Adam's Fallacy: A Guide to Economic Theology Hardcover – 29 Sep 2006
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"Can be read for pleasure and enlightenment by economists and
non-economists alike." -- Times Literary Supplement, 23 March 2007
About the Author
Duncan K. Foley is Leo Model Professor of Economics at the New School University.
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Foley believes that Smith, in his 1776 classic The Wealth of Nations, commits a fallacy in believing that self interest when interacting with markets in the capitalist economic system creates a more desirable moral system as members of the economy are forced to, as a result, develop an interest and regard for others. There are a number of good reasons why Smith would believe this: property rights for example provide a springboard to self-interest economically speaking (such as owning business premises) whilst engendering a sense of regard for others (only functions if everyone respects each others business premises). Foley, a vehement opponent of this position, gives a good reason why this has proved not to be the case: capitalism has caused widespread socio-economic inequalities, hardly a symptom of care for others and a charitable society.
Foley goes on to give concise, clear and at times quite breathtaking reviews of some of the greatest economist-philosophers of all time. At times it is quite bizarre just how he manages to fit in and explain so clearly several concepts in the space of just a few pages. He begins with Adam Smith, the focal point of the book, before systematically moving onto Malthus, Ricardo, Marx, Veblen and finally Keynes, with other more peripheral contributors in between such as Joseph Schumpeter and Vilfredo Pareto.Read more ›
Of course, even in the "hard" sciences, ideology creeps in - and not just at the level of the observer affecting the observed. The very questions that many hard scientists choose to address come from an ideological stance, but their methods are intended to be scientific, and the same methods can be used in the social sciences, such as economics. Social scientists face a more difficult problem that their theories can change the societies they are studying. Foley makes a great contribution to understanding this problem.
The key issue addressed by Foley is how Smithian thinking (that the invisible hand is "good" and the economics that spring from perfect equilibrium are the best way of organizing society) can be fallacious. It is surprising how deeply embedded (often unconciously) in assumptions used by economists this has become. It have become almost a requirement to assume in economic theory e.g. "rational consumer behaviour" or the existence of a global social optimum, with associated conditions required by neoclassical economic theory. With this approach, mainstream economists have ended up declaring that the best outcome in a cost-benefit model of global warming is one with indefinite and probably accelerating climate change. (See the works of William Nordhaus and his followers).Read more ›