Comparing Orthodox (N. G. Mankiw) and Heterodox (M. Zafirovski) Economist Views of Adam Smith, the Invisible Hand of the Market, and Laissez Faire: Both Views Completely Overlook the Very Severe Detrimental Impacts on the Macro Economy Created by Smith’s Upper Income Class Prodigals, Imprudent Risk Takers, and Projectors
22 Pages Posted: 19 Mar 2020
Date Written: February 23, 2020
The degree to which Adam Smith’s view, that the opulence of any nation at the macro level was the result of, and was determined by, large numbers of “sober” people practicing the Virtue of Prudence, which Smith demonstrated in Part VI of the Sixth Edition of The Theory of Moral Sentiments in 1790 was connected to the practice of the other Virtues of Self Command( a combination of Temperance and Courage combined), Justice and Benevolence, was ever understood by any economist was severely questioned by Gavin Kennedy in the 21st century. Kennedy argued, in his books, journal articles, and Blog, titled “Adam Smith’s Lost Legacy”, that practically no living economist understood Smith’s approach.
This can be confirmed by analyzing the assessment of Adam Smith made by a highly recognized Orthodox economist, N. Gregory Mankiw, and the assessment made by a highly recognized Heterodox economist, Milan Zafirovski. Both authors agree completely that Smith’s views of the economic process were based on some kind of rational economic man concept, which resulted in Smith’s promulgation of his doctrine of The Invisible Hand of the Market leading to the need for Laissez Faire policies, which, with a few exceptions, would result in private self(ish) interest being turned into a social maximum that benefited all.
Kennedy simply pointed out that Smith’s extensive and detailed discussions of the economic damages done by Upper-Income Class Prodigals, Imprudent Risk Takers, and Projectors required the government to impose preventive measures, laws, sanctions, and penalties against this category of powerful private citizens in order to prevent severe detrimental impacts such as depressions and inflations from hurting the sober people. Needless to say, there are no discussions about such a group of people in either Mankiw’s account or Zafirovski’s account.
The conclusion reached is the same as the conclusion reached by G. Kennedy-there is no current economist who understands what it was that Adam Smith was stating led to the wealth and opulence of nations.
Keywords: Adam Smith, Sober People Prudence Versus Utility, Prodigals, Projectors, Laissez Faire, Virtue Ethics, Utilitarianism
JEL Classification: B10, B12, B14, B16, B18, B20, B22
Suggested Citation: Suggested Citation