Das Adam Smith Problem

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Das Adam Smith Problem

• Peter Boettke
• Econ 828/Fall 2005
• 26 September

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Main Points

• Nature of the Conflict
• Tension between self-interest and reciprocal
  altruism
• Answers to the Conflict
• Tension is an illusion
• Self interest with guile is not how man behaves
• Mises and Ricardos Law of Association
• Tension is part of our evolutionary past
• Hard wired from our tribal past
• Implications
• Efficiency and Cooperation
• Moral Intuition and Moral Demands

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Nature of the Tension

• The historical discussion
• How can the author of The Theory of Moral
  Sentiments (which championed other regarding
  behavior) be the same person as the author of The
  Wealth of Nations (which championed self
  regarding behavior)?
• Vernon Smiths capturing of this discussion
• Efficiency
• Trust and cooperation

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Tension is an Illusion

• Rational Choice as if the choosers were human
• Myopia and Long term interests
• Division of labor
• Gains from cooperation
• Biological competition versus Economic Competition

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Tension and Evolution

• Reciprocal Altruism and Virtue
• Nature Red in Tooth and Claw
• E.g., Vampire Bats and the keeping of accounts
• Tribal Past and Group Selection
• Human survival requires cooperation
• Adam Smith and the multitudes
• Pros and Cons of Cooperation
• Bridging and Bonding
• Bonding in order to defeat

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Implications

• The core problem at the heart of classical
  liberalism
• Moral intuitions of the intimate order must be
  checked by the moral demands of the great society
• Hope for voluntarism
• Cooperation without command is within our
  ability self-enforcing arrangements outside the
  realm of a sovereign.