Madam I am Adam: Sid Harth

[chhotemianinshallah]

History of Palindromes

Palindromes as a form of wordplay have been created for many
centuries. For example, the ancient Greeks are known to have often
inscribed the following onto their fountains:

Nipson anomemata me monan opsin.

It translates as wash the sin as well as the face. Sharp-eyed readers
will notice that the above it not actually a palindrome. This is
because we have written it using letters of the English alphabet; when
Greek characters are used it is a palindrome because ps is a single
letter in Greek (Y).

The Romans were also admirers of palindromes, and produced such
sentences as:

In girum imus nocte et consumimur igni.

It means we enter the circle after dark and are consumed by fire and
is said to describe the movement of moths.

List of Palindromes
Our Top 30 Best Palindrome List:

Don't nod
Dogma: I am God
Never odd or even
Too bad – I hid a boot
Rats live on no evil star
No trace; not one carton
Was it Eliot's toilet I saw?
Murder for a jar of red rum
May a moody baby doom a yam?
Go hang a salami; I'm a lasagna hog!
Satan, oscillate my metallic sonatas!
A Toyota! Race fast... safe car: a Toyota
Straw? No, too stupid a fad; I put soot on warts
Are we not drawn onward, we few, drawn onward to new era?
Doc Note: I dissent. A fast never prevents a fatness. I diet on cod
No, it never propagates if I set a gap or prevention
Anne, I vote more cars race Rome to Vienna
Sums are not set as a test on Erasmus
Kay, a red nude, peeped under a yak
Some men interpret nine memos
Campus Motto: Bottoms up, Mac
Go deliver a dare, vile dog!
Madam, in Eden I'm Adam
Oozy rat in a sanitary zoo
Ah, Satan sees Natasha
Lisa Bonet ate no basil
Do geese see God?
God saw I was dog
Dennis sinned

http://www.fun-with-words.com/palin_history.html

Reference »
Wikipedia Articles

This article is about the Scottish moral philosopher. For other
persons of the same name, see Adam Smith (disambiguation).

Adam Smith

Full name Adam Smith
Born 16 June 1723
(OS: 5 June 1723)
Kirkcaldy, Fife, Scotland
Died 17 July 1790 (aged 67)
Edinburgh, Scotland

Adam Smith (baptised 16 June 1723 – 17 July 1790 [OS: 5 June 1723 – 17
July 1790]) was a Scottish moral philosopher and a pioneer of
political economics. One of the key figures of the Scottish
Enlightenment, Smith is the author of The Theory of Moral Sentiments
and An Inquiry into the Nature and Causes of the Wealth of Nations.
The latter, usually abbreviated as The Wealth of Nations, is
considered his magnum opus and the first modern work of economics.
Smith is widely cited as the father of modern economics.

Smith studied moral philosophy at the University of Glasgow and Oxford
University. After graduating, he delivered a successful series of
public lectures at Edinburgh, leading him to collaborate with David
Hume during the Scottish Enlightenment. Smith obtained a professorship
at Glasgow teaching moral philosophy, and during this time he wrote
and published The Theory of Moral Sentiments. In his later life, he
took a tutoring position that allowed him to travel throughout Europe,
where he met other intellectual leaders of his day. Smith returned
home and spent the next ten years writing The Wealth of Nations,
publishing it in 1776. He died in 1790.

Biography

Early life

Smith was born to Margaret Douglas at Kirkcaldy, Fife, Scotland. His
father, also named Adam Smith, was a lawyer, civil servant, and
widower who married Margaret Douglas in 1720 and died six months
before Smith was born.[1] Although the exact date of Smith's birth is
unknown, his baptism was recorded on 16 June 1723 at Kirkcaldy.[2]
Though few events in Smith's early childhood are known, Scottish
journalist and Smith's biographer John Rae recorded that the man was
abducted by gypsies at the age of four and eventually released when
others went to rescue him.[N 1] Smith was close to his mother, who
likely encouraged him to pursue his scholarly ambitions.[4] He
attended the Burgh School of Kirkcaldy—characterised by Rae as "one of
the best secondary schools of Scotland at that period"—from 1729 to
1737.[3] While there, he studied Latin, mathematics, history, and
writing.[4]

A commemorative plaque for Smith is located at Smith's home town of
Kirkcaldy.
Formal education

Smith entered the University of Glasgow when he was fourteen and
studied moral philosophy under Francis Hutcheson.[4] Here he developed
his passion for liberty, reason, and free speech. In 1740, Smith was
awarded the Snell exhibition and left the University of Glasgow to
attend Balliol College, Oxford.[5]

Smith considered the teaching at Glasgow to be far superior to that at
Oxford, and found his experience at the latter to be intellectually
stifling.[6] In Book V, Chapter II of The Wealth of Nations, Smith
wrote: "In the University of Oxford, the greater part of the public
professors have, for these many years, given up altogether even the
pretence of teaching." Smith is also reported to have complained to
friends that Oxford officials once discovered him reading a copy of
David Hume's Treatise on Human Nature, and they subsequently
confiscated his book and punished him severely for reading it.[3][7]
[8] According to William Robert Scott, "The Oxford of [Smith's] time
gave little if any help towards what was to be his lifework."[9]
Nevertheless, Smith took the opportunity while at Oxford to teach
himself several subjects by reading many books from the shelves of the
large Oxford library.[10] When Smith was not studying on his own, his
time at Oxford was not a happy one, according to his letters.[11] Near
the end of his time at Oxford, Smith began suffering from shaking
fits, probably the symptoms of a nervous breakdown.[12] He left Oxford
University in 1746, before his scholarship ended.[12][13]

In Book V of The Wealth of Nations, Smith comments on the low quality
of instruction and the meager intellectual activity at English
universities, when compared to their Scottish counterparts. He
attributes this both to the rich endowments of the colleges at Oxford
and Cambridge, which made the income of professors independent of
their ability to attract students, and to the fact that distinguished
men of letters could make an even more comfortable living as ministers
of the Church of England. Smith had originally intended to study
theology and enter the clergy, but his subsequent learning, especially
from the skeptical writings of David Hume, persuaded him to take a
different route.[8]

Teaching career

Smith began delivering public lectures in 1748 at Edinburgh under the
patronage of Lord Kames.[14] His lecture topics included rhetoric and
belles-lettres, and later the subject of "the progress of opulence".
On this latter topic he first expounded his economic philosophy of
"the obvious and simple system of natural liberty". While Smith was
not adept at public speaking, his lectures met with success.[15]

David Hume was a friend and contemporary of Smith.In 1750, he met the
philosopher David Hume, who was his senior by more than a decade. The
alignments of opinion that can be found within their writings covering
history, politics, philosophy, economics, and religion indicate that
they shared a closer intellectual alliance and friendship than with
the others who were to play important roles during the emergence of
what has come to be known as the Scottish Enlightenment.[16]

In 1751, Smith earned a professorship at Glasgow University teaching
logic courses. When the Chair of Moral Philosophy died the next year,
Smith took over the position.[15] He would continue academic
production for the next thirteen years, which he characterized as "by
far the most useful and therefore by far the happiest and most
honourable period [of his life]".[17]

Smith published The Theory of Moral Sentiments in 1759, embodying some
of his Glasgow lectures. This work was concerned with how human
morality depends on sympathy between agent and spectator, or the
individual and other members of society. He bases his explanation not
on a special "moral sense", as the third Lord Shaftesbury and
Hutcheson had done, nor on utility as Hume did, but on sympathy.
Smith's popularity greatly increased due to the The Theory of Moral
Sentiments, and as a result, many wealthy students left their schools
in other countries to enroll at Glasgow to learn under Smith.[18]

After the publication of The Theory of Moral Sentiments, Smith began
to give more attention to jurisprudence and economics in his lectures
and less to his theories of morals. The development of his ideas on
political economy can be observed from the lecture notes taken down by
a student in 1763, and from what William Robert Scott described as an
early version of part of The Wealth of Nations.[19] For example, Smith
lectured that labor—rather than the nation's quantity of gold or silver
—is the cause of increase in national wealth.[18]

François Quesnay, one of the leaders of the Physiocratic school of
thoughtIn 1762, the academic senate of the University of Glasgow
conferred on Smith the title of Doctor of Laws (LL.D.). At the end of
1763, he obtained a lucrative offer from Charles Townshend (who had
been introduced to Smith by David Hume) to tutor his stepson, Henry
Scott, the young Duke of Buccleuch. Smith subsequently resigned from
his professorship to take the tutoring position. Because he resigned
in the middle of the term, Smith attempted to return the fees he had
collected from his students, but they refused.[20]

Tutoring and travels

Smith's tutoring job entailed touring Europe with Henry Scott while
teaching him subjects including proper Polish.[20] Smith was paid £300
per year plus expenses along with £300 per year pension, which was
roughly twice his former income as a teacher.[20] Smith first traveled
as a tutor to Toulouse, France, where he stayed for a year and a half.
[20] According to accounts, Smith found Toulouse to be very boring,
and he wrote to Hume that he "had begun to write a book in order to
pass away the time".[20] After touring the south of France, the group
moved to Geneva. While in Geneva, Smith met with the philosopher
Voltaire.[21]

After staying in Geneva, the party went to Paris, where Smith came to
know intellectual leaders such as Benjamin Franklin,[22] Turgot, Jean
D'Alembert, André Morellet, Helvétius and, in particular, Francois
Quesnay, the head of the Physiocratic school, whose academic products
he respected greatly.[23] The physiocrats believed that wealth came
from production and not from the attainment of precious metals, which
was adverse to mercantilist thought. They also believed that
agriculture tended to produce wealth and that merchants and
manufacturers did not.[22] While Smith did not embrace all of the
physiocrats' ideas, he did say that physiocracy was "with all its
imperfections [perhaps] the nearest approximation to the truth that
has yet been published upon the subject of political economy".[24]

Later years

In 1766, Henry Scott's younger brother died in Paris, and Smith's tour
as a tutor ended shortly thereafter.[24] Smith returned home that year
to Kirkcaldy, and he devoted much of the next ten years to his magnum
opus.[25] There he befriended Henry Moyes, a young blind man who
showed precocious aptitude. As well as teaching Moyes himself, Smith
secured the patronage of David Hume and Thomas Reid in the young man's
education.[26] In May 1773, Smith was elected fellow of the Royal
Society of London,[27] and was elected a member of the Literary Club
in 1775.[28] The Wealth of Nations was published in 1776 and was an
instant success, selling out the first edition in only six months.[29]

In 1778, Smith was appointed to a post as commissioner of customs in
Scotland and went to live with his mother in Panmure House in
Edinburgh's Canongate.[30] Five years later, he became one of the
founding members of the Royal Society of Edinburgh,[31] and from 1787
to 1789 he occupied the honorary position of Lord Rector of the
University of Glasgow.[32] He died in the northern wing of Panmure
House in Edinburgh on 17 July 1790 after a painful illness and was
buried in the Canongate Kirkyard.[33] On his death bed, Smith
expressed disappointment that he had not achieved more.[34]

Smith's literary executors were two friends from the Scottish academic
world: the physicist and chemist Joseph Black, and the pioneering
geologist James Hutton.[35] Smith left behind many notes and some
unpublished material, but gave instructions to destroy anything that
was not fit for publication.[36] He mentioned an early unpublished
History of Astronomy as probably suitable, and it duly appeared in
1795, along with other material such as Essays on Philosophical
Subjects.[35]

Personality and beliefs

Character

James Tassie's enamel paste medallion of Smith provided the model for
many engravings and portraits which remain today.[37]Not much is known
about Smith's personal views beyond what can be deduced from his
published articles. His personal papers were destroyed after his
death, at his own request.[36] He never married[38] and seems to have
maintained a close relationship with his mother, with whom he lived
after his return from France and who died six years before his own
death.[39]

Contemporary accounts describe Smith as an eccentric but benevolent
intellectual, comically absent minded, with peculiar habits of speech
and gait and a smile of "inexpressible benignity".[40] He was known to
talk to himself, and had occasional spells of imaginary illness.[34]
Smith is often described as a prototypical absent-minded professor.
[41] He is reported to have had books and papers stacked up in his
study, with a habit he developed during childhood of speaking to
himself and smiling in rapt conversation with invisible companions.
[41]

Various anecdotes have discussed his absentminded nature. In one
story, Smith took Charles Townshend on a tour of a tanning factory and
while discussing free trade, Smith walked into a huge tanning pit from
which he had to be removed.[42] Another episode records that he put
bread and butter into a teapot, drank the concoction, and declared it
to be the worst cup of tea he ever had. In another example, Smith went
out walking and daydreaming in his nightgown and ended up 15 miles (24
km) outside town before nearby church bells brought him back to
reality.[41][42]

Portrait of Smith by John Kay, 1790Smith is reported to have been an
odd-looking fellow. One author stated that Smith "had a large nose,
bulging eyes, a protruding lower lip, a nervous twitch, and a speech
impediment".[8] Smith is reported to have acknowledged his looks at
one point saying, "I am a beau in nothing but my books."[8] Smith
"never" sat for portraits [43], so depictions of him created during
his lifetime were drawn from memory, with rare exceptions. The most
famous examples were a profile by James Tassie and two etchings by
John Kay.[44] The line engravings produced for the covers of 19th
century reprints of The Wealth of Nations were based largely on
Tassie's medallion.[45]

Religious views

There has been considerable scholarly debate about the nature of
Smith's religious views. Smith's father had a strong interest in
Christianity and belonged to the moderate wing of the Church of
Scotland.[46] In addition to the fact that he received the Snell
Exhibition, Smith may have also moved to England with the intention of
pursuing a career in the Church of England. At Oxford, Smith rejected
Christianity and it is generally believed that he returned to Scotland
as a deist.[47]

Economist Ronald Coase has challenged the view that Smith was a deist,
[48] stating that while Smith may have referred to the "Great
Architect of the Universe", other scholars have "very much exaggerated
the extent to which Adam Smith was committed to a belief in a personal
God".[49] He based this on analysis of a remark in The Wealth of
Nations where Smith writes that the curiosity of mankind about the
"great phenomena of nature" such as "the generation, the life, growth
and dissolution of plants and animals" has led men to "enquire into
their causes". Coase notes Smith's observation that "[s]uperstition
first attempted to satisfy this curiosity, by referring all those
wonderful appearances to the immediate agency of the gods". Smith's
distant friend and colleague David Hume, with whom he agreed on most
matters, was described by contemporaries as an atheist, although there
is some debate about the exact nature of his views among modern
philosophers.[50]

In a letter to William Strahan, Smith's account of Hume's courage and
tranquility in the face of death aroused violent public controversy,
[51] since it contradicted the assumption, widespread among orthodox
believers, that an untroubled death was impossible without the
consolation of religious belief.[52]

Published works

The Theory of Moral Sentiments

Main article: The Theory of Moral Sentiments

In 1759, Smith published his first work, The Theory of Moral
Sentiments. He continued to revise the work throughout his life,
making extensive revisions to the final (6th) edition shortly before
his death in 1790.[N 2] Although The Wealth of Nations is widely
regarded as Smith's most influential work, it has been reported that
Smith himself "always considered his Theory of Moral Sentiments a much
superior work to his Wealth of Nations".[54] P. J. O'Rourke, author of
the commentary On The Wealth of Nations (2007), has agreed, calling
The Theory of Moral Sentiments "the better book".[55] It was in this
work that Smith first referred to the "invisible hand" to describe the
apparent benefits to society of people behaving in their own interests.
[56]

In The Theory of Moral Sentiments, Smith critically examined the moral
thinking of the time and suggested that conscience arises from social
relationships.[57] His aim in the work is to explain the source of
mankind's ability to form moral judgements, in spite of man's natural
inclinations toward self-interest. Smith proposes a theory of sympathy
in which the act of observing others makes people aware of themselves
and the morality of their own behavior. Haakonssen writes that in
Smith's theory, "Society is ... the mirror in which one catches sight
of oneself, morally speaking."[58]

Because The Theory of Moral Sentiments emphasizes sympathy for others
while The Wealth of Nations famously emphasizes the role of self
interest, some scholars have perceived a conflict between these works.
As one economic historian observed: "Many writers, including the
present author at an early stage of his study of Smith, have found
these two works in some measure basically inconsistent."[59] In recent
years, however, most scholars of Smith's work have argued that no
contradiction exists. In The Theory of Moral Sentiments, Smith
develops a theory of psychology in which individuals seek the approval
of the "impartial spectator" as a result of a natural desire to have
outside observers sympathize with them. Rather than viewing The Wealth
of Nations and The Theory of Moral Sentiments as presenting
incompatible views of human nature, most Smith scholars regard the
works as emphasizing different aspects of human nature that vary
depending on the situation. The Wealth of Nations draws on situations
where man's morality is likely to play a smaller role—such as the
laborer involved in pin-making—whereas The Theory of Moral Sentiments
focuses on situations where man's morality is likely to play a
dominant role among more personal exchanges.

The Wealth of Nations
Main article: The Wealth of Nations

The site where Smith wrote The Wealth of NationsAn Inquiry into the
Nature and Causes of the Wealth of Nations expounds that the free
market, while appearing chaotic and unrestrained, is actually guided
to produce the right amount and variety of goods by a so-called
"invisible hand".[56] Smith opposed any form of economic concentration
because it distorts the market's natural ability to establish a price
that provides a fair return on land, labor, and capital. He advanced
the idea that a market economy would produce a satisfactory outcome
for both buyers and sellers, and would optimally allocate society's
resources.[60] The image of the invisible hand was previously employed
by Smith in The Theory of Moral Sentiments, but it has its original
use in his essay, "The History of Astronomy". Smith believed that when
an individual pursues his self-interest, he indirectly promotes the
good of society: "by pursuing his own interest, [the individual]
frequently promotes that of the society more effectually than when he
intends to promote it."[61] Self-interested competition in the free
market, he argued, would tend to benefit society as a whole by keeping
prices low, while still building in an incentive for a wide variety of
goods and services. Nevertheless, he was wary of businessmen and
argued against the formation of monopolies.

The first page of The Wealth of Nations, 1776 London editionAn often-
quoted passage from The Wealth of Nations is: "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 self-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."[62] Value theory was important in classical theory. Smith
wrote that the "real price of every thing ... is the toil and trouble
of acquiring it" as influenced by its scarcity. Smith maintained that,
with rent and profit, other costs besides wages also enter the price
of a commodity.[63] Other classical economists presented variations on
Smith, termed the "labour theory of value". Classical economics
focused on the tendency of markets to move to long-run equilibrium.

Smith's advocacy of self-interest based economic exchange did not,
however, preclude for him issues of fairness and justice. In Asia,
Europeans "by different arts of oppression..have reduced the
population of several of the Moluccas,"[64] he wrote, while "the
savage injustice of the Europeans" arriving in America, "rendered an
event, which ought to have been beneficial to all, ruinous and
destructive to several of those unfortunate countries."[65] The Native
Americans, "far from having ever injured the people of Europe, had
received the first adventurers with every mark of kindness and
hospitality." However, "superiority of force" was "so great on the
side of the Europeans, that they were enabled to commit with impunity
every sort of injustice in those remote countries."[66]

Smith also believed that a division of labour would effect a great
increase in production. One example he used was the making of pins.
One worker could probably make only twenty pins per day. However, if
ten people divided up the eighteen steps required to make a pin, they
could make a combined amount of 48,000 pins in one day. However,
Smith's views on division of labour are not unambiguously positive,
and are typically mis-characterized.[67] On labor relations, Smith
noted "severity" of laws against worker actions, and contrasted the
masters' "clamour" against workers associations, with associations and
collusions of the masters which "are never heard by the people" though
such actions are "always" and "everywhere" taking place.[68]

Other works

Smith's burial place in Canongate KirkyardShortly before his death,
Smith had nearly all his manuscripts destroyed. In his last years, he
seemed to have been planning two major treatises, one on the theory
and history of law and one on the sciences and arts. The posthumously
published Essays on Philosophical Subjects, a history of astronomy
down to Smith's own era, plus some thoughts on ancient physics and
metaphysics, probably contain parts of what would have been the latter
treatise. Lectures on Jurisprudence were notes taken from Smith's
early lectures, plus an early draft of The Wealth of Nations,
published as part of the 1976 Glasgow Edition of the works and
correspondence of Smith. Other works, including some published
posthumously, include Lectures on Justice, Police, Revenue, and Arms
(1763) (first published in 1896); A Treatise on Public Opulence (1764)
(first published in 1937); and Essays on Philosophical Subjects
(1795).

Legacy

A statue of Smith on Edinburgh's Royal Mile built through private
donations and organised by the Adam Smith InstituteThe Wealth of
Nations, one of the earliest attempts to study the rise of industry
and commercial development in Europe, was a precursor to the modern
academic discipline of economics. In this and other works, Smith
expounded how rational self-interest and competition can lead to
economic prosperity and well-being. It also provided one of the best-
known intellectual rationales for free trade and capitalism, greatly
influencing the writings of later economists. Smith is often cited as
the father of modern economics.[69][70][71] Smith was controversial in
his own day and his general approach and writing style was often
satirized by Tory writers in the moralizing tradition of Hogarth and
Swift, as a discussion at the University of Winchester suggests.[72]

George Stigler attributes to Smith the central proposition of
mainstream economic theory, namely that an individual will invest a
resource, for example, land or labour, so as to earn the highest
possible return on it. Consequently, all uses of the resource should
yield a risk-adjusted equal rate of return; otherwise resource
reallocation would result.

On the other hand, Joseph Schumpeter dismissed Smith's contributions
as unoriginal, saying "His very limitation made for success. Had he
been more brilliant, he would not have been taken so seriously. Had he
dug more deeply, had he unearthed more recondite truth, had he used
more difficult and ingenious methods, he would not have been
understood. But he had no such ambitions; in fact he disliked whatever
went beyond plain common sense. He never moved above the heads of even
the dullest readers. He led them on gently, encouraging them by
trivialities and homely observations, making them feel comfortable all
along.” (Schumpeter History of Economic Analysis. New York: Oxford
University Press, p 185)

Classical economists presented variations on Smith, termed the "labour
theory of value", later Marxian economics descends from classical
economics also using Smith's labour theories in part. The first volume
of Karl Marx's major work, Capital, was published in German in 1867.
In it, Marx focused on the labour theory of value and what he
considered to be the exploitation of labour by capital.[73][74] The
labour theory of value held that the value of a thing was determined
by the labor that went into its production. This contrasts with the
modern understanding of mainstream economics, that the value of a
thing is determined by what one is willing to give up to obtain the
thing. Smith is often cited not only as the conceptual builder of free
markets in capitalism but also as a main contributor to communist
theory, via his influence on Marx.

The Adam Smith Theatre in KirkcaldyA body of theory later termed
"neoclassical economics" or "marginalism" formed from about 1870 to
1910. The term "economics" was popularized by such neoclassical
economists as Alfred Marshall as a concise synonym for "economic
science" and a substitute for the earlier, broader term "political
economy" used by Smith.[75][76] This corresponded to the influence on
the subject of mathematical methods used in the natural sciences.[77]
Neoclassical economics systematized supply and demand as joint
determinants of price and quantity in market equilibrium, affecting
both the allocation of output and the distribution of income. It
dispensed with the labour theory of value of which Smith was most
famously identified with in classical economics, in favour of a
marginal utility theory of value on the demand side and a more general
theory of costs on the supply side.[78]

The bicentennial anniversary of the publication of The Wealth of
Nations was celebrated in 1976, resulting in increased interest for
The Theory of Moral Sentiments and his other works throughout
academia. After 1976, Smith was more likely to be represented as the
author of both The Wealth of Nations and The Theory of Moral
Sentiments, and thereby as the founder of a moral philosophy and the
science of economics. His homo economicus or "economic man" was also
more often represented as a moral person. Additionally, his opposition
to slavery, colonialism, and empire was emphasised, as were his
statements about high wages for the poor, and his views that a common
street porter was not intellectually inferior to a philosopher.[79]

This £20 note was issued by the Bank of England and features Smith.
Portraits, monuments, and banknotes

Smith has been commemorated in the UK on banknotes printed by two
different banks; his portrait has appeared since 1981 on the £50 notes
issued by the Clydesdale Bank in Scotland,[80][81] and in March 2007
Smith's image also appeared on the new series of £20 notes issued by
the Bank of England, making him the first Scotsman to feature on an
English banknote.[82]

A large-scale memorial of Smith was unveiled on 4 July 2008 in
Edinburgh. It is a 10 feet (3.0 m)-tall bronze sculpture and it stands
above the Royal Mile outside St Giles' Cathedral in Parliament Square,
near the Mercat cross.[83] 20th century sculptor Jim Sanborn (best
known for creating the Kryptos sculpture at the United States Central
Intelligence Agency) has created multiple pieces which feature Smith's
work. At Central Connecticut State University is Circulating Capital,
a tall cylinder which features an extract from The Wealth of Nations
on the lower half, and on the upper half, some of the same text but
represented in binary code.[84] At the University of North Carolina at
Charlotte, outside the Belk College of Business Administration, is
Adam Smith's Spinning Top.[85][86] Another Smith sculpture is at
Cleveland State University.[87]

As a symbol of free market economics

Adam Smith's Spinning Top, sculpture by American artist Jim Sanborn at
Cleveland State UniversitySmith has been celebrated by advocates of
free market policies as the founder of free market economics, a view
reflected in the naming of bodies such as the Adam Smith Institute,
Adam Smith Society[88] and the Australian Adam Smith Club,[89] and in
terms such as the Adam Smith necktie.[90]

Alan Greenspan argues that, while Smith did not coin the term laissez-
faire, "it was left to Adam Smith to identify the more-general set of
principles that brought conceptual clarity to the seeming chaos of
market transactions". Greenspan continues that The Wealth of Nations
was "one of the great achievements in human intellectual history".[91]
P. J. O'Rourke describes Smith as the "founder of free market
economics".[92]

However, other writers have argued that Smith's support for laissez-
faire (which in French means leave alone) has been overstated. Herbert
Stein wrote that the people who "wear an Adam Smith necktie" do it to
"make a statement of their devotion to the idea of free markets and
limited government", and that this misrepresents Smith's ideas. Stein
writes that Smith "was not pure or doctrinaire about this idea. He
viewed government intervention in the market with great skepticism ...
yet he was prepared to accept or propose qualifications to that policy
in the specific cases where he judged that their net effect would be
beneficial and would not undermine the basically free character of the
system. He did not wear the Adam Smith necktie." In Stein's reading,
The Wealth of Nations could justify the Food and Drug Administration,
the Consumer Product Safety Commission, mandatory employer health
benefits, environmentalism, and "discriminatory taxation to deter
improper or luxurious behavior".[93]

Similarly, Vivienne Brown stated in The Economic Journal that in the
20th century United States, Reaganomics supporters, The Wall Street
Journal, and other similar sources have spread among the general
public a partial and misleading vision of Smith, portraying him as an
"extreme dogmatic defender of laissez-faire capitalism and supply-side
economics".[94] In fact, The Wealth of Nations includes the following
statement on the payment of taxes: "The subjects of every state ought
to contribute towards the support of the government, as nearly as
possible, in proportion to their respective abilities; that is, in
proportion to the revenue which they respectively enjoy under the
protection of the state."[95]

Smith even specifically named taxes that he thought should be required
by the state among them luxury goods taxes and tax on rent. He
believed that tax laws should be as transparent as possible and that
each individual should pay a "certain amount, and not arbitrary," in
addition to paying this tax at the time "most likely to be convenient
for the contributor to pay it".[96]

Additionally, Smith outlined the proper expenses of the government in
The Wealth of Nations, Book V, Ch. I. Included in his requirements of
a government is to enforce contracts and provide justice system, grant
patents and copy writes, provide public goods such as infrastructure,
provide national defense and regulate banking. It was the role of the
government to provide goods "of such a nature that the profit could
never repay the expense to any individual" such as roads, bridges,
canals, and harbours. He also encouraged invention and new ideas
through his patent enforcement and support of infant industry
monopolies. he supported public education and religious institutions
as providing general benefit to the society. Finally he outlined how
the government should support the dignity of the monarch or chief
magistrate, such that they are equal or above the public in fashion.
He even states that monarchs should be provided for in a greater
fashion than magistrates of a republic because "we naturally expect
more splendor in the court of a king than in the mansion-house of a
doge."[97] In addition, he was in favor of retaliatory tariffs and
believed that they would eventually bring down the price of goods. He
even stated in Wealth of Nations, "The recovery of a great foreign
market will generally more than compensate the transitory
inconvenience of paying dearer during a short time for some sorts of
goods."[98]

Noam Chomsky has argued[N 3] that several aspects of Smith's thought
have been misrepresented and falsified by contemporary ideology,
including Smith’s reasons for supporting markets and Smith’s views on
corporations. Chomsky argues that Smith supported markets in the
belief that they would lead to equality, and that Smith opposed wage
labor and corporations.[99] Economic historians such as Jacob Viner
regard Smith as a strong advocate of free markets and limited
government (what Smith called "natural liberty") but not as a dogmatic
supporter of laissez-faire.[100]

Economist Daniel Klein believes using the term "free market economics"
or "free market economist" to identify the ideas of Smith is too
general and slightly misleading. Klein offers six characteristics
central to the identity of Smith's economic thought and argues that a
new name is needed to give a more accurate depiction of the "Smithian"
identity.[101][102] Economist David Ricardo set straight some of the
misunderstandings about Smith’s thoughts on free market. Most people
still fall victim to the thinking that Smith was a free market
economist without exception, though he was not. Ricardo pointed out
that Smith was in support of helping infant industries. Smith believed
that the government should subsidise newly formed industry, but he did
fear that when the infant industry grew into adulthood it would be
unwilling to surrender the government help.[103] Smith also supported
tariffs on imported goods to counteract an internal tax on the same
good. Smith also fell to pressure in supporting some tariffs in
support for national defense.[103]

Footnotes

↑ In Life of Adam Smith, Rae writes, "In his fourth year, while on a
visit to his grandfather's house at Strathendry on the banks of the
Leven, [Smith] was stolen by a passing band of gypsies, and for a time
could not be found. But presently a gentleman arrived who had met a
gypsy woman a few miles down the road carrying a child that was crying
piteously. Scouts were immediately dispatched in the direction
indicated, and they came upon the woman in Leslie wood. As soon as she
saw them she threw her burden down and escaped, and the child was
brought back to his mother. [Smith] would have made, I fear, a poor
gypsy."[3]

↑ The 6 editions of The Theory of Moral Sentiments were published in
1759, 1761, 1767, 1774, 1781, and 1790 respectively.[53]

↑ See chapters 2, 5, 6, and 10 of his Understanding Power, New Press
(February 2002), along with his Year 501: The Conquest Continues,
primarily chapter 1, South End Press, 1993.

