True freedom

"Freedom means that in some measure we entrust our fate to forces we do not control; and this seems intolerable to those positivist / rationalist who believe that men can master his fate; as if civilization and reason itself were the fate of his making"
F.A. Hayek

Thursday, September 6, 2012

All my previous essays on PDF

Through a little of internet searching, I realize that I can upload my essays on PDF and attach them to hiperlinks so people can actually download them, instead of reading them on my blog. I think this will enhance a lot of people to read them more extensively or whenever they want, specially if they will be using e-readers that support PDF.

So here are the PDF links of all of my previous essays:

1. Money as a form of spontaneous order (Carl Menger's theory):

2. The Cantillon Effect and Monetary policy:

3. Esperanto and languages as a form of spontanous order:

4. Classic liberalism and why this is not being conservative:

5. The EU crisis and the price mechanism:

6. Coordinated monetary policies and financial despotism:

7. Joseph A. Schumpeter and historical review:

8. Monetary morphine and the job market:

9. Adam Smith, an enlighten life:

Monday, September 3, 2012

Adam Smith, Part 2

Adam Smith’s civic ethics, sympathy, virtue and the impartial spectator:

“And hence it is, that to feel much for others and little for ourselves, that to restrain our selfish, and to indulge our benevolent affections, constitutes the perfection of human nature; and can alone produce among mankind that harmony of sentiments and passions in which consists their whole grace and propriety. As to love our neighbor as we love ourselves is the great law of Christianity, so it is the great precept of nature to love ourselves only as we love our neighbor, or what comes to the same thing, as our neighbor is capable of loving us.”
Adam Smith

As we notice from this quote, Smith’s ethic is based preponderantly on two systems: the philosophic system of the Stoics and the Christian system of virtues and values. The Christian attitude of benevolence towards our fellow man is fundamental according to Smith, as well as the Stoic virtues of self-command and self-love to guarantee a balanced human society. Smith followed the Stoics completely against Plato’s belief that a form of moral and intellectual hierarchy exists between men. Instead, Smith believed in an ideal of equality in mankind’s morality in the sense of old Christian tradition. Adam Smith firmly believed in the Stoic ethic of loving yourself only as you understand how to love your neighbor. In the TMS he proposed a system of equalitarian ethics; he stated that equal moral and social grounds are necessary to allow everyone to play a different societal role regardless of their hierarchy and social class.

He used this dual ethical system based on Christianity and Stoicism, for example in his self-love plus invisible hand analogy, in which he tries to create a form of reconciliation between individuals’ self-interests and the common good:

“Every single event ought to be regarded as making a necessary part of the plan of the universe, and, as tending to promote the general order and happiness of the whole: that the vices and follies of mankind, therefore, made as necessary a part of this plan as their wisdom or their virtue; and by that eternal art which educes good from ill, were made to tend equally to the prosperity and perfection of the great system of nature”.

Self-love belongs to a longer list of virtues and it remains so as long as it does not damage others. Smith established that there must be a common universal moral approbation which supports social morality and controls our actions. Smith thought a variety of moral feelings and sentiments were necessary for social approbation; therefore the philosophy of morality, according to Smith, could be called the “theory and diversity of shared moral sentiments”. We measure these different moral sentiments that emerge naturally through human interaction, then we measure those social sentiments  through the impartial spectator exercise (which, as a reminder, is a disinterested character not involved in the action from a moral perspective). This spectator is a very useful creation for Smith to explain the source of human nature and consciousness, which lies in the capacity of any human being to impartially judge their own actions. The impartial spectator is a form of impartial human consciousness created through the evolution of social interaction and traditions.

The first foundation of our moral sentiments towards judging our actions is the one based on observations in society. What we observe in other people’s actions in a social context shape our moral sentiments that are then redirected towards our own actions, in order to “impartially” judge them. Smith proposes a unique form of consciousness in which we do not only observe some other person being the spectator of our actions but rather proposes a mirror-image game in which we ask ourselves how we should morally feel if we were the spectator watching our actions being executed. Smith thought that this was the only way to gradually overcome human judgment’s partiality toward our own actions.  
Regarding virtue, according to Smith, there is more than one set of motivations; therefore Smith enriched Mandeville’s and Hutcheson’s views into a more complex system of virtue. According to Smith, virtue means a set of different things: first, in its most basic form it appears to represent the notion of “property”; secondly, going further into the level of virtue, there is the natural task of fulfilling one’s “private interest and happiness”; finally, the highest degree of virtue is seeking “happiness of others”. All of these levels represent a human in his “doing good” function. However Smith emphasized that these levels can be mixed, not necessarily standard or in a fixed order, and that humans can integrate all of these virtues in human action and apply them as he feels is correct in life. Then, in order to see what appears to be correct is when the impartial spectator comes to help us.  

