Duncan Foley’s best-selling Adam’s Fallacy: A Guide to Economic Theology (Belknap Press, 2006) criticizes a popular understanding of economics that is attributed to Adam Smith: the idea that market competition transforms selfishness into regard and service for others.
In Wealth of Nations, Smith wrote what has become one of his most quoted passages and the inspiration for Foley’s critique:
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.
This passage is offensive to many because it seems to prefer selfishness to benevolence. The passage seems also to contradict the theme of sympathy as the basis for moral judgments in Smith’s earlier text on moral philosophy, Theory of Moral Sentiments. How, after all, can ethically oriented ideas of sympathy and benevolence be reconciled with the pursuit of self-interest? By consulting the “impartial spectator” within, replies Smith in Theory of Moral Sentiments, who “dares not, as self-love might suggest to us, to prefer the interest of the one to the interest of the many.”
What Foley calls “Adam’s Fallacy” is what previous commentators have labeled the “Adam Smith Problem”—but with a subtle new twist. In fairness, Foley thinks that many of Smith’s claims in Wealth of Nations are not fallacious at all. For example, he thinks it is true that, “harnessing the pursuit of self-interest through competitive capitalist markets can be (though it is not invariably) a powerful mechanism for fostering progressive technical change and producing material wealth.” He thus carefully avoids the popular mantra that all pursuit of self-interest through competitive markets is morally suspect.
But, alas, the story does not end here.
What precisely is “Adam’s Fallacy”? “For me,” insists Foley, “the fallacy lies in the idea that it is possible to separate an economic sphere of life, in which the pursuit of self-interest is guided by objective laws to a socially beneficent outcome, from the rest of social life, in which the pursuit of self-interest is morally problematic and has to be weighed against other ends. This separation … is the foundation of political economy and economics as an intellectual discipline.” In other words, Adam’s fallacy is a rationalization used to encourage toleration and active support of the fundamental institutions of capitalism, private property, and the market. But this rationalization, we are told, fails on moral, logical, and psychological grounds.
The moral fallacy of Smith’s political economy is that “it urges us to accept direct and concrete evil in order that indirect and abstract good may come of it.” The logical fallacy is “that neither Smith nor any of his successors has been able to demonstrate rigorously and robustly how private selfishness turns into public altruism.” And, finally, the psychological failure of Smith’s rationalization is “that it requires a strategy of wholesale denial of the real consequences of capitalist development, particularly the systematic imposition of costs on those least able to bear them, and the implacable reproduction of inequalities that divide people from one another in society.” Continue >>
RSS