Notes

↑ Bussing-Burks 2003, pp. 38–39
↑ Buchan 2006, p. 12
↑ 3.0 3.1 3.2 Rae 1895, p. 5
↑ 4.0 4.1 4.2 Bussing-Burks 2003, p. 39
↑ Buchan 2006, p. 22
↑ Bussing-Burks 2003, p. 41
↑ Rae 1895, p. 24
↑ 8.0 8.1 8.2 8.3 Buchholz 1999, p. 12
↑ Introductory Economics. New Age Publishers. p. 4. ISBN 8122418309.
↑ Rae 1895, p. 22
↑ Rae 1895, pp. 24–25
↑ 12.0 12.1 Bussing-Burks 2003, p. 42
↑ Buchan 2006, p. 29
↑ Rae 1895, p. 30
↑ 15.0 15.1 Bussing-Burks 2003, p. 43

↑ Winch, Donald (September 2004). "Smith, Adam (bap. 1723, d. 1790)".
Dictionary of National Biography. Oxford University Press.

↑ Rae 1895, p. 42
↑ 18.0 18.1 Buchholz 1999, p. 15
↑ Buchan 2006, p. 67
↑ 20.0 20.1 20.2 20.3 20.4 Buchholz 1999, p. 16
↑ Buchholz 1999, pp. 16–17
↑ 22.0 22.1 Buchholz 1999, p. 17
↑ Buchan 2006, p. 80
↑ 24.0 24.1 Buchholz 1999, p. 18
↑ Buchan 2006, p. 90
↑ Dr James Currie to Thomas Creevey, 24 February 1793, Lpool RO,
Currie MS 920 CUR

↑ Buchan 2006, p. 89

↑ "First Visit to London". Library of Economics and Liberty.

http://econlib.org/library/YPDBooks/Rae/raeLS10.html. Retrieved
2008-05-22.

↑ Buchholz 1999, p. 19
↑ Buchan 2006, p. 128
↑ Buchan 2006, p. 133
↑ Buchan 2006, p. 137
↑ Buchan 2006, p. 145
↑ 34.0 34.1 Bussing-Burks 2003, p. 53
↑ 35.0 35.1 Buchan 2006, p. 25
↑ 36.0 36.1 Buchan 2006, p. 88
↑ Bonar 1895, pp. xx–xxiv
↑ Buchan 2006, p. 11
↑ Buchan 2006, p. 134
↑ Rae 1895, p. 262
↑ 41.0 41.1 41.2 Skousen 2001, p. 32

↑ 42.0 42.1 Buchholz 1999, p. 14

↑ Stewart, Dugald (1853). The Works of Adam Smith: With An Account of
His Life and Writings. London: Henry G. Bohn. lxix. OCLC 3226570.

http://books.google.com/books?id=FbYCAAAAYAAJ.

↑ Rae 1895, pp. 376–377
↑ Bonar 1895, p. xxi
↑ Ross 1995, p. 15

↑ [Expression error: Missing operand for > "Times obituary of Adam
Smith"]. The Times. 1790-07-24.

↑ Coase 1976, pp. 529–546

↑ Coase 1976, p. 538

↑ "Hume on Religion". Stanford Encyclopedia of Philosophy.

http://plato.stanford.edu/entries/hume-religion/. Retrieved
2008-05-26.

↑ "Letter From Adam Smith, LL.D. TO William Strahan, Esq. - Essays
Moral, Political, Literary (LF ed.)". Online Library of Liberty.

http://oll.libertyfund.org/?option=com_staticxt&staticfile=show.php%3Ftitle=704&chapter=137475&layout=html&Itemid=27.

Retrieved 2008-05-26.

↑ Rae 1895, p. 311

↑ "Adam Smith, Glasgow Edition of the Works and Correspondence Vol. 1
The Theory of Moral Sentiments [1759"]. The Online Library of
Liberty.

http://oll.libertyfund.org/index.php?option=com_staticxt&staticfile=show.php%3Ftitle=192&Itemid=27.

Retrieved 2010-01-31.
↑ Rae 1895

↑ O'Rourke, P. J. (2007-01-08). "P.J. O'Rourke Takes On 'The Wealth of
Nations'". NPR.

http://www.npr.org/templates/story/story.php?storyId=6743689.
Retrieved 2008-06-10.

↑ 56.0 56.1 Minowitz, Peter (December 2004). "Adam Smith's Invisible
Hands". Econ Journal Watch 1 (3): 381–412.
http://econjwatch.org/articles/adam-smith-s-invisible-hands.

↑ Falkner, Robert (1997). "Biography of Smith". Liberal Democrat
History Group.

http://www.liberalhistory.org.uk/item_single.php?item_id=37&item=biography.
Retrieved 2008-05-14.

↑ Smith 2002, p. xv

↑ Viner 1991, p. 250

↑ "The Betrayal of Adam Smith". The People-Centered Development
Forum.

http://www.pcdf.org/corprule/betrayal.htm. Retrieved 2010-01-31.

↑ Smith 1977, bk. IV, ch. 2
↑ Smith 1977, p. 18
↑ Smith 1977, bk. 1, ch. 5–6
↑ Smith 1977, bk. IV, ch. 7
↑ Smith 1977, bk. IV, ch. 1
↑ Smith 1977, bk. IV, ch. 7
↑ Smith 1977, bk. V, ch. 1
↑ Smith 1977, bk. I, ch. 8

↑ Pressman, Steven (1999). Fifty Major Economists. Routledge. p. 20.
ISBN 0415134811.

↑ Hoaas, David J.; Madigan, Lauren J. (1999). [Expression error:
Missing operand for > "A citation analysis of economists in principles
of economics textbooks"]. The Social Science Journal 36 (3): 525–532.
doi:10.1016/S0362-3319(99)00022-1.
↑ Rae 1895, p. 292

↑ "Adam Smith - Jonathan Swift". University of Winchester.

http://journalism.winchester.ac.uk/?page=343. Retrieved 2010-02-11.

↑ Roemer, J.E. (1987). "Marxian Value Analysis". The New Palgrave: A
Dictionary of Economics, v. 3, 383.

↑ Mandel, Ernest (1987). "Marx, Karl Heinrich", The New Palgrave: A
Dictionary of Economicsv. 3, pp. 372, 376.

↑ Marshall, Alfred; Marshall, Mary Paley (1879). The Economics of
Industry. p. 2.

http://books.google.com/books?hl=en&lr=&id=NLcJAAAAIAAJ&pg=PA1#PPA2,M1.

↑ Jevons, W. Stanley (1879). The Theory of Political Economy (2nd
ed.). p. xiv.

http://books.google.com/books?id=aYcBAAAAQAAJ&pg=PR3#PPR3,M1.

↑ Clark, B. (1998). Political-economy: A comparative approach, 2nd
ed., Westport, CT: Preagerp. p. 32..

↑ Campos, Antonietta (1987). "Marginalist Economics", The New
Palgrave: A Dictionary of Economics, v. 3, p. 320

↑ Smith 1977, §Book I, Chapter 2

↑ "Clydesdale 50 Pounds, 1981". Ron Wise's Banknoteworld.

http://aes.iupui.edu/rwise/banknotes/scotland/ScotlandP209-50Pounds-1981-donatedowl_f.jpg.
Retrieved 2008-10-15.

↑ "Current Banknotes : Clydesdale Bank". The Committee of Scottish
Clearing Bankers.

http://www.scotbanks.org.uk/banknotes_current_clydesdale_bank.php.
Retrieved 2008-10-15.
↑ "Smith replaces Elgar on £20 note". BBC. 2006-10-29.

http://news.bbc.co.uk/1/hi/business/6096938.stm. Retrieved
2008-05-14.

↑ Blackley, Michael (2007-09-26). "Adam Smith sculpture to tower over
Royal Mile". Edinburgh Evening News.

↑ Fillo, Maryellen (2001-03-13). "CCSU welcomes a new kid on the
block". The Hartford Courant.

↑ Kelley, Pam (1997-05-20). "Piece at UNCC is a puzzle for Charlotte,
artist says". Charlotte Observer.

↑ Shaw-Eagle, Joanna (1997-06-01). "Artist sheds new light on
sculpture". The Washington Times.

↑ "Adam Smith's Spinning Top". Ohio Outdoor Sculpture Inventory.
Archived from the original on 2005-02-05.

http://web.archive.org/web/20050205065104/http://www.sculpturecenter.org/oosi/sculpture.asp?SID=1055.
Retrieved 2008-05-24.

↑ "The Adam Smith Society". The Adam Smith Society. Archived from the
original on 2007-07-21.

http://web.archive.org/web/20070721032612/

http://www.adamsmith.it/presentazione.html. Retrieved 2008-05-24.

↑ "The Australian Adam Smith Club". Adam Smith Club. http://www.adamsmithclub.org/.
Retrieved 2008-10-12.

↑ Levy, David (June 1992). "Interview with Milton Friedman". Federal
Reserve Bank of Minneapolis.

http://www.minneapolisfed.org/publications_papers/pub_display.cfm?id=3748.
Retrieved 2008-09-01.

↑ "FRB: Speech, Greenspan—Adam Smith—6 February 2005".

http://www.federalreserve.gov/boarddocs/speeches/2005/20050206/default.htm.
Retrieved 2008-05-31.
↑ "Adam Smith: Web Junkie - Forbes.com".

http://www.forbes.com/free_forbes/2007/0507/086.html. Retrieved
2008-06-10.

↑ Stein, Herbert (1994-04-06). [Expression error: Missing operand for
> "Board of Contributors: Remembering Adam Smith"]. The Wall Street
Journal Asia: A14.

↑ Brown, Vivienne; Pack, Spencer J.; Werhane, Patricia H. (January
1993). [Expression error: Missing operand for > "Untitled review of
'Capitalism as a Moral System: Adam Smith's Critique of the Free
Market Economy' and 'Adam Smith and his Legacy for Modern
Capitalism'"]. The Economic Journal 103 (416): 230–232. doi:
10.2307/2234351.

↑ Smith 1977, bk. V, ch. 2
↑ Smith 1977, bk. V, ch. 2
↑ Smith 1977, bk. V
↑ Smith 1977, bk. IV, ch. 2
↑ Chomsky 2002, ch. 6

↑ Viner, Jacob; Pack, Spencer J.; Werhane, Patricia H. (April 1927).
[Expression error: Missing operand for > "Adam Smith and Laissez-
faire"]. The Journal of Political Economy 35 (2): 198–232. doi:
10.2307/2234351.

↑ Klein, Daniel B. (2008). "Toward a Public and Professional Identity
for Our Economics". Econ Journal Watch 5 (3): 358–372.
http://econjwatch.org/articles/toward-a-public-and-professional-identity-for-our-economics.

↑ Klein, Daniel B. (2009). "Desperately Seeking Smithians: Responses
to the Questionnaire about Building an Identity". Econ Journal Watch 6
(1): 113–180.

http://econjwatch.org/articles/desperately-seeking-smithians-responses-to-the-questionnaire-about-building-an-identity.

↑ 103.0 103.1 Buchholz, Todd (December 1990). pp. 38–39.

References

Bonar, James (1895). A Catalogue of the Library of Adam Smith. London:
Macmillan. OCLC 2320634. http://books.google.com/books?id=pUmfjlAfM3kC.

Buchan, James (2006). The Authentic Adam Smith: His Life and Ideas. W.
W. Norton & Company. ISBN 0393061213.

Buchholz, Todd (1999). New ideas from Dead Economists: An introduction
to modern economic thought. Penguin Books. ISBN 0140283137.

Bussing-Burks, Marie (2003). Influential Economists. Minneapolis: The
Oliver Press. ISBN 1-881508-72-2.

Campbell, R. H.; Skinner, Andrew S. (1985). Adam Smith. Routledge.
ISBN 0709934734.

Chomsky, Noam (2002). Understanding power: the indispensable Chomsky.
Scribe Publications. ISBN 9780908011728.

Coase, R.H. (October 1976). [Expression error: Missing operand for >
"Adam Smith's View of Man"]. The Journal of Law and Economics 19 (3):
529–546. doi:10.1086/466886.

Rae, John (1895). Life of Adam Smith. New York City: Macmillan
Publishers. ISBN 0722226586.
http://books.google.com/books?id=V80JAAAAIAAJ&printsec=frontcover&dq=Adam+Smith+-inauthor:%22Adam+Smith%22&ei=lCArSNj3K4uujgGNgtnCDQ#PPA4,M1.

Ross, Ian Simpson (December 14, 1995). The Life of Adam Smith. Oxford
University Press. ISBN 0198288212.

Skousen, Mark (2001). The Making of Modern Economics: The Lives and
Ideas of Great Thinkers. M.E. Sharpe. ISBN 0765604809.

http://books.google.com/books?id=nsnl3hHPuowC.

Smith, Adam (1977) [1776]. An Inquiry into the Nature and Causes of
the Wealth of Nations. University Of Chicago Press. ISBN 0226763749.

Smith, Adam (1982) [1759]. The Theory of Moral Sentiments, ed. D.D.
Raphael and A.L. Macfie, vol. I of the Glasgow Edition of the Works
and Correspondence of Adam Smith. Liberty Fund. ISBN 0865970122.

http://oll.libertyfund.org/index.php?option=com_staticxt&staticfile=show.php%3Ftitle=192&Itemid=27.

Smith, Adam (2002) [1759]. Knud Haakonssen. ed. The Theory of Moral
Sentiments. Cambridge University Press. ISBN 0521598478.

http://www.cambridge.org/catalogue/catalogue.asp?isbn=0521598478.

Smith, Vernon L. (July 1998). [Expression error: Missing operand for >
"The Two Faces of Adam Smith"]. Southern Economic Journal 65 (1): 2–
19.

Tribe, Keith; Mizuta, Hiroshi (2002) (Hardcover). A Critical
Bibliography of Adam Smith. Pickering & Chatto. ISBN 9781851967414.

Viner, Jacob (1991). Douglas A. Irvin. ed. Essays on the Intellectual
History of Economics. Princeton, New Jersey: Princeton University
Press. ISBN 0691042667.

This article incorporates public domain text from the entry Smith,
Adam in: Cousin, John William (1910). A Short Biographical Dictionary
of English Literature. London, J. M. Dent & Sons; New York, E. P.
Dutton.

Further reading

Butler, Eamonn (March 2007). Adam Smith - A Primer. Institute of
Economic Affairs. ISBN 0255366086. http://www.iea.org.uk/record.jsp?type=book&ID=414.

Copley, Stephen (March 1995). Adam Smith's Wealth of Nations: New
Interdisciplinary Essays. Manchester University Press. ISBN
0719039436.

http://www.amazon.com/Adam-Smiths-Wealth-Nations-Interdisciplinary/dp/0719039436.
Glahe, F. (June 1977). Adam Smith and the Wealth of Nations: 1776–
1976. University Press of Colorado. ISBN 0870810820.
http://www.amazon.com/Adam-Smith-Wealth-Nations-1776-1976/dp/0870810820.

Haakonssen, Knud (2006-03-06). The Cambridge Companion to Adam Smith.
Cambridge University Press. ISBN 0521779243.
http://www.amazon.com/Cambridge-Companion-Smith-Companions-Philosophy/dp/0521779243.

Hollander, Samuel (June 1973). Economics of Adam Smith. University of
Toronto Press. ISBN 0802063020. http://www.amazon.com/Economics-Adam-Smith-Samuel-Hollander/dp/0802063020.

Iain McLean (2006). Adam Smith, Radical and Egalitarian: An
Interpretation for the 21st Century. Edinburgh University Press. ISBN
0748623523.

http://www.amazon.co.uk/Adam-Smith-Radical-Egalitarian-Interpretation/dp/0748623523/.

Muller, Jerry Z. (1995-07-03). Adam Smith in His Time and Ours.
Princeton University Press. ISBN 0691001618.
http://www.amazon.com/Adam-Smith-His-Time-Ours/dp/0691001618.

O'Rourke, P. J. (2006-12-04). On The Wealth of Nations. Grove/Atlantic
Inc.. ISBN 0871139499. http://www.amazon.com/Wealth-Nations-Books-Changed-World/dp/0871139499.

External links

Works related to Adam Smith at Wikisource
Quotations related to Adam Smith at Wikiquote
Adam Smith at the Concise Encyclopedia of Economics
Adam Smith at the Adam Smith Institute

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Glasgow
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Succeeded by
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Portal v • [[|d]] • e

Ethics (also known as moral philosophy) is a branch of philosophy
which seeks to address questions about morality; that is, about
concepts such as good and bad, right and wrong, justice, and virtue.

Major branches of ethics include:

meta-ethics, about the theoretical meaning and reference of moral
propositions and how their truth-values (if any) may be determined;
normative ethics, about the practical means of determining a moral
course of action; applied ethics, about how moral outcomes can be
achieved in specific situations;
moral psychology, about how moral capacity or moral agency develops
and what its nature is; and descriptive ethics, about what moral
values people actually abide by.

Within each of these branches are many different schools of thought
and still further sub-fields of study.

Meta-ethics

Main article: Meta-ethics

Meta-ethics is concerned primarily with the meaning of ethical
judgments and/or prescriptions and with the notion of which
properties, if any, are responsible for the truth or validity thereof.
Meta-ethics as a discipline gained attention with G.E. Moore's famous
work Principia Ethica from 1903 in which Moore first addressed what he
referred to as the naturalistic fallacy. Moore's rebuttal of
naturalistic ethics, his Open Question Argument sparked an interest
within the analytic branch of western philosophy to concern oneself
with second order questions about ethics; specifically the semantics,
epistemology and ontology of ethics.

The semantics of ethics divides naturally into descriptivism and non-
descriptivism. Descriptivism holds that ethical language (including
ethical commands and duties) is a subdivision of descriptive language
and has meaning in virtue of the same kind of properties as
descriptive propositions. Non-descriptivism contends that ethical
propositions are irreducible in the sense that their meaning cannot be
explicated sufficiently in terms of descriptive truth-conditions.

Correspondingly, the epistemology of ethics divides into cognitivism
and non-cognitivism; a distinction that is often perceived as
equivalent to that between descriptivists and non-descriptivists. Non-
cognitivism may be understood as the claim that ethical claims reach
beyond the scope of human cognition or as the (weaker) claim that
ethics is concerned with action rather than with knowledge.
Cognitivism can then be seen as the claim that ethics is essentially
concerned with judgments of the same kind as knowledge judgments;
namely about matters of fact.

The ontology of ethics is concerned with the idea of value-bearing
properties, i.e. the kind of things or stuffs that would correspond to
or be referred to by ethical propositions. Non-descriptivists and non-
cognitivists will generally tend to argue that ethics do not require a
specific ontology, since ethical propositions do not refer to objects
in the same way that descriptive propositions do. Such a position may
sometimes be called anti-realist. Realists on the other hand are left
with having to explain what kind of entities, properties or states are
relevant for ethics, and why they have the normative status
characteristic of ethics.

Normative ethics

Main article: Normative ethics

Traditionally, normative ethics (also known as moral theory) was the
study of what makes actions right and wrong. These theories offered an
overarching moral principle to which one could appeal in resolving
difficult moral decisions.

At the turn of the 20th century, moral theories became more complex
and are no longer concerned solely with rightness and wrongness, but
are interested in many different kinds of moral status. During the
middle of the century, the study of normative ethics declined as meta-
ethics grew in prominence. This focus on meta-ethics was in part
caused by an intense linguistic focus in analytic philosophy and by
the popularity of logical positivism.

In 1971, John Rawls published A Theory of Justice, noteworthy in its
pursuit of moral arguments and eschewing of meta-ethics. This
publication set the trend for renewed interest in normative ethics.

Greek philosophy

Socrates

Socrates (469 BC – 399 BC) was one of the first Greek philosophers to
encourage both scholars and the common citizen to turn their attention
from the outside world to the condition of humankind. In this view,
Knowledge having a bearing on human life was placed highest, all other
knowledge being secondary. Self-knowledge was considered necessary for
success and inherently an essential good. A self-aware person will act
completely within their capabilities to their pinnacle, while an
ignorant person will flounder and encounter difficulty. To Socrates, a
person must become aware of every fact (and its context) relevant to
his existence, if he wishes to attain self-knowledge. He posited that
people will naturally do what is good, if they know what is right.
Evil or bad actions, are the result of ignorance. If a criminal were
truly aware of the mental and spiritual consequences of his actions,
he would neither commit nor even consider committing those actions.
Any person who knows what is truly right will automatically do it,
according to Socrates. While he correlated knowledge with virtue, he
similarly equated virtue with happiness. The truly wise man will know
what is right, do what is good, and therefore be happy.[1]

Aristotle

Aristotle (384 BC – 322 BC) posited an ethical system that may be
termed "self-realizationism." In Aristotle's view, when a person acts
in accordance with his nature and realizes his full potential, he will
do good and be content. At birth, a baby is not a person, but a
potential person. In order to become a "real" person, the child's
inherent potential must be realized. Unhappiness and frustration are
caused by the unrealized potential of a person, leading to failed
goals and a poor life. Aristotle said, "Nature does nothing in vain."
Therefore, it is imperative for persons to act in accordance with
their nature and develop their latent talents, in order to be content
and complete. Happiness was held to be the ultimate goal. All other
things, such as civic life or wealth, are merely means to the end.
Self-realization, the awareness of one's nature and the development of
one's talents, is the surest path to happiness.[2]

Aristotle asserted that man had three natures: vegetable (physical),
animal (emotional) and rational (mental). Physical nature can be
assuaged through exercise and care, emotional nature through
indulgence of instinct and urges, and mental through human reason and
developed potential. Rational development was considered the most
important, as essential to philosophical self-awareness and as
uniquely human. Moderation was encouraged, with the extremes seen as
degraded and immoral. For example, courage is the moderate virtue
between the extremes of cowardice and recklessness. Man should not
simply live, but live well with conduct governed by moderate virtue.
This is regarded as difficult, as virtue denotes doing the right
thing, to the right person, at the right time, to the proper extent,
in the correct fashion, for the right reason.[3]

Hedonism

Hedonism posits that the principle ethic is maximizing pleasure and
minimizing pain. There are several schools of Hedonist thought ranging
from those advocating the indulgence of even momentary desires to
those teaching a pursuit of spiritual bliss. In their consideration of
consequences, they range from those advocating self-gratification
regardless of the pain and expense to others, to those stating that
the most ethical pursuit maximizes pleasure and happiness for the most
people.[4]

Cyrenaic hedonism

Founded by Aristippus of Cyrene, Cyrenaics supported immediate
gratification. "Eat, drink and be merry, for tomorrow we die." Even
fleeting desires should be indulged, for fear the opportunity should
be forever lost. There was little to no concern with the future, the
present dominating in the pursuit for immediate pleasure. Cyrenaic
hedonism encouraged the pursuit of enjoyment and indulgence without
hesitation, believing pleasure to be the only good.[4]

Epicureanism

Epicurus rejected the extremism of the Cyrenaics, believing some
pleasures and indulgences to be detrimental to human beings.
Epicureans observed that indiscriminate indulgence sometimes resulted
in negative consequences. Some experiences were therefore rejected out
of hand, and some unpleasant experiences endured in the present to
ensure a better life in the future. The summum bonum, or greatest
good, to Epicurus was prudence, exercised through moderation and
caution. Excessive indulgence can be destructive to pleasure and can
even lead to pain. For example, eating one food too often will cause a
person to lose taste for it. Eating too much food at once will lead to
discomfort and ill-health. Pain and fear were to be avoided. Living
was essentially good, barring pain and illness. Death was not to be
feared. Fear was considered the source of most unhappiness. Conquering
the fear of death would naturally lead to a happier life. Epicurus
reasoned if there was an afterlife and immortality, the fear of death
was irrational. If there was no life after death, then the person
would not be alive to suffer, fear or worry; he would be non-existent
in death. It is irrational to fret over circumstances that do not
exist, such as one's state in death in the absence of an afterlife.[5]

Christian Hedonism

Christian Hedonism is a controversial Christian doctrine current in
some evangelical circles, particularly those of the Reformed
tradition. The term was coined by Reformed Baptist pastor John Piper
in his 1986 book Desiring God. Piper summarizes this philosophy of the
Christian life as "God is most glorified in us when we are most
satisfied in Him."[6]

Stoicism

The Stoic philosopher Epictetus posited that the greatest good was
contentment and serenity. Peace of mind, or Apatheia, was of the
highest value; self-mastery over one's desires and emotions leads to
spiritual peace. The "unconquerable will" is central to this
philosophy. The individual will should be independent and inviolate.
Allowing a person to disturb the mental equilibrium is in essence
offering yourself in slavery. If a person is free to anger you at
will, you have no control over your internal world, and therefore no
freedom. Freedom from material attachments is also necessary. If a
thing breaks, the person should not be upset, but realize it was a
thing that could break. Similarly, if someone should die, those close
to them should hold to their serenity because the loved one was made
of flesh and blood destined to death. Stoic philosophy says to accept
things that cannot be changed, resigning oneself to existence and
enduring in a rational fashion. Death is not feared. People do not
"lose" their life, but instead "return", for they are returning to God
(who initially gave what the person is as a person). Epictetus said
difficult problems in life should not be avoided, but rather embraced.
They are spiritual exercises needed for the health of the spirit, just
as physical exercise is required for the health of the body. He also
stated that sex and sexual desire are to be avoided as the greatest
threat to the integrity and equilibrium of a man's mind. Abstinence is
highly desirable. Epictetus said remaining abstinent in the face of
temptation was a victory for which a man could be proud.[7]

Modern ethics

In the modern era, ethical theories were generally divided between
consequentialist theories of philosophers such as Jeremy Bentham and
John Stuart Mill, and deontological ethics as epitomized by the work
of Immanuel Kant.

