic and political philosophy.  The best rhetorical move he and Joe Biden have been making on the campaign trail lately has been to call attention to the stark differences in the two candidates’ overarching political and economic “visions”.   But carrying this forward without it deteriorating into us-and-them reductionism may prove tricky.  Philosophy plays about as well on television as watching paint dry, and the imperative in the corporate media to hypersimplify, the better to maximize advertising revenue, is mighty.

None of this is to suggest that a philosophical veneer hasn't been given to the Republican economic position.  I mean here not the sophomoric varnish of Ayn Rand, but the citation of serious economic thinkers such as Milton Friedman and Friedrich Hayek .  Perhaps somewhat less often named, but nonetheless weighty among these, even a godfather figure to the rest, is Adam Smith. 

Here is Ryan, in the introduction to his "Roadmap for America’s Future: A Plan to Solve America’s Long Term Fiscal and Economic Crisis":

"The Founders enshrined in the U.S. Constitution the principles of a government drawing its legitimacy from the consent of the governed, of freedom, and of leaving future generations better off – the second and third of which are best captured by the phrase to “secure the Blessings of Liberty to ourselves and our Posterity.”  The Founders also understood the importance and value of free enterprise. In addition to the Declaration of Independence, the year 1776 saw the publication of Adam Smith’s treatise The Wealth of Nations, which argued in part that the “system of natural liberty,” or free markets in commerce, would vastly increase national wealth. The Founders saw Smith not only as an economic thinker, but as a moral philosopher whose other great work was The Theory of Moral Sentiments. They were just as committed to an American economics of freedom as they were to American moral greatness."

It’s apt of Ryan to align Smith’s famous Wealth of Nations (WN) with the lesser-known Theory of Moral Sentiments (TMS).  Smith thought of the works as thoroughly continuous; he thought TMS, first published in 1759, the more important and overarching work, and he made significant revisions to it in 1790 in part in the light WN, and in response to the excesses of a mercantilism that had gone from putting trade at the service of national policy to making national policy the servant of trade.  Ryan wants to pair Smith’s seminal work on capitalism with another important work by the same author on things moral as a combined endorsement of his plan.  He’s right, albeit likely more through convenient accident than intent, to imply that the old “Adam Smith Problem”—i.e., how to reconcile WN’s making self-interest the engine of societal benefits with TMS’s requirements for “fellow-feeling” and human sympathy as a basis for societal flourishing—is only a problem for uncareful readers. 

What’s missing from Ryan’s appropriation of Smith is any evidence that would show him to be a careful student of Smith.  For anyone who attentively reads these two treatises, as the Founders surely did, will know that Smith’s self-interest is not selfishness, and that moral sympathy with others is in one’s self-interest, as well as in the interest of societal flourishing.  Ryan’s glib summation of these works as an endorsement of his brand of libertarianism, as well as his wishful attempt to weld to it the idea that Smith thought such a program would be “moral” is so facile as to belie indeed any claim that might be made in favor of his intellectual seriousness.  He certainly could not have read Smith with any attention on either economics or morality.  It would be good if he and the backers of his budget plan did so.  Here are just of a few of the things they might be surprised to learn:

•They would learn, for instance, that although Smith generally uses the term “wealth” in our present-day understanding of the word, in the title of his famous treatise, Smith could not have meant just national treasure or personal riches.  His usage was meant to resonate with an older but not yet obsolete meaning: common well-being, or general good.  And such commonweal would not be measured in the success of the rich or how financially well-off the citizens could become.  Smith routinely says precisely the opposite.  Here’s just one such telling passage (pay special attention to the word “never”):

"Servants, labourers and workmen of different kinds, make up the far greater part of every great political society. But what improves the circumstances of the greater part can never be regarded as an inconveniency to the whole. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, cloath and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, cloathed and lodged." (WN I.viii.36)

•They would learn that while Smith indeed linked markets and liberty, he would have been scathingly critical of a society such as ours where the relation between them has been exploited to generate gross inequity between rich and poor.  Indeed, Smith would have seen this gulf as a symptom of the absence of real liberty in that society, and anything but a sign of “moral greatness”:

"The whole of the advantages and disadvantages of the different employments of labour and stock must, in the same neighbourhood, be either perfectly equal or continually tending to equality. If in the same neighbourhood, there was any employment evidently either more or less advantageous than the rest, so many people would crowd into it in the one case, and so many would desert it in the other, that its advantages would soon return to the level of other employments. This at least would be the case in a society where things were left to follow their natural course, where there was perfect liberty, and where every man was perfectly free both to chuse what occupation he thought proper, and to change it as often as he thought proper. Every man's interest would prompt him to seek the advantageous, and to shun the disadvantageous employment." (WN I.x.i)

•They would learn that Smith was no adherent to the gospel of “success.”  For Smith, the measure of a person had nothing to do with one’s ability (or inability) to succeed as a self-reliant bootstrapper or economic winner.   Yes, he did recognize that humans seem inevitably to have a “natural” propensity  to admire “the rich and the great,” and that this can have some utility in maintaining “the distribution of ranks,” which can in turn foster social stability.  Yet he unequivocally saw this tendency as morally pernicious:  “This disposition to admire, and almost to worship, the rich and the powerful, and to despise, or, at least, to neglect persons of poor and meand condition…is…the great and most universal cause of the corruption of our moral sentiments…. It is scarce agreeable to good morals, and even to good language, perhaps, to say, that mere wealth and greatness, abstracted from merit and virtue, deserve our respect” (TMS I.iii.3.1…4).  Instead, merit and virtue are wholly generated through our capacity for sympathy and “fellow-feeling” (one might call it friendship or even love)—with the acts of good done by others, with the gratitude felt by those who receive such benefits, as well as with the just resentment of those who are maliciously or thoughtlessly harmed by others. This sympathy is the foundation of the virtue of benevolence, which turns the hierarchy of individual success on its head:

