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Ch. 5 Adam Smith, Abundance and Sympathy

Commons spent almost fifty pages on Adam Smith in chapter five.  Obviously part of the reason for this is the importance of Adam Smith in the history of economic thought and his continuing importance in the discipline.

According to Commons, Smith based his economics on abundance and divine beneficence. It meant that one person could use their labor power to gain some commodity and that would not take away from what another person could achieve by their labor power.  The abundance of nature is provided by the divine.  This labor power is what gives value to a commodity and its exchange value is based on the labor required to obtain a commodity from nature.  This is the general economic tradition of Smith that Commons takes away in very short form.

Besides this abundance, there are important innate human characteristics that help motivate and provide guide rails on human behavior.  Smith believes our inherent "sympathy" is what drives is to self-restraint and prudence and no need for external compulsion from an external government entity or other entities. Commons writes that several key characteristics are critical for Smith, "When it comes to looking for these motives divinely planted by Adam Smith in the human breast, we find that they cannot be reduced by him to less than six; namely: sympathy, self-interest, the sense of propriety, the propensity to truck and barter, labor pain placed there to regulate output by preventing over-production, and a divine or natural right to be free from almost every kind of collective action except punishment for fraud and violence or for national self-defense."

This leads to Commons stating that Smith does not want any form of artificial constraint or compulsion on people, whether from government or any other form of collective action. Commons writing about Smith says, "But legislatures are not the only collective action that interferes with liberty and equality. Equally to be prohibited, according to Smith, were all customs and all private associations that made arrangements, rules, or gentlemen's understandings, which limited individual competition." 

Commons believed that Smith wanted to eliminate all form of compulsion and understanding of social compulsion and collective action from economics. This is not a position Commons would have supported. He even cites Smith as evidence that it is not realistic.  Smith wrote in the Wealth of Nations that, "But it is not easy to find an accurate measure either of hardship or ingenuity. In exchanging indeed the different productions of different sorts of labour for one another, some allowance is commonly made for both. It is adjusted, however, not by any accurate measure, but by the higgling and bargaining of the market, according to that sort of rough equality which, though not exact, is sufficient for car rying on the business of common life.” Commons takes this as a statement that it is in fact bargaining power and transactions that are the key to understanding economics not labor power and sympathy. In fact, Commons thought that Smith's sympathy was derived from being involved in market transactions rather than the force that regulated market transactions.







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