Consequentialism

Main article: Consequentialism

Consequentialism refers to those moral theories which hold that the
consequences of a particular action form the basis for any valid moral
judgment about that action (or create a structure for judgment, see
rule consequentialism). Thus, from a consequentialist standpoint, a
morally right action is one that produces a good outcome, or
consequence. This view is often expressed as the aphorism "The ends
justify the means".

The term "consequentialism" was coined by G.E.M. Anscombe in her essay
"Modern Moral Philosophy" in 1958, to describe what she saw as the
central error of certain moral theories, such as those propounded by
Mill and Sidgwick.[8] Since then, the term has become common in
English-language ethical theory.

The defining feature of consequentialist moral theories is the weight
given to the consequences in evaluating the rightness and wrongness of
actions.[9] In consequentialist theories, the consequences of an
action or rule generally outweigh other considerations. Apart from
this basic outline, there is little else that can be unequivocally
said about consequentialism as such. However, there are some questions
that many consequentialist theories address:

What sort of consequences count as good consequences?

Who is the primary beneficiary of moral action?

How are the consequences judged and who judges them?

One way to divide various consequentialisms is by the types of
consequences that are taken to matter most, that is, which
consequences count as good states of affairs. According to hedonistic
utilitarianism, a good action is one that results in an increase in
pleasure, and the best action is one that results in the most pleasure
for the greatest number. Closely related is eudaimonic
consequentialism, according to which a full, flourishing life, which
may or may not be the same as enjoying a great deal of pleasure, is
the ultimate aim. Similarly, one might adopt an aesthetic
consequentialism, in which the ultimate aim is to produce beauty.
However, one might fix on non-psychological goods as the relevant
effect. Thus, one might pursue an increase in material equality or
political liberty instead of something like the more ephemeral
"pleasure". Other theories adopt a package of several goods, all to be
promoted equally. Whether a particular consequentialist theory focuses
on a single good or many, conflicts and tensions between different
good states of affairs are to be expected and must be adjudicated.

Deontology

Main article: Deontological Ethics

Deontological ethics or deontology (from Greek δέον, deon,
"obligation, duty"; and -λογία, -logia) is an approach to ethics that
determines goodness or rightness from examining acts, rather than
third-party consequences of the act as in consequentialism, or the
intentions of the person doing the act as in virtue ethics.
Deontologists look at rules and duties.[10] For example, the act may
be considered the right thing to do even if it produces a bad
consequence[11], if it follows the rule that “one should do unto
others as they would have done unto them”[10], and even if the person
who does the act lacks virtue and had a bad intention in doing the
act[citation needed]. We have a duty to act in a way that does those
things that are inherently good as acts ("truth-telling" for example),
or follow an objectively obligatory rule (as in rule utilitarianism).
For deontologists, the ends or consequences of our actions are not
important in and of themselves, and our intentions are not important
in and of themselves.

Immanuel Kant's theory of ethics is considered deontological for
several different reasons.[12][13] First, Kant argues that to act in
the morally right way, people must act from duty (deon).[14] Second,
Kant argued that it was not the consequences of actions that make them
right or wrong but the motives of the person who carries out the
action.

Immanuel KantKant's argument that to act in the morally right way, one
must act from duty, begins with an argument that the highest good must
be both good in itself, and good without qualification.[15] Something
is 'good in itself' when it is intrinsically good, and 'good without
qualification' when the addition of that thing never makes a situation
ethically worse. Kant then argues that those things that are usually
thought to be good, such as intelligence, perseverance and pleasure,
fail to be either intrinsically good or good without qualification.
Pleasure, for example, appears to not be good without qualification,
because when people take pleasure in watching someone suffering, this
seems to make the situation ethically worse. He concludes that there
is only one thing that is truly good:

Nothing in the world—indeed nothing even beyond the world—can possibly
be conceived which could be called good without qualification except a
good will.[15]

Postmodern ethics

This article or section may contain previously unpublished synthesis
of published material that conveys ideas not attributable to the
original sources. See the talk page for details. (July 2009)

The 20th century saw a remarkable expansion of critical theory and its
evolution. The earlier Marxist Theory created a paradigm for
understanding the individual, society and their interaction. The
Renaissance Enlightened Man had persisted up until the Industrial
Revolution when the romantic vision of noble action began to fade.

Modernism, exemplified in the literary works of Virginia Woolf and
James Joyce, wrote out God, then antihumanists such as Louis Althusser
and Michel Foucault and structuralists such as Roland Barthes presided
over the death of the author and man himself[clarification needed]. As
critical theory developed in the later 20th century, post-
structuralism queried the existence of reality. Jacques Derrida argued
reality was in the linguistic realm, stating ‘There is nothing outside
the text’, while Jean Baudrillard theorised that signs and symbols or
simulacra had usurped reality, particularly in the consumer world.

Post-structuralism and postmodernism are both heavily theoretical and
follow a fragmented, anti-authoritarian course which is absorbed in
narcissistic and near nihilistic activities.[citation needed] 2010}}
Normative issues are generally ignored. This has led to some opponents
of these later movements echoing the critic Jürgen Habermas who fears
‘that the postmodern mood represents a turning away from both
political responsibilities and a concern for suffering’(cited in Lyon,
1999, p. 103).

David Couzens Hoy says that Emmanuel Levinas’ writings on the face of
the Other and Derrida’s mediations on the relevance of death to ethics
are signs of the ‘ethical turn’ in Continental philosophy that occurs
in the 1980’s and 1990’s. Hoy clarifies post-critique ethics as the
‘obligations that present themselves as necessarily to be fulfilled
but are neither forced on one or are enforceable’ (2004, p. 103).

This aligns with Australian philosopher Peter Singer’s thoughts on
what ethics is not. He firstly claims it is not a moral code
particular to a sectional group. For example it has nothing to do with
a set of prohibitions concerned with sex laid down by a religious
order. Neither is ethics a ‘system that is noble in theory but no good
in practice’ (2000, p. 7). For him, a theory is good only if it is
practical. He agrees that ethics is in some sense universal but in a
utilitarian way it affords the ‘best consequences’ and furthers the
interests of those affected (2000, p. 15).

Hoy in his post-critique model uses the term ethical resistance.
Examples of this would be an individual’s resistance to consumerism in
a retreat to a simpler but perhaps harder lifestyle, or an
individual’s resistance to a terminal illness. Hoy describes these
examples in his book Critical Resistance as an individual’s engagement
in social or political resistance. He provides Levinas’s account as
‘not the attempt to use power against itself, or to mobilize sectors
of the population to exert their political power; the ethical
resistance is instead the resistance of the powerless’(2004, p. 8).

Hoy concludes that

"The ethical resistance of the powerless others to our capacity to
exert power over them is therefore what imposes unenforceable
obligations on us. The obligations are unenforceable precisely because
of the other’s lack of power. That actions are at once obligatory and
at the same time unenforceable is what put them in the category of the
ethical. Obligations that were enforced would, by the virtue of the
force behind them, not be freely undertaken and would not be in the
realm of the ethical" (2004, p.184).

In present day terms the powerless may include the unborn, the
terminally sick, the aged, the insane, and animals. It is in these
areas that ethical action will be evident. Until legislation or state
apparatus enforces a moral order that addresses the causes of
resistance these issues will remain in the ethical realm. For example,
should animal experimentation become illegal in a society, it will no
longer be an ethical issue. Likewise one hundred and fifty years ago,
not having a black slave in America may have been an ethical choice.
This later issue has been absorbed into the fabric of a more
utilitarian social order and is no longer an ethical issue but does of
course constitute a moral concern. Ethics are exercised by those who
possess no power and those who support them, through personal
resistance.

Applied ethics

Main article: Applied ethics

Applied ethics is a discipline of philosophy that attempts to apply
ethical theory to real-life situations. The discipline has many
specialized fields, such as bioethics and business ethics.

Specific questions

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Please help improve this article by adding reliable references.
Unsourced material may be challenged and removed. (May 2009)

Applied ethics is used in some aspects of determining public policy.
The sort of questions addressed by applied ethics include: "Is getting
an abortion immoral?" "Is euthanasia immoral?" "Is affirmative action
right or wrong?" "What are human rights, and how do we determine
them?" and "Do animals have rights as well?"

A more specific question could be: "If someone else can make better
out of his/her life than I can, is it then moral to sacrifice myself
for them if needed?" Without these questions there is no clear fulcrum
on which to balance law, politics, and the practice of arbitration —
in fact, no common assumptions of all participants—so the ability to
formulate the questions are prior to rights balancing. But not all
questions studied in applied ethics concern public policy. For
example, making ethical judgments regarding questions such as, "Is
lying always wrong?" and, "If not, when is it permissible?" is prior
to any etiquette.

People in-general are more comfortable with dichotomies (two choices).
However, in ethics the issues are most often multifaceted and the best
proposed actions address many different areas concurrently. In ethical
decisions the answer is almost never a "yes or no", "right or wrong"
statement. Many buttons are pushed so that the overall condition is
improved and not to the benefit of any particular faction.

Particular fields of application

Relational ethics

Relational ethics are related to an ethics of care.[16] They are used
in qualitative research, especially ethnography and authoethnography.
Researchers who employ relational ethics value and respect the
connection between themselves and the people they study, and "between
researchers and the communities in which they live and work" (Ellis,
2007, p. 4).[17] Relational ethics also help researchers understand
difficult issues such as conducting research on intimate others that
have died and developing friendships with their participants.[18][19]

Military ethics

This section does not cite any references or sources.

Please help improve this article by adding citations to reliable
sources. Unsourced material may be challenged and removed. (March
2009)

See also: Nuremberg Principles and Geneva Conventions

Military ethics is a set of practices and philosophy to guide members
of the armed forces to act in a manner consistent with the values and
standards as established by military tradition, and to actively
clarify and enforce these conditions rigorously in its administrative
structure. Military ethics is evolutionary and the administrative
structure is modified as new ethical perspectives consistent with
national interests evolve.

Some ethical issues involving a country's military establishment, such
as:

justification for using force
race (loss of capability due to race bias or abuse)

gender equality (loss of capability due to gender bias or abuse)

age discrimination (authority based upon age instead of accomplishment
or productivity)

nepotism (unfair control by family members; also known as "empire
building")

political influence (military members having a political position or
political influence)

And others.

Moral psychology

Main article: Moral psychology

Moral psychology is a field of study in both philosophy and
psychology. Some use the term "moral psychology" relatively narrowly
to refer to the study of moral development.[20] However, others tend
to use the term more broadly to include any topics at the intersection
of ethics and psychology (and philosophy of mind).[21] Such topics are
ones that involve the mind and are relevant to moral issues. Some of
the main topics of the field are moral responsibility, moral
development, moral character (especially as related to virtue ethics),
altruism, psychological egoism, moral luck, and moral disagreement.
[22]

Evolutionary ethics

See also: Evolutionary ethics and Evolution of morality

Evolutionary ethics concerns approaches to ethics (morality) based on
the role of evolution in shaping human psychology and behavior. Such
approaches may be based in scientific fields such as evolutionary
psychology or sociobiology, with a focus on understanding and
explaining observed ethical preferences and choices.[23]

Descriptive ethics

Main article: Descriptive ethics

Descriptive ethics is a value-free approach to ethics which examines
ethics not from a top-down a priori perspective but rather
observations of actual choices made by moral agents in practice. Some
philosophers rely on descriptive ethics and choices made and
unchallenged by a society or culture to derive categories, which
typically vary by context. This can lead to situational ethics and
situated ethics. These philosophers often view aesthetics, etiquette,
and arbitration as more fundamental, percolating "bottom up" to imply
the existence of, rather than explicitly prescribe, theories of value
or of conduct. The study of descriptive ethics may include
examinations of the following:

Ethical codes applied by various groups. Some consider aesthetics
itself the basis of ethics– and a personal moral core developed
through art and storytelling as very influential in one's later
ethical choices.

Informal theories of etiquette which tend to be less rigorous and more
situational. Some consider etiquette a simple negative ethics, i.e.
where can one evade an uncomfortable truth without doing wrong? One
notable advocate of this view is Judith Martin ("Miss Manners").
According to this view, ethics is more a summary of common sense
social decisions.

Practices in arbitration and law, e.g. the claim that ethics itself is
a matter of balancing "right versus right," i.e. putting priorities on
two things that are both right, but which must be traded off carefully
in each situation.

Observed choices made by ordinary people, without expert aid or
advice, who vote, buy, and decide what is worth valuing. This is a
major concern of sociology, political science, and economics.

See also

The length of this "see also" section may adversely affect
readability. Please ensure that the "see also" links are not mentioned
elsewhere in the article, are not red links, are as few in number and
as relevant as possible.

Philosophy portal

Altruism (ethics)

Bioethics
Buddhist Ethics (discipline)
Business ethics
Deontological ethics
Engineering ethics
Ethical egoism
Ethical relativism
Ethical skepticism
Ethical subjectivism
Ethics in religion
Fallibilism
Foucault/Habermas debate
Journalism ethics
Legal ethics

List of ethics topics

Medical ethics
Moral absolutism
Moral nihilism
Moral syncretism
Morality
Normative ethics

Notes

↑ Sahakian, William S. & Sahakian, Mabel Lewis. Ideas of the Great
Philosophers. pp 32-33. Barnes & Noble Books (1993). ISBN
9781566192712.

↑ Sahakian, William S. & Sahakian, Mabel Lewis. Ideas of the Great
Philosophers. pp 33-35. Barnes & Noble Books (1993). ISBN
9781566192712.

↑ Sahakian, William S. & Sahakian, Mabel Lewis. Ideas of the Great
Philosophers. pp 35-37. Barnes & Noble Books (1993). ISBN
9781566192712.

↑ 4.0 4.1 Sahakian, William S. & Sahakian, Mabel Lewis. Ideas of the
Great Philosophers. pg 37. Barnes & Noble Books (1993). ISBN
9781566192712.

↑ Sahakian, William S. & Sahakian, Mabel Lewis. Ideas of the Great
Philosophers. pp 37-38. Barnes & Noble Books (1993). ISBN
9781566192712.
↑ http://www.desiringgod.org/ResourceLibrary/TopicIndex/85_Christian_Hedonism/1538_Christian_Hedonism/

↑ Sahakian, William S. & Sahakian, Mabel Lewis. Ideas of the Great
Philosophers. pp 38-41. Barnes & Noble Books (1993). ISBN
9781566192712.

↑ Anscombe, G. E. M. (1958). "Modern Moral Philosophy". Philosophy 33:
1–19. doi:10.1017/S0031819100037943.

http://www.philosophy.uncc.edu/mleldrid/cmt/mmp.html.

↑ Mackie, J. L. (1990). Ethics: Inventing Right and Wrong. London:
Penguin. ISBN 0-14-013558-8.

↑ 10.0 10.1 [1]

↑ Olson, Robert G. 1967. 'Deontological Ethics'. In Paul Edwards (ed.)
The Encyclopedia of Philosophy. London: Collier Macmillan: 343.

↑ Orend, Brian. 2000. War and International Justice: A Kantian
Perspective. West Waterloo, Ontario:Wilfrid Laurier University Press:
19.

↑ Kelly, Eugene. 2006. The Basics of Western Philosophy. Greenwood
Press: 160.

↑ Kant, Immanuel. 1780. 'Preface'. In The Metaphysical Elements of
Ethics. Translated by Thomas Kingsmill Abbott

↑ 15.0 15.1 Kant, Immanuel. 1785. 'First Section: Transition from the
Common Rational Knowledge of Morals to the Philosophical', Groundwork
of the Metaphysic of Morals.

↑ Gilligan, C. (1982). In a different Voice: Pscychological theory and
women's development. Cambridge, MA: Harvard University Press.

↑ Ellis, C. (2007). Telling secrets, revealing lives: Relational
ethics in research with intimate others. Qualitative Inquiry, 13,
3-29.

↑ Ellis, C. (1986). Fisher folk. Two communities on Chesapeake Bay.
Lexington: University Press of Kentucky.

↑ Ellis, C. (1995).Final negotiations: A story of love, loss, and
chronic illness. Philadelphia: Temple University Press.

↑ See, for example, Lapsley (2006) and "moral psychology" (2007).

↑ See, for example, Doris & Stich (2008) and Wallace (2007). Wallace
writes: "Moral psychology is the study of morality in its
psychological dimensions" (p. 86).
↑ See Doris & Stich (2008), §1.

↑ Doris Schroeder. "Evolutionary Ethics". http://www.iep.utm.edu/evol-eth/.
Retrieved 2010-01-05.

References

Hoy, D 2004, Critical resistance from poststructuralism to
postcritique, Massachusetts Institute of Technology, Massachusetts.

Lyon, D 1999, Postmodernity, 2nd ed, Open University Press,
Buckingham.
Singer, P 2000, Writings on an ethical life, Harper Collins
Publishers, London.

Further reading

The London Philosophy Study Guide offers many suggestions on what to
read, depending on the student's familiarity with the subject: Ethics
Perle, Stephen. "Morality and Ethics: An Introduction".

http://www.chiroweb.com/archives/22/06/16.html.

Retrieved 2007-02-13. , Butchvarov, Panayot. Skepticism in Ethics
(1989).

Encyclopedia of Ethics. Lawrence C. Becker and Charlotte B. Becker,
editors. Second edition in three volumes. New York: Routledge, 2002. A
scholarly encyclopedia with over 500 signed, peer-reviewed articles,
mostly on topics and figures of, or of special interest in, Western
philosophy.

De La Torre, Miguel A., "Doing Christian Ethics from the Margins,"
Orbis Books, 2004.

Derrida, J 1995, The Gift of Death, translated by David Wills,
University of Chicago Press, Chicago.

Levinas, E 1969, Totality and infinity, an essay on exteriority,
translated by Alphonso Lingis, Duquesne University Press, Pittsburgh.

External links

Look up ethics in Wiktionary, the free dictionary.

Wikiversity has learning materials about Ethics

Wikisource has the text of the 1911 Encyclopædia Britannica article
Ethics.

An Introduction to Ethics by Paul Newall, aimed at beginners.

"Ethics" article in the Stanford Encyclopedia of Philosophy
Ethics, 2d ed., 1973. by William Frankena

Ethics Bites Open University podcast series podcast exploring ethical
dilemmas in everyday life.

'The Right and the Good (1930) by W. D. Ross
University of San Diego - Ethics glossary Useful terms in ethics
discussions

The Hastings Center An independent, nonpartisan, and nonprofit
bioethics research institute founded in 1969 to address fundamental
ethical issues in the areas of health, medicine, and the environment

National Reference Center for Bioethics Literature World's largest
library for ethical issues in medicine and biomedical research

Ethics and Democracy

Ethics entry in Encyclopædia Britannica by Peter Singer

The Philosophy of Ethics on Philosophy Archive

http://www.bing.com/reference/semhtml/Ethics

[chhotemianinshallah]

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v • [[|d]] • e

Political economy originally was the term for studying production,
buying and selling, and their relations with law, custom, and
government. Political economy originated in moral philosophy. It
developed in the 18th century as the study of the economies of states—
polities, hence political economy.

In late nineteenth century, the term "political economy" was generally
replaced by the term economics, used by those seeking to place the
study of economy upon mathematical and axiomatic bases, rather than
the structural relationships of production and consumption (cf.
marginalism, William Stanley Jevons, Alfred Marshall).

History of the term

Originally, political economy meant the study of the conditions under
which production or consumption within limited parameters was
organized in the nation-states. The phrase économie politique
(translated in English as political economy) first appeared in France
in 1615 with the well known book by Antoine de Montchrétien: Traité de
l’economie politique. French physiocrats, Adam Smith, David Ricardo
and Karl Marx were some of the exponents of political economy. In
1805, Thomas Malthus became England's first professor of political
economy, at the East India Company College, Haileybury, Hertfordshire.
The world's first professorship in political economy was established
in 1763 at the University of Vienna, Austria; Joseph von Sonnenfels
was the first tenured professor.

In the United States, political economy first was taught at the
College of William and Mary; in 1784 Adam Smith's Wealth of Nations
was a required textbook.[1]

Glasgow University, where Smith was Professor of Logic and Moral
Philosophy, changed the name of its Department of Political Economy to
the Department of Economics (ostensibly to avoid confusing prospective
undergraduates) in academic year 1997–1998, making the class of 1998
the last to be graduated with a Scottish Master of Arts degree in
Political Economy.

Current approaches

In its contemporary meaning, political economy refers to different,
but related, approaches to studying economic and political behaviours,
ranging from the combining of economics with other fields, to the
using of different, fundamental assumptions that challenge orthodox
economic assumptions:

Political economy most commonly refers to interdisciplinary studies
drawing upon economics, law, and political science in explaining how
political institutions, the political environment, and the economic
system—capitalist, socialist, mixed—influence each other. When
narrowly construed, it refers to applied topics in economics
implicating public policy, such as monopoly, market protection,
government fiscal policy,[2] and rent seeking.[3]

Historians have employed political economy to explore the ways in the
past that persons and groups with common economic interests have used
politics to effect changes beneficial to their interests.[4]

"International political economy" (IPE) is an interdisciplinary field
comprising approaches to international trade and finance, and state
policies affecting international trade, i.e. monetary and fiscal
policies. In the U.S., these approaches are associated with the
journal International Organization, which, in the 1970s, became the
leading journal of international political economy under the
editorship of Robert Keohane, Peter J. Katzenstein, and Stephen
Krasner. They are also associated with the journal The Review of
International Political Economy. There also is a more critical school
of IPE, inspired by Karl Polanyi's work; two major figures are Susan
Strange and Robert W. Cox.[5]

Economists and political scientists often associate the term with
approaches using rational choice assumptions, especially game theory,
in explaining phenomena beyond economics' standard remit, in which
context the term "positive political economy" is common.[6]

Anthropologists, sociologists, and geographers, use political economy
in referring to the neo-Marxian approaches to development and
underdevelopment postulated by André Gunder Frank and Immanuel
Wallerstein.

New political economy students treat economic ideologies as the
phenomenon to explain, per the traditions of Marxian political
economy. Thus, Charles S. Maier suggests that a political economy
approach: interrogates economic doctrines to disclose their
sociological and political premises....in sum, [it] regards economic
ideas and behavior not as frameworks for analysis, but as beliefs and
actions that must themselves be explained.[7] This approach informs
Andrew Gamble's The Free Economy and the Strong State (Palgrave
Macmillan, 1988), and Colin Hay's The Political Economy of New Labour
(Manchester University Press, 1999). It also informs much work
published in New Political Economy an international journal founded by
Sheffield University scholars in 1996.[8]

Related disciplines

Because political economy is not a unified discipline, there are
studies using the term that overlap in subject matter, but have
radically different perspectives:

Sociology studies the effects of persons' involvement in society as
members of groups, and how that changes their ability to function.
Many sociologists start from a perspective of production-determining
relation from Karl Marx.

Political Science focuses on the interaction between institutions and
human behavior, the way in which the former shapes choices and how the
latter change institutional frameworks. Along with economics, it has
made the best works in the field by authors like Shepsle, Ostrom,
Ordeshook, among others.

Anthropology studies political economy by studying the relationship
between the world capitalist system and local cultures.

Psychology is the fulcrum on which political economy exerts its force
in studying decision-making (not only in prices), but as the field of
study whose assumptions model political economy.

History documents change, using it to argue political economy;
historical works have political economy as the narrative's frame.

Economics focuses on markets by leaving the political—governments,
states, legal frameworks—as givens. Economics dropped the adjective
political in the 19th century, but works backwards, by describing "The
Ideal Market", urging governments to formulate policy and law to
approach said ideal. Economists and political economists often
disagree on what is preeminent in developing production, market, and
political structure theories.

Law concerns the creation of policy and its mediation via political
actions that have specific results, it deals with political economy as
political capital and as social infrastructure—and the sociological
results of one society upon another.
Human Geography is concerned with politico-economic processes,
emphasizing space and environment.

Ecology deals with political economy, because human activity has the
greatest effect upon the environment, its central concern being the
environment's suitability for human activity. The ecological effects
of economic activity spur research upon changing market economy
incentives.

International Relations often uses political economy to study
political and economic development.

Cultural Studies studies social class, production, labor, race,
gender, and sex.
Communications examines the institutional aspects of media and
telecommuncation systems, with particular attention to the historical
relationships between owners, labor, consumers, advertisers, and the
state.

See also

Economic study of collective action
Public Choice
EAEPE
Economic system
Economist
Economic ideology
Institutional economics
Important publications in political economy
Socioeconomics
Social Capital

Notes

↑ Image of "Priorities of the College of William and Mary"

↑ Groenwegen (1987, p.906).

↑ Anne O. Krueger, "The Political Economy of the Rent-Seeking
Society," American Economic Review, 64(3), June 1974, pp.291–303

↑ McCoy, Drew R. "The Elusive Republic: Political Ecocomy in
Jeffersonian America", Chapel Hill, University of North Carolina,
1980.

↑ Cohen, Benjamin J. (2007), ‘The transatlantic divide: Why are
American and British IPE so different?’, Review of International
Political Economy, Vol. 14, No. 2, May 2007

↑ Alt, James E. and Kenneth Shepsle (eds.) (1990), Perspectives on
Positive Political Economy (Cambridge [UK]; New York: Cambridge
University Press).

↑ Charles S. Mayer "In search of Stability: Explorations in Historical
Political Economy", Cambridge University Press, Cambridge, 1987, pp.3–
6.

↑ cf: David Baker, "The political economy of fascism: Myth or reality,
or myth and reality?" New Political Economy, Volume 11, Issue 2 June
2006, pp.227–250.

References

Groenwegen, Peter (1987). "'political economy' and 'economics'", The
New Palgrave: A Dictionary of Economics, v. 3, pp. 904–07.

Pressman, Steven, Encyclopedia of Political Economy Routledge, 1999

Pressman, Steven, Interactions in Political Economy: Malvern After Ten
Years Routledge, 1996

Winch, Donald, Riches and poverty : an intellectual history of
political economy in Britain, 1750–1834 Cambridge [etc.]: Cambridge
U.P., 1996.