The base of social contracts and human interactions are based on some sort of respect for a system of morality and ethics; according to Smith the only way to exercise any control of this morality in human action is through a form of human impartiality that can judge us and tame our animalistic instincts. This human impartiality comes from a form of humanistic personification of justice, fairness and social morality.  According to Smith, the relevant perspective in order to make a judgment upon human life is therefore  through the people living immersed in society; the original action will be analyzed and contemplated by a form of the impartial spectator.

Smith’s impartial spectator adopts the characteristic of “idealistic” human impartiality; it is society’s evolution and human interaction that gives birth to the source of the common “impartial” social morality, which establishes social rules which positively govern human action. Therefore the impartial spectator comes from social morality created by the society’s interaction and evolution (so as Hume predicted, outside the conclusions of our human individual reason). According to Smith, this is the best way to define and control people’s sentiments and their notion of justice; we have to analyze our sentiments at a “certain distance from us”. Smith was a pioneer in exploring the psychology of human action and its relationship between economics and society. In the TMS he created a system based on social acceptance and sympathy, he modeled human behavior through a mirror in which we judge ourselves, our sentiments and then our actions, and all of them in relation to how the spectator would feel under those circumstances. It is because we are immersed in society that we realize that our actions, which can make some fellow men miserable, can then make us miserable; likewise those actions which make others happy can also make us happy. Social evolution creates moral sentiments which we use and acknowledge by putting ourselves under the impartial spectator role, therefore developing our conscience and social self-control. 

This whole process of realizing how other human beings and parties not directly involved would feel about our individual actions helps us control our decisions and actions, considering the effects they would bring to the rest of society. The concern for others therefore comes from mutual sympathetic responses in society. What is enjoyable and makes us happy is due to the reinforcement of the conscience or impartial spectator, which guide our actions according to what it would consider proper. Hence society shapes common societal morals which in turn shape man’s actions. Playing by social rules brings approval and admiration; respecting social rules leads to stability and prosperity. Therefore there is no fundamental difference between the morality of a man in the TMS and in the WN; they are complementary moral sentiments. As an example, in the TMS Smith establishes:

“Nature when she formed man for society, endowed him with an original desire to please, and an original aversion to offend his brethren. She taught him to feel pleasure in their favorable, and pain in their unfavorable regard. She remembered their approbation most flattering… for its own sake; and their disapprobation most notifying and most offensive”.

Therefore sympathy and the impartial spectator are two main concepts in Adam Smith’s moral theory. The impartial spectator helps our human intuitions by showing us social ethical judgment, not coming from of any powerful god judging us from above, but rather from an abstract form of our social selves.  The impartial spectator evaluates our actions by finding the common good of shared values of the parties involved, seen through a social values lens. As Professor D.D. Raphael stated, Smith’s philosophy aimed “to provide a satisfactory alternative to a priori accounts of conscience and morality”. Here Smith departs from Hume and Hutcheson towards a more sociological context, adding more human complexity, creating a more fallible system of evolutionary moral judgment.

People in real life situations will try to apply the impartial spectator to judge their actions; however there will always be forms of partiality since in real life the spectator possesses his own individual values which he will use in his assessment. Smith tries to help us be better social beings; he helped us to realize that in order to make a moral judgment of our own actions, we first need to include the other involved people’s perspectives and try to be as impartial as possible. Social sympathy towards fellow man therefore will enable people to be less biased in judging their actions creating better and purer forms of the impartial spectator, overall helping society to contain human actions which could damper others.   

