9 Conclusion
In this book I have attempted to provide a cogent re-interpretation of the socio-economic methodology of Adam Smith, by a detailed examination of his scientific model. The methodological equipment developed in Chapter 2 was used to provide a set of organising principles, which were then applied to Smith’s work, in an attempt to elucidate its meaning.
This perspective was intended to serve as a vehicle for textual exegesis, by suggesting how the various aspects of Smith’s highly complex and wide-ranging discussions of society might be related to form a coherent whole. In other words, the Lakatosian schematisation of science, modified to allow for the depiction of qualitative social change, was aimed at providing a ‘way in’ to Smith’s writing, primarily by suggesting ways in which his own epistemological and methodological discussions might be interpreted. This equipment was then used to ‘reconstruct’ Smith’s scientific model (in Chapters 4 and 5) and the full model, as thus interpreted, was put to work (in Chapters 6, 7 and 8) in an attempt to articulate some of the meanings implicit in his work, and resolve some apparent paradoxes.In the process of this examination a number of conclusions have been argued for, and these can now be summarised.
It was argued in Chapter 3 that Smith has a fundamental epistemological perspective, which sees man as being in a dynamic process of interaction with a recondite nature. In this interaction the mind plays an active role in ‘working up’ the raw material of sense experience, and seeks to impose order on an otherwise chaotic flow of information by devising classificatory systems and relational analogies. Observation is interpreted in terms of this nexus of preconceptions and postulations, and the world-view is modified as necessary in order to preserve its overall coherence. The criteria used to assess the adequacy of our world-view as an analogue of reality, function in the context of its overall perspective and are, in this sense, internal, and in the ultimate analysis aesthetic.
Smith uses close analogues of this epistemology to explain all aspects of man’s interaction with nature. Language, art, social institutions and systems of scientific interpretation are all seen as conforming to the same pattern of dialectical interaction, and the same aesthetic criteria are used in evaluating constructs, in each of these areas of human action.
Smith’s own scientific system is profoundly influenced by his epistemological position. His model seeks to depict the process of socio-historical evolution by giving speculative development to concepts which are intended to mirror the essential principles of dynamic change. In other words, it attempts to represent social change by providing an analogous representation of the factors which are seen as bringing this change about. Social development is conceived of as being a qualitative transition from one contextual framework to the next, and it follows from this that the evaluation of social structures is always contextual. Their adequacy is assessed in terms of their generality, familiarity, simplicity and overall coherence relative to the social context within which they function.
It was also argued (Chapters 4 and 5) that Smith’s meta- scientific world-view is a dynamic synthesis of elements of Associationism and some aspects of the more ‘rationalist’ perspectives of the European Enlightenment. These premisses are developed into a model in which individuals, seen very much in terms of eighteenth-century Associationism, interact to form social structures. The process of sympathetic interaction involves an element of judging, or practical reasoning, in which the adequacy of any specific action is evaluated relative to the existing framework of social structure. These structures are, in turn, modified by the results of sympathetic interaction, so that practical reasoning is reflected in the developing social contextual framework.
The division of labour provides the dynamic factor in this process.
Individuals, motivated by self-interest, engage in greater specialisation, thus increasing the efficiency of man’s interaction with nature. The degree of specialisation attained defines the material context within which social structures function, and their relevance and fitness for their purpose is assessed relative to that context. The role of practical reasoning is thus to ensure that theinstitutional framework within which sympathetic interaction takes place, is appropriate for a given stage of economic development.
The links with Smith’s epistemology seem clear, in that the degree of specialisation specifies the framework of interpretation within which social institutions have their meaning and relevance. As the division of labour proceeds, so we have a qualitative transition of this interpretive framework, and one result of this is that structures that were appropriate to an earlier period may become outmoded. It was further argued in this connection that Smith sees the growing interdependence, which is a defining feature of commercial society, as being a major qualitative change of the sort we have been discussing, and that his model reflects this, so that it functions both as a ‘general theory’ of historical development, and as a ‘special theory’ of change within commercial society.
At the level of the special theory, Smith identifies a wide range of potential and actual imperfections in the dialectical interaction between individuals and social structures. I have called these imperfections ‘social estrangement’ and argued that they have in common that they result from a distortion or fragmentation of the contextual framework within which sympathetic interaction functions. This interferes with the working of practical reasoning and results in the formation of social structures that are lacking in generality, and in the cultural and intellectual impoverishment of the individual. Smith holds that social estrangement will tend to intensify as the division of labour increases, but that the capacity of government to alleviate its worst effects will also increase.
Part of the science of legislation is to ensure that this potential is translated into effective action.The legislator has a key role in Smith’s model in that it is his task to adopt the position of the impartial spectator so as to ensure that those structures which are actually formed are fully ‘universal’, in that they reflect the general interest of society. He makes piecemeal modifications to an existing social framework, in order to deal with new situations, whilst attempting to preserve the coherence and generality of the overall system. He can be contrasted with both the ‘statesman’, who is governed by shortterm expediency rather than general principles, and the ‘man of system’ who rejects the piecemeal approach in an effort to remodel the social framework. This latter task would require a degree of rationality that is denied to us in practice, and is well beyond the limits of the power of practical reasoning.
