Deriving 'General Principles' in Adam Smith: The Ubiquity of Equilibrium and Comparative Statics Analysis Throughout His Works

38 Pages Posted: 17 Jul 2015 Last revised: 29 Jan 2017

See all articles by Glory Liu

Glory Liu

Stanford University, Department of Political Science, Students

Barry R. Weingast

Stanford University, Department of Political Science

Date Written: January 27, 2017

Abstract

This paper contributes to the debate over the unity in Smith's corpus by emphasizing Smith's pervasive methodological approach based on an assumption of self-interest. Specifically, Smith consistently relies on equilibrium arguments to explain why a given pattern of economic, political, or social interaction is stable; and comparative static arguments to explain how a stable pattern changes. Some scholars have noted this technique in Smith's economics; however, missing in the literature is an appreciation for Smith’s usage of equilibrium and comparative statics arguments virtually every topic that he studies. As we demonstrate, this includes his explanation of morality and benevolence; the theory of languages; the political economics of development; and his theories of law, politics, and government, such as the form of government, property rights, family structure, and virtue in his famous “four stages” theory of history. We close the paper by arguing that equilibrium and comparative statics analysis has significant implications for the contents of Smith's so-called “missing second book” on government, law, and jurisprudence. Finally, this approach makes it easier to see that Smith's historical jurisprudence is more than narrative: it contains a great many theoretical explanations in the form of equilibrium and comparative statics.

Keywords: Adam Smith, equilibrium analysis, political-economic development

JEL Classification: B12, B38, D74, D78, H11, K10, N43, P16

Suggested Citation

Liu, Glory and Weingast, Barry R., Deriving 'General Principles' in Adam Smith: The Ubiquity of Equilibrium and Comparative Statics Analysis Throughout His Works (January 27, 2017). Stanford Law and Economics Olin Working Paper No. 483. Available at SSRN: https://ssrn.com/abstract=2631299 or http://dx.doi.org/10.2139/ssrn.2631299

Glory Liu

Stanford University, Department of Political Science, Students ( email )

Stanford, CA 94305
United States

Barry R. Weingast (Contact Author)

Stanford University, Department of Political Science ( email )

Stanford, CA 94305-6010
United States
650-723-0497 (Phone)
650-723-1808 (Fax)

HOME PAGE: http://https://www.stanford.edu/group/mcnollgast/cgi-bin/wordpress/

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
92
Abstract Views
674
rank
290,454
PlumX Metrics