It is important to bear in mind that Adam Smith was at a cross roads in thinking, between a literary and a newtonian approach to understanding society.
The imperative in economics. and much of intellectual life in current times, is toward calculability, which requires assumptions of stability, which is politically conservative. The needs of “big data’ require calculability. Change and stability are both needed by society. The interesting task is to honor both and it would be terrific to see economics playing more of a role in this balanced thinking.
But as it is, the drive in economics to deal with single dimensions distorts the whole field of society.
Hot and cold, heavy and light, beautiful girl. Beautiful painting, beautiful music. In economics it is pleasure and pain, or utility.
we have from Bentham
“that property in any object, whereby it tends to produce benefit, advantage, pleasure, good, or happiness…or…to prevent the happening of mischief, pain, evil, or unhappiness” Introduction to the Principles of Morals and Legislation (1789)
The idea of the draw of attractive things seems ok, but to then try to compare the power of the draw of a sunset by quantifying it with the draw of a $10 bill or a bowl of soup seems a bit confused. Maybe even sinister. (Notice his use of the word property (that will be the topic of an upcoming provocation.)
Seriously how can the pleasure of a Modigliani painting be compared to the pleasure of Mozart sonata? In forcing these to a single dimension we force much of social life out of economics. Hence we get a corrupted climate, ugly cities, a drive for GDP in the presence of a clear understanding that it is a bad measure – but oh so convenient. A world of textures and nuances gets collapsed into a single linear scale.
Aristotle began with the idea of estate management, the whole thing. Look at this paragraph from his little book Economics.
“When we turn our attention to the human part of the household, it is the woman who makes the first claim upon it; <for the natural comes first, as we have said,> and nothing is more natural than the tie between female and male. For we have elsewhere laid down the premiss that Nature is intent on multiplying severally her types; and this is true of every animal in particular. Neither the female, however, can effect this without the male, nor the male without the female; whence the union of the sexes has of necessity arisen.
Now among the lower animals, this union is irrational in character; it exists merely for the purpose of procreation, and lasts only so long as the parents are occupied in producing their brood. In tame animals, on the other hand, and those which possess a greater share of intelligence, it has assumed a more complex form; for in their case we see more examples of mutual help, goodwill, and co-operation. It is, however, in the human species that this complexity is most marked; since the co-operation between woman and man aims not merely at existence, but at a happy existence. “
So different from most economics now.
The issue is, what do we think about when we try to think economics? Do we look at the mechanics of a newtonian field where pain and pleasure work like the gratifying simple reduction to mass, energy and velocity? Or do we deal with what makes real lives livable?
Economics looks for the equivalent of the solar system within the facts of economy. What is found is the mechanism that seem to lead to wealth concentration. If that system (money is cheaper for the already rich) were frictionless all wealth would be owned by one person.
Jeremy Bentham (of panopticon and having himself mummified and never married) was keen on measurement. Bentham was not stupid, but the attraction to math was powerful
He spells it out
(From Wiki) The felicific calculus is an algorithm formulated by utilitarian philosopher Jeremy Bentham (1748–1832) for calculating the degree or amount of pleasure that a specific action is likely to cause. Bentham, an ethical hedonist, believed the moral rightness or wrongness of an action to be a function of the amount of pleasure or pain that it produced. The felicific calculus could, in principle at least, determine the moral status of any considered act. The algorithm is also known as the utility calculus, the hedonistic calculus and the hedonic calculus.
To be included in this calculation are several variables (or vectors), which Bentham called “circumstances”. These are:
Intensity: How strong is the pleasure?
Duration: How long will the pleasure last?
Certainty or uncertainty: How likely or unlikely is it that the pleasure will occur?
Propinquity or remoteness: How soon will the pleasure occur?
Fecundity: The probability that the action will be followed by sensations of the same kind.
Purity: The probability that it will not be followed by sensations of the opposite kind.
Extent: How many people will be affected?
Notice that all are measurable, but hardly describe life as lived.
By the way, his most famous quote, the greatest good for the greatest number, is obviously flawed.
Population 1. Number of people =x and their good = y. The total is xy or per capital y/x.
Population 2. Assume Double the number of people – 2x and Lower their individual good by a third. Total = 2x’. 2/3y =4/3 xy. We still have greatest good for greatest number but less good for each person. So we get more total good but less per person.
Smith was quite critical of paraphrasing text with math,Reference on Smith and Math
Schliesser, Eric S., Adam Smith and Anti-Mathematics (September 3, 2012). Available at SSRN: https://ssrn.com/abstract=2140828 or http://dx.doi.org/10.2139/ssrn.2140828
We do not have a politics that can cope with the economy and we do not have an economics sufficient to cope with society and its interaction with the environment.