Book Report: Saving Adam Smith by Jonathan Wight

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Saving Adam smith "by Jonathan Wight

Saving Adam Smith: A tale of wealth, transformation, and virtue

Saving Adam Smith: A tale of wealth, transformation, and virtue

It is everyone's fantasy during a political debate to be able to channel a famous figure from the long-ago past and get him or her to justify your ideals. This is the premise of the 2002 book Saving Adam Smith: A tale of wealth, transformation, and virtue by Jonathan B. Wight. In Wight's novel, Rich Burns, an economics graduate student writing his thesis under the watch of a cruel dissertation adviser, Professor Lattimer, gets advice from the real Adam Smith. Smith speaks through the persona and voice of an Eastern European auto mechanic. In contrast, Lattimer, who in his capacity as the Adam Smith Chair of Economics gives advice to former communist economies, advocates a zealously free market approach and claims to be the true voice of free enterprise. Lattimer wants Burns to use his dissertation to justify a self-interested act by a large corporation to take over the Russian aluminum industry and thus privatize the formerly state-run enterprise in a swift fashion that will not necessarily be beneficial to the Russian people. In Lattimer's view, so long as something is pro-privatization, it is good.

But the 'real' Adam Smith advocated a much more morally complex and nuanced view of economics, according to Wight, and would demand a more sensitive approach to the immediate needs of the people. Paradoxically, today's zealous defendants of capitalism are trying to 'out-Smith' Adam Smith. Smith was a philosopher as well as an economist, and also advocated a theory of justice as well as profit. In bringing Smith back to life, Wight suggests that students of economics have lost their moral 'centers' and instead lapsed into calculus and numerical jargon. But economics is about human behavior, not just facts and figures. At the beginning of the tale, Burns admits he never even 'cracked' Smith's seminal work an Inquiry into the Nature and Causes of the Wealth of Nations, during any of his graduate school classes, and instead focused on calculus and matrix algebra (Wight, 2002, p. 36). No one has even checked out Smith's the Theory of Moral Sentiments from the library at Burns' prestigious university.

This is meant to be symbolic of the fact that while Smith's name (as in the case of the Department Chair title) is often used as a defense of pure free market economics, in actual practice, Smith's theory of economic morality is ignored by the current academy. "While modern economic theories exhibited logical elegance, did they address the interconnectedness of one to another, in social and moral ways" (Wight 2003, 233). Mainstream economics has made a virtue out of selfishness, to the exclusion of all other social values. Smith could never have foreseen how his theory would have been used, nor would he have endorsed this reasoning.

Wight's critique of contemporary economics is two-fold: first he criticizes economics for being overly mathematical. Economics is a social science, and is part of 'real' human existence. Human behavior can be unpredictable, and cannot be reduced to a series of facts and figures. Wight's idea seems prescient given the influence of 'quants' or quantitative mathematicians hired by many Wall Street firms who provided advice to investment bankers right before the recent credit crisis. Despite all of their mathematical knowledge, they seemed unable to spot the obvious, namely that it was unwise to extend mortgages to individuals who could ill-afford these loans, that an economic bubble eventually bursts and that housing prices cannot increase indefinitely. In the real world, economic decisions are made by humans rather than formulas, or, as one observer said: "As a result the odds of game-changing outliers like Bill Gates'fortune or a Black Monday are actually much greater than the quant models predict, rendering quants useless or even dangerous…I think physicists should go back to the physics department and leave Wall Street alone" (Overbye 2009, p.2). Although Wight wrote his book in 2002, long before the current recession took hold, his observation about the state of modern economics is apt -- it is all about the numbers. Yet those who claim to be the modern incarnations of Adam Smith do not remember that Smith wrote in words, not functions, and Smith was a philosopher of humanity, not a student of functions and statistics.

Wight's second main critique of modern economics is the worship of the idea of free market values in… [END OF PREVIEW]

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