Adam Smith’s impartial spectator: equity, efficiency, or justice?

Alternative Title: Review of Chapter 9 of Law and the Invisible Hand

If you are a legal theory geek like myself, then Chapter 9 of Robin Paul Malloy’s Law and the Invisible Hand is a really fun chapter to read. In that chapter, Professor Malloy compares and contrasts Adam Smith’s “impartial spectator” with two competing legal-theory constructs. One is homo economicus: the so-called “rational actor model” that dominated the old-school “Law & Economics” movement associated with Judge Richard Posner and the University of Chicago. The other is homo identicus, Malloy’s short-hand for critical race theory (CRT), which emphasizes race and the primacy of group identity.

As Malloy correctly notes, these two legal-theory “paradigms” (in the Kuhnian sense) espouse radically different ends or goals. The central aim of homo economicus, the “economic man” of the rational actor model, is utility maximization at the individual level and wealth maximization at the social level, or “efficiency” at both levels. By contrast, the main goal of critical race theorists is anti-subordination or “equity”, such as reparations for past wrongs like slavery and genocide. Both efficiency and equity are no doubt laudable goals; in fact, the two most iconic legal documents in U.S. history–the Declaration of Independence of July 4, 1776 and the Emancipation Proclamation of January 1, 1863–are more about anti-subordination than they are about the efficient use of scarce resources.

[As an aside, my 2006 paper “Cornel West, Meet Richard Posner” explores what these two influential legal-theory paradigms might share in common. Also, there are two problems with Malloy’s picture of “Law & Economics” and CRT in Chapter 9. For starters, Malloy himself concedes that homo economicus and homo identicus are both simplified caricatures of the theories they are standing in for. The more serious problem is that these caricatures are either incorrect or incomplete. A key concept developed by CRT scholars, for example, is missing from Malloy’s description of homo identicus: the idea of “intersectionality.” Worse yet, homo economicus is for all practical purposes dead and buried; so-called “behavioral economics” has replaced the unrealistic economic assumptions of yore.]

In any case, what is the impartial spectator’s goal? Alas, here is where Professor Malloy’s interpretation of the impartial spectator starts to fall apart. On the one hand, Malloy claims in a previous chapter that Smith’s spectator is about process, not about outcomes or end-states. For Malloy, the impartial spectator is a useful tool we can use, if we so choose, to help us judge the morality of our actions (cf. Malloy’s inner spectator) and the justice of our social norms and laws (cf. his “outer” spectator), and these inner and outer spectators are more like the “reasonable man” of the common law tradition, a familiar legal standard used by Anglo-American courts to judge individual conduct. At the same time, however, Malloy is trying to build a Smithian theory of justice, and according to Malloy’s version of Smith’s theory, the ideal of justice (defined by Smith himself as the protection of one’s person and property) is the most important goal of all, the “pillar” that holds civil society together. If Malloy’s version of Smith’s theory is correct, then one could easily conclude that the impartial spectator does have an ultimate end: the supreme goal of justice.

If so, then what is the impartial spectator’s view of justice? More to the point, why should we prefer Smith’s conception of justice (protection of private property at all costs) over other conceptions of justice, such as Kantian duties, utilitarian efficiency (cf. homo economicus), or even equity (cf. homo identicus)? Alas, as I shall explain in a future blog post, it is here where we may encounter an insurmountable difficulty.

Racial Equity | ELA

About F. E. Guerra-Pujol

When I’m not blogging, I am a business law professor at the University of Central Florida.
This entry was posted in Uncategorized. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s