prior probability

My previous post highlighted an unsolved mystery involving two of the foremost European thinkers of the Age of Enlightenment — Adam Smith and Jean-Jacques Rousseau — an enigma posed by Paul Sagar in his 2022 book Adam Smith Reconsidered. Specifically, what did Smith think of Rousseau, or what influence did Rousseau have on Smith? In addition, by my count Professor Sagar also identifies or mentions at least four more important “Adam Smith problems”:

1. The ‘real’ Das Adam Smith Problem. First off, Prof Sagar refers to what he calls “the real Das Adam Smith Problem” in the Introduction to his book: “How could a first-rate moral philosopher like Smith think that morality was not fatally compromised by the existence of [commercial society] …,” i.e. the tension between private and public virtue on the one hand and the pursuit of material luxury goods on the other? (See Sagar 2022, p. 3, emphasis in the original.)
2. Fellow feeling versus the love of domination. Next, Sagar compares and contrasts Smith’s theory of “fellow feeling” with his (Smith’s) realist recognition of man’s love to dominate and enslave other men and then asks, “How can we be both fundamentally disposed towards fellow feeling with each other, and yet so liable to oppress and dominate others when we get the chance, as Smith thought we evidently are?” (Sagar 2022, p. 63. See generally the chapter on “Domination, Liberty, and the Rule of Law” (Ch. 2), especially the subsection on “Slavery and the Love of Domination” on pp. 60-67.)
3. The conspiracy of the merchants. In the words of Sagar, “… nobody even passingly familiar with Smith’s works will be surprised to hear that he exhibited a profound hostility to the merchants ….” (Sagar 2022, p. 188.) Although it is easy to appreciate the source of Smith’s hostility — the dangers to consumers of merchants colluding to raise prices, obtain ill-gotten subsidies, and bend the rules in their favor — this hostility is paradoxical. On the one hand, the merchant classes “are dangerous to a modern commercial society” (Sagar 2022, p. 207), since they will often collude to enrich themselves at the expense of consumers, yet at the same time, they are “entirely necessary to [a modern commercial society’s] continued operation and flourishing.” (Ibid.) But how can the merchant classes be both necessary and dangerous, or good and bad, simultaneously? In a nutshell, they are good when they are pursuing legitimate commercial activities and playing by a fair set of rules that equally apply to all firms, but they are bad when they try to bend these rules or conspire to raise prices or obtain subsidies or other special favors from those in power at the expense of the general welfare of the public, and this delicate dichotomy, in turn, poses an even deeper and more fundamental Smithian paradox: how can we ever hope to constrain the self-serving rent-seeking activities of merchants without stifling their wealth-maximizing commercial activities?
4. Smith’s politics. Towards the end of his book, Sagar mentions in passing one last enigma: if Smith were alive today, would his politics be ‘left’ or ‘right’? (See, for example, the sources listed on page 210, footnote 26 of Sagar’s book as well as the infographic below; hat tip: Reddit user u/entropy13.)

There is more than one “Das Adam Smith Problem.” Case-in-point: Paul Sagar’s 2022 book Adam Smith Reconsidered, especially chapter 3, which poses a new “Adam Smith problem”, one that I had not given much thought before reading Professor Sagar’s work. Specifically: what did Adam Smith think of Rousseau, and what influence did this reclusive Swiss author have on Smith’s intellectual development?

In summary, the consensus among academics is that Smith considered Rousseau “a major intellectual interlocutor and challenger.” (Sagar 2022, p. 116.) Some Smithian scholars have even gone as far as to say that Smith wrote his first great work, The Theory of Moral Sentiments, in direct response to Rousseau’s famed Second Discourse on the origins of inequality. (See generally the collection of essays in Maria Pia Paganelli and Dennis C. Rasmussen, editors, Adam Smith and Rousseau: Ethics, Politics, Economics (Edinburgh University Press, 2018), available here, via Amazon. See also the YouTube video below of Professor Istvan Hont’s October 2010 Benedict Lecture at Boston University on “Rousseau and Smith: Political Theorists of Commercial Society.”)

Professor Sagar, however, has a different take; according to Sagar’s reading of Smith, The Theory of Moral Sentiments was more influenced by David Hume, Bernard Mandeville, and others than by Rousseau, for Smith would have considered Rousseau’s ideas either obsolete or unpersuasive! I won’t rehash the particulars of Prof Sagar’s meticulous, if not tedious, line of reasoning. Instead, for now it suffices to restate Sagar’s surprising conclusion that “the influence of Rousseau upon Smith is at best minimal and secondary.” (Sagar 2022, p. 141.) Alas, if Sagar’s conclusion about Rousseau’s limited influence on Smith is correct, then why did the Scottish professor choose to review Rousseau’s Second Discourse in his [Smith’s] March 1756 letter to the Edinburgh Review? Sagar himself is perplexed by this fact: “… we simply do not know why Smith reviewed [Rousseau’s Second Discourse] for his Scottish audience ….” (See Sagar 2022, p. 126.)

In addition to Sagar’s macro question — i.e., what influence did Rousseau have on Smith, if any? –, I would add one further micro question regarding Smith and Rousseau: did the two great Enlightenment thinkers ever meet each other in person? By all accounts, Rousseau left Strasbourg for Paris 9 December 1765, arriving a week later, and lodged in the palace of his friend, the Prince of Conti, where he met David Hume, among many other numerous friends and well-wishers. (See, e.g., Leo Damrosch, Jean-Jacques Rousseau: Restless Genius (Houghton Mifflin, 2005), pp. 404-405, available here via Amazon.) As it happens, most of Smith’s biographers think that Smith arrived in Paris sometime in December of 1765, so was Adam Smith among Rousseau’s many visitors during this time?

Note: Professor Sagar identifies at least four more Adam Smith mysteries in his book. I will survey these additional problems in the next day or two.

Check out his amazing Instagram page here.

That is the title of my latest article, which was just published in Bocconi Legal Papers; see https://blp.egeaonline.it/it/102/papers. Below is an excerpt with the footnotes omitted:

 Ramsey developed his new approach to chance in a paper titled Truth and Probability, which he presented for the first time at a meeting of the Moral Sciences Club in November of 1926. In this remarkable paper, which was eventually published posthumously in 1931, Ramsey sketched out an entirely new and revolutionary way of looking at probability. We can summarize Ramsey’s picture of probability in ten words: “probabilities are beliefs and beliefs, in turn, are metaphorical bets”, or to quote Ramsey’s himself, “Whenever we go to the station we are betting that a train will really run, and if we had not a sufficient degree of belief in this [outcome] we should decline this bet and stay at home”. On this subjective view of probability, one can measure the strength of a person’s beliefs in betting terms, or again in Ramsey’s own words: a “probability of 1/3 is clearly related to the kind of belief [that] would lead to a bet of 2 to 1”. Most importantly, Ramsey also showed how one’s bets – i.e., one’s subjective or personal probabilities – should obey the formal axioms of probability theory.

Capitalism and Freedom by Milton and Rose Friedman (pictured below, top row), first published in 1962 and available here in full –> https://en.wikipedia.org/wiki/Capitalism_and_Freedom

Capitalism and Slavery by Eric Williams (pictured below, bottom row), first published in 1944 and available here in full or here (first 30 pp.) –> https://en.wikipedia.org/wiki/Capitalism_and_Slavery

Bonus link: additional books about “capitalism” –> https://en.wikipedia.org/wiki/Category:Books_about_capitalism