prior probability

Happy New Year’s Eve, loyal readers! Here, I will review Chapter 1 of Adam Smith Reconsidered, which is titled “Commercial Society, History, and the Four Stages Theory”. In brief, from what I can tell, Professor Sagar has two goals in this early chapter. One is to clarify the true meaning of the term “commercial society” in Smith’s works; the other is to put Adam Smith’s so-called “four stages” model of economic development into context. As it happens, Sagar devotes most of Chapter 1 to Smith’s theory of history, so let’s begin there.

By way of background, the “four stages” is a simple model that Smith himself first presented to his students when he was still a full-time professor at the University of Glasgow in the 1750s and early 1760s. (Specifically, see Smith’s “Lectures on Jurisprudence”, which are available here.) In summary, Smith divides economic history into four separate stages: “1st, the Age of Hunters; 2dly, the Age of Shepherds; 3dly, the Age of Agriculture; and 4thly, the Age of Commerce” (see Smith, Lectures on Jurisprudence (A), i.27; see also the infographic pictured below.) So, what should we make of this model?

For his part, Professor Sagar explains why most Smith scholars have for various reasons misinterpreted Smith’s simple model, believing it to represent a “stadial” or deterministic account of economic history, with commercial society representing the culmination of economic progress. Although Sagar’s meticulous critique of this common-sense reading of Smith’s historical theory is the most tedious part of his entire tome, it suffices to say that, according to Sagar, Smith’s four-stages model is just a thought experiment, not a “conjectural history”, let alone an historical account, “of how things ever actually happened” (Sagar, p. 20, internal quotation marks omitted). So, who’s right?

Alas, I don’t think the answer to this question matters too much, for as Sagar himself correctly notes, Adam Smith makes no mention of his four-stages model in The Wealth of Nations (ibid., p. 40). Also, for what it’s worth, I would further add that this simple model — as well as anything else in the “Lectures on Jurisprudence” for that matter — must be taken with a large grain of salt. Why? Because Smith never published those Glasgow-era law lectures. (The Lectures on Jurisprudence are a series of class notes taken by one of his students.) Although Adam Smith was writing a book on jurisprudence — something Smith reveals to his readers as early as 1759 in the last paragraph of his first great work, The Theory of Moral Sentiments — he not only never finished writing that promised law book; he specifically instructed his literary executors to destroy the unpublished manuscript upon his death, which they did!

What about the meaning of the term “commercial society” in Smith’s works? Here, Sagar makes two important points, both of which I readily concede as correct. One is that Smith himself used the words “commercial society” only twice (p. 52). The other is that, for Smith, there are many different types of commercial society, such as those of ancient Athens and Rome, that of Imperial China, and that of post-feudal Europe. Having now dispensed with Smith’s four-stages model and having also established that “commercial society” can have multifarious meanings, we will proceed to Chapter 2 in my next post.

This is part 1 of my review of Adam Smith Reconsidered. To begin, two things about the Introduction to Paul Sagar’s beautiful book caught my attention: (1) Professor Sagar’s striking but simple solution to something called “Das Adam Smith Problem” and (2) his formulation of what he considers to be the “real” Adam Smith problem. So, let’s start off with the so-called Das Adam Smith Problem, a longstanding academic controversy originating in the 19th century. What is it? Why does this obscure scholarly conundrum matter? And how does Sagar solve it?

In brief, the original “Adam Smith Problem” refers to a possible internal contradiction between Smith the political economist and Smith the moral philosopher — a deep paradox that arises when his two great works are read as a whole — namely, the possible contradiction between the invisible hand of self-interest in Smith’s Wealth of Nations, where the Scottish philosopher develops a testable theory of political economy based on “self-regarding” or wealth-maximizing behavior on the one hand, and the impartial spectator of Smith’s Theory of Moral Sentiments, where he develops a more complex and convoluted pro-social theory of ethics based on mutual “fellow feeling” and “other-regarding” behavior on the other. Or in the eloquent words of Paul Sagar himself, “How could the same man have written both books?” (Sagar 2022, p. 1, footnote omitted).

For his part, Professor Sagar waves away this scholarly Smithian dilemma as a faux problem. Simply put, for Sagar there is no “Adam Smith Problem” because both of Smith’s great works are operating at “differing levels of analysis” (p. 2). Specifically, The Theory of Moral Sentiments is about “individual-level morality”, while The Wealth of Nations is about “societal level systemic analysis” (ibid.). As an aside, Sagar’s simple solution to this centuries-old Smithian conundrum is so potent and compelling that I wish I had thought of it first!