"The wise and virtuous man is at all times willing that his own private interest should be sacrificed to the public interest of his own particular order or society. He is at all times willing, too, that the interest of this order or society should be sacrificed to the greater interest of the state or sovereignty, of which it is only a subordinate part. He should, therefore, be equally willing that all those inferior interests should be sacrificed to the greater interest of the universe, to the interest of that great society of all sensible and intelligent beings, of which God himself is the immediate administrator and director." (TMS VI.ii.46)

•They would learn that, for Smith, no nation that tolerates the exploitation and dehumanization of a substantial part of its working citizens—a great potential problem in industrialized society, he reckoned—can be considered civilized, much less moral, nor can it enjoy the benefits of “wealth.”  The antidote, some Republicans would be shocked to learn, is the very visible hand of government intervention:

"In the progress of the division of labour, the employment of the far greater part of those who live by labour, that is, of the great body of the people, comes to be confined to a few very simple operations; frequently to one or two. But the understandings of the greater part of men are necessarily formed by their ordinary employments. The man whose whole life is spent in performing a few simple operations, of which the effects too are, perhaps, always the same, or very nearly the same, has no occasion to exert his understanding, or to exercise his invention in finding out expedients for removing difficulties which never occur. He naturally loses, therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is possible for a human creature to become. The torpor of his mind renders him, not only incapable of relishing or bearing a part in any rational conversation, but of conceiving any generous, noble, or tender sentiment, and consequently of forming any just judgment concerning many even of the ordinary duties of private life. Of the great and extensive interests of his country, he is altogether incapable of judging; and unless very particular pains have been taken to render him otherwise, he is equally incapable of defending his country in war. The uniformity of his stationary life naturally corrupts the courage of his mind, and makes him regard with abhorrence the irregular, uncertain, and adventurous life of a soldier. It corrupts even the activity of his body, and renders him incapable of exerting his strength with vigour and perseverance, in any other employment than that to which he has been bred. His dexterity at his own particular trade seems, in this manner, to be acquired at the expence of his intellectual, social, and martial virtues. But in every improved and civilized society this is the state into which the labouring poor, that is, the great body of the people, must necessarily fall, unless government takes some pains to prevent it." (WN V.i.f.)

One could go on at great length citing Smith against the current Republican brand of prosperity-rhetoric, a quite unphilosophical mélange of libertarian anti-governmentalism, trickle-down wishful thinking, radical individualism, social Darwinism, and market idolatry that is quite far removed from the civilized and moral social system Smith envisioned.  Every serious contemporary Smith scholar has in one way and another demonstrated this—D.D. Raphael, Knud Haakonssen, Donald Winch, Nicholas Phillipson, Emma Rothschild, Jerry Muller, Charles Griswold, Jerry Evensky, Ryan Patrick Hanley--the list would be long.  All one has to do is read.  It should go without saying that one should start with Smith himself.  Were the Catholic Ryan to read Smith, he might be shocked to realize that Smith’s vision had more in common with Catholic Social Teaching—as in preferential option for the poor, or the market restraint advocated in Quadragesimo Anno and Centesimus Annus—than with the ultimate views of Hayek or Friedman.

A little-known fact about Smith is that he began his career in 1748 giving public lectures on rhetoric and belles-lettres at the University of Edinburgh, a humanistic undertaking he thought worthwhile enough to continue after he became Professor of Moral Philosophy at the University of Glasgow.  His views on communication are rich and insightful, providing valuable keys to how his later works should be read.  Like Friedrich Hayek, one of the godfathers of contemporary American libertarianism, Smith recognized that an economy is many ways an elaborate communication system.  Early in The Wealth of Nations he remarks that the division of labor most likely originates in our “faculties of reason and speech” (II.ii) , demurring, however, from further comment as outside his present subject.  But Smith did argue in his earlier Lectures on Jurisprudence, from which Wealth ultimately sprung, that the human propensity to engage in commerce (“trucking”) is fundamentally rhetorical:

"If we should enquire into the principle in the human mind on which this disposition of trucking is founded, it is clearly the naturall inclination every one has to persuade….Men always endeavour to persuade others to be of their opinion even when the matter is of no consequence to them. If one advances any thing concerning China or the more distant moon which contradicts what you imagine to be true, you immediately try to persuade him to alter his opinion. And in this manner every one is practising oratory on others thro the whole of his life.—You are uneasy whenever one differs from you, and you endeavour to persuade him to be of your mind; or if you do not it is a certain degree of self command, and to this every one is breeding thro their whole lives." (LJ(B))

Unlike Hayek, however, Smith was deeply concerned with the moral characteristics of communication in an economy and society.  Contrary to the behavioristic biases of Chicago-school economics, homo economicus reductivism—the idea that humans are best understood as rational optimizers of personal utility, at best mere relays of incentive and self-interest in a communication system—is quite at odds with the Smithian vision that emerges from The Wealth of Nations paired with The Theory of Moral Sentiments. This despite Chicago’s claim, like Ryan’s, to Smith as one of their own.  Homo rhetoricus comes much closer to Smith’s view of the human condition.  This presumes that we understand the art of rhetoric as Smith did: that it is a practice of effectively expressing sentiments deriving from sympathy, which is the ability to internalize the actual perspectives and judgments of the morally best models in the community as a restraint on behavior driven by selfish and individualistic desire.  Such a reality check against the convenient seductions of cherry-picked economic and moral philosophy would do Paul Ryan, Mitt Romney, and the Republican right some good.  And that would benefit everyone.