Friday, December 07, 2007

Tyler Cowen on Adam Smith

Tyler Cowen, a top economist blogger at Marginal Revolution (here) is interviewed by KnowledgeWharton (here)

Economics for Humans: Tyler Cowen on Using Incentives for a Better Life
6 December, 2007 in Knowledge@Wharton. I was struck by these two excerpts:

Tyler
It's true that scientists get paid, but typically they don't get paid more, or much more, for discovering something that will make them famous. They do it because they love science, or because they want the recognition or because they just stumble upon it. Einstein was never a wealthy man but he worked very hard. So blogging is a new form of an old idea: that people do great things for free. Adam Smith didn't get paid much for writing Wealth of Nations, even though it's a long book that required a lot of work. He had an inner drive to get his ideas out there.”

And:

“Knowlege@Wharton: Do you see an "inner economist" as a kind of ideal economist, someone who takes into account not only the financial facts but also moral concerns?

Cowen: Absolutely. Keep in mind that the first economist, Adam Smith, was also a moral philosopher. This is returning to the true roots of economics. I think it's the other economists who have been subversive. I'm just putting economics back to where it was in the first place and never should have left. Economics used to be a moral philosophy, very connected to the humanities.”

Comment
Adam Smith was not pressed for money. His life pension of £300 pr year from the Duke of Buccleugh from taking him on a tutorial tour to France and Geneva 1764-66 was more than sufficient to support himself and his cousin (Janet Douglas) in his mother’s house in Kirkcaldy while writing Wealth Of Nations (1766 to1774), and afterwards when he rented, Panmure House, just off the High Street in Edinburgh High Street (1778-90) (and still standing). He is reputed to have kept a ‘frugal table’ and welcomed guests at his Sunday dinners.

University salaries, and student fees, at the time would contribute about £170 a year, and he had some royalties from his Theory of Moral Sentiments(1759). He made no sacrifices to be a writer and he did not write for money (made irrelevant when he accepted the post of Commissioner of Customs in 1778-90 at £600 a year). He worked at the Customs House almost daily until a few months before he died.

Tyler Cowen is right: “He had an inner drive to get his ideas out there.

I especially liked the second quoted paragraph:

“Adam Smith, was also a moral philosopher. This is returning to the true roots of economics. I think it's the other economists who have been subversive. I'm just putting economics back to where it was in the first place and never should have left. Economics used to be a moral philosophy, very connected to the humanities."

This has got to be the right approach to economics today. Having abandoned so much of the field of political economy as seen by Adam Smith, many economists have retreated into a mystical imaginary world of their own, replete with mathematical abstractions far removed from how economies work with people in them.

The interview is about Tyler Cowen’s book, The Inner Economist. It has persuaded me to get it for myself this Christmas.

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