There are many reasons to object to the effort in modern (well, post 1940s) economics to enlist Adam Smith as an early co-author on the First Fundamental Welfare Theorem (FWT), but one reason is that Smith would object on ethical grounds to the utilitarian basis of the FWT.
Modern welfare economics is based “more or less explicitly on utilitarian ideas, even when economists deal only with the idea of Pareto efficiency.”[1] By contrast, Smith was opposed to the consequentialist ethic of his teacher Frances Hutcheson, and was “deeply opposed to utilitarianism.”[2] The seemingly few economists who have paid attention to Smith's overall intellectual project know that he focused on the propriety of one’s actions rather than on their consequences; they might also know that he described his ethical system as “pretty exactly” in line with Aristotle’s virtue ethical system.
Smith's goal was to examine how the virtue ethics approach might apply to commercial society. McCloskey (2008, p.58) wrote, "Smith, in sharp contrast to his great contemporaries in ethical theorizing, was a virtues man, a half-conscious follower of Plato and Aristotle and therefore of Aquinas, and also of the Stoics…in emphasizing a system of multiple virtues—and indeed precisely five of the seven Aquinian virtues. That is to say, he was indeed the last of the former virtue ethicists.”
Smith’s concept of the invisible hand clearly does not imply nor does it anticipate the First Welfare Theorem, despite claims to the contrary. Nor, I would submit, is his normative ethical approach consistent with the utilitarianism on which the FWT is based. Perhaps someday we can rescue Smith from his "followers."
[1] Hammond, Peter J. , “Utilitarianism, Uncertainty and Information” in Utilitarianism and Beyond, Amartya Sen and Bernard Williams (eds), Cambridge University Press (1982), pp. 85-102.
[2] Fleischacker, Samuel. On Adam Smith's Wealth of Nations: A Philosophical Companion. Princeton University Press (2005).
McCloskey, Deirdre, "Adam Smith, the Last of the Former Virtue Ethicists," History of Political Economy (2008)
Modern welfare economics is based “more or less explicitly on utilitarian ideas, even when economists deal only with the idea of Pareto efficiency.”[1] By contrast, Smith was opposed to the consequentialist ethic of his teacher Frances Hutcheson, and was “deeply opposed to utilitarianism.”[2] The seemingly few economists who have paid attention to Smith's overall intellectual project know that he focused on the propriety of one’s actions rather than on their consequences; they might also know that he described his ethical system as “pretty exactly” in line with Aristotle’s virtue ethical system.
Smith's goal was to examine how the virtue ethics approach might apply to commercial society. McCloskey (2008, p.58) wrote, "Smith, in sharp contrast to his great contemporaries in ethical theorizing, was a virtues man, a half-conscious follower of Plato and Aristotle and therefore of Aquinas, and also of the Stoics…in emphasizing a system of multiple virtues—and indeed precisely five of the seven Aquinian virtues. That is to say, he was indeed the last of the former virtue ethicists.”
Smith’s concept of the invisible hand clearly does not imply nor does it anticipate the First Welfare Theorem, despite claims to the contrary. Nor, I would submit, is his normative ethical approach consistent with the utilitarianism on which the FWT is based. Perhaps someday we can rescue Smith from his "followers."
[1] Hammond, Peter J. , “Utilitarianism, Uncertainty and Information” in Utilitarianism and Beyond, Amartya Sen and Bernard Williams (eds), Cambridge University Press (1982), pp. 85-102.
[2] Fleischacker, Samuel. On Adam Smith's Wealth of Nations: A Philosophical Companion. Princeton University Press (2005).
McCloskey, Deirdre, "Adam Smith, the Last of the Former Virtue Ethicists," History of Political Economy (2008)
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