Winch, Donald, "The emergence of Economics as a Science 1750–1870".
In: The Fontana Economic History of Europe, Vol. 3. London: Collins/
Fontana, 1973.

External links

Wikibooks has a book on the topic of
Political Economy

National System of Political Economy—Major work on political economy
by Friedrich List.

Harmony of Interests—Work contrasting American System and British
System of political economy by Henry C. Carey

International Political Economy at Jacobs University Bremen
Centre for Global Political Economy at the University of Sussex, UK

Categories:
Political economy

http://www.bing.com/reference/semhtml/Political_economy?qpvt=Political%20economy

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Wikipedia Articles

Scottish Enlightenment

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v • d • e
The Scottish Enlightenment was the period in 18th century Scotland
characterised by an outpouring of intellectual and scientific
accomplishments. By 1750, Scots were among the most literate citizens
of Europe, with an estimated 75% level of literacy.[1]

Sharing the humanist and rationalist outlook of the European
Enlightenment of the same time period, the thinkers of the Scottish
Enlightenment asserted the fundamental importance of human reason
combined with a rejection of any authority which could not be
justified by reason. They held to an optimistic belief in the ability
of man to effect changes for the better in society and nature, guided
only by reason.

It was this latter feature which gave the Scottish Enlightenment its
special flavour, distinguishing it from its continental European
counterpart. In Scotland, the Enlightenment was characterised by a
thoroughgoing empiricism and practicality where the chief virtues were
held to be improvement, virtue, and practical benefit for both the
individual and society as a whole.

Among the advances of the period were achievements in philosophy,
political economy, engineering, architecture, medicine, geology,
archaeology, law, agriculture, chemistry, and sociology. Among the
outstanding Scottish thinkers and scientists of the period were
Francis Hutcheson, Alexander Campbell, David Hume, Adam Smith, Thomas
Reid, Robert Burns, Adam Ferguson, John Playfair, Joseph Black and
James Hutton.

The Scottish Enlightenment had effects far beyond Scotland itself, not
only because of the esteem in which Scottish achievements were held in
Europe and elsewhere, but also because its ideas and attitudes were
carried across the Atlantic as part of the Scottish diaspora which had
its beginnings in that same era. As a result, a significant proportion
of technological and social development in the United States and
Canada in the 18th and 19th centuries were accomplished through Scots-
Americans.

After the Act of Union 1707

In the period following the Act of Union 1707[citation needed],
Scotland's place in the world was altered radically. Following the
Reformation, many Scottish academics were teaching in great cities of
mainland Europe but with the birth and rapid expansion of the new
British Empire came a revival of philosophical thought in Scotland and
a prodigious diversity of thinkers.

Arguably the poorest[2] country in Western Europe in 1707, Scotland
was then able to turn its attentions to the wider world without the
opposition of England. Scotland reaped the economic benefits of free
trade within the British Empire together with the intellectual
benefits of having established Europe's first public education system
since classical times. Under these twin stimuli, Scottish thinkers
began questioning assumptions previously taken for granted; and with
Scotland's traditional connections to France, then in the throes of
the Enlightenment, the Scots began developing a uniquely practical
branch of humanism to the extent that Voltaire said "We look to
Scotland for all our ideas of civilisation"[3][4].

Empiricism and inductive reasoning

The first major philosopher of the Scottish Enlightenment was Francis
Hutcheson,[5] who held the Chair of Philosophy at the University of
Glasgow from 1729 to 1746. A moral philosopher with alternatives to
the ideas of Thomas Hobbes, one of his major contributions to world
thought was the utilitarian and consequentialist principle that virtue
is that which provides, in his words, "the greatest happiness for the
greatest numbers".

Much of what is incorporated in the scientific method (the nature of
knowledge, evidence, experience, and causation) and some modern
attitudes towards the relationship between science and religion were
developed by David Hume. "Like many of the learned Scots, he revered
the new science of Copernicus, Bacon, Galileo, Kepler, Boyle, and
Newton; he believed in the experimental method and loathed
superstition"[5]. Hume stands out from the mainstream enlightenment
due to his deep pessimism which is largely not shared by other
humanist thinkers[citation needed].

Adam Smith developed and published The Wealth of Nations, the first
work in modern economics. This famous study, which had an immediate
impact on British economic policy, still frames 21st century
discussions on globalisation and tariffs[6].

Scottish Enlightenment thinkers developed what Hume called a 'science
of man'[7] which was expressed historically in works by such as James
Burnett, Adam Ferguson, John Millar, and William Robertson, all of
whom merged a scientific study of how humans behave in ancient and
primitive cultures with a strong awareness of the determining forces
of modernity. Gathering places in Edinburgh such as The Select Society
and, later, The Poker Club, were among the crucibles from which many
of the ideas which distinguish the Scottish Enlightenment emerged.

The focus of the Scottish Enlightenment ranged from intellectual and
economic matters to the specifically scientific as in the work of
William Cullen, physician and chemist, James Anderson, a lawyer and
agronomist, Joseph Black, physicist and chemist, and James Hutton, the
first modern geologist[5][8].

While the Scottish Enlightenment is traditionally considered to have
concluded toward the end of the 18th century[7], it is worth noting
that disproportionately large Scottish contributions to British
science and letters continued for another fifty years or more, thanks
to such figures as James Hutton, James Watt, William Murdoch, James
Clerk Maxwell, Lord Kelvin and Sir Walter Scott.

An English visitor to Edinburgh during the heyday of the Scottish
Enlightenment remarked: "Here I stand at what is called the Cross of
Edinburgh, and can, in a few minutes, take 50 men of genius and
learning by the hand". It is a striking summation of the outburst of
pioneering intellectual activity that occurred in Scotland in the
second half of the 18th century.

They were a closely knit group: most knew one another; many were close
friends; some were related by marriage. All were politically
conservative but intellectually radical (Unionists and progressives to
a man), courteous, friendly and accessible. They were stimulated by
enormous curiosity, optimism about human progress and a
dissatisfaction with age-old theological disputes. Together they
created a cultural golden age.

– Magnus Magnusson, New Statesman[7]

Key figures in the Scottish Enlightenment

Robert Adam (1728-1792) architect

James Anderson (1739-1808) agronomist, lawyer, amateur scientist

Joseph Black (1728-1799) physicist and chemist, first to isolate
carbon dioxide
Hugh Blair (1718-1800) minister, author

James Boswell (1740-1795) lawyer, author of Life of Johnson

Thomas Brown (1778–1820), Scottish moral philosopher and philosopher
of mind; jointly held the Chair of Moral Philosophy at Edinburgh
University with Dugald Stewart

James Burnett, Lord Monboddo (1714-1799) philosopher, judge, founder
of modern comparative historical linguistics

Robert Burns[9] (1759-1796) poet

Alexander Campbell (1788-1866) founder of the Restoration Movement

George Campbell (1719-1796) philosopher of language, theology, and
rhetoric

Sir John Clerk of Eldin (1728-1812) prolific artist, author of An
Essay on Naval Tactics; great-uncle of James Clerk Maxwell

William Cullen (1710-1790) physician, chemist, early medical
researcher

Adam Ferguson (1723-1816) considered the founder of sociology

Robert Fergusson (1750-1774), poet.

Andrew Fletcher (1653-1716) a forerunner of the Scottish Enlightenment,
[10] writer, patriot, commissioner of Parliament of Scotland

James Hall, 4th Baronet (1761-1832) geologist, geophysicist

Henry Home, Lord Kames (1696-1782) philosopher, judge, historian

David Hume (1711-1776) philosopher, historian, essayist

Francis Hutcheson (1694-1746) philosopher of metaphysics, logic, and
ethics
James Hutton[8][9] (1726–1797) founder of modern geology

Sir John Leslie (1766-1832) mathematician, physicist, investigator of
heat (thermodynamics)

James Mill (1773-1836) late in the period - Father of John Stuart
Mill.

John Millar (1735-1801) philosopher, historian, historiographer

John Playfair (1748-1819) mathematician, author of Illustrations of
the Huttonian Theory of the Earth

Allan Ramsay[11] (1686 - 1758) poet

Henry Raeburn[7] (1756-1823) portrait painter

Thomas Reid (1710-1796) philosopher, founder of the Scottish School of
Common Sense

William Robertson (1721-1793) one of the founders of modern historical
research
Sir Walter Scott (1771-1832) lawyer, novelist, poet

John Sinclair (1754 - 1835) politician, writer, the first person to
use the word statistics in the English language

William Smellie (1740-1795) editor of the first edition of
Encyclopædia Britannica
Adam Smith (1723-1790) whose The Wealth of Nations was the first
modern treatise on economics

Dugald Stewart (1753-1828) moral philosopher

George Turnbull (1698-1748), theologian, philosopher and writer on
education
John Walker (naturalist) (1730-1803) professor of natural history

James Watt (1736-1819) student of Joseph Black; engineer, inventor
(see Watt steam engine)

Plus two who visited and corresponded with Edinburgh scholars[8]:

Erasmus Darwin (1731-1802) physician, botanist, philosopher,
grandfather of Charles Darwin

Benjamin Franklin (1706-1790) polymath, one of the Founding Fathers of
the United States

The learned Scots were remarkably unlike the French philosophes;
indeed, they were unlike any other group of philosophers that ever
existed. In a gigantic study, “The Sociology of Philosophies,”
published in 1998, Randall Collins assembled structural portraits of
the seminal moments in philosophy, both Western and Eastern.
Typically, the most important figures in a given cluster of thinkers
(perhaps three or four men) would jockey for centrality while
cultivating alliances with other thinkers or students on the margins.

In the Scottish group, however, there was little of the bristling,
charged, and exclusionary fervour of the Diderot-d’Alembert circle; or
of the ruthless atmosphere found in Germany in the group that included
Fichte, the Schelling brothers, and Hegel; or of the conscious glamour
of the existentialists in postwar Paris. The Scots vigorously
disagreed with one another, but they lacked the temperament for the
high moral drama of quarrels, renunciations, and reconciliation.
Hutcheson, Hume and Smith, along with Adam Ferguson and Thomas Reid,
were all widely known, but none of them were remotely cult figures in
the style of Hegel, Marx, Emerson, Wittgenstein, Sartre, or Foucault.

To an astonishing degree, the men supported one another’s projects and
publications, which they may have debated at a club that included
amateurs (say, poetry-writing doctors, or lawyers with an interest in
science) or in the fumy back room of some dark Edinburgh tavern. In
all, the group seems rather like an erudite version of Dickens’s
chattering and benevolent Pickwick Club.

– David Denby, The New Yorker[5]

See also

Midlands Enlightenment
American Enlightenment

References

↑ Herman, Arthur (2003). The Scottish Enlightenment: The Scots'
Invention of the Modern World. 4th Estate, Limited. ISBN 1841152765.

↑ Herman, Arthur (2001). How the Scots Invented the Modern World: The
True Story of How Western Europe's Poorest Nation Created Our World &
Everything in It (Hardcover: ISBN 978-0609606353, Paperback: ISBN
978-0609809990 ed.). Crown Publishing Group.

↑ José Manuel Barroso, 11th President of the European Commission (28
November 2006). "The Scottish enlightenment and the challenges for
Europe in the 21st century; climate change and energy" (html).
Enlightenment Lecture Series, Edinburgh University.
http://europa.eu/rapid/pressReleasesAction.do?

reference=SPEECH/06/756&format=HTML&aged=1&language=EN&guiLanguage=en.
"I will try to show why Voltaire was right when he said: 'Nous nous
tournons vers l’Écosse pour trouver toutes nos idées sur la
civilisation' [we look to Scotland for all our ideas on
civilisation]."

↑ "Visiting The Royal Society of Edinburgh…" (html). Royal Society of
Edinburgh. First published in The Scotsman Saturday 4 June 2005.

http://www.royalsoced.org.uk/international/potocnik.htm.

"Scotland has a proud heritage of science, research, invention and
innovation, and can lay claim to some of the greatest minds and
greatest discoveries since Voltaire wrote those words 250 years ago."

↑ 5.0 5.1 5.2 5.3 David Denby (11 October 2004). "Northern Lights: How
modern life emerged from eighteenth-century Edinburgh" (html). The New
Yorker. Review of James Buchan's Crowded With Genius: Edinburgh's
Moment of the Mind (Capital of the Mind: Edinburgh in the UK)
HarperCollins, 2003. Hardcover: ISBN 0-06-055888-1, ISBN
978-0060558888.

http://www.newyorker.com/archive/2004/10/11/041011crat_atlarge.

"The fountainhead was Francis Hutcheson, a kind of pan-Enlightenment
figure who, from 1729 until his death in 1746, held the chair in moral
philosophy at the University of Glasgow, where he broke with tradition
by lecturing in English in addition to the common lecturing language
of the time, Latin. Hutcheson, a frequent visitor to Edinburgh, was
Adam Smith’s teacher and he encouraged Hume’s early efforts. He was
suspicious of metaphysics or any claims not based on observation or
experience. Empiricism and the inductive method was the clarion call
of the Scottish Enlightenment.

The intellectual break with the past was drastic and seemingly
irreversible. In recent years, scholars have traced the rudiments of
modern psychology, anthropology, the earth sciences, and theories of
civil society and liberal education to eighteenth-century Scotland."

↑ Fry, Michael (1992). Adam Smith's Legacy: His Place in the
Development of Modern Economics. Paul Samuelson, Lawrence Klein,
Franco Modigliani, James M. Buchanan, Maurice Allais, Theodore
Schultz, Richard Stone, James Tobin, Wassily Leontief, Jan Tinbergen.
Routledge. ISBN 978-0415061643. "Adam Smith's Legacy brings together
ten Nobel Laureates in Economics, the greatest number since the prize
was instituted in 1969. They explore themes as diverse as Smith's use
of data, his attitude towards human capital, and his views on economic
policy. Heirs to Smith and leaders of the discipline, the contributors
also reflect upon the current state of economics, assessing the extent
to which it measures up to the benchmark established by its founder."

↑ 7.0 7.1 7.2 7.3 Magnus Magnusson (10 November 2003). "Northern
lights" (html). New Statesman. Review of James Buchan's Capital of the
Mind: Edinburgh (Crowded With Genius: Edinburgh's Moment of the Mind
in the U.S.) London: John Murray ISBN 0719554462. http://www.newstatesman.com/200311100040.

↑ 8.0 8.1 8.2 Repcheck, Jack (2003). "Chapter 7: The Athens of the
North" (in English). The Man Who Found Time: James Hutton and the
Discovery of the Earth's Antiquity. Cambridge, Massachusetts: Basic
Books, The Perseus Books Group. pp. 117–143. ISBN 0-7382-0692-X. "Onto
the list should also be added two men who never lived in Edinburgh but
who visited and maintained an active correspondence with the scholars
there: Ben Franklin (1706-1790), the statesman and talented polymath
who discovered electricity; and Erasmus Darwin (1731-1802), Charles
Darwin's grandfather and the author of a precursor theory of
evolution."

↑ 9.0 9.1 Phillip Manning (28 December 2003). "A Toast To Times
Past" (html). Chapel Hill News.

http://www.scibooks.org/manwhofoundtime.html.

"Burns penned the song [Auld Lang Syne] in 1788 during the
intellectual flowering known as the Scottish Enlightenment. Burns was
part of a convivial group in Edinburgh whose writing and thinking
produced the Enlightenment. One of the most original thinkers in that
group, the man whose work would stimulate Charles Darwin’s ideas about
evolution, was a well-to-do gentleman farmer named James Hutton. He
discovered the immensity of our past, the days gone by that Burns
wrote about so eloquently."

↑ Cambridge University Press. "Andrew Fletcher: Political Works".

http://www.cambridge.org/us/catalogue/catalogue.asp?isbn=9780521439947.

↑ Dr David Allan. "A Hotbed of Genius: Culture and Society in the
Scottish Enlightenment" (html). University of St Andrews.
http://www.st-andrews.ac.uk/academic/history/scothist/hons/4111.shtml.

Further reading

Darwin in Scotland: Edinburgh, Evolution and Enlightenment. JF Derry.
· Whittles Publishing, 2009. Paperback: ISBN 1904445578.

A Hotbed of Genius: The Scottish Enlightenment 1731-1790. David
Daiches, Peter Jones, Jean Jones (eds).

· Edinburgh University Press, 1986. Hardcover: ISBN 0 85224 537 8.

· Saltire Society 1996. Paperback: ISBN 0-85411-069-0.

Crowded With Genius: Edinburgh's Moment of the Mind. James Buchan
· Harper Perennial 2004. Paperback: ISBN 006055889X, ISBN
978-0060558895.

The Scottish Nation: A History 1700-2000. Thomas Devine.

· Viking, 1999. Hardcover: ISBN 0670888117, ISBN 978-0670888
115.

· Penguin, 2001. Paperback: ISBN 0141002344, ISBN 978-0141002347.

The Scottish Enlightenment: The Historical Age of the Historical
Nation. Alexander Broadie.

· Birlinn 2002. Paperback: ISBN 1-84158-151-8, ISBN 978-1841581514.

America's Founding Secret: What the Scottish Enlightenment Taught Our
Founding Fathers. Robert W. Galvin.

· Rowman & Littlefield, 2002. Hardcover: ISBN 0-7425-2280-6, ISBN
978-0742522800.
The Cambridge Companion to the Scottish Enlightenment. (Cambridge
Companions to Philosophy) Alexander Broadie, ed.

· Cambridge University Press, 2003. Hardcover: ISBN 0521802733, ISBN
9780521802734. Paperback: ISBN 0521003237, ISBN 978-0521003230.

The Mark of the Scots: Their Astonishing Contributions to History,
Science, Democracy, Literature, and the Arts. Duncan A. Bruce.

· (Publisher?) 1996. Hardcover: ISBN 1559723564, ISBN 978-1559723565.

· Citadel, Kensington Books, 2000. Paperback: ISBN 0-8065-2060-4, ISBN
978-0806520605.

How the Scots Made America. Michael Fry.

· Thomas Dunne Books, St. Martin's Press, 2004. Hardcover: ISBN
0-312-33876-7, ISBN 978-0312338763.

Scotland: A New History. Michael Lynch.

· Pimlico, Random House, 1992 (new edition). Paperback: ISBN
0-7126-9893-0, ISBN 978-0712698931.

Virtue, Learning and the Scottish Enlightenment: Ideas of Scholarship
in Early Modern History. David Allan.

· Edinburgh University Press, 1993. ISBN 978-0748604388.

External links

Northern Lights: How modern life emerged from eighteenth-century
Edinburgh.
Scottish Enlightenment - an introduction.

living philosophy - Philosophical play readings of the legacy of David
Hume, Adam Smith and Robert Burns

http://www.bing.com/reference/semhtml/Scottish_Enlightenment?qpvt=Scottish%20Enlightenment

[chhotemianinshallah]

Reference »
Wikipedia Articles

The Theory of Moral SentimentsThe Theory of Moral Sentiments

Author Adam Smith
Publication date 1759

The Theory of Moral Sentiments was written by Adam Smith in 1759. It
provided the ethical, philosophical, psychological and methodological
underpinnings to Smith's later works, including The Wealth of Nations
(1776), A Treatise on Public Opulence (1764) (first published in
1937), Essays on Philosophical Subjects (1795), and Lectures on
Justice, Police, Revenue, and Arms (1763) (first published in 1896).

Overview

Broadly speaking, Smith followed the views of his mentor, Francis
Hutcheson of the University of Glasgow, who divided moral philosophy
into four parts: Ethics and Virtue; Private rights and Natural
liberty; Familial rights (called Economics); and State and Individual
rights (called Politics).

More specifically, Smith divided moral systems into:

Categories of the nature of morality. These included Propriety,
Prudence, and Benevolence.

Categories of the motive of morality. These included Self-love,
Reason, and Sentiment.

Hutcheson had abandoned the psychological view of moral philosophy,
claiming that motives were too fickle to be used as a basis for a
philosophical system. Instead, he hypothesised a dedicated "sixth
sense" to explain morality. This idea, to be taken up by David Hume
(see Hume's A Treatise of Human Nature), claimed that man is pleased
by utility.

Smith rejected his teacher's reliance on this special sense. Starting
in about 1741, Smith set on the task of using Hume's experimental
method (appealing to human experience) to replace the specific moral
sense with a pluralistic approach to morality based on a multitude of
psychological motives. The Theory of Moral Sentiments begins with the
following assertion:

How selfish soever man may be supposed, there are evidently some
principles in his nature, which interest him in the fortunes of
others, and render their happiness necessary to him, though he derives
nothing from it, except the pleasure of seeing it. Of this kind is
pity or compassion, the emotion we feel for the misery of others, when
we either see it, or are made to conceive it in a very lively manner.
That we often derive sorrow from the sorrows of others, is a matter of
fact too obvious to require any instances to prove it; for this
sentiment, like all the other original passions of human nature, is by
no means confined to the virtuous or the humane, though they perhaps
may feel it with the most exquisite sensibility. The greatest ruffian,
the most hardened violator of the laws of society, is not altogether
without it.

Smith departed from the "moral sense" tradition of Shaftesbury,
Hutcheson, and Hume, as the principle of sympathy takes the place of
that organ. "Sympathy" was the term Smith used for the feeling of
these moral sentiments. It was the feeling with the passions of
others. It operated through a logic of mirroring, in which a spectator
imaginatively reconstructed the experience of the person he watches:

As we have no immediate experience of what other men feel, we can form
no idea of the manner in which they are affected, but by conceiving
what we ourselves should feel in the like situation. Though our
brother is on the rack, as long as we ourselves are at our ease, our
senses will never inform us of what he suffers. They never did, and
never can, carry us beyond our own person, and it is by the
imagination only that we can form any conception of what are his
sensations. Neither can that faculty help us to this any other way,
than by representing to us what would be our own, if we were in his
case. It is the impressions of our own senses only, not those of his,
which our imaginations copy. By the imagination, we place ourselves in
his situation.

Sympathy arose from an innate desire to identify with the emotions of
others. It could lead people to strive to maintain good relations with
their fellow human beings and provide the basis both for specific
benevolent acts and for the general social order. Thus was formed
within the beast the psychological basis for the desire to obey
natural laws. The Theory of Moral Sentiments culminated in man as self-
interested and self-commanded. Individual freedom, according to Smith,
was rooted in self-reliance, the ability of an individual to pursue
his self-interest while commanding himself based on the principles of
natural law.

However, Smith rejected the idea that Man was capable of forming moral
judgements beyond a limited sphere of activity, again centered around
his own self-interest:

The administration of the great system of the universe ... the care of
the universal happiness of all rational and sensible beings, is the
business of God and not of man. To man is allotted a much humbler
department, but one much more suitable to the weakness of his powers,
and to the narrowness of his comprehension: the care of his own
happiness, of that of his family, his friends, his country.... But
though we are ... endowed with a very strong desire of those ends, it
has been entrusted to the slow and uncertain determinations of our
reason to find out the proper means of bringing them about. Nature has
directed us to the greater part of these by original and immediate
instincts. Hunger, thirst, the passion which unites the two sexes, and
the dread of pain, prompt us to apply those means for their own sakes,
and without any consideration of their tendency to those beneficent
ends which the great Director of nature intended to produce by them.

It was in the TMS that Smith first referred to the "invisible hand" to

describe the apparent benefits to society of people behaving in their

own interests. Smith writes (6th ed. p. 350):

... In spite of their natural selfishness and rapacity, though they
mean only their own conveniency, though the sole end which they
propose ... be the gratification of their own vain and insatiable
desires, they divide with the poor the produce of all their
improvements. They are led by an invisible hand to make nearly the
same distribution of the necessaries of life, which would have been
made, had the earth been divided into equal portions among all its
inhabitants, and thus without intending it, without knowing it,
advance the interest of the society.
In a published lecture, Vernon L. Smith further argued that Theory of
Moral Sentiments and Wealth of Nations together encompassed:

"one behavioral axiom, 'the propensity to truck, barter, and exchange
one thing for another,' where the objects of trade I will interpret to
include not only goods, but also gifts, assistance, and favors out of
sympathy ... whether it is goods or favors that are exchanged, they
bestow gains from trade that humans seek relentlessly in all social
transactions. Thus, Adam Smith's single axiom, broadly interpreted ...
is sufficient to characterize a major portion of the human social and
cultural enterprise. It explains why human nature appears to be
simultaneously self-regarding and other-regarding."[1]

The Theory of Moral Sentiments: The Fourth Edition
Consists of 6 parts:

Part I: Of the propriety of action

Part II: Of merit and demerit; or of the objects of reward and
punishment

Part III: Of the foundations of our judgments concerning our own
sentiments and conduct, and of the sense of duty.

Part IV: Of the effect of utility upon the sentiments of approbation.

Part V: Of the influence of custom and fashion upon the sentiments of
moral approbation and disapprobation.

Part VI: Of systems of moral philosophy

Part I: Of the propriety of action

Part one of the Theory of Moral Sentiments consists of three sections:

Section 1: Of the sense of propriety

Section 2: Of the degrees of which different passions are consistent
with propriety
Section 3: Of the effects of propriety and adversity upon the judgment
of mankind with regard to the propriety of action; and why it is more
easy to obtain their approbation in the one state than the other

Part I, Section I: Of the Sense of Propriety

Section 1 consists of 5 chapters:

Chapter 1: Of sympathy
Chapter 2: Of the pleasure of mutual sympathy
Chapter 3: Of the manner in which we judge of the propriety or
impropriety of the affections of other men by their concord or
dissonance with our own
Chapter 4: The same subject continued
Chapter 5: Of the amiable and respectable virtues

Part I, Section I, Chapter I: Of Sympathy

According to Smith humans have a natural tendency to care about the
well-being of others for no other reason than the pleasure one gets
from seeing them happy. He calls this sympathy, defining it "our
fellow-feeling with any passion whatsoever" (p. 5). He argues that
this occurs under either of two conditions:

We see firsthand the fortune or misfortune of another person
The fortune or misfortune is vividly depicted to us

Although this is apparently true, he follows to argue that this
tendency lies even in "the greatest ruffian, the most hardened
violator of the laws of society" (p.2).

Smith also proposes several variables that can moderate the extent of
sympathy, noting that the situation that is the cause of the passion
is the large determinant of our response:

The vividness of the account of the condition of another person

An important point put forth by Smith is that the degree to which we
sympathize, or "tremble and shudder at the thought of what he feels",
is proportional to the degree of vividness in our observation or the
description of the event.

Knowledge of the causes of the emotions

When observing the anger of another person, for example, we are
unlikely to sympathize with this person because we "are unacquainted
with his provocation" and as a result cannot imagine what it is like
to feel what he feels. Further, since we can see the "fear and
resentment" of those who are the targets of the person's anger we are
likely to sympathize and take side with them. Thus, sympathetic
responses are often conditional on or their magnitude is determined by
the causes of the emotion in the person being sympathized with.

Whether other people are involved in the emotion

Specifically, emotions such as joy and grief tell us about the "good
or bad fortune" of the person we are observing them in, whereas anger
tells us about the bad fortune with respect to another person. It is
the difference between intrapersonal emotions, such as joy and grief,
and interpersonal emotions, such as anger, that causes the difference
in sympathy, according to Smith. That is, intrapersonal emotions
trigger at least some sympathy without the need for context whereas
interpersonal emotions are dependent on context.

He also proposes a natural 'motor' response to seeing the actions of
others: If we see a knife hacking off a person's leg we wince away, if
we see someone dance we move in the same ways, we feel the injuries of
others as if we had them ourselves.

