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December 2013 posts

On Liberty

Jonathan B. Wight

 The crush of semester-end grading has limited blogging.  The world may be better off for that, but anyway, here’s something to think about during this season of peace and brotherly love:

 “What do we mean when we say that first of all we seek liberty? I often wonder whether we do not rest our hopes too much upon constitutions, upon laws, and upon courts. These are false hopes; believe me, these are false hopes. Liberty lies in the hearts of men and women; when it dies there, no constitution, no law, no court can save it; no constitution, no law, no court can even do much to help it.

 "And what is this liberty which must lie in the hearts of men and women? It is not the ruthless, the unbridled will; it is not freedom to do as one likes. That is the denial of liberty, and leads straight to its overthrow. A society in which men recognize no check upon their freedom soon becomes a society where freedom is the possession of only a savage few; as we have learned to our sorrow.

 --Learned Hand, The Spirit of Liberty (1944, p. 190).

Vernon Smith on Adam Smith at the Social Economics Blog and Forum for Social Economics

Vernon smithMark D. White

The Social Economics Blog (the blog of the Association for Social Economics, of which Jonathan B. Wight and I are currently president and president-elect, respectively) is featuring an article from the Forum for Social Economics by Nobel leaurate Vernon L. Smith on Adam Smith, plus comments from three social economics luminaries (including Jonathan himself). The Forum's publisher, Taylor & Francis, has graciously made the Smith-on-Smith article and comments available of free of charge to encourage open and wide discussion.

The abstract to Smith's paper, "Adam Smith: From Propriety and Sentiments to Property and Wealth," follows:

“Why return to Adam Smith?” Because we learn that he had fresh-for-today insights, derived from a modeling perspective that was never part of economic analysis. Smith wrote two classics: The Theory of Moral Sentiments (1759; hereafter Sentiments); and An Inquiry into the Nature and Causes of the Wealth of Nations (1776; hereafter Wealth). In Sentiments it is argued that human sociability in close-knit groups is governed by the “propriety and fitness” of conduct based on sympathy. This non-utilitarian model provides new insights into the results of 2-person experimental “trust” and other games that defied the predictions of traditional game theory in the 1980s and 90s, and offers testable new predictions. Moreover, Smith shows how the civil order of “property” grew naturally out of the rules of propriety. Property together with what I call Smith's Discovery Axiom then enabled his break-through in Wealth that defined the liberal intellectual and practical foundation of two centuries of Western economic growth.

Why We Need History

Jonathan B. Wight

Paul Krugman in “New Thinking and Old Books Revisited” puts in a plug for economic history and history of economic thought:

“Furthermore, to temper your modeling with a sense of realism you need to know something about reality — and not just the statistical properties of U.S. time series since 1947. Economic history — global economic history — should be a core part of the curriculum. Nobody should be making pronouncements on macro without knowing a fair bit about the collapse of the gold standard in the 1930s, what actually happened in the stagflation of the 1970s, the Asian financial crisis of the 90s, and, looking forward, the euro crisis.

“I’d put my oar in for history of thought, too. Watching highly trained economists reinvent old economic fallacies suggests to me that there would be real payoff to requiring that students have some idea how the current leading doctrines got to where they are.

“But must we reconstruct all of economics? No. Most of what we need, at least for now, is in those old books."