Adam Smith on Reputation, Commutative Justice, and Defamation Laws

50 Pages Posted: 18 Aug 2019 Last revised: 19 Oct 2020

See all articles by Mark Bonica

Mark Bonica

University of New Hampshire - Health Management and Policy

Daniel B. Klein

George Mason University - Department of Economics; George Mason University - Mercatus Center

Date Written: August 15, 2019

Abstract

We interpret Adam Smith on reputation, commutative justice, and defamation laws. We address two major questions. The first question concerns whether Smith thought that “one’s own” as covered by commutative justice included one’s reputation. Several passages point to the affirmative. But reputation is left out of Smith’s “most sacred laws” description of commutative justice. Most importantly, so much of reputation—e.g., “Steve’s work stinks”—does not fit Smith’s description of commutative justice’s rules (precise and accurate). Our reading makes use of older terminology from Pufendorf, Carmichael, and Hutcheson distinguishing “simple” and “intensive” reputation, and suggests that the “reputation” that sometimes appears in Smith’s characterizations of “one’s own” is of a simple variety (“Steve steals horses”) that potentially incites invasion of commutative justice’s three staples—person, property, promises due. On that reading the “reputation” that comes under commutative justice, though not a staple, belongs to the penumbra around the three staples, just as incitement and endangerment belong to that penumbra. We also recruit Hume, who nowhere even hinted at reputation being a constituent of commutative justice.

The second question is: Did Smith favor defamation laws (libel, slander) that reached beyond simple reputation, so as to cover some intensive-reputation detraction? Were Smith to favor intensive-reputation defamation laws (against, say, “Steve’s work stinks”), we would have to count that as another exception made to the liberty principle. Smith’s remarks are mixed, but we think he was rather inclined against aggressive or extensive laws of such kind. (Also, we draw a parallel to patent and copyright.)

We also suggest that if Smith thought that wantonly telling malicious lies like “Steve’s work stinks” was not in violation of commutative justice and, moreover, is best left perfectly legal, those are judgments that the liberal project’s great prophet would hardly want to make plain, because indifferent readers would misunderstand them and adversaries would misrepresent them.

Keywords: Adam Smith, reputation, commutative justice, defamation, libel, slander, perfect rights, natural jurisprudence, esotericism

JEL Classification: A13, B12, K11, K15

Suggested Citation

Bonica, Mark and Klein, Daniel B., Adam Smith on Reputation, Commutative Justice, and Defamation Laws (August 15, 2019). GMU Working Paper in Economics No. 19-24, Journal of Economic Behavior and Organization, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3438041 or http://dx.doi.org/10.2139/ssrn.3438041

Mark Bonica

University of New Hampshire - Health Management and Policy ( email )

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HOME PAGE: http://https://chhs.unh.edu/person/mark-bonica

Daniel B. Klein (Contact Author)

George Mason University - Department of Economics ( email )

4400 University Drive
Fairfax, VA 22030
United States

HOME PAGE: http://economics.gmu.edu/people/dklein

George Mason University - Mercatus Center ( email )

3434 Washington Blvd., 4th Floor
Arlington, VA 22201
United States

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