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    Adam Smith: Essays on Adam Smith: Adam Smith and the Alleged French Connection
    Adam Smith: Essays on Adam Smith: Adam Smith and the Alleged French Connection
    Adam Smith: Essays on Adam Smith: Adam Smith and the Alleged French Connection
    Ebook126 pages1 hour

    Adam Smith: Essays on Adam Smith: Adam Smith and the Alleged French Connection

    By Michael Emmett Brady

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    About this ebook

    Adam Smiths original path-breaking work on decision making, uncertainty, and public policies to minimize the impact of uncertainty in the economy has been overlooked for well over two hundred years. One need only peruse the badly analyzed work of Smith in this area, as presented by Henry D. MacLeod in his The Elements of Political Economy, on pages 212220, or Henry Sidgwicks The Principles of Political Economy, on pages 359361, as well as the misevaluations of Smiths contributions made by Jacob Viner in 1927, Joseph Schumpeter in 1954, Murray Rothbard in 1995, or Salim Rashid in 1998 to realize that Smiths important contributions were never recognized. The claim that Smith made no original contributions to economic theory or economics is simply false.
    LanguageEnglish
    PublisherXlibris US
    Release dateDec 17, 2015
    ISBN9781514434000
    Adam Smith: Essays on Adam Smith: Adam Smith and the Alleged French Connection
    Author

    Michael Emmett Brady

    Michael Emmett Brady received his PhD degree in economics from the University of California. He received his BA and MA degrees from California State University as well as in completing all requirements for a BA in Mathematics. He has done graduate level work in mathematics.

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      Book preview

      Adam Smith - Michael Emmett Brady

      Copyright © 2015 by Michael Emmett Brady.

      All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without permission in writing from the copyright owner.

      Scripture quotations marked KJV are from the Holy Bible, King James Version (Authorized Version). First published in 1611. Quoted from the KJV Classic Reference Bible, Copyright © 1983 by The Zondervan Corporation.

      Any people depicted in stock imagery provided by Thinkstock are models, and such images are being used for illustrative purposes only.

      Certain stock imagery © Thinkstock.

      Rev. date: 12/14/2015

      Xlibris

      1-888-795-4274

      www.Xlibris.com

      724756

      TABLE OF CONTENTS

      Introduction

      Essay 1-

      On Adam Smith’s Wealth of Nations and the Continental (French), Intellectual Connection: There was a Small, Intellectual Connection

      Essay 2-

      A Straightforward Demonstration of Adam Smith’s Vast Intellectual Superiority over Richard Cantillon on Issues related to the relative Roles of Uncertainty and Risk in Economic and Decision Theory

      Essay 3-

      Schumpeter’s Misevaluation of Adam Smith’s Original Contributions in the Wealth of Nations-What Schumpeter Overlooked in Chapter 10 of Part I

      Essay 4-

      William Stanley Jevons’ erroneous comparison of Adam Smith and Robert Cantillon-Overlooking the Risk versus Uncertainty Divide.

      Essay 5-

      The New Economic Thinking on Adam Smith of Vines and Morris Leads to the Same Old Errors about Adam Smith

      Essay 6-

      Jesus Christ, the Parable of the Good Samaritan, and Adam Smith’s Wise, Virtuous, Just, and Noble Person: A Comparison of Jesus Christ’s System of Virtue Ethics with that of Adam Smith’s

      This book is

      dedicated to His Excellency, Pope Francis.

      The theoretical support for his Economic,

      Political and Social reform initiatives has been provided by Adam Smith and J M Keynes.

      Introduction

      Adam Smith’s original, path breaking work on decision making, uncertainty and public policies to minimize the impact of uncertainty in the economy has been overlooked for well over two hundred years. One need only peruse the badly analyzed work of Smith in this area as presented by Henry D MacLeod in his The Elements of Political Economy on pp. 212-220 or Henry Sidgwick’s The Principles of Political Economy on pp. 359-361, as well as the misevaluations of Smith’s contributions made by Jacob Viner in 1927, Joseph Schumpeter in 1954, Murray Rothbard in 1995, or Salim Rashid in 1998 to realize that Smith’s important contributions were never recognized, much less understood. The claim that Smith made no original contributions to economic theory or economics is simply false and represents a stunning lacuna for the members of a discipline that likes to believe that they are scientists.

