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Commerce and Strangers in Adam Smith

Author(s):Nohara, Shinji
Reviewer(s):Garnett, Robert F.

Published by EH.Net (July 2019)

Shinji Nohara, Commerce and Strangers in Adam Smith. Singapore: Springer, 2018. xi + 192 pp. $120 (hardcover), ISBN: 978-981-10-9013-4.

Reviewed for EH.Net by Robert F. Garnett, Jr., John V. Roach Honors College, Texas Christian University.

 
Readers trained in late twentieth century Anglophone economics would probably assume that a book on “commerce and strangers in Adam Smith” would deal exclusively with Smith’s Inquiry into the Nature and Causes of the Wealth of Nations. Despite a secondary literature in which The Theory of Moral Sentiments is coming to be recognized as an analysis of non-monetary cooperation at the societal level, not just in small face-to-face groups, Smith’s two major works continue to be cast as a tale of two worlds: The Theory of Moral Sentiments as a theory of cooperation with familiars, The Wealth of Nations as a theory of cooperation with strangers.

Shinji Nohara (Faculty of Economics, University of Tokyo) paints a different picture of Adam Smith’s moral philosophy and political economy. Situating Smith in the heart of the Scottish Enlightenment, Nohara reads Smith as a prescient student of globalization who theorized — in The Theory of Moral Sentiments and The Wealth of Nations — varied forms of communication and degrees of social distance through which “encounters with strangers” (p. 169) produce cooperation and conflict in the modern world.

Stressing the originality of Smith’s four-stage theory of human/economic history, Nohara organizes his discussion around Smith’s analysis of commercial society, a life in the company of strangers. We are strangers to everyone in a commercial society, Nohara contends, even to ourselves (p. 172). The crux of Smith’s analysis thus becomes commerce, defined broadly as “communication in general” (p. 2), the give-and-take interactions through which we negotiate our connections to others. Our capacity for mutually beneficial exchange, whether for sympathy or commodities, emerges paradoxically from our mutual estrangement (p. 53), “the impossibility of knowing others” (p. 64). As trucking and bartering shift the boundaries between “strangers” and “us,” the members of commercial society become symbiotically linked to a growing array of persons and communities, local and international.

Nohara reads The Theory of Moral Sentiments and The Wealth of Nations as complementary social theories in which macroscopic phenomena such as social norms or the social division of labor emerge from the dialectic of self and strangers. Whereas many interpreters locate Smith’s discussion of social norms entirely within The Theory of Moral Sentiments, Nohara defines norms broadly to include normal (natural) prices as well as moral/ethical norms. “Each different communicational space establishes its regular rules,” says Nohara (p. 178). The commercial market is one such space; another is the marketplace of social norms through which “people come to have and share their morality” (p. 171). Nohara highlights the role of strangers in the latter space, describing Smith’s impartial spectator procedure as an educational process through which we learn to evaluate our own conduct and the conduct of others through “the eye of the stranger” (p. 172). Extending the notion of exchange as social learning to the commercial market, Nohara extols Smith’s demand-led theory of economic growth, premised on the transformative role of merchants in the eighteenth century global economy: expanding markets and thus extending the international division of labor and its presumptively beneficial effects on labor productivity and economic growth.

Nohara’s reading of Smith is further distinguished by its anti-reductionism. Nohara’s aim is “not to synthesize Smith’s overall thought as an integrated system” but to “elucidate . . . how his writings were permeated with discourses on meeting strangers” (p. 11). With regard to Smith’s own theory of commercial society, Nohara underscores the evolutionary-institutionalist character of Smith’s approach, citing numerous ways in which his theoretical models and claims are contingent upon specific institutional conditions — reading Smith’s political economy “not as a universal theory which can be applicable to any occasion but as different models with different assumptions” (p. 175). Following Montesquieu, for example, Smith rejects “state of nature” accounts of the origin and nature of human society or government, looking instead to the evolution of legal and political institutions. Smith also offers a complex analysis of real-monetary relations, highlighting the non-neutral effects on output and employment of changes in the quantity and composition of the aggregate money supply money in the context of paper currency (p. 176). Further, Smith calls attention to negative as well as positive byproducts of free trade, including “conquest, invasion, colonization, slavery, and war” (p. 5). Hence in contrast to canonical readings of Smith’s economic/social theory as mechanistic, universalist, and utopian, Nohara finds that although “he might have intended to be a Newtonian as a reductionist, his discourses in reality were not necessarily so” (p. 16).

