The Smithian world-view.

in #economics5 years ago

It strikes me that one way to frame the Smithian world-view that encompasses both Wealth of Nations and Moral Sentiments is something like the following:

Humans are natural social animals. We observe others around us and we react to the choices they make. We care what they think. Our responses to them and their responses to us enable us to coordinate our actions in ways that are socially and individually beneficial. This implies that in both the realm of our intimates and strangers we are engaged in rule-following forms of mutual adjustment.

Market institutions are valuable because they provide us with ways to "see" the choices that strangers at a distance have made and react to them. That is, markets are processes of mutual adjustment by which we alter our behaviour in response to that of others (strangers in this case). While we may primarily aim to improve our own condition, the result is social coordination and human progress.

In the realm of the intimate, we do the same. We engage in conduct, we watch how others react, we invoke the impartial spectator to judge ourselves in light of that, and we make the necessary adjustments in order to be praiseworthy, or at least not blameworthy. We do this by following learned rules (cf., Hayek's "rules of just conduct" in the realm of the anonymous) that forward the ultimate goal of mutual sympathy. In the realm of the intimate, we also seek human social cooperation and learn to adjust our conduct to the needs of others in ways that forward human moral progress.

Smithian humans learn to engage in progress-creating mutual adjustment by following learned rules of conduct. In the realm of the intimate, we make use of direct signals from others. In the realm of the anonymous, we evolve institutions that provide such signals and substitute for things like known trust.

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