Smith makes clear that we sympathize not only with the misery of
others but also the joy; he states that observing an emotional state
through the "looks and gestures" in another person is enough to
initiate that emotional state in ourselves. Furthermore, we are
generally insensitive to the real situation of the other person, but
instead to how we would feel ourselves if we were in the situation of
the other person. For example, a mother with a suffering baby feels
"the most complete image of misery and distress" while the child
merely feels "the uneasiness of the present instant" (p. 8).

Part I, Section I, Chapter II: Of Pleasure and mutual sympathy

Smith continues by arguing that people feel pleasure from the presence
of others with the same emotions as one's self, and displeasure in the
presence of those with "contrary" emotions. Smith argues that this
pleasure is not the result of self-interest: that others are more
likely to assist oneself if they are in a similar emotional state.
Smith also makes the case that pleasure from mutual sympathy is not
derived merely from a heightening of the original felt emotion
amplified by the other person. Smith further notes that people get
more pleasure from the mutual sympathy of negative emotions than
positive emotions, but people feel "more anxious to communicate to our
friends" (p. 13) negative than positive emotions.

Smith proposes that mutual sympathy heightens the original emotion and
"disburdens" the person of sorrow. This is a 'relief' model of mutual
sympathy, where mutual sympathy heightens the sorrow but also produces
pleasure from relief "because the sweetness of his sympathy more than
compensates the bitterness of that sorrow" (p. 14). In contrast,
mocking or joking about their sorrow is the "cruelest insult" one can
inflict on another person:

To seem to not be affected by the joy of our companions is but want of
politeness; but to not wear a serious countentance when they tell us
their afflictions, is real and gross inhumanity (p. 14).

He makes clear that mutual sympathy of negative emotions is a
necessary condition for friendship, whereas mutual sympathy of
positive emotions is desirable but not required. This is due to the
"healing consolation of mutual sympathy" that a friend is 'required'
to provide in response to "grief and resentment", as if not doing so
would be akin to a failure to help the physically wounded.

Not only do we get pleasure from the sympathy of others, but we also
obtain pleasure from being able to successfully sympathize with
others, and discomfort from failing to do so. Sympathizing is
pleasurable, failing to sympathize is aversive. Smith also makes the
case that failing to sympathize with another person may not be
aversive to ourselves but we may find the emotion of the other person
unfounded and blame them, as when another person experiences great
happiness or sadness in response to an event that we think should not
warrant such a response.

Part I, Section I, Chapter III: Of the manner in which we judge of the
propriety or impropriety of the affections of other men by their
concord or dissonance with our own
Smith presents the argument that approval or disapproval of the
feelings of others is completely determined by whether we sympathize
or fail to sympathize with their emotions. Specifically, if we
sympathize with the feelings of another we judge that their feelings
are just, and if we do not sympathize we judge that their feelings are
unjust.

This holds in matters of opinion also, as Smith flatly states that we
judge the opinions of others as correct or incorrect merely by
determining whether they agree with our own opinions. Smith also cites
a few examples where our judgment is not in line with our emotions and
sympathy, as when we judge the sorrow of a stranger who has lost her
mother as being justified even though we know nothing about the
stranger and do not sympathize ourselves. However, according to Smith
these non-emotional judgments are not independent from sympathy in
that although we do not feel sympathy we do recognize that sympathy
would be appropriate and lead us to this judgment and thus deem the
judgment as correct.

Next, Smith puts forth that not only are the consequences of one's
actions judged and used to determine whether one is just or unjust in
committing them, but also whether one's sentiments justified the
action that brought about the consequences. Thus, sympathy plays a
role in determining judgments of the actions of others in that if we
sympathize with the affections that brought about the action we are
more likely to judge the action as just, and vice versa:

If upon bringing the case home to our own breast we find that the
sentiments which it gives occasion to, coincide and tally with our
own, we necessarily approve of them as proportioned and suitable to
their objects; if otherwise, we necessarily disapprove of them, as
extravagant and out of proportion (p. 20).

Part I, Section I, Chapter IV: The same subject continued

Smith delineates two conditions under which we judge the "propriety or
impropriety of the sentiments of another person":

1 When the objects of the sentiments are considered alone

2 When the objects of the sentiments are considered in relation to the
person or other persons

When one's sentiments coincide with another person's when the object
is considered alone, then we judge that their sentiment is justified.
Smith lists objects that are in one of two domains: science and taste.
Smith argues that sympathy does not play a role in judgments of these
objects; differences in judgment arise only due to difference in
attention or mental acuity between people. When the judgment of
another person agrees with us on these types of objects it is not
notable; however, when another person's judgment differs from us, we
assume that they have some special ability to discern characteristics
of the object we have not already noticed, and thus view their
judgment with special approbation called admiration.

Smith continues by noting that we assign value to judgments not based
on usefulness (utility) but on similarity to our own judgment, and we
attribute to those judgments which are in line with our own the
qualities of correctness or truth in science, and justness or
delicateness in taste. Thus, the utility of a judgment is "plainly an
afterthought" and "not what first recommends them to our
approbation" (p. 24).

Of objects that fall into the second category, such as the misfortune
of oneself or another person, Smith argues that there is no common
starting point for judgment but are vastly more important in
maintaining social relations. Judgments of the first kind are
irrelevant as long as one is able to share a sympathetic sentiment
with another person; people may converse in total disagreement about
objects of the first kind as long as each person appreciates the
sentiments of the other to a reasonable degree. However, people become
intolerable to each other when they have no or sympathy for the
misfortunes or resentment of each other: "You are confounded at my
violence and passion, and I am enraged at your cold insensibility and
want of feelings" (p. 26).

Another important point Smith makes is that our sympathy will never
reach the degree or "violence" of the person who experiences it, as
our own "safety" and comfort as well as separation from the offending
object constantly "intrude" on our efforts to induce a sympathetic
state in ourselves. Thus, sympathy is never enough, as the "sole
consolation" for the sufferer is " to see the emotions of their
hearts, in every respect, beat time to his own, in the violent and
disagreeable passions" (p. 28). Therefore, the original sufferer is
likely to dampen her feelings to be in "concord" with the degree of
sentiment expressible by the other person, who feels only due to the
ability of one's imagination. It is this which is "sufficient for the
harmony of society" (p. 28). Not only does the person dampen her
expression of suffering for the purpose of sympathizing, but she also
takes the perspective of the other person who is not suffering, thus
slowly changing her perspective and allowing the calmness of the other
person and reduction of violence of the sentiment to improve her
spirits.

As a friend is likely to engage in more sympathy than a stranger, a
friend actually slows the reduction in our sorrows because we do not
temper our feelings out of sympathizing with the perspective of the
friend to the degree that we reduce our sentiments in the presence of
acquaintances or a group of acquaintances. This gradual tempering of
our sorrows from repeated perspective taking of someone in a more calm
state make "society and conversation...the most powerful remedies for
restoring the mind to its tranquility" (p. 29).

Part I, Section I, Chapter V: Of the amiable and respectable virtues
Smith starts to use an important new distinction in this section and
late in the previous section:

The "person principally concerned": The person who has had emotions
aroused by an object

The spectator: The person observing and sympathizing with the
emotionally aroused "person principally concerned"

These two people have two different sets of virtues. The person
principally concerned, in "bring[ing] down emotions to what the
spectator can go along with" (p. 30), demonstrates "self-denial" and
"self-government" whereas the spectator displays "the candid
condescension and indulgent humanity" of "enter[ing]into the
sentiments of the person principally concerned."

Smith returns to anger and how we find "detestable...the insolence and
brutality" of the person principally concerned but "admire...the
indignation which they naturally call forth in that of the impartial
spectator" (p. 32). Smith concludes that the "perfection" of human
nature is this mutual sympathy, or "love our neighbor as we love
ourself" by "feeling much for others and little for ourself" and to
indulge in "benevolent affections" (p. 32). Smith makes clear that it
is this ability to "self-command" our "ungovernable passions" through
sympathizing with others that is virtuous.

Smith further distinguishes between virtue and propriety:

Part I, Section II: Of the degrees of which different passions are
consistent with propriety

Chapter 1: Of the passions which take their origins from the body

Chapter 2: Of the passions which take their origins from a particular
turn or habit of the imagination

Chapter 3: Of the unsocial passions

Chapter 4: Of the social passions

Chapter 5: Of the selfish passions

Smith starts off by noting that the spectator can sympathize only with
passions of medium "pitch". However, this medium level at which the
spectator can sympathize depends on what "passion" or emotion is being
expressed; with some emotions even the most justified expression of
cannot be tolerated at a high level of fervor, at others sympathy in
the spectator is not bounded by magnitude of expression even though
the emotion is not as well justified. Again, Smith emphasizes that
specific passions will be considered appropriate or inappropriate to
varying degrees depending on the degree to which the spectator is able
to sympathize, and that it is the purpose of this section to specify
which passions evoke sympathy and which do not and therefore which are
deemed appropriate and not appropriate.

Part I, Section II, Chapter I: Of the passions which take their
origins from the body

Since it is not possible to sympathize with bodily states or
"appetites which take their origin in the body" it is improper to
display them to others, according to Smith. One example is "eating
voraciously" when hungry, as the impartial spectator can sympathize a
little bit if there is a vivid description and good cause for this
hunger, but not to a great extent as hunger itself cannot be induced
from mere description. Smith also includes sex as a passion of the
body that is considered indecent in the expression of others, although
he does make note that to fail to treat a woman with more "gaiety,
pleasantry, and attention" would also be improper of a man (p. 39). To
express pain is also considered unbecoming.

Smith believes the cause of lack of sympathy for these bodily passions
is that "we cannot enter into them" ourselves (p. 40). Temperance, by
Smith's account, is to have control over bodily passions.

On the contrary, passions of the imagination, such as loss of love or
ambition, are easy to sympathize with because our imagination can
conform to the shape of the sufferer, whereas our body cannot do such
a thing to the body of the sufferer. Pain is fleeting and the harm
only lasts as long as the violence is inflicted, whereas an insult
lasts to harm for longer duration because our imagination keeps
mulling it over. Likewise, bodily pain that induces fear, such as a
cut, wound or fracture, evoke sympathy because of the danger that they
imply for ourselves; that is, sympathy is activated chiefly through
imagining what it would be like for us.

Part I, Section II, Chapter II: Of the passions which take their
origins from a particular turn or habit of the imagination Passions
which "take their origins from a particular turn or habit of the
imagination" are "little sympathized with". These include love, as we
are unlikely to enter into our own feeling of love in response to that
of another person and thus unlikely to sympathize. He further states
that love is "always laughed at, because we cannot enter into it"
ourselves.

Instead of inspiring love in ourselves, and thus sympathy, love makes
the impartial spectator sensitive to the situation and emotions that
may arise from the gain or loss of love. Again this is because it is
easy to imagine hoping for love or dreading loss of love but not the
actual experience of it, and that the "happy passion, upon this
account, interests us much less than the fearful and the melancholy"
of losing happiness (p. 49). Thus, love inspires sympathy for not for
love itself but for the anticipation of emotions from gaining or
losing it.

Smith, however, finds love "ridiculous" but "not naturally odious" (p.
50). Thus, we sympathize with the "humaneness, generosity, kindness,
friendship, and esteem" (p. 50) of love. However, as these secondary
emotions are excessive in love, one should not express them but in
moderate tones according to Smith, as:

All these are objects which we cannot expect should interest our
companions in the same degree in which they interest us.

Failing to do so makes bad company, and therefore those with specific
interests and "love" of hobbies should keep their passions to those
with kindred spirits ("A philosopher is company to a philosopher
only" (p. 51)) or to themselves.

Part I, Section II, Chapter III: Of the unsocial passions

Smith talks of hatred and resentment next, as "unsocial passions."
According to Smith these are passions of imagination, but sympathy is
only likely to be evoked in the impartial spectator when they are
expressed in moderate tones. Because these passions regard two people,
namely the offended (resentful or angry person) and the offender, our
sympathies are naturally drawn between these two. Specifically,
although we sympathize with the offended person, we fear that the
offended person may do harm to the offender, and thus also fear for
and sympathize with the danger that faces the offender.

The impartial spectator sympathizes with the offended person in a
manner, as emphasized previously, such that the greatest sympathy
occurs when the offended person expresses anger or resentment in a
temperate manner. Specifically, if the offended person seems just and
temperate in coping with the offense, then this magnifies the misdeed
done to the offended in the mind of the spectator, increasing
sympathy. Although excess anger does not beget sympathy, neither does
too little anger, as this may signal fear or uncaring on the part of
the offended. This lack of response is just as despicable to the
impartial spectator as is the excesses of anger.

However, in general, any expression of anger is improper in the
presence of others. This is because the "immediate effects [of anger]
are disagreeable" just as the knives of surgery are disagreeable for
art, as the immediate effect of surgery is unpleasant even though long-
term effect is justified. Likewise, even when anger is justly
provoked, it is disagreeable. According to Smith, this explains why we
reserve sympathy until we know the cause of the anger or resentment,
as if the emotion is not justified by the action of another person,
than the immediate disagreeableness and threat to the other person
(and by sympathy to ourselves) overwhelm any sympathy that the
spectator may have for the offended. In response to expressions of
anger, hatred, or resentment, it is likely that the impartial
spectator will not feel anger in sympathy with the offended but
instead anger toward the offended for expressing such an aversive.
Smith believes that there is some form of natural optimality to the
aversiveness of these emotions, as it reduces the propagation of ill
will among people, and thus increases the probability of functional
societies.

Smith also puts forth that anger, hatred, and resentment are
disagreeable to the offended mostly because of the idea of being
offended rather than the actual offense itself. He remarks that we are
likely able to do without what was taken from us, but it is the
imagination which angers us at the thought of having something taken.
Smith closes this section by remarking that the impartial spectator
will not sympathize with us unless we are willing to endure harms,
with the goal of maintaining positive social relations and humanity,
with equanimity, as long as it does not put us in a situation of being
"exposed to perpetual insults" (p. 59). It is only "with reluctance,
from necessity, and in consequence of great and repeated
provocations" (p. 60) that we should take revenge on others. Smith
makes clear that we should take very good care to not act on the
passions of anger, hatred, resentment, for purely social reasons, and
instead imagine what the impartial spectator would deem appropriate,
and base our action solely on a cold calculation.

Part I, Section II, Chapter IV: Of the social passions

The social emotions such as "generosity, humanity, kindness,
compassion, mutual friendship and esteem" are considered
overwhelmingly with approbation by the impartial spectator. The
agreeableness of the "benevolent" sentiments leads to full sympathy on
the part of the spectator with both the person concerned and the
object of these emotions and are not felt as aversive to the spectator
if they are in excess.

Part I, Section II, Chapter V: Of the selfish passions

The final set of passions, or "selfish passions", are grief and joy,
which Smith considers to be not so aversive as the unsocial passions
of anger and resentment, but not so benevolent as the social passions
such as generosity and humanity. Smith makes clear in this passage
that the impartial spectator is unsympathetic to the unsocial emotions
because they put the offended and the offender in opposition to each
other, sympathetic to the social emotions because they join the lover
and beloved in unison, and feels somewhere in between with the selfish
passions as they are either good or bad for only one person and are
not disagreeable but not so magnificent as the social emotions.

Of grief and joy, Smith notes that small joys and great grief are
assured to be returned with sympathy from the impartial spectator, but
not other degrees of these emotions. Great joy is likely to be met
with envy, so modesty is prudent for someone who has come upon great
fortune or else suffer the consequences of envy and disapprobation.
This is appropriate as the spectator appreciates the lucky
individual's "sympathy with our envy and aversion to his happiness"
especially because this shows concern for the inability of the
spectator to reciprocate the sympathy toward the happiness of the
lucky individual. According to Smith, this modesty wears on the
sympathy of both the lucky individual and the old friends of the lucky
individual and they soon part ways; likewise, the lucky individual may
acquire new friends of higher ranks who he must also be modest to,
apologizing for the "mortification" of now becoming their equal:

He generally grows weary too soon, and is provoked, by the sullen and
suspicious pride of the one, and by the saucy contempt of the other,
to treat the first with neglect, and the second with petulance, till
at last he grows habitually insolent, and forfeits the esteem of them
all...those sudden changes of fortune seldom contribute much to
happiness (p. 66).

The solution is to ascend social rank by gradual steps, with the path
cleared for one by approbation before one takes the next step, giving
people time to adjust, and thus avoiding any "jealousy in those he
overtakes, or any envy in those he leaves behind" (p. 66).

Small joys of every day life are met with sympathy and approbation
according to Smith. These "frivolous nothings which fill up the void
of human life" (p. 67) divert attention and help us forget problems,
reconciling us as with a lost friend.

The opposite is true for grief, with small grief triggering no
sympathy in the impartial spectator, but large grief with much
sympathy. Small griefs are likely, and appropriately, turned into joke
and mockery by the sufferer, as the sufferer knows how complaining
about small grievances to the impartial spectator will evoke ridicule
in the heart of the spectator, and thus the sufferer sympathizes with
this, mocking himself to some degree.

Part I, Section III

Of the effects of propriety and adversity upon the judgment of mankind
with regard to the propriety of action; and why it is more easy to
obtain their approbation in the one state than in the other

Part V, Section V, Chapter I: Of the influence of Custom and Fashion
upon the Sentiments of Approbation and Disapprobation Smith argues
that two principles, custom and fashion, pervasively influence
judgment. These are based on the modern psychological concept of
associativity: Stimuli presented closely in time or space become
mentally linked over time and repeated exposure. In Smith's own words:

When two objects have frequently been seen together, the imagination
requires a habit of passing easily from one to the other. If the first
is to appear, we lay our account that the second is to follow. Of
their own accord they put us in mind of one another, and the attention
glides easily along them. (p. 1)

Regarding custom, Smith argues that approbation occurs when stimuli
are presented according to how one is accustomed to viewing them and
disapprobation occurs when they are presented in a way that one is not
accustomed to. Thus, Smith argues for social relativity of judgment
meaning that beauty and correctness are determined more by what one
has previously been exposed to rather than an absolute principle.
Although Smith places greater weight on this social determination he
does not discount absolute principles completely, instead he argues
that that evaluations are rarely inconsistent with custom, therefore
giving greater weight to customs than absolutes:

I cannot, however, be induced to believe that our sense of external
beauty is founded altogether on custom...But though I cannot admit
that custom is the sole principle of beauty, yet I can so far allow
the truth of this ingenious system as to grant, that there is scarce
any one external form to please, if quite contrary to custom...(p.
14-15).

Smith continues by arguing that fashion is a particular "species" of
custom. Fashion is specifically the association of stimuli with people
of high rank, for example, a certain type of clothes with a notable
person such as a king or a renowned artist. This is because the
"graceful, easy, and commanding manners of the great" (p.3) person are
frequently associated with the other aspects of the person of high
rank (e.g., clothes, manners), thus bestowing upon the other aspects
the "graceful" quality of the person. In this way objects become
fashionable. Smith includes not only clothes and furniture in the
sphere of fashion, but also taste, music, poetry, architecture, and
physical beauty.

Smith also points out that people should be relatively reluctant to
change styles from what they are accustomed to even if a new style is
equal to or slightly better than current fashion: "A man would be
ridiculous who should appear in public with a suit of clothes quite
different from those which are commonly worn, though the new dress be
ever so graceful or convenient" (p. 7).

Physical beauty, according to Smith, is also determined by the
principle of custom. He argues that each "class" of things has a
"peculiar conformation which is approved of" and that the beauty of
each member of a class is determined by the extent to which it has the
most "usual" manifestation of that "conformation":

Thus, in the human form, the beauty of each feature lies in a certain
middle, equally removed from a variety of other forms that are ugly.
(p. 10-11).

Part V, Section V, Chapter II: Of the influence of Custom and Fashion
upon Moral Sentiments
Smith argues that the influence of custom is reduced in the sphere of
moral judgment. Specifically, he argues that there are bad things that
no custom can bring approbation to:

But the characters and conduct of a Nero, or a Claudius, are what no
custom will ever reconcile us to, what no fashion will ever render
agreeable; but the one will always be the object of dread and hatred;
the other of scorn and derision. (p. 15-16).

Smith further argues for a "natural" right and wrong, and that custom
amplifies the moral sentiments when one's customs are consistent with
nature, but dampens moral sentiments when one's customs are
inconsistent with nature.

Fashion also has an effect on moral sentiment. The vices of people of
high rank, such as the licentiousness of Charles VIII, are associated
with the "freedom and independency, with frankness, generosity,
humanity, and politeness" of the "superiors" and thus the vices are
endued with these characteristics.

See also

History of economic thought

Notes

↑ Smith (1998) p. 3.

References

Bonar, J. (1926) The Theory of Moral Sentiments by Adam Smith, Journal
of Philosophical Studies, vol. 1, 1926, pp. 333-353.

Doomen, J. (2005) Smith’s Analysis of Human Actions, Ethic@. An
International Journal for Moral Philosophy vol. 4, no. 2, pp 111-122.

Morrow, G. R. (1923) The Ethical and Economic Theories of Adam Smith:
A study in the social philosophy of the 18th century, Cornell Studies
in Philosophy, no. 13, 1923, pp 91-107.

Morrow, G. R. (1923) The Significance of the Doctrine of Sympathy in
Hume and Adam Smith, Philosophical Review, vol. XXXII, 1923, pp
60-78.

Schneider, H.W. editor (1948) Adam Smith's Moral and Political
Philosophy, Harper Torchbook edition 1970, New York.

Smith, Vernon L. (1998), [Expression error: Missing operand for > The
Two Faces of Adam Smith], Southern Economic Journal

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Liberty. Fully searchable, free online.

Works and Correspondence of Adam Smith. Glasgow edition, 7 volumes at
the Online Library of Liberty. Definitive, free online. Includes The
Theory of Moral Sentiments.

Biography of Adam Smith, at the "Concise Encyclopedia of Economics"

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The Wealth of NationsThe Wealth of Nations

In this article: Locations Images From the web: Images Videos The
Wealth of Nations
The Wealth of Nations

Author Adam Smith
Country United Kingdom
Genre(s) Economics
Publisher W. Strahan and T. Cadell, London
Publication date 1776

An Inquiry into the Nature and Causes of the Wealth of Nations

(generally referred to by the short title The Wealth of Nations) is
the magnum opus written by Scottish economist and moral philosopher
Adam Smith and was first published in 1776. It is an account of
economics at the dawn of the Industrial Revolution, as well as a
rhetorical piece written for the generally educated individual of the
18th century - advocating a free market economy as more productive and
more beneficial to society.

Themes
One of the book's main themes is the concept of an invisible hand that
naturally guides a society through self-interest.

In The Wealth of Nations, Smith writes:

"By preferring the support of domestic to that of foreign industry, he
intends only his own security; and by directing that industry in such
a manner as its produce may be of the greatest value, he intends only
his own gain, and he is in this, as in many other cases, led by an
invisible hand to promote an end which was no part of his intention."

This phrase, often quoted and alluded to, was written in the context
of the rise and dominance of eighteenth century chartered corporations
such as Muscovy Company and the English East India Company both
controlled by the powers of the state. These early multinational
government controlled corporations were chartered exclusively by
seventeenth and eighteenth century monarchs in a manner similar to
modern no-bid contracts. These monarchs would also enact laws
favorable to the enterprise of these early corporations but less
favorable to the local workforces that they employed. In the American
colonies for instance, colonists were permitted to grow cotton but not
to make clothing from it. It had to be shipped to England for
manufacture, then purchased back in its finished form. Smith felt that
if these laws were removed that it would be advantageous to both the
state and the individual, thus "promoting an end which was no part his
own."

Where free markets are concerned, Smith felt that if capital was able
to flow naturally on its own accord that it would, without the
assistance of government, flow to the most productive hands; as the
individual simply strives to better his own condition.

History

The Wealth of Nations was first published on March 9, 1776, during the
British Agricultural Revolution. It influenced not only authors and
economists, but governments and organizations. For example, Alexander
Hamilton was influenced in part by The Wealth of Nations to write his
Report on Manufactures, in which he argued against many of Smith's
policies. Interestingly, Hamilton based much of this report on the
ideas of Jean-Baptiste Colbert, and it was, in part, to Colbert's
ideas that Smith wished to respond with The Wealth of Nations.

Many other authors were influenced by the book and used it as a
starting point in their own work, including Jean-Baptiste Say, David
Ricardo, Thomas Malthus and, later, Karl Marx and Ludwig von Mises.
The Russian national poet Aleksandr Pushkin refers to The Wealth of
Nations in his 1833 verse-novel Eugene Onegin.

Irrespective of historical influence, however, The Wealth of Nations
represented a clear leap forward in the field of economics, similar to
Sir Isaac Newton's Principia Mathematica for physics or Antoine
Lavoisier's Traité Élémentaire de Chimie for chemistry.

Publishing history

Five editions of The Wealth of Nations were published during Smith's
lifetime: in 1776, 1778, 1784, 1786, and 1789. Numerous editions
appeared after Smith's death in 1790. To better understand the
evolution of the work under Smith's hand, a team led by Edwin Cannan
collated the first five editions. The differences were published along
with an edited fifth edition in 1904.[1] They found minor but numerous
differences (including the addition of many footnotes) between the
first and the second editions, both of which were published in two
volumes. The differences between the second and third editions,
however, are major: In 1784, Smith annexed these first two editions
with the publication of Additions and Corrections to the First and
Second Editions of Dr. Adam Smith’s Inquiry into the Nature and Causes
of the Wealth of Nations, and he also had published the now three
volume third edition of the Wealth of Nations, which incorporated
Additions and Corrections and, for the first time, an index. Among
other things, the Additions and Corrections included entirely new
sections. The fourth edition published in 1786 had only slight
differences with the third edition, and Smith himself says in the
Advertisement at the beginning of the book, "I have made no
alterations of any kind." Finally, Cannan notes only trivial
differences between the fourth and fifth editions — a set of misprints
being removed from the fourth, and a different set of misprints being
introduced.

Anachronisms and terminology

Some commentary on the work suffers from anachronism - imposition of
modern context and political contests on a two hundred and fifty year
old work.

The book is written in the English of the late 1700s, so there are
some points to consider:

The term economics was not yet in use.
The term capitalism was not yet in use.
Smith talks about a "system of perfect liberty" or "system of natural
liberty".

To a certain extent, some form of feudalism was still dominant in
parts of Europe.
The term corporation, as in feudal corporations, referred to a body
that regulated and, in Smith's portrayal, limited participation in a
skilled trade.

Synopsis

This article's plot summary may be too long or overly detailed.
Please help improve it by removing unnecessary details and making it
more concise. (October 2009)

Book I: Of the Causes of Improvement...

Of the Division of Labour: Smith states that "the greatest improvement
in the productive powers of labour, and the greater part of the skill,
dexterity, and judgment with which it is anywhere directed, or
applied, seem to have been the effects of the division of labour." To
illustrate this, he describes the extensive division of labour within
the "trifling" industry of pin manufacture, along with the astounding
resultant productivity, and labourers' dexterity; then levers this as
an introductory microcosm of the greater, yet less obvious division of
labour in the broader economy. The advantages of this division were
likely the driving force behind diversification of the trades and
industry, and this diversification was greatest for nations with more
industry and improvement. Agriculture is differentiated from industry
for its comparative lack of division of labour, and the attendant lack
of improved productivity; hence, while poor nations could not compete
with rich nations in manufactures, they could compete in agriculture.