      Smith’s recognition as a Great economist, or even The Greatest economist, is currently based on two conventional opinions that have taken hold since Smith’s death in 1790. The first reason for categorizing Smith as a great economist was that he was a great synthesizer of the works of other thinkers. Smith created the first systematic study of microeconomic, macroeconomics, and economic growth by combining the works of these others into a systematically ordered and comprehensive study that had never been attempted by any of these other thinkers. He was able to use the ideas of others, which, supposedly, he did, while simultaneously not giving them credit for their work, in order to create an overarching system of economic thought.

      The second reason for Smith’s categorization as a Great economist was that he was able to recognize the operation of an Invisible Hand which, supposedly, led to the coordination of all decision makers’ competing/conflicting expectations in an optimal fashion over time, as long as there was no governmental intervention and/or interference in the economy. This Invisible Hand operated by transforming the greedy and selfish micro decisions of each individual decision maker into a macro social optimum.

      Gavin Kennedy has demonstrated for many years that the Invisible Hand had nothing to do with the decisions of greedy and selfish individuals. The Invisible Hand was a metaphor used by Smith in lieu of providing the extensive, detailed explanations necessary to explain the reasons why the majority of domestic manufacturers and merchants would choose to trade in their home markets as opposed to moving into foreign markets. The Invisible hand metaphor allowed Smith to avoid spending a great deal of time. effort, and pages in the Wealth of Nations in explaining the reasoning of these businessmen. Kennedy’s answer, that the home countries business men were risk averse (WN;1776), is correct as a first approximation. However, his analysis needs to be expanded to incorporate a discussion of uncertainty/ambiguity averse behavior besides risk aversion. This was done in an essay in Volume II.

      Smith’s actual originality in the fields of Political Economy and Economics has nothing to do with so called Invisible hands. Smith’s greatness is due to very specific ways in which he innovated in the areas of economic and theoretical decision making reasons. Six distinct reasons can be identifed. First, his understanding of the crucial importance of a society’s ethical foundations or lack of such foundations. The importance of honesty and integrity as characteristics of businessmen lead to confidence and trust in the agreements that were formulated after the bargaining in the market place had taken place. Smith realized that the type of society that will result, if built on the sands of egoism, utilitarianism, and libertarianism, is completely different from a society built on the granite of virtue ethics. Smith had a clear understanding of the important role that Virtue Ethics would play in allowing the application of Aristotle’s Golden Mean when applied to evaluating the conditions that would promote economic growth that would lead to a very large middle class and small lower and upper classes. Second, Smith’s understanding of the uncertainty versus risk distinction. Third, his correct analysis of the definition and meaning of uncertainty. Fourth, his realization that it simply would not be possible to apply the purely mathematical laws of the probability calculus to the large majority of decisions undertaken in a real world of partial, incomplete knowledge. Fifth, Smith’s realization that the probabilities would most likely be interval estimates and not numerical and ordinal probabilities. Sixth, his understanding of the importance of fixed capital and the importance of a banking policy that insured that the sober people (middle class) receive the vast majority of bank loans.

      Smith’s mastery of virtue ethics, especially his understanding of the role of corruption in economic interactions and undertakings, allowed him to pinpoint the crucial area where corruption, if allowed to take hold and manifest itself, would impose the most damage on society by promoting exactly the opposite result aimed at above-large lower and upper classes and a small middle class.

      Jesus also recognized this problem:

      Then Jesus said to his disciples, Truly I tell you, it is hard for someone who is rich to enter the kingdom of heaven. Again I tell you, it is easier for a camel to go through the eye of a needle than for someone who is rich to enter the kingdom of God". (Matthew;19:23-24).

      As in the parable of Lazarus, the rich man has allowed himself to become corrupted and become a prisoner of his baubles, trinkets, and other material possessions.

      Smith recognized the crucial problem as being a banking industry that served the interests of upper class projectors, imprudent risk takers, and prodigals. These categories are the same as J M Keynes’s speculators (Smith used the term speculator in the WN to designate an entrepreneur trying his hand at a number of different businesses) and rentiers. Today, these categories would consist of your Hedge Funds, private equity firms, and banks and bankers like Chase –Morgan and Jamie Dimon.

      The Wealth of Nations (1776) is an application by Smith of his Virtue Ethics approach to political economy. At the micro level, Smith recognized, just as Jesus did in his parable of the Good Samaritan, that in order to be able to help your neighbor, you first must have been able to help yourself become a

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