On Adam Smith

I recently found a book by James R. Otteson titled Adam Smith’s Marketplace of Life, the goal of which is to synthesize Smith’s An Inquiry into the Nature and Causes of the Wealth of Nations, which argues for people acting in their own rational self-interest so that everyone may be better off, and his The Theory of Moral Sentiments, which argues for mutual sympathy and community as the sources of morality. In modern American politics, the liberals reject this connection entirely, while the conservatives don’t see any point in even making the connection.
But the connection is there, and it is important to make this connection. Smith was writing in the Scottish philosophical tradition, which developed a much different theory of human nature, including theories of equality and individualism, than did the Continental European philosophical tradition, which included Decartes, Kant, Hegel, Marx, and Heidegger.

Before I continue, let me introduce a concept: the world can be viewed as digital, analog, or both. Digital comes from the Latin digitus, for finger. It is countable and separable – a digit is a number. Number comes from the Latin numerus, meaning number and division, and numerus comes from nom-eso, which also gives rise to the Greek nomos, meaning portion, custom, law, division, and melody. Nom comes from gno, which gives rise to knowledge and noble, and "noble" is one way to translate the Greek to kalon, which means not only noble, but also beautiful, just, and fair. Analog comes from analogous, meaning alike. Analog comes from the Greek ana-, complete, and logos, meaning explanation, collection, discourse, or account. A digital view of the world sees the world as divided, pluralistic; an analog view of the world sees the world as one, unified. As Heraclitus says, "It is wise, listening not to me but to the report [logos], to agree [homologein] that all things are one" (K. XXXVI). The view I am propounding agrees with Heraclitus that physis, logos, and nomos are intimately connected. If dynamic systems such as cultures and economies are both analog and digital, we again have an agonal unity of opposites, a complete account explainable only as parts, giving rise to greater complexity in the dynamic system arising out of their interaction. It is important to understand that the world is neither merely digital/fragmented nor merely analog/continuous in order to both have a clearer, more accurate understanding of the scientifically explainable parts of the world, and for aesthetic, ethical, and political reasons (as suggested by the connection of "digital" to to kalon and nomos). There are important consequences for our aesthetics, ethics, and politics if we hold to this (or any) particular (meta)physical view.

If the world is merely digital, the parts cannot interact. If the world is merely analog, it is indistinct. If it is both simultaneously – analog-unified and digital-plural – it has communication, coordination, cooperation, and co-action among its parts. It has unity in variety, and is thus beautiful.

In Individualism and Economic Order, F. A. Hayek points out the dangers of the digital-exclusive view – showing it can and usually does lead to the analogical view (too fine a texture looks like a solid color). The digital-exclusive view leads to bad games (social systems, economic systems, government), since information cannot be shared among players. A good game-system is one where communication – thus, community – is possible. Hayek says there are two kinds of individualism. One is based on rational philosophy, which started with René Descartes and was further developed by Jean-Jacques Rousseau, Voltaire, Emmanuel Kant, Georg W. F. Hegel, Arthur Schopenhauer, and the existentialists, including Martin Heidegger, Jean-Paul Sartre, and Simone de Beauvoir (I am sure the last three would object to being put in the "rationalist" tradition, but their ideas did not really deviate much from Kant’s). I will call this Cartesian Individualism (the digital-exclusive view). The other is in the Scottish tradition of David Hume, Bernard Mandeville, Josiah Tucker, Adam Ferguson, Adam Smith, and John Locke, and further developed by Edmund Burke, Alexis de Tocqueville and Lord Acton (the digital-analog agonal view). Cartesian Individualism sees man as rational; the Scottish tradition does not see man as fully rational, but also, perhaps primarily, influenced by his drives, wants and needs of the moment. These different views give rise to different forms of individualism. Perhaps the best way to show the differences would be to put the two traditions side by side in a table showing the difference Hayek sees between the two, and the consequences of each of these, traditions:

COMPARISONS OF TWO PHILOSOPHIES OF INDIVIDUALISM

SCOTTISH (DIGITAL-ANALOG)

the individual is found within the social, leading to free markets
man is not always rational, or even capable of always being rational – man also has impulses and instincts
since man is not rational, he cannot design or plan something like a society or economy
the individual participates in the social (cooperates) through being selfish
"If left free, men will often achieve more than individual human reason could design or foresee" (11).
It is not necessary to find good men to run the society, meaning anyone can play
it is not necessary for us to become better than we already are, making it easy to enter the game to play it
freedom is granted to all
no one group never always wins, which keeps people playing
reason is seen "as an interpersonal process in which anyone’s contribution is tested and corrected by others" (15)
inherently unequal people are treated equally
inherent inequality allows diversity
hierarchical – intermediates encouraged

CARTESIAN (DIGITAL-EXCLUSIVE)

radical individualism, leading (ironically (?)) to socialism
man is rational and has no instincts and can always control his impulses
since man is rational, he can create through planning the ideal society or economy
individual vs. the social – i.e., selfishness vs. cooperation – therefore need coercion
"social processes can be made to serve human ends only if they are subjected to the control of individual human reason" (10)
only the best can or should run society and make economic decisions – few can play
men need to be improved (presumably made more rational) before a good economy or society can be created – hard to play
freedom granted only to the good and wise
the "good and wise," "rational" rulers always win – no reason to play the game
reason found in the individual, especially in certain "good and wise" individuals
people are made equal in actuality – thus, have to arbitrarily assign tasks
only State and Individual, thus flattening society – intermediates suppressed


The Scottish form of individualism, by being digital-analogical, provides us with a broader, more inclusive set of game rules. Anyone can play the social and economic games – making these systems more complex by containing more parts acting in coordination and cooperation. Man does not have to be "improved" for systems set up using Scottish principles to work as he does for those using Cartesian principles (historical examples of attempts to "improve" man to make him more suitable for "rationally" designed societies include the Holocaust in Nazi Germany, the Terror of Revolutionary France, and the slaughters of millions in the Marxist states of the Soviet Union, Maoist China, and Cambodia). In the Cartesian view, there is one rationality; but in the Scottish view, there are many, which can often come into conflict.

The field in which we operate is our democratic society. The ideal democratic system includes, of course, the various levels of government, but it also encompasses every other organized part of society, including the neighborhood, family, workplace, political party, voluntary or nongovernmental organization, transnational corporation, Internet, and a variety of multilateral organizations. Operating within such a spectrum of responsibility progressively demands the most that individuals can give. Instead of requiring full mastery at the outset, this system establishes conditions under which human beings can achieve their full potential, through their participation, their education, and their receipt of the benefits which the system can produce. ( Craig Eisendrath, At War With Time, 277)

One can make a rational decision about an immediate individualistic concern, one about a long-term individualistic concern, one about one’s family, one for social organizations (i.e., churches, schools, businesses), one for one’s city, county, state, and/or country, one for one’s friends, one for strangers, etc. – all of which could come into conflict (something could be rational for the individual, but not for the family, etc.). This recognizes that individual decisions can and often do effect and affect others through the different levels of society between the individual and the state.

If we take the Scottish view that a person’s knowledge and interests are limited, making our actions limited to a tiny sphere of influence – our family and friends, our churches, schools and businesses, the intermediate social groups the rationalists suppress and the Scottish encourage – we see a highly complex society emerging: the individual influences small social groups, the small social groups influence the individual, and both interact to influence larger social groups, which feeds back to the smaller groups. There is a series of nested hierarchies where each person acts as a digital element, acting in a digital-analogical way, communicating information to other digital elements to create smaller cultural subsystems – the digital elements – of the larger culture. The same individual can have an effect on a school, a church, a business, and a local government, each of which will have larger effects on society at large. More people have more influence over society. And man does not have to be "improved" – the worst can be canceled out by the best. In what other country than the United States and other Western-style democratic republics does it really not matter who the President or Prime Minister is? – any mischief the American President may want to make is more often than not counterbalanced by two houses of Congress, a Supreme Court, and the voters’ opinions (these same voters who can vote the President out after four years if worse comes to worse, or vote in a different party during midterm elections). These principles, upon which the free market is based, are "an effective way of making man take part in a process more complex and extended than he could comprehend" (Hayek, 14-5). Perfect knowledge is not needed to participate. One can have a considerable amount of uncertainty, and still do well. We can reduce uncertainty through education, increasing our own individual knowledge, but we are still left with a plethora of things which we will never have the time to learn.