Here, as always, Smith presents his explanations in terms of individual actions rather than social wholes. It is not abstract historical forces that call into being new social institutions, but the specific actions of individual legislators. The science of a legislator lies in seeing that modifications to the social framework are appropriate to a specific historical context, but there can be good and bad legislation, so that the actual progress of society will typically deviate from its natural path, as depicted by the model. It is this stress on individual response to qualitative change that gives Smith’s model a semi-autonomous political dimension, and a richness of explanation that is lacking in economic deter- minist interpretations of historical development.
In this connection, it was also argued that since an evaluation of the ‘propriety’ of political action makes ultimate reference to the level of economic development, Smith’s model can fairly be called materialist, but that the label is in need of heavy qualification. The four stages theory is best seen as a heuristic device which illustrates the underlying dynamic model, rather than a fundamental organising principle in its own right.
Some conclusions have also been offered as to the nature of Smith’s ‘deception theory’. Here it was suggested that there is no fundamental incompatibility in his model between short-run action based upon self-interest, and long-run social evolution based upon reason-guided sympathetic interaction. Both are rooted in the dialectical interplay between human passions and human rationality, and they shape and support each other. More tentatively it was argued that Smith does not have a ∞nventional teleology, but sees society as a process in which human potential can be realised. That is to say, that human rationality, if unconstrained by social estrangement and other deviations from the natural path (‘fortune’) can, as the division of labour proceeds, produce a society which gives full realisation to human potential. On this view, the deception theory is connected with the fact that the overall pattern of this development is not visible in any particular short-run setting, partly because there can be no ex ante specification of ends. Whilst such an interpretation seems to me to be consistent with the general tone of Smith’s published work, and also to resolve some of the apparent difficulties in his use of ‘actual’ and ‘natural’, in the absence of firm textual support, it must remain very much a matter of speculation.
The penultimate chapter examined the way in which Smith’s detailed discussion of, what we now call, e∞nomic concepts, is related to his overall model. The central conclusion was that his economic ∞ncepts function in the context of a dynamic model of qualitative change and cannot be fully comprehended in isolation. A concept such as ‘capital’ has a dynamic historical dimension, and any attempt to treat it in isolation from that dimension will fail to capture the meaning that it had for Smith.
To the extent that this view is accepted, it follows that those who have held that the historical dimension in Smith’s work is not necessary for an adequate understanding of his economics, have been thoroughly mistaken.
It also follows that the gap between Smith and Ricardo is even wider than is commonly supposed. It is not simply that Ricardo re-worked Smithian concepts by purging this historical and philosophical dimension, but rather that they were engaged in a fundamentally different type of scientific activity. Indeed, if the interpretation I have presented is accepted, then, in so far as such periodisations are meaningful, Smith is better seen as standing at the end of an epoch, rather than at the beginning of one. His work is a brilliant synthesis of aspects of eighteenth-century thought rather than a seminal contribution to that of the nineteenth century, and has no counterpart amongst the work of political economists writing after the Napoleonic Wars.It is also clear that the Smith I have depicted bears little resemblance to the champion of free markets and perfect competition beloved by our ∞ntemporary advocates of laissez-faire. If Smith’s discussions of competition and free trade are taken in the overall ∞ntext of his model of institutional evolution, they yield prescriptions for social development that are notably interventionist. The Smith of the ‘Adam Smith Institute’ is the product of a ‘reading backwards’ that is both anachronistic and reductionist.
Finally, whilst my objective has been to provide a possible reconstruction of Smith’s model, in order to understand its meanings, rather than to evaluate its adequacy, it can now be said that the model does seem to me to fulfil its task exceptionally well. It is, of ∞urse, true that Smith’s model is lacking in predictive power, in the sense of being able to suggest how and when social structures will change, but if my arguments concerning his epistemology are accepted, this is not in any case his central concern. Scientific systems, for him, are constructs of the imagination which seek to render reality coherent. Their task is to generate explanations of observed events so that they can be assimilated into our worldview without loss of generality or simplicity; without, in short, occasioning surprise and wonder. On this view the importance of the American Revolution for Smith lay not in the fact that his model could have predicted it, but in that its causes, developments and possible remedies could be given a coherent explanation and articulation within the perspectives of his world-view. This interpretation would also help to explain why he should retain his discussions of the issue in later editions of the Wealth of Nations, long after any predictive power they might have had, would have disappeared. Epistemology aside, the flexibility of individual response that Smith’s model allows in the face of new situations, renders anything approaching rigorous prediction impossible. The existence of a semi-autonomous political dimension in his model, whilst it adds greatly to its overall richness and explanatory power, also removes the possibility of the precision that is claimed by economic determinist interpretations of history. Such a trade-off would only represent an overall loss, if one believed that human social evolution was indeed amenable to predictive scientific analysis.