Smith lists three causes, arising from division, of improved
productivity:

the labourer's dexterity - due to specializing, year-round, in a
specific task
time not wasted passing from one task to the next - as in agriculture
- as well as the more consistent and focused effort when working in
just one area
the machines and tools that have evolved in conjunction with
increasingly specialized labour.
Of the Principle which gives Occasion to the Division of Labour:
Chapter 2 illustrates the growth in division of labour. Smith
hypothesizes that early societies benefited from specialization in a
natural and spontaneous way - that one person may focus on hunting
while another concentrates on bow-making.

That the Division of Labour is Limited by the Extent of the Market:
Chapter 3 deals with limitations on division of labour. Smith
illustrates with real world examples of how the extent of market
determines the level of division of labour and the resulting
productivity improvements; it is the extent of the market that
determines the degree to which division of labour can survive - in a
limited market, the liability of specialization out weigh the benefits
of greater productivity.

Of the Origin and Use of Money: When money was first invented, it was
not well regulated, which made agriculture and trade in commodities
very difficult between individual owners.

Of the Real and Nominal Price of Commodities, or of their Price in
Labour, and their Price in Money: Smith begins by setting out the
source of a commodity's value. He states,

"Every man is rich or poor according to the degree in which he can
afford to enjoy the necessaries, conveniencies, and amusements of
human life. But after the division of labour has once thoroughly taken
place, it is but a very small part of these with which a man's own
labour can supply him. The far greater part of them he must derive
from the labour of other people, and he must be rich or poor according
to the quantity of that labour which he can command, or which he can
afford to purchase. The value of any commodity, therefore, to the
person who possesses it, and who means not to use or consume it
himself, but to exchange it for other commodities, is equal to the
quantity of labour which it enables him to purchase or command.
Labour, therefore, is the real measure of the exchangeable value of
all commodities. The real price of every thing, what every thing
really costs to the man who wants to acquire it, is the toil and
trouble of acquiring it."[2]
This is known as the labour theory of value, a defining feature of
classical political economy. Smith then distinguishes between the
nominal value of a commodity (in money denomination) and its real
value in the labour required to purchase it. According to Smith, while
the nominal value of a commodity is subject to fluctuation, this does
not change its real value, because the amount of labour required to
produce it and bring it to the market remains constant.

For example, the price of a commodity redeemable in silver may be 1:1,
as the amount of labour required to produce that commodity is the same
as the amount of labour required to retrieve one piece of silver.
However, with the discovery of new silver mines in North America, a
surge in the supply of silver in the economy may bring the nominal
price of the commodity in silver to 1:2. Yet this does not affect the
commodity's real value, because the abundance of silver in the newly
discovered mines does not suppose a lesser degree of labour required
to retrieve them, but simply a greater availability of silver in the
market. It is this greater availability that accounts for the
deflation of the price; while the commodity is worth just as much
labour now as it was before, it will not command as much power in the
economy as before. However, if the price were to rise to 1:2 as a
result of technological improvements in the manufacture or transport
of the commodity, this would constitute a decline in its real value,
because less labour is necessary to produce and market it.

Of the Component Parts of the Price of Commodities: Smith argues that
the price of any product reflects wages, rent of land and "profit of
stock," which compensates the capitalist for risking his resources.

Of the Natural and Market Price of Commodities:

"When the quantity of any commodity which is brought to market falls
short of the effectual demand, all those who are willing to pay...
cannot be supplied with the quantity which they want... Some of them
will be willing to give more. A competition will begin among them, and
the market price will rise... When the quantity brought to market
exceeds the effectual demand, it cannot be all sold to those who are
willing to pay the whole value of the rent, wages and profit, which
must be paid in order to bring it thither... The market price will
sink..."[3]
To paraphrase Smith, and the first part of this Chapter, when demand
exceeds supply, the price goes up. When the supply exceeds demand, the
price goes down.

He then goes on to comment on the different avenues that people can
take to generate a larger profit than normal. Some of those include:
finding a commodity that few others have that allows for a high
profit, and being able to keep that secret; Finding a way to produce a
unique commodity (The dyer who discovers a unique dye). He also states
that the former usually has a short lifespan of high profitability,
and the latter has a longer. He also notes that a monopoly is
essentially the same as the dyers trade secret, and can thus lead to
high profitability for a long time by keeping the supply below the
effectual demand.

"A monopoly granted either to an individual or to a trading company
has the same effect as a secret in trade or manufactures. The
monopolists, by keeping the market constantly understocked, by never
fully supplying the effectual demand, sell their commodities much
above the natural price, and raise their emoluments, whether they
consist in wages or profit, greatly above their natural rate. The
price of monopoly is upon every occasion the highest which can be got.
The natural price, or the price of free competition, on the contrary,
is the lowest which can be taken, not upon every occasion, indeed, but
for any considerable time together. The one is upon every occasion the
highest which can be squeezed out of the buyers, or which, it is
supposed, they will consent to give: the other is the lowest which the
sellers can commonly afford to take, and at the same time continue
their business."[4]

Of the Wages of Labour: In this section, Smith describes how the wages
of labour are dictated primarily by the competition among labourers
and masters. When labourers bid against one another for limited
opportunities for employment, the wages of labour collectively fall,
whereas when employers compete against one another for limited
supplies of labour, the wages of labour collectively rise. However,
this process of competition is often circumvented by combinations
among labourers and among masters. When labourers combine and no
longer bid against one another, their wages rise, whereas when masters
combine, wages fall. In Smith's day, it should be noted, organized
labour was dealt with very harshly by the law.

Smith himself wrote about the "severity" of such laws against worker
actions, and made a point to contrast the "clamour" of the "masters"
against workers associations, while associations and collusions of the
masters "are never heard by the people" though such actions are
"always" and "everywhere" taking place:

"We rarely hear, it has been said, of the combinations of masters,
though frequently of those of workmen. But whoever imagines, upon this
account, that masters rarely combine, is as ignorant of the world as
of the subject. Masters are always and everywhere in a sort of tacit,
but constant and uniform, combination, not to raise the wages of
labour above their actual rate...Masters, too, sometimes enter into
particular combinations to sink the wages of labour even below this
rate. These are always conducted with the utmost silence and secrecy
till the moment of execution; and when the workmen yield, as they
sometimes do without resistance, though severely felt by them, they
are never heard of by other people" In contrast, when workers combine,
"the masters..never cease to call aloud for the assistance of the
civil magistrate, and the rigorous execution of those laws which have
been enacted with so much severity against the combination of
servants, labourers, and journeymen."[5]

In societies where the amount of labour exceeds the amount of revenue
available for waged labour, competition among workers is greater than
the competition among employers, and wages fall. Inversely, where
revenue is abundant, labour wages rise. Smith argues that, therefore,
labour wages only rise as a result of greater revenue disposed to pay
for labour. Smith thought labour the same as any other commodity in
this respect:

"the demand for men, like that for any other commodity, necessarily
regulates the production of men; quickens it when it goes on too
slowly, and stops it when it advances too fast. It is this demand
which regulates and determines the state of propagation in all the
different countries of the world, in North America, in Europe, and in
China; which renders it rapidly progressive in the first, slow and
gradual in the second, and altogether stationary in the last."[6]

However, the amount of revenue must increase constantly in proportion
to the amount of labour for wages to remain high. Smith illustrates
this by juxtaposing England with the North American colonies. In
England, there is more revenue than in the colonies, but wages are
lower, because more workers flock to new employment opportunities
caused by the large amount of revenue— so workers eventually compete
against each other as much as they did before. By contrast, as capital
continues to flow to the colonial economies at least at the same rate
that population increases to "fill out" this excess capital, wages
there stay higher than in England.

Smith was highly concerned about the problems of poverty. He writes,

"poverty, though it does not prevent the generation, is extremely
unfavourable to the rearing of children... It is not uncommon... in
the Highlands of Scotland for a mother who has borne twenty children
not to have two alive... In some places one half the children born die
before they are four years of age; in many places before they are
seven; and in almost all places before they are nine or ten. This
great mortality, however, will every where be found chiefly among the
children of the common people, who cannot afford to tend them with the
same care as those of better station."[7]

The only way to determine whether a man is rich or poor is to examine
the amount of labour he can afford to purchase. "Labour is the real
exchange for commodities".

Smith also describes the relation of cheap years and the production of
manufactures versus the production in dear years. He argues that while
some examples such as the linen production in France shows a
correlation, another example in Scotland shows the opposite. He
concludes that there are too many variables to make any statement
about this.

Of the Profits of Stock: In this chapter, Smith uses interest rates as
an indicator of the profits of stock. This is because interest can
only be paid with the profits of stock, and so creditors will be able
to raise rates in proportion to the increase or decrease of the
profits of their debtors.

Smith argues that the profits of stock are inversely proportional to
the wages of labor, because as more money is spent compensating labor,
there is less remaining for personal profit. It follows that, in
societies where competition among laborers is greatest relative to
competition among employers, profits will be much higher. Smith
illustrates this by comparing interest rates in England and Scotland.
In England, government laws against usury had kept maximum interest
rates very low, but even the maximum rate was believed to be higher
than the rate at which money was usually loaned. In Scotland, however,
interest rates are much higher. This is the result of a greater
proportion of capitalists in England, which offsets some competition
among laborers and raises wages.

However, Smith notes that, curiously, interest rates in the colonies
are also remarkably high (recall that, in the previous chapter, Smith
described how wages in the colonies are higher than in England). Smith
attributes this to the fact that, when an empire takes control of a
colony, prices for a huge abundance of land and resources are
extremely cheap. This allows capitalists to increase his profit, but
simultaneously draws many capitalists to the colonies, increasing the
wages of labor. As this is done, however, the profits of stock in the
mother country rise (or at least cease to fall), as much of it has
already flocked offshore.

Of Wages and Profit in the Different Employments of Labour and Stock:
Smith repeatedly attacks groups of politically aligned individuals who
attempt to use their collective influence to manipulate the government
into doing their bidding. At the time, these were referred to as
"factions," but are now more commonly called "special interests," a
term that can comprise international bankers, corporate
conglomerations, outright oligopolies, trade unions and other groups.
Indeed, Smith had a particular distrust of the tradesman class. He
felt that the members of this class, especially acting together within
the guilds they want to form, could constitute a power block and
manipulate the state into regulating for special interests against the
general interest:

"People of the same trade seldom meet together, even for merriment and
diversion, but the conversation ends in a conspiracy against the
public, or in some contrivance to raise prices. It is impossible
indeed to prevent such meetings, by any law which either could be
executed, or would be consistent with liberty and justice. But though
the law cannot hinder people of the same trade from sometimes
assembling together, it ought to do nothing to facilitate such
assemblies; much less to render them necessary."[8]

Smith also argues against government subsidies of certain trades,
because this will draw many more people to the trade than what would
otherwise be normal, collectively lowering their wages.

Chapter 10, part ii, motivates an understanding of the idea of
feudalism.

Of the Rent of the Land: Rent, considered as the price paid for the
use of land, is naturally the highest the tenant can afford in the
actual circumstances of the land. In adjusting lease terms, the
landlord endeavours to leave him no greater share of the produce than
what is sufficient to keep up the stock from which he furnishes the
seed, pays the labour, and purchases and maintains the cattle and
other instruments of husbandry, together with the ordinary profits of
farming stock in the neighbourhood. This is evidently the smallest
share with which the tenant can content himself without being a loser,
and the landlord seldom means to leave him any more. Whatever part of
the produce, or, what is the same thing, whatever part of its price,
is over and above this share, he naturally endeavours to reserve to
himself as the rent of his land, which is evidently the highest the
tenant can afford to pay in the actual circumstances of the land.
Sometimes, indeed, the liberality, more frequently the ignorance, of
the landlord, makes him accept of somewhat less than this portion; and
sometimes too, though more rarely, the ignorance of the tenant makes
him undertake to pay somewhat more, or to content himself with
somewhat less, than the ordinary profits of farming stock in the
neighbourhood. This portion, however, may still be considered as the
natural rent of land, or the rent for which it is naturally meant that
land should for the most part be let.

Book II: Of the Nature, Accumulation, and Employment of Stock

Of the Division of Stock: When the stock which a man possesses is no
more than sufficient to maintain him for a few days or a few weeks, he
seldom thinks of deriving any revenue from it. He consumes it as
sparingly as he can, and endeavours by his labour to acquire something
which may supply its place before it be consumed altogether. His
revenue is, in this case, derived from his labour only. This is the
state of the greater part of the labouring poor in all countries.

II.1.1

But when he possesses stock sufficient to maintain him for months or
years, he naturally endeavours to derive a revenue from the greater
part of it; reserving only so much for his immediate consumption as
may maintain him till this revenue begins to come in. His whole stock,
therefore, is distinguished into two parts. That part which, he
expects, is to afford him this revenue, is called his capital.

Of Money Considered as a particular Branch of the General Stock of the
Society...: From references of the first book, that the price of the
greater part of commodities resolves itself into three parts, of which
one pays the wages of the labour, another the profits of the stock,
and a third the rent of the land which had been employed in producing
and bringing them to market: that there are, indeed, some commodities
of which the price is made up of two of those parts only, the wages of
labour, and the profits of stock: and a very few in which it consists
altogether in one, the wages of labour: but that the price of every
commodity necessarily resolves itself into some one, or other, or all
of these three parts; every part of it which goes neither to rent nor
to wages, being necessarily profit to somebody.

Of the Accumulation of Capital, or of Productive and Unproductive
Labour: One sort of labour adds to the value of the subject upon which
it is bestowed: there is another which has no such effect. The former,
as it produces a value, may be called productive; the latter,
unproductive labour. Thus the labour of a manufacturer adds,
generally, to the value of the materials which he works upon, that of
his own maintenance, and of his master's profit. The labour of a
menial servant, on the contrary, adds to the value of nothing.

Of Stock Lent at Interest: The stock which is lent at interest is
always considered as a capital by the lender. He expects that in due
time it is to be restored to him, and that in the meantime the
borrower is to pay him a certain annual rent for the use of it. The
borrower may use it either as a capital, or as a stock reserved for
immediate consumption. If he uses it as a capital, he employs it in
the maintenance of productive labourers, who reproduce the value with
a profit. He can, in this case, both restore the capital and pay the
interest without alienating or encroaching upon any other source of
revenue. If he uses it as a stock reserved for immediate consumption,
he acts the part of a prodigal, and dissipates in the maintenance of
the idle what was destined for the support of the industrious. He can,
in this case, neither restore the capital nor pay the interest without
either alienating or encroaching upon some other source of revenue,
such as the property or the rent of land.

The stock which is lent at interest is, no doubt, occasionally
employed in both these ways, but in the former much more frequently
than in the latter.

Book III: Of the different Progress of Opulence in different Nations

Of the Natural Progress of Opulence: The great commerce of every
civilized society is that carried on between the inhabitants of the
town and those of the country. It consists in the exchange of crude
for manufactured produce, either immediately, or by the intervention
of money, or of some sort of paper which represents money. The country
supplies the town with the means of subsistence and the materials of
manufacture. The town repays this supply by sending back a part of the
manufactured produce to the inhabitants of the country. The town, in
which there neither is nor can be any reproduction of substances, may
very properly be said to gain its whole wealth and subsistence from
the country. We must not, however, upon this account, imagine that the
gain of the town is the loss of the country. The gains of both are
mutual and reciprocal, and the division of labour is in this, as in
all other cases, advantageous to all the different persons employed in
the various occupations into which it is subdivided.

Of the Discouragement of Agriculture...: Chapter 2's long title is "Of
the Discouragement of Agriculture in the Ancient State of Europe after
the Fall of the Roman Empire". When the German and Scythian nations
overran the western provinces of the Roman empire, the confusions
which followed so great a revolution lasted for several centuries. The
rapine and violence which the barbarians exercised against the ancient
inhabitants interrupted the commerce between the towns and the
country. The towns were deserted, and the country was left
uncultivated, and the western provinces of Europe, which had enjoyed a
considerable degree of opulence under the Roman empire, sunk into the
lowest state of poverty and barbarism. During the continuance of those
confusions, the chiefs and principal leaders of those nations acquired
or usurped to themselves the greater part of the lands of those
countries. A great part of them was uncultivated; but no part of them,
whether cultivated or uncultivated, was left without a proprietor. All
of them were engrossed, and the greater part by a few great
proprietors.

This original engrossing of uncultivated lands, though a great, might
have been but a transitory evil. They might soon have been divided
again, and broke into small parcels either by succession or by
alienation. The law of primogeniture hindered them from being divided
by succession: the introduction of entails prevented their being broke
into small parcels by alienation.

Of the Rise and Progress of Cities and Towns, after the Fall of the
Roman Empire: The inhabitants of cities and towns were, after the fall
of the Roman empire, not more favoured than those of the country. They
consisted, indeed, of a very different order of people from the first
inhabitants of the ancient republics of Greece and Italy. These last
were composed chiefly of the proprietors of lands, among whom the
public territory was originally divided, and who found it convenient
to build their houses in the neighbourhood of one another, and to
surround them with a wall, for the sake of common defence. After the
fall of the Roman empire, on the contrary, the proprietors of land
seem generally to have lived in fortified castles on their own
estates, and in the midst of their own tenants and dependants. The
towns were chiefly inhabited by tradesmen and mechanics, who seem in
those days to have been of servile, or very nearly of servile
condition. The privileges which we find granted by ancient charters to
the inhabitants of some of the principal towns in Europe sufficiently
show what they were before those grants. The people to whom it is
granted as a privilege that they might give away their own daughters
in marriage without the consent of their lord, that upon their death
their own children, and not their lord, should succeed to their goods,
and that they might dispose of their own effects by will, must, before
those grants, have been either altogether or very nearly in the same
state of villanage with the occupiers of land in the country

How the Commerce of the Towns Contributed to the Improvement of the
Country: Smith often harshly criticised those who act purely out of
self-interest and greed, and warns that, "[a]ll for ourselves, and
nothing for other people, seems, in every age of the world, to have
been the vile maxim of the masters of mankind." (Book 3, Chapter 4)

Book IV: Of Systems of political Economy

Smith vigorously attacked the antiquated government restrictions which
he thought were hindering industrial expansion. In fact, he attacked
most forms of government interference in the economic process,
including tariffs, arguing that this creates inefficiency and high
prices in the long run. It is believed that this theory influenced
government legislation in later years, especially during the 19th
century. (However this was not an anarchistic opposition to
government. Smith advocated a Government that was active in sectors
other than the economy: he advocated public education of poor adults;
institutional systems that were not profitable for private industries;
a judiciary; and a standing army.)

Of the Principle of the Commercial or Mercantile System: The book has
sometimes been described as a critique of mercantilism and a synthesis
of the emerging economic thinking of Smith's time. Specifically, The
Wealth of Nations attacks, inter alia, two major tenets of
mercantilism:

The idea that protectionist tariffs serve the economic interests of a
nation (or indeed any purpose whatsoever) and
The idea that large reserves of gold bullion or other precious metals
are necessary for a country's economic success. This critique of
mercantilism was later used by David Ricardo when he laid out his
Theory of Comparative Advantage.

Of Restraints upon the Importation...: Chapter 2's full title is "Of
Restraints upon the Importation from Foreign Countries of such Goods
as can be Produced at Home". The "Invisible Hand" is a frequently
referenced theme from the book, although it is specifically mentioned
only once.

"As every individual, therefore, endeavors as much as he can both to
employ his capital in the support of domestic industry, and so to
direct that industry that its produce may be of the greatest value;
every individual necessarily labours to render the annual revenue of
the society as great as he can. He generally, indeed, neither intends
to promote the public interest, nor knows how much he is promoting it.
By preferring the support of domestic to that of foreign industry, he
intends only his own security; and by directing that industry in such
a manner as its produce may be of the greatest value, he intends only
his own gain, and he is in this, as in many other cases, led by an
invisible hand to promote an end which was no part of his intention.
Nor is it always the worse for the society that it was no part of it.
By pursuing his own interest he frequently promotes that of the
society more effectually than when he really intends to promote
it." (Book 4, Chapter 2)
Of the extraordinary Restraints...: Chapter 3's long title is "Of the
extraordinary Restraints upon the Importation of Goods of almost all
Kinds, from those Countries with which the Balance is supposed to be
Disadvantageous".

Of Drawbacks: Merchants and manufacturers are not contented with the
monopoly of the home market, but desire likewise the most extensive
foreign sale for their goods. Their country has no jurisdiction in
foreign nations, and therefore can seldom procure them any monopoly
there. They are generally obliged, therefore, to content themselves
with petitioning for certain encouragements to exportation.

Of these encouragements what are called Drawbacks seem to be the most
reasonable. To allow the merchant to draw back upon exportation,
either the whole or a part of whatever excise or inland duty is
imposed upon domestic industry, can never occasion the exportation of
a greater quantity of goods than what would have been exported had no
duty been imposed. Such encouragements do not tend to turn towards any
particular employment a greater share of the capital of the country
than what would go to that employment of its own accord, but only to
hinder the duty from driving away any part of that shares to other
employments.

Of Bounties: Bounties upon exportation are, in Great Britain,
frequently petitioned for, and sometimes granted to the produce of
particular branches of domestic industry. By means of them our
merchants and manufacturers, it is pretended, will be enabled to sell
their goods as cheap, or cheaper than their rivals in the foreign
market. A greater quantity, it is said, will thus be exported, and the
balance of trade consequently turned more in favour of our own
country. We cannot give our workmen a monopoly in the foreign as we
have done in the home market. We cannot force foreigners to buy their
goods as we have done our own countrymen. The next best expedient, it
has been thought, therefore, is to pay them for buying. It is in this
manner that the mercantile system proposes to enrich the whole
country, and to put money into all our pockets by means of the balance
of trade

Of Treaties of Commerce: When a nation binds itself by treaty either
to permit the entry of certain goods from one foreign country which it
prohibits from all others, or to exempt the goods of one country from
duties to which it subjects those of all others, the country, or at
least the merchants and manufacturers of the country, whose commerce
is so favoured, must necessarily derive great advantage from the
treaty. Those merchants and manufacturers enjoy a sort of monopoly in
the country which is so indulgent to them. That country becomes a
market both more extensive and more advantageous for their goods: more
extensive, because the goods of other nations being either excluded or
subjected to heavier duties, it takes off a greater quantity of
theirs: more advantageous, because the merchants of the favoured
country, enjoying a sort of monopoly there, will often sell their
goods for a better price than if exposed to the free competition of
all other nations.

Such treaties, however, though they may be advantageous to the
merchants and manufacturers of the favoured, are necessarily
disadvantageous to those of the favouring country. A monopoly is thus
granted against them to a foreign nation; and they must frequently buy
the foreign goods they have occasion for dearer than if the free
competition of other nations was admitted.

Of Colonies:

Of the Motives for establishing new Colonies: The interest which
occasioned the first settlement of the different European colonies in
America and the West Indies was not altogether so plain and distinct
as that which directed the establishment of those of ancient Greece
and Rome.

All the different states of ancient Greece possessed, each of them,
but a very small territory, and when the people in any one of them
multiplied beyond what that territory could easily maintain, a part of
them were sent in quest of a new habitation in some remote and distant
part of the world; warlike neighbours surrounded them on all sides,
rendering it difficult for any of them to enlarge their territory at
home. The colonies of the Dorians resorted chiefly to Italy and
Sicily, which, in the times preceding the foundation of Rome, were
inhabited by barbarous and uncivilised nations: those of the Ionians
and Eolians, the two other great tribes of the Greeks, to Asia Minor
and the islands of the Egean Sea, of which the inhabitants seem at
that time to have been pretty much in the same state as those of
Sicily and Italy. The mother city, though she considered the colony as
a child, at all times entitled to great favour and assistance, and
owing in return much gratitude and respect, yet considered it as an
emancipated child over whom she pretended to claim no direct authority
or jurisdiction. The colony settled its own form of government,
enacted its own laws, elected its own magistrates, and made peace or
war with its neighbours as an independent state, which had no occasion
to wait for the approbation or consent of the mother city. Nothing can
be more plain and distinct than the interest which directed every such
establishment.

Causes of Prosperity of new Colonies: The colony of a civilised nation
which takes possession either of a waste country, or of one so thinly
inhabited that the natives easily give place to the new settlers,
advances more rapidly to wealth and greatness than any other human
society.

The colonists carry out with them a knowledge of agriculture and of
other useful arts superior to what can grow up of its own accord in
the course of many centuries among savage and barbarous nations. They
carry out with them, too, the habit of subordination, some notion of
the regular government which takes place in their own country, of the
system of laws which supports it, and of a regular administration of
justice; and they naturally establish something of the same kind in
the new settlement.

Of the Advantages which Europe has derived from the Discovery of
America, and from that of a Passage to the East Indies by the Cape of
Good Hope: Such are the advantages which the colonies of America have
derived from the policy of Europe.

What are those which Europe has derived from the discovery and
colonization of America?

Those advantages may be divided, first, into the general advantages
which Europe, considered as one great country, has derived from those
great events; and, secondly, into the particular advantages which each
colonizing country has derived from the colonies which particularly
belong to it, in consequence of the authority or dominion which it
exercises over them.

The general advantages which Europe, considered as one great country,
has derived from the discovery and colonization of America, consist,
first, in the increase of its enjoyments; and, secondly, in the
augmentation of its industry.

The surplus produce of America, imported into Europe, furnishes the
inhabitants of this great continent with a variety of commodities
which they could not otherwise have possessed; some for conveniency
and use, some for pleasure, and some for ornament, and thereby
contributes to increase their enjoyments.

Conclusion of the Mercantile System: Smith's argument about the
international political economy opposed the idea of Mercantilism.
While the Mercantile System encouraged each country to horde gold,
while trying to grasp hegemony, Smith argued that free trade would
eventually make all actors better off. This argument is the modern
'Free Trade' argument.

Of the Agricultural Systems...: Chapter 9's long title is "Of the
Agricultural Systems, or of those Systems of Political Economy, which
Represent the Produce of Land, as either the Sole or the Principal,
Source of the Revenue and Wealth of Every Country".

That system which represents the produce of land as the sole source of
the revenue and wealth of every country has, so far as by that time,
never been adopted by any nation, and it at present exists only in the
speculations of a few men of great learning and ingenuity in France.
It would not, surely, be worth while to examine at great length the
errors of a system which never has done, and probably never will do,
any harm in any part of the world.

Book V: Of the Revenue of the Sovereign or Commonwealth

Smith postulated four "maxims" of taxation: proportionality,
transparency, convenience, and efficiency. Some economists interpret
Smith's opposition to taxes on transfers of money, such as the Stamp
Act, as opposition to capital gains taxes, which did not exist in the
eighteenth century.[9] Other economists credit Smith as one of the
first to advocate a progressive tax.[10][11] Smith wrote, "It is not
very unreasonable that the rich should contribute to the public
expense, not only in proportion to their revenue, but something more
in proportion."

Of the Expenses of the Sovereign or Commonwealth: Smith uses this
chapter to comment on the concept of taxation and expenditure by the
state. On taxation Smith wrote,

"The subjects of every state ought to contribute towards the support
of the government, as nearly as possible, in proportion to their
respective abilities; that is, in proportion to the revenue which they

respectively enjoy under the protection of the state. The expense of
government to the individuals of a great nation is like the expense of
management to the joint tenants of a great estate, who are all obliged
to contribute in proportion to their respective interests in the
estate. In the observation or neglect of this maxim consists what is
called the equality or inequality of taxation."

Smith advocates a tax naturally attached to the "abilities" and habits
of each echelon of society.

For the lower echelon, Smith recognized the intellectually erosive
effect that the otherwise beneficial division of labour can have on
workers, what Marx, though he mainly opposes Smith, later named
"alienation,"; therefore, Smith warns of the consequence of government
failing to fulfill its proper role, which is to preserve against the
innate tendency of human society to fall apart.

