Thread by @delong

braddelong.substack.com/p/adam-smiths-…

First: Adam Smith’s Big Project, and the Place of His Wealth of Nations in It:

J. Bradford DeLong: Lecture Notes: Adam Smith: ‘Adam Smith starts with the observation that humans are largely but not exclusively self-interested creatures: we are... 1/

..., largely but not exclusively greedy. Yet we have a complex and sophisticated societal division of labor. And that division of labor is essential to our prosperity. Indeed, it is essential to our survival: drop one of us into the Sierra Nevada, even in summer—or even in... 2/

...our environment of evolutionary adaptation in the Horn of Africa—and we will quite likely die. Drop 100 of us, and we will quite likely survive, and even flourish. How can animals that are by nature greedy nevertheless cooperate on a large scale? That is the deep... 3/

... moral-philosophical question that we can see both of Smith’s big books—his Theory of the Moral Sentiments and An Inquiry into the Nature and Causes of the Wealth of Nations—and much of the rest of his writing as aimed at. As Robert Heilbroner puts it in his The... 4/

...Worldly Philosophers, Smith: is interested in laying bare the mechanism by which society hangs together….

Adam Smith says that our ability to create and maintain a complicated societal division of labor that is so productive rests on four facets of human nature...

...(1): language: in that we are an anthology intelligence—what one of us knows or learns, pretty quickly all of us within and many of us without earshot will quickly learn;

(2) hierarchy: in that we tend to form and respect dominance hierarchies in which we can command.../7

... and obey;

(3) gift exchange: in that we bind ourselves together by forming gift-exchange relationships—what Adam Smith called our “natural propensity to truck and barter”: we firmly expect to be and are very happy when we trade favors with each other, and we are... 8/

...uneasy when we feel as though we are always giving or always receiving, for we want the exchange of gifts and favors to be reciprocal, and roughly balanced.

(4) benevolence: in that our weak sense of fellow-feeling and empathy can be trained up to be quite strong and... 9/

...govern our decisions in gives us a powerful bias toward choosing win-win arrangements.
\The Wealth of Nations, of course, is about (3). Back in our environment of evolutionary adaptation, we could form gift-exchange relationships only with a few: our close neighbors... /10

...our good friends, and our near kin. Trust, you see, is necessary for a long-term gift-exchange relationship, and short-term such relationships are rare because each has to have and be willing to give up something the other wants or needs right now. And since we are... /11

...largely self-interested, trust is hard to generate and maintain without other binding social ties.

Hence the key importance of the human cultural invention of money in forming our large-scale human society: money means that any one of us can make a short-term... 12/

...one-shot exchange relationship with any other one of us, someone who we may well never see again. Money, you see, is manufactured trust, and it allows us to extend our societal division of labor to encompass, indirectly, nearly everybody else in the world… 13/

...<delong.typepad.com/files/lecturea…> 14/END