There needs to be a way for individuals, with their limited information, knowledge, etc., to enter into a highly complex game, to be able to participate in the game itself. The way to allow someone into a highly complex game is by not having barriers to their entering and playing the game in the first place. And, if you do choose to play, and take large risks while playing, you should be able to reap a correspondingly larger reward. To have a good game,
any workable individualist order must be so framed not only so that the relative remunerations the individual can expect from the different uses of his abilities and resources correspond to the relative utility of the result of his efforts to others but also that these remunerations correspond to the objective results of his efforts rather than to their subjective merits. (21)

And the game must not be constructed of iron-clad laws, but of flexible rules (not too flexible, as those of pragmatism, nor too rigid, as those of absolute principles, both of which, as opposed to the idea of general principles, cannot create a system, since principles are the strange attractors, and neither pragmatism nor iron-clad absolutes create attractors). These are also good guidelines for creating works of art and literature, and for writing works of philosophy, theory, and criticism.

An example of good game rules are our "traditions and conventions . . . [which] evolve in a free society and . . . , without being enforceable, establish flexible but normally deserved rules that make the behavior of other people predictable in a high degree" (Hayek, 23). Most social rules should be those agreed upon and practiced by most of the people most of the time, enforced by subtle social pressures, not the use and threat of physical force. "In the social sciences the things are what people think they are. Money is money, a word is a word, a cosmetic is a cosmetic, if and because somebody thinks they are" (Hayek, 60). They are rules because we agree they are – they are socially constructed. With these kinds of rules, those we find in the free market, we have various choices – while with orders or iron-clad laws, we get no real choices. Any choice is better than none. "It is better to have a choice between several unpleasant alternatives than being coerced into one" (Hayek 24).

A word of caution: just because the world has a socially constructed element, it does not follow that all the world is socially constructed. To claim it is brings us to the problems with pragmatism, where no system at all can be constructed. Hayek says pragmatism is "the preference for proceeding from particular instance to particular instance," where the rule-maker "decides each question "on its merits""(1). With pragmatism, expediency and compromise lead us "to a system in which order is created by direct commands" (1). "Without principles we drift," and we are led "to a state of affairs which nobody wanted" (2). Pragmatism makes it possible to change the rules with each move in the game – imagine a game master watching a game being played between two people, and changing the rules whenever he wished. This would lead to the players in each move trying to gain the game master’s favor. They would try to bribe the game master rather than play the game. If this sounds like how big business is conducted, with the government as the game master, we can see why. How much money do businesses waste trying to influence "pragmatic" government officials? With basic principles, everyone is clear what the rules are and that they cannot – or are very difficult to – change. The game players concentrate on the playing of the game itself rather than coming up with strategies to influence some game master. With the use of general principles, the game master can all but be done away with.

The world Adam Smith envisioned was thus one where people cooperated because they worked in their own self-interest – but not exploitatively. Free market systems work because we have sympathy for others, and we want to engage in actions where "if you do something good for me, I will do something good for you," versus the way governments necessarily act: "unless you do something good for me, I will do something bad to you." Governments only help foster community when they prevent individuals and groups from engaging in the latter type of behavior. Those who try to dissolve community bonds and flatten out the natural hierarchies that develop in a culture only seek to create a situation where people are loyal only to them, and not to the series of smaller groups to which they belong. Those who adopt the Cartesian view of humankind are interested only in ruling others. That is why they oppose free markets and the creation of true communities.