Humans, according to Smith, have the need to use the impartial spectator because the necessity of societal approval and praise is inherent in human beings. This necessity pushes humans to seek a higher level of abstraction and imagination, allowing them to create a mental and moral distance between the impartial judge and the culprit. We pretend to be seen by another person through an abstract representation of another person. Adam Smith gave us one of his biggest contributions through the development of the Impartial Spectator Theory. As Raphael acknowledged, this was Smith’s enduring contribution to creating a theory of genetic evolution of individual conscience. This in essence lies in the social experience of being spectators ourselves of the conduct, customs and traditions of other actors in society, then knowing that others are spectators of our own actions as well. As Raphael stated, he helped us to understand “that both economic tendencies and common moral sentiments are products of nature”.

In conclusion Adam Smith was a moral philosopher with a solid theory of political economy which he presented in complete coherency and integration with his moral and ethical system. The real Smith saw the complexity of human behavior, standing completely away from the reductionist and basic form of a self-interested “homo economicus”. He showed that any human moral system is complex, social and evolutionary. He presented a very heterogeneous system of sentiments that explain this moral complexity in different dimensions: social, political, economic, all intertwined and interacting with each other. Adam Smith’s work and insights are fundamental to understanding the key element that ensures a healthy society, both in the spiritual and material spectrum. As Evensky noticed, society’s progress is a dual work and presents a symbiotic relationship and evolution between the foundations that direct society: people’s self-government and social institutions. As Evensky puts it, “Ultimately, the cohesiveness and constructiveness of a liberal order depends, according to Smith, not on institutional government but on self-government, on the ethical maturity of the citizenry”. Smiths highlighted the relevance of mature social ethic systems and the necessary conditions for a long-term, sustainable free society.

 A real world that requires moral, judicial and economical foundations for proper functioning is enriched by Smith’s works. His two books shed light like no other on the necessary foundations for any society’s prosperity. He helped us realize the deep positive interdependence among a strong set of social morals and economic prosperity. This intertwined relationship among social institutions make his work as relevant today as it was 250 years ago. It will probably be even more relevant in the future if we lose sight and conscience of the correctness and necessity of both justice and social ethics, which are the frameworks for a prosperous society.  

“To continue preaching Laissez-faire doctrine in the name of Adam Smith is to misrepresent the systematic nature of his work, it is to ignore the true genius of the philosopher from Kirkcaldy, Scotland and to condemn contemporary economics to a caricaturish prison of its own design.”
J. Weinstein

“Man, it has been said, has a natural love for society, and desires that the union of mankind should be preserved for its own sake, and thought he himself was to derive no benefit from it. The orderly and flourishing state of society is agreeable to him, and he takes delight in contemplating it. Its disorder and confusion, on the contrary, is the object of his aversion, and he is chagrined at whatever tends to produce it. He is sensible, too, that his own interest is connected with the prosperity of society, and that the happiness, perhaps the preservation of his existence, depends upon its preservation.”
Adam Smith 

Martin Leroch. Adam Smith’s Intuition Pump: the Impartial Spectator, 2004.
Amartya Sen.  Introduction of the 250th anniversary edition of The Theory of Moral Sentiments, Penguin Classics 250th anniversary edition, 2009.
Gavin Kennedy. Adam Smith and the Invisible Hand: from metaphor to myth, Economic Journal watch, Volume 6, number 2, 2009.
Jerry Evensky. Adam Smith’s Moral Philosophy, Cambridge University Press, 2001.
Jerry Evensky. Adam Smith’s “Theory of Moral Sentiments”: on morals and why they matter to a liberal society of free people and free markets, The Journal of Economic Perspective, Volume 19, number 3, 2005.
D.D. Raphael. The Impartial Spectator, Adam Smith’s Moral Philosophy, Oxford University Press, 2007.
Smith, Adam. [1759] The Theory of Moral Sentiments, Indianapolis: Liberty Fund, 1984.
Smith, Adam. [1776] An Inquiry into the Nature and Causes of the Wealth of Nations, Indianapolis: Liberty Fund, 1981.
Smith, Adam. [1759] The Theory of Moral Sentiments, Penguin Classics 250th anniversary edition, 1984.
Maria Pia Paganelli. The Moralizing Role of Distance in Adam Smith: the theory of moral sentiments as a possible praise of commerce, Yeshiva University, New York, 2008.

Adam Smith (1723-1790)