The foundations of microeconomics: Adam Smith not Thomas Hobbes

Moral Philosophy: Chris Bertram Makes an Elementary Mistake - Brad DeLong:

Bertram:

Getting the microfoundations right: I ordered a copy of Tomasello’s Why We Cooperate in which he argues, on the basis of detailed empirical work with young children and other primates, that humans are hard-wired with certain pro-social dispositions to inform, help, share etc and to engage in norm-guided behaviour of various kinds.... [T]hat work in empirical psychology and evolutionary anthropolgy (and related fields) doesn’t – quelle surprise! – support anything like the Hobbesian picture of human nature that lurks in at the foundations of microeconomics...

Let's go to the videotape on the foundations of microeconomics: Adam Smith:

Wealth of Nations — Bk 1 Chpt 02: The division of labour, from which so many advantages are derived, is not originally the effect of any human wisdom.... It is the necessary, though very slow and gradual consequence of a certain propensity in human nature which has in view no such extensive utility; the propensity to truck, barter, and exchange one thing for another.

Whether this propensity be one of those original principles in human nature of which no further account can be given; or whether, as seems more probable, it be the necessary consequence of the faculties of reason and speech, it belongs not to our present subject to inquire. It is common to all men, and to be found in no other race of animals, which seem to know neither this nor any other species of contracts.... Nobody ever saw a dog make a fair and deliberate exchange of one bone for another with another dog.... When an animal wants to obtain something either of a man or of another animal, it has no other means of persuasion but to gain the favour of those whose service it requires. A puppy fawns upon its dam, and a spaniel endeavours by a thousand attractions to engage the attention of its master who is at dinner, when it wants to be fed by him. Man sometimes uses the same arts with his brethren, and when he has no other means of engaging them to act according to his inclinations, endeavours by every servile and fawning attention to obtain their good will. He has not time, however, to do this upon every occasion. In civilised society he stands at all times in need of the cooperation and assistance of great multitudes, while his whole life is scarce sufficient to gain the friendship of a few persons....

[M]an has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in his favour, and show them that it is for their own advantage to do for him what he requires of them. Whoever offers to another a bargain of any kind, proposes to do this. Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages....

As it is by treaty, by barter, and by purchase that we obtain from one another the greater part of those mutual good offices which we stand in need of, so it is this same trucking disposition which originally gives occasion to the division of labour.... The difference of natural talents in different men is, in reality, much less than we are aware of; and the very different genius which appears to distinguish men of different professions, when grown up to maturity, is not upon many occasions so much the cause as the effect of the division of labour. The difference between the most dissimilar characters, between a philosopher and a common street porter, for example, seems to arise not so much from nature as from habit, custom, and education. When they came into the world, and for the first six or eight years of their existence, they were, perhaps, very much alike....

As it is this disposition [to truck, barter, and exchange] which forms that difference of talents, so remarkable among men of different professions, so it is this same disposition which renders that difference useful. Many tribes of animals acknowledged to be all of the same species derive from nature a much more remarkable distinction of genius, than what, antecedent to custom and education, appears to take place among men. By nature a philosopher is not in genius and disposition half so different from a street porter, as a mastiff is from a greyhound, or a greyhound from a spaniel, or this last from a shepherd's dog. Those different tribes of animals, however, though all of the same species, are of scarce any use to one another.... Among men, on the contrary, the most dissimilar geniuses are of use to one another; the different produces of their respective talents, by the general disposition to truck, barter, and exchange, being brought, as it were, into a common stock, where every man may purchase whatever part of the produce of other men's talents he has occasion for...

Adam Smith does not say: "the propensity to steal, pillage, rape, burn, and kill..." He says: "the propensity to truck, barter, and exchange one thing for another... to make a fair and deliberate exchange..."

The foundation of microeconomics is not the Hobbesian "this is good for me" but rather the Smithian "this trade is good for us," and on the uses and abuses of markets built on top of the "this trade is good for us" principle.

If microeconomics's foundations were as Bertram claims, Smith would not write:

It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest...

but would instead write:

Be wary of the butcher, and only enter his shope armed and with loyal and armed attendants at his back. For from his regard for his own self interest you cannot expect your dinner but rather that he will slaughter you and sell you to somebody else as long pig...