But as they say on late-night TV infomercials: wait, there’s more! Much, much more. In addition to solving the so-called Das Adam Smith Problem, Sagar’s Introduction makes another significant contribution to the literature. In a word, he identifies what he consider to be the “Real Das Adam Smith Problem” (p. 3). For Sagar, the true or “real” Adam Smith problem is the inherent tension between markets and morality, or in Sagar’s own words: “How could a first-rate moral philosopher like Smith think that morality was not fatally compromised by the existence of the kind of market-reliant society that he set out not only to understand and explain, but in various ways to suggest could be improved?” (ibid.).

Although this particular query might appear to be of interest only to a handful of historians and a few other esoteric academics, it turns out that it concerns each and every one of us, especially in our times, i.e. “consumer-driven postindustrial capitalism” (ibid.). After all, how can one reconcile self love and love of others, capitalism and Christianity, the urge to accumulate material goods and the desire be a good person at the same time? Like the catchy Nicki Minaj rap battle song “No Frauds” (featuring hip hop legends Drake and Lil Wayne), do we have to pick a side? Or can the pursuit of material wealth (e.g. “get yours”) be compatible with higher moral standards such as those embodied in the Sermon on the Mount or the Golden Rule (“love thy neighbor as thyself”)?

It suffices to say (for now) that the rest of Sagar’s book, to which I shall turn in my next few posts, is devoted to the painstaking task of reconstructing Adam Smith’s responses to these larger economic/ethical questions.

Thus far this week I have written up and posted several short reviews (i.e. “micro reviews”) of some of the works that I have been reading this holiday season. The last book on my list, however — Paul Sagar’s new work Adam Smith Reconsidered, pictured below — is so good and so dense (in the good sense of the word) that it deserves an in-depth, multi-part review of its own. Starting tomorrow, then, we will begin reviewing each of the chapters in Sagar’s excellent book, one-by-one, beginning with the Introduction. I can’t think of a better way of ending the old year and starting off the new one.

Given my previous work on Adam Smith and his extended visit to the City of Light in 1766 (see especially here and here), I decided to give Robert Darnton’s new book The Revolutionary Temper: Paris, 1748-1789 a go. Darnton, a history professor at Harvard University, purports to narrate the history of the “collective consciousness” or “frame of mind” of the people of Paris during the four decades preceding the great Revolution of 1789. Alas, although this beautiful book is well-researched and written, Professor Darnton’s project is doomed from the start for three reasons:

1. The definitional or “level of generality” problem: how does one even begin to define such vague and fuzzy constructs like “collective consciousness” or “frame of mind”?
2. The measurement problem: even if we could all agree on an acceptable definition of these social constructs, there is no reliable way of measuring them!
3. Both of these problems are further compounded by the fact that Paris was the second-largest city in Europe at the time (after London), with an estimated population of at least 600,000 souls at the start of the 1789 Revolution. (See here, for example.) How could such a large and diverse group of people — from artisans to aristocrats, merchants to clergymen, and everyone in between — share a “collective consciousness” in the first place?

Nevertheless, although the plural of anecdote is not data (or is it?), Darnton’s collection of amusing 18th-century anecdotes is still worth reading, for he covers all the major events in French history that in one way or another may have contributed to the eventual downfall of the old regime. (Indeed, a better title for this book would be Vignettes of the Ancien Régime.) By way of illustration, I will limit this micro review to my favorite of these old regime vignettes: the commotion caused by the publication of Richesse de l’Etat in 1763, a political pamphlet that “took Paris by storm and stirred up an enormous debate about royal finances” (p. 72). In Darton’s telling, the anonymous author of this pamphlet proposed nothing less than an end to France’s “unjust system of taxation”, to be replaced with a new and simple single tax system, “which would be apportioned among the top two million property owners according to a graduated scale” (ibid.).

For my part, I wonder whether Adam Smith was aware of Richesse de l’Etat and other similar political pamphlets during his travels in France (early February 1764 to late October 1766), and if so, to what extent did these works and the larger political debate over taxation in France influence his subsequent magnum opus on The Wealth of Nations, especially Book V? These are questions that I shall explore in a future post, but in the meantime, speaking of the great Scottish philosopher-economist, I will conclude my series of “micro reviews” in the next day or two with Paul Sagar’s excellent 2022 tome Reconsidering Adam Smith.

FYI: I will post my next “micro review” in the next day or two; in the meantime, “from my fridge to yours”: below is my family’s holiday card for 2023 (not pictured, for the photo was taken in October: Aritzia and Kleber, who are in college, and Adela, who lives in California).