..."the understandings of the greater part of men are necessarily
formed by their ordinary employments. The man whose whole life is
spent in performing a few simple operations, of which the effects are
perhaps always the same, or very nearly the same, has no occasion to
exert his understanding or to exercise his invention in finding out
expedients for removing difficulties which never occur. He naturally
loses, therefore, the habit of such exertion, and generally becomes as
stupid and ignorant as it is possible for a human creature to become.
The torpor of his mind renders him not only incapable of relishing or
bearing a part in any rational conversation, but of conceiving any
generous, noble, or tender sentiment, and consequently of forming any
just judgment concerning many even of the ordinary duties of private
life... But in every improved and civilized society this is the state
into which the laboring poor, that is, the great body of the people,
must necessarily fall, unless government takes some pains to prevent
it."[12]
"Under Smith's model, government involvement in any area other than
those stated above would have a negative impact on economic growth.
This is because economic growth is determined by the needs of a free
market and the entrepreneurial nature of private persons. If there is
a shortage of a product its price will rise, and so stimulate
producers to produce more, while at the same time attracting new
persons into that line of production. If there is an excess supply of
a product (more of the product than people are willing to buy), prices
will fall and producers will focus their energy and money in other
areas where there is a shortage or where there is a need which no one
has yet satisfied (thereby creating a new market)."[13]

Of the Sources of the General or Public Revenue of the Society: In his
discussion of taxes in Book Five, Smith wrote:

"The necessaries of life occasion the great expense of the poor. They
find it difficult to get food, and the greater part of their little
revenue is spent in getting it. The luxuries and vanities of life
occasion the principal expense of the rich, and a magnificent house
embellishes and sets off to the best advantage all the other luxuries
and vanities which they possess. A tax upon house-rents, therefore,
would in general fall heaviest upon the rich; and in this sort of
inequality there would not, perhaps, be anything very unreasonable. It
is not very unreasonable that the rich should contribute to the public
expense, not only in proportion to their revenue, but something more
than in that proportion." [14]
Proponents of progressive taxation cite Smith[citation needed] to
justify the modern implementation of this idea, the disproportionate
taxation of income.

Smith is absolutely against any form of income or capital gains tax,
as it punishes productivity. It is clear that Smith's statement
demonstrates that the means of the rich can greatly benefit society,
especially when taxes on their luxuries are used to offset the
hardships of the poor; however, in context with other of his
statements and his treatise as a whole, citing this statement as
evidence that Smith supports a tax on income, the prevailing mode of
modern, progressive taxation, is unreasonable. Smith's statement
suggests not a tax on income, the incentive and reward for the further
production and generation of wealth, but rather a tax on expenditure.
Naturally, the rich, having by their superior revenue greater means to
possess magnificent houses, luxuries and vanities, would pay, in a tax
on this expenditure, disproportionally more than would the poor.

Of War and Public Debts:

"...when war comes [politicians] are both unwilling and unable to
increase their [tax] revenue in proportion to the increase of their
expense. They are unwilling for fear of offending the people, who, by
so great and so sudden an increase of taxes, would soon be disgusted
with the war... The facility of borrowing delivers them from the
embarrassment... By means of borrowing they are enabled, with a very
moderate increase of taxes, to raise, from year to year, money
sufficient for carrying on the war, and by the practice of perpetually
funding they are enabled, with the smallest possible increase of taxes
[to pay the interest on the debt], to raise annually the largest
possible sum of money [to fund the war].

...The return of peace, indeed, seldom relieves them from the greater
part of the taxes imposed during the war. These are mortgaged for the
interest of the debt contracted in order to carry it on.[15]"

Smith then goes on to say that even if money was set aside from future
revenues to pay for the debts of war, it seldom actually gets used to
pay down the debt. Politicians are inclined to spend the money on some
other scheme that will win the favor of their constituents. Hence,
interest payments rise and war debts continue to grow larger, well
beyond the end of the war.

Summing up, if governments can borrow without check, then they are
more likely to wage war without check, and the costs of the war
spending will burden future generations, since war debts are almost
never repaid by the generations that incurred them.

Reception and impact
This section requires expansion.

Further reading

An Inquiry into the Nature and Causes of the Wealth of Nations: A
Selected Edition Adam Smith (Author), Kathryn Sutherland (Editor),
2008, Oxford Paperbacks, Oxford, UK; ISBN 978-0-199535-92-7

Adam Smith's The Wealth of Nations: A modern-day interpretation of an
economic classic. Karen McCreadie, 2009, Infinite Ideas, Oxford, UK;
ISBN 978-1-906821-03-6

See also

Free Trade

American School of Economics
Austrian School of Economics Free Trade and Capitalism
Classical economics
Marginalism
Neoclassical economics
Political economy
Socialism
The Theory of Moral Sentiments (1759), Adam Smith's other classic
Wealth (economics)
The Invisible Hand

Notes

↑ An Inquiry into the Nature and Causes of the Wealth of Nations, by
Adam Smith. London: Methuen and Co., Ltd., ed. Edwin Cannan, 1904.
Fifth edition.

↑ Smith (1776) Book I, Chapter 5, para 1
↑ Smith (1776) Book I, Chapter 7, para 9
↑ Smith (1776) Book I, Chapter 7, para 26
↑ Wealth of Nations, Book I. Chap. viii
↑ Smith (1776) I, 8, para 39
↑ Smith (1776) I, 8, para 37
↑ Smith (1776) Book I, Chapter 10, para 82

↑ Bartlett, Bruce (2001-01-24). "Adam Smith On Taxes". National Center
for Policy Analysis.

http://www.ncpa.org/oped/bartlett/jan2401.html. Retrieved 2008-05-14.

↑ Reich, Robert B. (1987-04-26). "Do Americans Still Believe In
Sharing The Burden?". The Washington Post. p. d.01.

http://pqasb.pqarchiver.com/washingtonpost/access/73816461.html?dids=73816461:73816461&FMT=ABS&FMTS=ABS:FT&date=Apr+26%2C+1987&author=Robert+B.+Reich&pub=The+Washington+Post+(pre-1997+Fulltext)&edition=&startpage=d.01&desc=Do+Americans+Still+Believe+In+Sharing+The+Burden%3F.
Retrieved 2008-05-14.

↑ Stein, Herbert (1994-04-06). "Board of Contributors: Remembering
Adam Smith". Wall Street Journal (Eastern Edition).

↑ Smith (1776) V, 1, para 178

↑ R. Conteras, "How the Concept of Development Got Started" University
of Iowa Center for International Finance and Development E-Book[1]

↑ Adam Smith, An Inquiry into the Nature And Causes of the Wealth of
Nations (1776). Book V, Chapter 2, Article I: Taxes upon the Rent of
House.[2]

↑ Adam Smith, An Inquiry into the Nature And Causes of the Wealth of
Nations (1776). Book V, Chapter 3, Article III: Of Public Debts.[3]

External links

Wikisource has original text related to this article:

The Wealth of Nations

The Wealth of Nations at MetaLibri Digital Library

The Theory of Moral Sentiments at MetaLibri Digital Library

An Inquiry into the Nature and Causes of the Wealth of Nations at
Project Gutenberg

An Inquiry into the Nature and Causes of the Wealth of Nations, 1776
(accessible by table of contents chapter titles) AdamSmith.org ISBN
1404309985

Life of Adam Smith, by John Rae, at the Library of Economics and
Liberty

An Inquiry into the Nature and Causes of the Wealth of Nations
Google's scan of the book

Introduction by Ludwig von Mises to the 1952 edition of The Wealth of
Nations
Wealth of Nations Reading Notes

An Inquiry into the Nature and Causes of the Wealth of Nations

Facsimile of the original two volumes: Volume 1 (2nd edition/ 1778) &
Volume 2 (1st edition/ 1776)

http://www.bing.com/reference/semhtml/The_Wealth_of_Nations?qpvt=The%20Wealth%20of%20Nations

[chhotemianinshallah]

REference »
Wikipedia Articles
Invisible hand

In this article: Locations Images From the web: Images Videos

Invisible hand
For other uses, see Invisible hand (disambiguation).

It contains too many quotations for an encyclopedic entry. Tagged
since March 2008.

In economics, the invisible hand, also known as the invisible hand of
the market, the term economists use to describe the self-regulating
nature of the marketplace,[1] is a metaphor first coined by the
economist Adam Smith in The Theory of Moral Sentiments. For Smith, the
invisible hand was created by the conjunction of the forces of self-
interest, competition, and supply and demand, which he noted as being
capable of allocating resources in society.[2] This is the founding
justification for the laissez-faire economic philosophy.[3]

The Wealth of Nations

Adam Smith uses the metaphor in Book IV of The Wealth of Nations,
arguing that people in any society will employ their capital in
foreign trading only if the profits available by that method far
exceed those available locally. In such a case, Smith argues, it is
better for society as a whole if they so do.

“ By preferring the support of domestic to that of foreign industry,

he intends only his own security; and by directing that industry in
such a manner as its produce may be of the greatest value, he intends
only his own gain, and he is in this, as in many other cases, led by
an invisible hand to promote an end which was no part of his

intention. Nor is it always the worse for the society that it was not

part of it. By pursuing his own interest he frequently promotes that
of the society more effectually than when he really intends to promote

it. I have never known much good done by those who affected to trade
for the public good. It is an affectation, indeed, not very common
among merchants, and very few words need be employed in dissuading
them from it. ”

Economists' interpretation of the "invisible hand" quotation
The concept of the "invisible hand" is nearly always generalized
beyond Smith's original discussion of domestic versus foreign trade.
Smith himself participated in such generalization, as is already
evident in his allusion to "many other cases" quoted above.

Milton Friedman, a Nobel Prize winner in economics, called Smith's
Invisible Hand "the possibility of cooperation without coercion."[4]

Notice that the Invisible Hand is here considered a "natural
inclination", not yet a social mechanism as it was later classified by
Leon Walras and Vilfredo Pareto.

The theory of the Invisible Hand states that if each consumer is
allowed to choose freely what to buy and each producer is allowed to
choose freely what to sell and how to produce it, the market will
settle on a product distribution and prices that are beneficial to all
the individual members of a community, and hence to the community as a
whole. The reason for this is that self-interest drives actors to
beneficial behavior. Efficient methods of production are adopted to
maximize profits. Low prices are charged to maximize revenue through
gain in market share by undercutting competitors. Investors invest in
those industries most urgently needed to maximize returns, and
withdraw capital from those less efficient in creating value. Students
prepare for the most needed (and therefore most remunerative) careers.
All these effects take place dynamically and automatically.

It also works as a balancing mechanism. For example, the inhabitants
of a poor country will be willing to work very cheaply, so
entrepreneurs can make great profits by building factories in poor
countries. Because they increase the demand for labor, they will
increase its price; further, because the new producers also become
consumers, local businesses must hire more people to provide the
things they want to consume. As this process continues, the labor
prices eventually rise to the point where there is no advantage for
the foreign countries doing business in the formerly poor country.
Overall, this mechanism causes the local economy to function on its
own.

In The Wealth of Nations, Smith provides an example that illustrates
the principle:

“ 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
self 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.[5] ”

Some economists question the integrity of how the term "invisible
hand" is currently used. Gavin Kennedy, Professor Emeritus at Heriot-
Watt University in Edinburgh, Scotland, argues that its current use in
modern economic thinking as a symbol of free market capitalism is not
reconcilable with the rather modest and indeterminate manner in which
it was employed by Smith.[6] In response to Kennedy, Professor Daniel
Klein argues that reconciliation is legitimate. Moreover, even if
Smith did not intend the term "invisible hand" to be used in the
current manner, it's serviceability as such should not be rendered
ineffective.[7] In conclusion of their exchange, Kennedy insists that
Smith's intentions are of utmost importance to the current debate,
which is one of Smith's association with the term "invisible hand". If
the term is to be used as a symbol of liberty and economic
coordination as it has been in the modern era, Kennedy argues that it
should exist as a construct completely separate from Adam Smith since
there is little evidence that Smith imputed any significance onto the
term, much less the meanings given it at present.[8]

Understood as a metaphor

Smith uses the metaphor in the context of an argument against
protectionism and government regulation of markets, but it is based on
very broad principles developed by Bernard Mandeville, Bishop Butler,
Lord Shaftesbury, and Francis Hutcheson. In general, the term
“invisible hand” can apply to any individual action that has
unplanned, unintended consequences, particularly those that arise from
actions not orchestrated by a central command, and that have an
observable, patterned effect on the community.

Bernard Mandeville argued that private vices are actually public
benefits. In The Fable of the Bees (1714), he laments that the “bees
of social virtue are buzzing in Man’s bonnet”: that civilized man has
stigmatized his private appetites and the result is the retardation of
the common good.

Bishop Butler argued that pursuing the public good was the best way of
advancing one’s own good since the two were necessarily identical.

Lord Shaftesbury turned the convergence of public and private good
around, claiming that acting in accordance with one’s self-interest
produces socially beneficial results. An underlying unifying force
that Shaftesbury called the “Will of Nature” maintains equilibrium,
congruency, and harmony. This force, to operate freely, requires the
individual pursuit of rational self-interest, and the preservation and
advancement of the self.

Francis Hutcheson also accepted this convergence between public and
private interest, but he attributed the mechanism, not to rational
self-interest, but to personal intuition, which he called a “moral
sense.” Smith developed his own version of this general principle in
which six psychological motives combine in each individual to produce
the common good. In The Theory of Moral Sentiments, vol. II, page 316,
he says, “By acting according to the dictates of our moral faculties,
we necessarily pursue the most effective means for promoting the
happiness of mankind.”

Contrary to common misconceptions, Smith did not assert that all self-
interested labour necessarily benefits society, or that all public
goods are produced through self-interested labour. His proposal is
merely that in a free market, people usually tend to produce goods
desired by their neighbours. The tragedy of the commons is an example
where self-interest tends to bring an unwanted result.

Moreover, a free market arguably provides numerous opportunities for
maximizing one’s own profit at the expense (rather than for the
benefit) of others. The tobacco industry is often cited as an example
of this: the sale of cigarettes and other tobacco products certainly
brings a very good revenue, but the industry’s critics deny that the
social benefits (the pleasures associated with smoking, the
camaraderie, the feeling of doing something “cool”) can possibly
outbalance the social costs.[citation needed]

Examples and arguments

Since Smith’s time, the principle of the invisible hand has been
further incorporated into economic theory. Leon Walras developed a
four-equation general equilibrium model that concludes that individual
self-interest operating in a competitive market place produces the
unique conditions under which a society’s total utility is maximized.
Vilfredo Pareto used an edgeworth box contact line to illustrate a
similar social optimality.

Ludwig von Mises, in Human Action (see note 3 at the bottom), claims
that Smith believed that the invisible hand was that of God. He did
not mean this as a criticism, since he held that secular reasoning
leads to similar conclusions.

The invisible hand is traditionally understood as a concept in
economics, but Robert Nozick argues in Anarchy, State and Utopia that
substantively the same concept exists in a number of other areas of
academic discourse under different names, notably Darwinian natural
selection. In turn, Daniel Dennett argues in Darwin’s Dangerous Idea
that this represents a “universal acid” that may be applied to a
number of seemingly disparate areas of philosophical inquiry
(consciousness and free will in particular). See also Social
Darwinism.

Tawney's interpretation

Christian socialist R. H. Tawney saw Smith as putting a name on an
older idea:

“ If preachers have not yet overtly identified themselves with the
view of the natural man, expressed by an eighteenth-century writer in
the words, trade is one thing and religion is another, they imply a
not very different conclusion by their silence as to the possibility
of collisions between them. The characteristic doctrine was one, in
fact, which left little room for religious teaching as to economic
morality, because it anticipated the theory, later epitomized by Adam
Smith in his famous reference to the invisible hand, which saw in
economic self-interest the operation of a providential plan... The
existing order, except insofar as the short-sighted enactments of
Governments interfered with it, was the natural order, and the order
established by nature was the order established by God. Most educated
men, in the middle of the [eighteenth] century, would have found their
philosophy expressed in the lines of Pope:

Thus God and Nature formed the general frame,

And bade self-love and social be the same.

Naturally, again, such an attitude precluded a critical examination of
institutions, and left as the sphere of Christian charity only those
parts of life that could be reserved for philanthropy, precisely
because they fell outside that larger area of normal human relations,
in which the promptings of self-interest provided an all-sufficient
motive and rule of conduct. (Religion and the Rise of Capitalism, page
195.) ”

Other uses of the phrase by Smith

Adam Smith used the phrase two other times in his writings, once
published and once unpublished. The unpublished reference simply says
that practitioners of Polytheistic religions did not attribute gravity
or fire to the invisible hand of Jupiter, and the idea clearly has no
relation to the invisible hand of the market. However, this particular
reference should be observed for a complete picture of what Smith
intends to portray by the term "Invisible Hand."[9]

In Theory of Moral Sentiments, Smith uses the invisible hand to
explain the distribution of wealth (1759, p. 350):

“ The rich ... consume little more than the poor, and in spite of
their natural selfishness ... They are led by an invisible hand to

make nearly the same distribution of the necessaries of life, which
would have been made, had the earth been divided into equal portions

among all its inhabitants, and ... advance the interest of the
society, and afford means to the multiplication of the species. ”

This was written before Smith visited France and the
"Économistes" (Physiocrats) who gave him and classical economics the
"circular flow" vision of the economy. See the emphasis of "annually"
in Smith's Introduction. In a "circular flow" output that does not
become input in the next circle is "unproductive labour" produced by a
"classe stérile" (Économistes).

References

↑ Sullivan, Arthur; Steven M. Sheffrin (2003). Economics: Principles
in action. Upper Saddle River, New Jersey 07458: Pearson Prentice
Hall. p. 32. ISBN 0-13-063085-3.

http://www.pearsonschool.com/index.cfm?locator=PSZ3R9&PMDbSiteId=2781&PMDbSolutionId=6724&PMDbCategoryId=&PMDbProgramId=12881&level=4.

↑ Olsen, James Stewart. Encyclopedia of the Industrial Revolution.
Greenwood Publishing Group, 2002. pp. 153-154

↑ Ibid

↑ Friedman's Introduction to I, Pencil

↑ Smith, Adam. "2". Wealth of Nations.

http://www.econlib.org/LIBRARY/Smith/smWN1.html#B.I%2C%20Ch.2%2C%20Of%20the%20Principle%20which%20gives%20Occasion%20to%20the%20Division%20of%20Labour%2C%20benevolence.
Retrieved 2007-12-08.

↑ Kennedy, Gavin. 2009. Adam Smith and the Invisible Hand: From
Metaphor to Myth. Econ Journal Watch 6(2): 239-263.[1]

↑ Klein, Daniel B. 2009. In Adam Smith’s Invisible Hands: Comment on
Gavin Kennedy. Econ Journal Watch 6(2): 264-279.[2]

↑ Kennedy, Gavin. "A Reply to Daniel Klein on Adam Smith and the
Invisible Hand". Econ Journal Watch 6(3): 374-388.[3]

↑ Minowitz, Peter. "Adam Smith's Invisible Hands" (December 2004).
[4]

External links

The Theory of Moral Sentiments (full text)

The Wealth of Nations (full text) or

The History of Astronomy, in Essays on Philosophical Subjects (full
text)
I, Pencil (full text)

The National Gain (full text)

http://www.bing.com/reference/semhtml/Invisible_hand

Reference »
Wikipedia Articles

Selfishness

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Selfishness

"Selfish" redirects here. For other uses, see Selfish
(disambiguation).
Look up selfishness in Wiktionary, the free dictionary.

This article needs additional citations for verification.

Please help improve this article by adding reliable references.

Unsourced material may be challenged and removed. (October 2009)

Selfishness denotes the precedence given in thought or deed to the
self, i.e., self interest or self concern. It is the act of placing
one's own needs or desires above the needs or desires of others.

Psychologist and primatologist Frans de Waal takes issue with those
who equate "selfishness" with "self-serving." He argues that
"Selfishness implies the intention to serve oneself, hence knowledge
of what one stands to gain from a particular behavior".[1] (2009, 13).

Selfishness is the opposite of altruism (selflessness).

The implications of selfishness have inspired divergent views within
religious, philosophical, psychological, economic and evolutionary
contexts.

References

↑ de Waal, Frans (2009). Primates and Philosophers: How Morality
Evolved. Princeton University Press. pp. 13. ISBN 978-0-691-14129-9.

http://press.princeton.edu/titles/8240.html.

See also

Egoism
Egotism
Enlightened self-interest
Ethic of reciprocity (the "Golden Rule")
Generosity
Indirect self-interest
Little Miss Selfish
Narcissism
Objectivism
Solipsism

A Theory of Justice (by John Rawls)

Further reading

Twilight of the Idols, Friedrich Nietzsche Penguin Classics; Reissue
edition (February 15, 1990), ISBN 0140445145

The Evolution of Cooperation, Robert Axelrod, Basic Books, ISBN
0-465-02121-2

The Selfish Gene, Richard Dawkins (1990), second edition—includes two
chapters about the evolution of cooperation, ISBN 0-19-286092-5

The Virtue of Selfishness, Ayn Rand, ISBN 0451163931

http://www.bing.com/reference/semhtml/Selfishness

Reference »
Wikipedia Articles

Competition (economics)Competition (economics)

In this article: Locations Images From the web: Images Videos

Competition (economics)

Competition in economics is a term that encompasses the notion of
individuals and firms striving for a greater share of a market to sell
or buy goods and services. Merriam-Webster defines competition in
business as "the effort of two or more parties acting independently to
secure the business of a third party by offering the most favorable
terms."[1] It was described by Adam Smith in The Wealth of Nations
(1776) and later economists as allocating productive resources to
their most highly-valued uses.[2] and encouraging efficiency. Later
microeconomic theory distinguished between perfect competition and
imperfect competition, concluding that with the no system of resource
allocation is more efficient than perfect competition. Competition,
according to the theory, causes commercial firms to develop new
products, services and technologies, which would give consumers
greater selection and better products. The greater selection typically
causes lower prices for the products, compared to what the price would
be if there was no competition (monopoly) or little competition
(oligopoly).

Competition in practice

Competition is seen as a state which produces gains for the whole
economy, through promoting consumer sovereignty. It may also lead to
wasted (duplicated) effort and to increased costs (and prices) in some
circumstances. In a small number of goods and services the cost
structure means that competition may be inefficient. These situations
are known as natural monopoly and are usually publicly provided or
tightly regulated. The most common example is water supplies.

Three levels of economic competition have been classified:

The most narrow form is direct competition (also called category
competition or brand competition), where products that perform the
same function compete against each other. For example, a brand of pick-
up trucks competes with several different brands of pick-up trucks.
Sometimes two companies are rivals and one adds new products to their
line so that each company distributes the same thing and they
compete.

The next form is substitute competition, where products that are close
substitutes for one another compete. For example, butter competes with
margarine, mayonnaise, and other various sauces and spreads.

The broadest form of competition is typically called budget
competition. Included in this category is anything that the consumer
might want to spend their available money (the so-called discretionary
income) on. For example, a family that has $20,000 available may
choose to spend it on many different items, which can all be seen as
competing with each other for the family's available money.
Competition does not necessarily have to be between companies. For
example, business writers sometimes refer to "internal competition".
This is competition within companies. The idea was first introduced by
Alfred Sloan at General Motors in the 1920s. Sloan deliberately
created areas of overlap between divisions of the company so that each
division would be competing with the other divisions. For example, the
Chevy division would compete with the Pontiac division for some market
segments. Also, in 1931, Procter & Gamble initiated a deliberate
system of internal brand versus brand rivalry. The company was
organized around different brands, with each brand allocated
resources, including a dedicated group of employees willing to
champion the brand. Each brand manager was given responsibility for
the success or failure of the brand and was compensated accordingly.
This form of competition thus pitted a brand against another brand.
Finally, most businesses also encourage competition between individual
employees. An example of this is a contest between sales
representatives. The sales representative with the highest sales (or
the best improvement in sales) over a period of time would gain
benefits from the employer.

It should also be noted that business and economic competition in most
countries is often limited or restricted. Competition often is subject
to legal restrictions. For example, competition may be legally
prohibited as in the case with a government monopoly or a government-
granted monopoly. Tariffs, subsidies or other protectionist measures
may also be instituted by government in order to prevent or reduce
competition. Depending on the respective economic policy, the pure
competition is to a greater or lesser extent regulated by competition
policy and competition law. Competition between countries is quite
subtle to detect, but is quite evident in the World economy, where
countries like the US, Japan, the European Union, China and the East
Asian Tigers each try to outdo the other in the quest for economic
supremacy in the global market, harkening to the concept of Kiasuism.
Such competition is evident by the policies undertaken by these
countries to educate the future workforce. For example, East Asian
economies like Singapore, Japan and South Korea tend to emphasize
education by allocating a large portion of the budget to this sector,
and by implementing programmes such as gifted education, which some
detractors criticise as indicative of academic elitism.

Anti-competitive practices

A practice is anti-competitive if it is deemed to unfairly distort
free and effective competition in the marketplace. Examples include
cartels, restrictive trading agreements, predatory pricing and abuse
of a dominant position.

Further information: Anti-competitive practices

See also

Competition law
Self-competition

Notes

↑ Merriam-Webster Online
↑ George J. Stigler ([1987] 2008). "competition," The New Palgrave
Dictionary of Economics. Abstract.

References

External links

Competition in Utility Markets from the Body of Knowledge on
Infrastructure Regulation

http://www.bing.com/reference/semhtml/Competition_(economics)

[chhotemianinshallah]

Reference »
Wikipedia Articles
Supply and demand

In this article: Locations Images From the web: Images Videos Supply
and demand
For other uses, see Supply and demand (disambiguation).

The price P of a product is determined by a balance between production
at each price (supply S) and the desires of those with purchasing
power at each price (demand D). The diagram shows a positive shift in
demand from D1 to D2, resulting in an increase in price (P) and
quantity sold (Q) of the product.Supply and demand is an economic
model of price determination in a market. It concludes that in a
competitive market, price will function to equalize the quantity
demanded by consumers, and the quantity supplied by producers,
resulting in an economic equilibrium of price and quantity.

The graphical representation of supply and demand

The supply-demand model is a partial equilibrium model representing
the determination of the price of a particular good and the quantity
of that good which is traded. Although it is normal to regard the
quantity demanded and the quantity supplied as functions of the price
of the good, the standard graphical representation, usually attributed
to Alfred Marshall, has price on the vertical axis and quantity on the
horizontal axis, the opposite of the standard convention for the
representation of a mathematical function.

Determinants of supply and demand other than the price of the good in
question, such as consumers' income, input prices and so on, are not
explicitly represented in the supply-demand diagram. Changes in the
values of these variables are represented by shifts in the supply and
demand curves. By contrast, responses to changes in the price of the
good are represented as movements along unchanged supply and demand
curves.

Supply schedule

The supply schedule, depicted graphically as the supply curve,
represents the amount of some good that producers are willing and able
to sell at various prices, assuming ceteris paribus, that is all
determinants of supply other than the price of the good in question,
such as technology and the prices of factors of production, remaining
the same.

Under the assumption of perfect competition, supply is determined by
marginal cost. Firms will produce additional output as long as the
cost of producing an extra unit of output is less than the price they
will receive.