In sum, Nohara offers a helpful corrective to the popular Wealth of Nations-only view of Smith’s “economics of cooperation with strangers.” His focus on the productive tensions between familiars and strangers throughout Smith’s writings illuminates the unity of Smith’s project in The Theory of Moral Sentiments and The Wealth of Nations, namely: his efforts to theorize commercial society as an amalgam of overlapping communities, divided yet also coordinated by market and non-market forms of communication and learning.

At the same time, Nohara’s text is beset with significant scholarly and editorial problems. By offering only a brief contextualization of his central thesis (p. 11), he leaves the impression that he is the first to trace the role and significance of strangers in Smith’s thought. For example, he makes no mention of Paul Seabright’s The Company of Strangers (2004) or James Otteson’s Adam Smith’s Marketplace of Life (2002). Nohara offers few Wealth of Nations references to support his broad claims about Smith’s theory of economic behavior, e.g., “Smith regarded economic behavior as a moral sentiment” (p. 174) or “[A]pproval by others rather than material satisfaction is the origin of economic desires” (p. 175). Also, despite its intimate connection to every major topic in his book, Nohara makes surprisingly little use of Smith’s novel concept of the division of labor. Lastly, Nohara fails to recognize how his reading of Smith parallels the political economy of Friedrich Hayek, whom he mischaracterizes as an anarchist whose social theory pays little attention to rules and norms (p. 175). In view of Nohara’s emphasis on communication and the value of competition in Smith, he could have carried his arguments further by exploring how competition itself generates and disseminates social knowledge and thus serves as a crucial form of communication in Smith’s framework. He might also have acknowledged the Whatley/Hayek notion of an exchange-based social order as a catallaxy, the latter term derived from the Greek verb katallasso meaning not only “to exchange” but also “to admit into the community” and “to change from enemy into friend” (Hayek 1976, 108).

Editorially, Nohara’s book was published prematurely, with an undue number of errors and organizational problems: misspelled and mistyped words, grammatical miscues, arguments stated schematically but never fully articulated, repetitive use of textual segments across the manuscript, and several chapters in which the concept of “stranger” appears for the first time in the final sentence. A manuscript written in the author’s second language would presumably warrant greater editorial scrutiny and support; yet in this case the manuscript appears to have received less attention rather than more. As a result, Nohara’s readers are deprived of the opportunity to see his innovative arguments rendered in a more lucid and impactful way.

References:

Hayek, Friedrich A. (1976) Law, Legislation and Liberty, Volume II: The Mirage of Social Justice. London: Routledge.

Otteson, James R. (2002) Adam Smith’s Marketplace of Life, Cambridge: Cambridge University Press.

Seabright, Paul (2004) The Company of Strangers: A Natural History of Economic Life. Princeton: Princeton University Press.

Smith, Adam ([1776] 1981) An Inquiry into the Nature and Causes of the Wealth of Nations, Glasgow edition, volumes 1 and 2, edited by R.H. Campbell and A.S. Skinner with assistance from W.B. Todd, Indianapolis: Liberty Fund.

___ ([1790] 1984) The Theory of Moral Sentiments, Glasgow edition, edited by D. D. Raphael and A. L. Macfie, Indianapolis: Liberty Fund.

 
Robert Garnett is Associate Dean and Honors Professor of the Social Sciences in the John V. Roach Honors College at Texas Christian University. His current research, exploring Adam Smith’s expansive accounts of specialization and exchange in The Theory of Moral Sentiments and The Wealth of Nations, is taking shape as a monograph, provisionally titled Mere Economics: Adam Smith and the Strength of Weak Duties.

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Subject(s):History of Economic Thought; Methodology
Geographic Area(s):Europe
Time Period(s):18th Century