Friday, January 08, 2016

Get lovely

Leave it to our German friends to worry over "Das Adam Smith Problem".  How could one man author both, The Wealth of Nations and also The Theory of Moral Sentiments? Not a problem, says Russ Roberts in his very readable and enjoyable How Adam Smith Can Change Your Life. Smith always thought of himself as a moral philosopher, not an economist.

What do we know?  We humans dominate the planet like none other.  We dominate because we are good at forming teams. We have discovered non-zerosumness in a big way. We cooperate via impersonal exchange in markets. But there is more. Roberts notes that Smith thought that we also want be loved and, therefore, to be lovely (lovable).

"There are two ways to be loved, to satisfy the desire we all have to be noticed and to be somebody. The first path is to be rich, famous, powerful. The second path is to be wise and virtuous." (p. 112). We develop our morality via the latter.

As always, excepting those who resist (fear) modernity.

Love and markets are the two channels of non-zerosumness that we have discovered and made use of. Both have helped us to become cooperators and team players. Generally, we extend NZS via both channels ever more widely.

Around each of us, there are ever larger concentric circles of people with whom we cooperate. We cooperate with some of them via exchange (ever larger supply chains); we cooperate with others via (ever larger) links of loyalty and love. The two are linked because as we extend trust to ever larger circles, we reduce transactions costs and transact (and benefit) more.