Demand schedule

The demand schedule, depicted graphically as the demand curve,
represents the amount of some good that buyers are willing and able to
purchase at various prices, assuming all determinants of demand other
than the price of the good in question, such as income, personal
tastes, the price of substitute goods, and the price of complementary
goods, remain the same. Following the law of demand, the demand curve
is almost always represented as downward-sloping, meaning that as
price decreases, consumers will buy more of the good.[1]

Just as the supply curves reflect marginal cost curves, demand curves
are determined by marginal utility curves.[2] Consumers will be
willing to buy a given quantity of a good, at a given price, if the
marginal utility of additional consumption is equal to the opportunity
cost determined by the price, that is, the marginal utility of
alternative consumption choices. The demand schedule is defined as the
willingness and ability of a consumer to purchase a given product in a
given frame of time.

As described above, the demand curve is generally downward-sloping.
There may be rare examples of goods that have upward-sloping demand
curves. Two different hypothetical types of goods with upward-sloping
demand curves are Giffen goods (an inferior but staple good) and
Veblen goods (goods made more fashionable by a higher price).

Micro Economics

Equilibrium

Equilibrium is defined to the price-quantity pair where the quantity
demanded is equal to the quantity supplied, represented by the
intersection of the demand is rest.

Changes in market equilibrium

Practical uses of supply and demand analysis often center on the
different variables that change equilibrium price and quantity,
represented as shifts in the respective curves. Comparative statics of
such a shift traces the effects from the initial equilibrium to the
new equilibrium.

Demand curve shifts
Main article: Demand curve

An out-ward or right-ward shift in demand increases both equilibrium
price and quantityWhen consumers increase the quantity demanded at a
given price, it is referred to as an increase in demand. Increased
demand can be represented on the graph as the curve being shifted to
the right. At each price point, a greater quantity is demanded, as
from the initial curve D1 to the new curve D2. In the diagram, this
raises the equilibrium price from P1 to the higher P2. This raises the
equilibrium quantity from Q1 to the higher Q2. A movement along the
curve is described as a "change in the quantity demanded" to
distinguish it from a "change in demand," that is, a shift of the
curve. In the example above, there has been an increase in demand
which has caused an increase in (equilibrium) quantity. The increase
in demand could also come from changing tastes and fashions, incomes,
price changes in complementary and substitute goods, market
expectations, and number of buyers. This would cause the entire demand
curve to shift changing the equilibrium price and quantity.

If the demand decreases, then the opposite happens: a shift of the
curve to the left. If the demand starts at D2, and decreases to D1,
the price will decrease, and the quantity will decrease. This is an
effect of demand changing. The quantity supplied at each price is the
same as before the demand shift (at both Q1 and Q2). The equilibrium
quantity, price and demand are different. At each point, a greater
amount is demanded (when there is a shift from D1 to D2).

The demand curve "shifts" because a non-price determinant of demand
has changed. Graphically the shift is due to a change in the x-
intercept. A shift in the demand curve due to a change in a non-price
determinant of demand will result in the market's being in a non-
equilibrium state. If the demand curve shifts out the result will be a
shortage — at the new market price quantity demanded will exceed
quantity supplied. If the demand curve shifts in, there will be a
surplus — at the new market price quantity supplied will exceed
quantity demanded. The process by which a new equilibrium is
established is not the province of comparative statics — the answers
to issues concerning when, whether and how a new equilibrium will be
established are issues that are addressed by stochastic models —
economic dynamics.

Supply curve shifts

Main article: Supply (economics)

An out-ward or right-ward shift in supply reduces equilibrium price
but increases quantityWhen the suppliers' costs change for a given
output, the supply curve shifts in the same direction. For example,
assume that someone invents a better way of growing wheat so that the
cost of growing a given quantity of wheat decreases. Otherwise stated,
producers will be willing to supply more wheat at every price and this
shifts the supply curve S1 outward, to S2—an increase in supply. This
increase in supply causes the equilibrium price to decrease from P1 to
P2. The equilibrium quantity increases from Q1 to Q2 as the quantity
demanded extends at the new lower prices. In a supply curve shift, the
price and the quantity move in opposite directions.

If the quantity supplied decreases at a given price, the opposite
happens. If the supply curve starts at S2, and shifts inward to S1,
demand contracts, the equilibrium price will increase, and the
equilibrium quantity will decrease. This is an effect of supply
changing. The quantity demanded at each price is the same as before
the supply shift (at both Q1 and Q2). The equilibrium quantity, price
and supply changed.

When there is a change in supply or demand, there are four possible
movements. The demand curve can move inward or outward. The supply
curve can also move inward or outward.

Elasticity

Main article: Elasticity (economics)

Elasticity is a central concept in the theory of supply and demand. In
this context, elasticity refers to how supply and demand respond to
various factors, including price as well as other stochastic
principles. One way to define elasticity is the percentage change in
one variable divided by the percentage change in another variable
(known as arc elasticity, which calculates the elasticity over a range
of values, in contrast with point elasticity, which uses differential
calculus to determine the elasticity at a specific point). It is a
measure of relative changes.

Often, it is useful to know how the quantity demanded or supplied will
change when the price changes. This is known as the price elasticity
of demand and the price elasticity of supply. If a monopolist decides
to increase the price of their product, how will this affect their
sales revenue? Will the increased unit price offset the likely
decrease in sales volume? If a government imposes a tax on a good,
thereby increasing the effective price, how will this affect the
quantity demanded?

Elasticity corresponds to the slope of the line and is often expressed
as a percentage. In other words, the units of measure (such as gallons
vs. quarts, say for the response of quantity demanded of milk to a
change in price) do not matter, only the slope. Since supply and
demand can be curves as well as simple lines the slope, and hence the
elasticity, can be different at different points on the line.

Elasticity is calculated as the percentage change in quantity over the
associated percentage change in price. For example, if the price moves
from $1.00 to $1.05, and the quantity supplied goes from 100 pens to
102 pens, the slope is 2/0.05 or 40 pens per dollar. Since the
elasticity depends on the percentages, the quantity of pens increased
by 2%, and the price increased by 5%, so the price elasticity of
supply is 2/5 or 0.4.

Since the changes are in percentages, changing the unit of measurement
or the currency will not affect the elasticity. If the quantity
demanded or supplied changes a lot when the price changes a little, it
is said to be elastic. If the quantity changes little when the prices
changes a lot, it is said to be inelastic. An example of perfectly
inelastic supply, or zero elasticity, is represented as a vertical
supply curve. (See that section below)

Elasticity in relation to variables other than price can also be
considered. One of the most common to consider is income. How would
the demand for a good change if income increased or decreased? This is
known as the income elasticity of demand. For example, how much would
the demand for a luxury car increase if average income increased by
10%? If it is positive, this increase in demand would be represented
on a graph by a positive shift in the demand curve. At all price
levels, more luxury cars would be demanded.

Another elasticity sometimes considered is the cross elasticity of
demand, which measures the responsiveness of the quantity demanded of
a good to a change in the price of another good. This is often
considered when looking at the relative changes in demand when
studying complement and substitute goods. Complement goods are goods
that are typically utilized together, where if one is consumed,
usually the other is also. Substitute goods are those where one can be
substituted for the other, and if the price of one good rises, one may
purchase less of it and instead purchase its substitute.

Cross elasticity of demand is measured as the percentage change in
demand for the first good that occurs in response to a percentage
change in price of the second good. For an example with a complement
good, if, in response to a 10% increase in the price of fuel, the
quantity of new cars demanded decreased by 20%, the cross elasticity
of demand would be -2.0.

In a perfect economy, any market should be able to move to the
equilibrium position instantly without travelling along the curve. Any
change in market conditions would cause a jump from one equilibrium
position to another at once. So the perfect economy is actually
analogous to the quantum economy. Unfortunately in real economic
systems, markets don't behave in this way, and both producers and
consumers spend some time travelling along the curve before they reach
equilibrium position. This is due to asymmetric, or at least
imperfect, information, where no one economic agent could ever be
expected to know every relevant condition in every market. Ultimately
both producers and consumers must rely on trial and error as well as
prediction and calculation to find an the true equilibrium of a
market.

Vertical supply curve (perfectly inelastic supply)

When demand D1 is in effect, the price will be P1. When D2 is
occurring, the price will be P2. The quantity is always Q, any shifts
in demand will only affect price.If the quantity supplied is fixed no
matter what the price, the supply curve is a vertical line, and supply
is called perfectly inelastic. In practice, vertical supply curves
rarely exist.

As a hypothetical example, consider the supply curve of the land.
Suppose that no matter how much someone would be willing to pay for an
additional piece, more land cannot be created. Also, even if no one
wanted all the land, it still would exist. In such a case, land would
have a vertical supply curve, with zero elasticity.

Other markets

The model of supply and demand also applies to various specialty
markets.

The model is commonly applied to wages, in the market for labor. The
typical roles of supplier and consumer are reversed. The suppliers are
individuals, who try to sell their labor for the highest price. The
consumers of labors are businesses, which try to buy the type of labor
they need at the lowest price. The equilibrium price for a certain
type of labor is the wage.[3]

A number of economists (for example Pierangelo Garegnani[4], Robert L.
Vienneau[5], and Arrigo Opocher & Ian Steedman[6]), building on the
work of Piero Sraffa, argue that that this model of the labor market,
even given all its assumptions, is logically incoherent. Michael
Anyadike-Danes and Wyne Godley [7] argue, based on simulation results,
that little of the empirical work done with the textbook model
constitutes a potentially falsifying test, and, consequently,
empirical evidence hardly exists for that model. Graham White [8]
argues, partially on the basis of Sraffianism, that the policy of
increased labor market flexibility, including the reduction of minimum
wages, does not have an "intellectually coherent" argument in economic
theory.

This criticism of the application of the model of supply and demand
generalizes, particularly to all markets for factors of production. It
also has implications for monetary theory[9] not drawn out here.

In both classical and Keynesian economics, the money market is
analyzed as a supply-and-demand system with interest rates being the
price. The money supply may be a vertical supply curve, which the
central bank of a country can influence through monetary policy. Some
economists[10] argue that the money supply curve should be drawn as a
horizontal line. The demand for money intersects with the money supply
to determine the interest rate.[11]

Empirical estimation

Demand and supply relations in a market can be statistically estimated
from price, quantity, and other data with sufficient information in
the model. This can be done with simultaneous-equation methods of
estimation in econometrics. Such methods allow solving for the model-
relevant "structural coefficients," the estimated algebraic
counterparts of the theory. The Parameter identification problem is a
common issue in "structural estimation." Typically, data on exogenous
variables (that is, variables other than price and quantity, both of
which are endogenous variables) are needed to perform such an
estimation. An alternative to "structural estimation" is reduced-form
estimation, which regresses each of the endogenous variables on the
respective exogenous variables.

Macroeconomic uses of demand and supply

Demand and supply have also been generalized to explain macroeconomic
variables in a market economy, including the quantity of total output
and the general price level. The Aggregate Demand-Aggregate Supply
model may be the most direct application of supply and demand to
macroeconomics, but other macroeconomic models also use supply and
demand. Compared to microeconomic uses of demand and supply, different
(and more controversial) theoretical considerations apply to such
macroeconomic counterparts as aggregate demand and aggregate supply.
Demand and supply may also be used in macroeconomic theory to relate
money supply to demand and interest rates.

Demand shortfalls

A demand shortfall results from the actual demand for a given product
being lower than the projected, or estimated, demand for that product.
Demand shortfalls are caused by demand overestimation in the planning
of new products. Demand overestimation is caused by optimism bias and/
or strategic misrepresentation.

History

The power of supply and demand was understood to some extent by
several early Muslim economists, such as Ibn Taymiyyah who
illustrates:

"If desire for goods increases while its availability decreases, its
price rises. On the other hand, if availability of the good increases
and the desire for it decreases, the price comes down."[12]
The phrase "supply and demand" was first used by James Denham-Steuart
in his Inquiry into the Principles of Political Economy, published in
1767. Adam Smith used the phrase in his 1776 book The Wealth of
Nations, and David Ricardo titled one chapter of his 1817 work
Principles of Political Economy and Taxation "On the Influence of
Demand and Supply on Price".[13]

In The Wealth of Nations, Smith generally assumed that the supply
price was fixed but that its "merit" (value) would decrease as its
"scarcity" increased, in effect what was later called the law of
demand. Ricardo, in Principles of Political Economy and Taxation, more
rigorously laid down the idea of the assumptions that were used to
build his ideas of supply and demand. Antoine Augustin Cournot first
developed a mathematical model of supply and demand in his 1838
Researches on the Mathematical Principles of the Theory of Wealth.

During the late 19th century the marginalist school of thought
emerged. This field mainly was started by Stanley Jevons, Carl Menger,
and Léon Walras. The key idea was that the price was set by the most
expensive price, that is, the price at the margin. This was a
substantial change from Adam Smith's thoughts on determining the
supply price.

In his 1870 essay "On the Graphical Representation of Supply and
Demand", Fleeming Jenkin drew for the first time the popular graphic
of supply and demand which, through Marshall, eventually would turn
into the most famous graphic in economics.

The model was further developed and popularized by Alfred Marshall in
the 1890 textbook Principles of Economics.[13] Along with Léon Walras,
Marshall looked at the equilibrium point where the two curves crossed.
They also began looking at the effect of markets on each other.

Criticism

At least two assumptions are necessary for the validity of the
standard model: first, that supply and demand are independent; and
second, that supply is "constrained by a fixed resource"; If these
conditions do not hold, then the Marshallian model cannot be
sustained. Sraffa's critique focused on the inconsistency (except in
implausible circumstances) of partial equilibrium analysis and the
rationale for the upward-slope of the supply curve in a market for a
produced consumption good[14]. The notability of Sraffa's critique is
also demonstrated by Paul A. Samuelson's comments and engagements with
it over many years, for example:

"What a cleaned-up version of Sraffa (1926) establishes is how nearly
empty are all of Marshall's partial equilibrium boxes. To a logical
purist of Wittgenstein and Sraffa class, the Marshallian partial
equilibrium box of constant cost is even more empty than the box of
increasing cost."[15].

Aggregate excess demand in a market is the difference between the
quantity demanded and the quantity supplied as a function of price. In
the model with an upward-sloping supply curve and downward-sloping
demand curve, the aggregate excess demand function only intersects the
axis at one point, namely, at the point where the supply and demand
curves intersect. The Sonnenschein-Mantel-Debreu theorem shows that
the standard model cannot be rigorously derived in general from the
theory of general equilibrium[16].

The model of prices being determined by supply and demand assume
perfect competition. But:

"economists have no adequate model of how individuals and firms adjust
prices in a competitive model. If all participants are price-takers by
definition, then the actor who adjusts prices to eliminate excess
demand is not specified"[17].

See also

Look up supply or demand in Wiktionary, the free dictionary.

Aggregate demand
Aggregate supply
Alpha consumer
Artificial demand
Barriers to entry
Consumer theory
Deadweight loss
Demand Forecasting
Demand shortfall
Economic surplus
Effect of taxes and subsidies on price
Elasticity
Externality
Foundations of Economic Analysis by Paul A. Samuelson
History of economic thought
Induced demand
"invisible hand"
Inverse demand function
Labor shortage
Microeconomics
Neoclassical economics
Producer's surplus
Protectionism
Profit
Rationing
Real prices and ideal prices
Say's Law
Supply shock

An Inquiry into the Nature and Causes of the Wealth of Nations by Adam
Smith

References

↑ Note that unlike most graphs, supply & demand curves are plotted
with the independent variable (price) on the vertical axis and the
dependent variable (quantity supplied or demanded) on the horizontal
axis.

↑ "Marginal Utility and Demand".

http://www.amosweb.com/cgi-bin/awb_nav.pl?s=wpd&c=dsp&k=marginal+utility+and+demand.
Retrieved 2007-02-09.

↑ Kibbe, Matthew B.. "The Minimum Wage: Washington's Perennial Myth".
Cato Institute. http://www.cato.org/pubs/pas/pa106.html. Retrieved
2007-02-09.

↑ P. Garegnani, "Heterogeneous Capital, the Production Function and
the Theory of Distribution", Review of Economic Studies, V. 37, N. 3
(Jul. 1970): 407-436

↑ Robert L. Vienneau, "On Labour Demand and Equilibria of the Firm",
Manchester School, V. 73, N. 5 (Sep. 2005): 612-619

↑ Arrigo Opocher and Ian Steedman, "Input Price-Input Quantity
Relations and the Numeraire", Cambridge Journal of Economics, V. 3
(2009): 937-948

↑ Michael Anyadike-Danes and Wyne Godley, "Real Wages and Employment:
A Sceptical View of Some Recent Empirical Work", Machester School, V.
62, N. 2 (Jun. 1989): 172-187

↑ Graham White, "The Poverty of Conventional Economic Wisdom and the
Search for Alternative Economic and Social Policies", The Drawing
Board: An Australian Review of Public Affairs, V. 2, N. 2 (Nov. 2001):
67-87

↑ Colin Rogers, Money, Interest and Capital: A Study in the
Foundations of Monetary Theory, Cambridge University Press, 1989

↑ Basij J. Moore, Horizontalists and Verticalists: The Macroeconomics
of Credit Money, Cambridge University Press, 1988

↑ Ritter, Lawrence S.authorlink1 = Lawrence S. Ritter; Silber, William
L.; Udell, Gregory F. (2000). Principles of Money, Banking, and
Financial Markets (10th edition ed.). Addison-Wesley, Menlo Park C.
pp. 431-438,465-476. ISBN 0-321-37557-2.

↑ Hosseini, Hamid S. (2003). "Contributions of Medieval Muslim
Scholars to the History of Economics and their Impact: A Refutation of
the Schumpeterian Great Gap". in Biddle, Jeff E.; Davis, Jon B.;
Samuels, Warren J.. A Companion to the History of Economic Thought.
Malden, MA: Blackwell. pp. 28–45 [28 & 38]. doi:
10.1002/9780470999059.ch3. ISBN 0631225730.

↑ 13.0 13.1 Humphrey, Thomas M. (March/April 1992). "Marshallian Cross
Diagrams and Their Uses before Alfred Marshall: The Origins of Supply
and Demand Geometry" ([dead link] – Scholar search). Economic Review.

http://www.richmondfed.org/publications/economic_research/economic_review/pdfs/er780201.pdf,.

Federal Reserve Bank of Richmond.

↑ Avi J. Cohen, "'The Laws of Returns Under Competitive Conditions':
Progress in Microeconomics Since Sraffa (1926)?", Eastern Economic
Journal, V. 9, N. 3 (Jul.-Sep.): 1983)

↑ Paul A. Samuelson, "Reply" in Critical Essays on Piero Sraffa's
Legacy in Economics (edited by H. D. Kurz) Cambridge University Press,
2000

↑ Alan Kirman, "The Intrinsic Limits of Modern Economic Theory: The
Emperor has No Clothes", The Economic Journal, V. 99, N. 395,
Supplement: Conference Papers (1989): pp. 126-139

↑ Alan P. Kirman, "Whom or What Does the Representative Individual
Represent?" Journal of Economic Perspectives, V. 6, N. 2 (Spring
1992): pp. 117-136

External links

Nobel Prize Winner Prof. William Vickrey: 15 fatal fallacies of
financial fundamentalism - A Disquisition on Demand Side Economics

"Marshallian Cross Diagrams and Their Uses before Alfred Marshall: The
Origins of Supply and Demand Geometry" by Thomas Humphrey (via the
Richmond Fed)

Supply and Demand book by Hubert D. Henderson at Project Gutenberg.

Price Theory and Applications by Steven E. Landsburg ISBN
0-538-88206-9

An Inquiry into the Nature and Causes of the Wealth of Nations, Adam
Smith, 1776 [1]

By what is the price of a commodity determined?, a brief statement of
Karl Marx's rival account [2]

The Economic Motivation of Open Source Software: Stakeholder
Perspectives, Dirk Riehle, 2007 [3]

Supply and Demand by Fiona Maclachlan and Basic Supply and Demand by
Mark Gillis, Wolfram Demonstrations Project.

http://www.bing.com/reference/semhtml/Supply_and_demand

Reference »
Wikipedia Articles

Economic equilibrium

In this article: Locations Images From the web: Images Videos

Economic equilibrium

Price of market balance:

P - price
Q - quantity of good
S - supply
D - demand
P0 - price of market balance
A - surplus of demand - when P<P0
B - surplus of supply - when P>P0

In economics, economic equilibrium is simply a state of the world
where economic forces are balanced and in the absence of external
influences the (equilibrium) values of economic variables will not
change. It is the point at which quantity demanded and quantity
supplied are equal.[1] Market equilibrium, for example, refers to a
condition where a market price is established through competition such
that the amount of goods or services sought by buyers is equal to the
amount of goods or services produced by sellers. This price is often
called the equilibrium price or market clearing price and will tend
not to change unless demand or supply change.

Properties of equilibrium

When the price is above the equilibrium point there is a surplus of
supply; where the price is below the equilibrium point there is a
shortage in supply. Different supply curves and different demand
curves have different points of economic equilibrium. In most simple
microeconomic stories of supply and demand in a market a static
equilibrium is observed in a market; however, economic equilibrium can
exist in non-market relationships and can be dynamic. Equilibrium may
also be multi-market or general, as opposed to the partial equilibrium
of a single market.

In economics, the term equilibrium is used to suggest a state of
"balance" between supply forces and demand forces. For example, an
increase in supply will disrupt the equilibrium, leading to lower
prices. Eventually, a new equilibrium will be attained in most
markets. Then, there will be no change in price or the amount of
output bought and sold — until there is an exogenous shift in supply
or demand (such as changes in technology or tastes). That is, there
are no endogenous forces leading to the price or the quantity.

Not all economic equilibria are stable. For an equilibrium to be
stable, a small deviation from equilibrium leads to economic forces
that returns an economic sub-system toward the original equilibrium.
For example, if a movement out of supply/demand equilibrium leads to
an excess supply (glut) that induces price declines which return the
market to a situation where the quantity demanded equals the quantity
supplied. If supply and demand curves intersect more than once, then
both stable and unstable equilibria are found.

Most economists (e.g. Samuelson 1947, Chapter 3, p. 52) caution
against attaching a normative meaning (value judgement) to the
equilibrium price. For example, food markets may be in equilibrium at
the same time that people are starving (because they cannot afford to
pay the high equilibrium price).

Interpretations

In most interpretations, classical economists such as Adam Smith
maintained that the free market would tend towards economic
equilibrium through the price mechanism. That is, any excess supply
(market surplus or glut) would lead to price cuts, which decrease the
quantity supplied (by reducing the incentive to produce and sell the
product) and increase the quantity demanded (by offering consumers
bargains), automatically abolishing the glut. Similarly, in an
unfettered market, any excess demand (or shortage) would lead to price
increases, reducing the quantity demanded (as customers are priced out
of the market) and increasing in the quantity supplied (as the
incentive to produce and sell a product rises). As before, the
disequilibrium (here, the shortage) disappears. This automatic
abolition of non-market-clearing situations distinguishes markets from
central planning schemes, which often have a difficult time getting
prices right and suffer from persistent shortages of goods and
services[citation needed].

This view came under attack from at least two viewpoints. Modern
mainstream economics points to cases where equilibrium does not
correspond to market clearing (but instead to unemployment), as with
the efficiency wage hypothesis in labor economics. In some ways
parallel is the phenomenon of credit rationing, in which banks hold
interest rates low to create an excess demand for loans, so they can
pick and choose whom to lend to. Further, economic equilibrium can
correspond with monopoly, where the monopolistic firm maintains an
artificial shortage to prop up prices and to maximize profits.
Finally, Keynesian macroeconomics points to underemployment
equilibrium, where a surplus of labor (i.e., cyclical unemployment) co-
exists for a long time with a shortage of aggregate demand.

On the other hand, the Austrian School and Joseph Schumpeter
maintained that in the short term equilibrium is never attained as
everyone was always trying to take advantage of the pricing system and
so there was always some dynamism in the system. The free market's
strength was not creating a static or a general equilibrium but
instead in organising resources to meet individual desires and
discovering the best methods to carry the economy forward.

Solving for equilibrium price

To solve for the equilibrium price, one must either plot the supply
and demand curves, or solve for their equations being equal.

An example may be:

In the diagram, depicting simple set of supply and demand curves, the
quantity demanded and supplied at price P are equal.

At any price above P supply exceeds demand, while at a price below P
the quantity demanded exceeds that supplied. In other words, prices
where demand and supply are out of balance are termed points of
disequilibrium, creating shortages and oversupply. Changes in the
conditions of demand or supply will shift the demand or supply curves.
This will cause changes in the equilibrium price and quantity in the
market.

Consider the following demand and supply schedule:

Price ($) Demand Supply
8.00 6,000 18,000
7.00 8,000 16,000
6.00 10,000 14,000
5.00 12,000 12,000
4.00 14,000 10,000
3.00 16,000 8,000
2.00 18,000 6,000
1.00 20,000 4,000

The equilibrium price in the market is $5.00 where demand and supply
are equal at 12,000 units

If the current market price was $3.00 – there would be excess demand
for 8,000 units, creating a shortage.

If the current market price was $8.00 – there would be excess supply
of 12,000 units.

When there is a shortage in the market we see that, to correct this
disequilibrium, the price of the good will be increased back to a
price of $5.00, thus lessening the quantity demanded and increasing
the quantity supplied thus that the market is in balance.

When there is an oversupply of a good, such as when price is above
$6.00, then we see that producers will decrease the price to increase
the quantity demanded for the good, thus eliminating the excess and
taking the market back to equilibrium.

Influences changing price

A change in equilibrium price may occur through a change in either the
supply or demand schedules. For instance, an increase in demand
through an increase level of disposable income may produce a new
demand and supply schedule, such as the following:

Price ($) Demand Supply
8.00 10,000 18,000
7.00 12,000 16,000
6.00 14,000 14,000
5.00 16,000 12,000
4.00 18,000 10,000
3.00 20,000 8,000
2.00 22,000 6,000
1.00 24,000 4,000

Here we see that an increase in disposable income would increase the
quantity demanded of the good by 4,000 units at each price. This has
the effect of changing the price at which quantity supplied equals
quantity demanded. In this case we see that the two equal each other
at an increased price of $6.00. This increase in demand would have the
effect of shifting the demand curve rightward. Note that a decrease in
disposable income would have the exact opposite effect on the
equilibrium market.

We will also see similar behaviour in price when there is a change in
the supply schedule, occurring through technological changes, or
through changes in business costs. An increase in technology or
decrease in costs would have the effect of increasing the quantity
supplied at each price, thus reducing the equilibrium price. On the
other hand, a decrease in technology or increase in business costs
will decrease the quantity supplied at each price, thus increasing
equilibrium price.

See also

Competitive equilibrium
Dynamic equilibrium
Equilibrium (disambiguation page)
General equilibrium theory
Partial equilibrium
Nash equilibrium
Labor theory of value
Price
Exchange value
Supply and demand
Microeconomics
Real prices and ideal prices
Prices of production
Law of value

References

↑ Sullivan, arthur; Steven M. Sheffrin (2003). Economics: Principles

in action. Upper Saddle River, New Jersey 07458: Pearson Prentice

Hall. pp. 125. ISBN 0-13-063085-3.

http://www.pearsonschool.com/index.cfm?
locator=PSZ3R9&PMDbSiteId=2781&PMDbSolutionId=6724&PMDbCategoryId=&PMDbProgramId=12881&level=4.

Paul A. Samuelson (1947; Expanded ed. 1983), Foundations of Economic
Analysis. Harvard University Press. ISBN 0-674-31301-1

http://www.bing.com/reference/semhtml/Economic_equilibrium