Monday, December 21, 2015

Gavin Kennedy — Why Adam Smith Matters When Reported Accurately


Gavin Kennedy schools Randy Wray in Adam Smith on the invisible hand metaphor.

Adam Smith's Lost Legacy
Gavin Kennedy | Professor Emeritus, Heriot Watt University

15 comments:

Matt Franko said...

" the metaphor of “an invisible hand” have not read his “Lectures on Rhetoric and Belles Lettres”, in which he describes the role of metaphor in rhetoric."

All the MMT top-enders exhibit a lack of awareness regarding use of figures of speech of which a metaphor is a type...

They use the word "money" as a technical term when it is a manifest metonym (figure of speech) if not in fact a metalepsis (2nd order metonym)...

lastgreek said...

Also by GK,

"Not Sure About Chomsky's Version of Adam Smith"

http://adamsmithslostlegacy.blogspot.ca/2009/05/not-sure-about-chomskys-version-of-adam.html

Matt Franko said...

Then here is Kennedy himself the alleged figure of speech expert:

"L. Randall Wray has contributed mainly to theories of money and he is worth reading. "

LOL!!!

Matt Franko said...

"In WN he referred to the arithmetic addition of a merchant’s capital to what we would call GDP, if his felt insecurity about sending it abroad led him to invest domestically. "

Impossible today to "send a USD abroad..."

But possible to ship gold/silver back then....

MRW said...

@Matt, [I was out of the country with just my phone when I saw your metronym reply to me last week. Thanks. too fucking complicated to respond.]

"All the MMT top-enders exhibit a lack of awareness regarding use of figures of speech of which a metaphor is a type....They use the word "money" as a technical term when it is a manifest metonym (figure of speech) if not in fact a metalepsis (2nd order metonym)..."

I don't think they are unaware. I heard Mosler at an event honoring Paul Davidson say that Davidson would chastise him for using the term 'money' and not calling it 'net financial assets', iirc.

Wray calls it IOUs. Joe Public zones out at that.

MRW said...

Oh yeah, I was going to tell you last week that what you described about Trump was something like a franchise, wherein he would be an overseer, or manage the property somehow.

That's not what Trump did. At least not then. He sorta' revolutionized the real estate biz. He did what marketing genius and fashion designer Pierre Cardin did at the time (during the 70s; heard this from his US prez in the 80s). He retailed the fashion design biz. Before Cardin, the top French couture houses were ateliers with a protected small insular clientele. Cardin did what stores like Hermes, or merchandizing giants did. They found sources, got exclusives, and put their names on it. No one knew the difference. Cardin did it with his name. First designer to do it. Everyone thought Cardin had huge perfume and accessories biz. Nope.

So what Trump did was similar to Cardin. He put his name on buildings but he didn't run them. Nor did he build them. He may have a management company now with his kids, but not at the time. He just collected a fee for putting his name on other people's projects. He knew foreigners like the Japs and Arabs wanted to buy US real estate, but foreign ownership was pissing Americans off. Reached its zenith in 1989 when Japanese investors were buying US NYC landmarks.

Trump branded himself like Cardin, and was the first to do it with real estate. It's the underlying reason why he became a publicity hound. Can only imagine what he'll be like if he wins presidency, spend eight years in office, and then goes back to his old biz. He'll be asking for 50% of the building cost or value.

lastgreek said...

@MRW

Trump branded himself like Cardin, and was the first to do it with real estate. It's the underlying reason why he became a publicity hound

Lily Langtry beat both of them to it -- celebrity endorsement ;)

MRW said...

@lastgreek,

;-) But it was endorsement. She endorsed products like Pear's Soap. Like football players sponsoring known products in the 1960s. Couture designer Cardin, however, passed the products off as his own; American women did not know it. Ditto Trump. Sort of like LG and Aiwa (?) making televisions that the BIGs put their name on in Korea and Japan.

John said...

Matt: "LOL!!!"

What's to laugh about? Wray is an outstandingly brilliant economist and thinker. Just about everyone here thinks so, except you. Why is that?

lastgreek said...

@MRW

Good point, thank you.


John said...

Apparently if Trump put the stupendous amount of money he inherited from his daddy in index linked funds he'd be about ten times richer than he actually is (he may in fact not even be a billionaire by many estimates). http://fortune.com/2015/08/20/donald-trump-index-funds/

That's Trump the businessman for you. A dismal failure were it not for his use of the bankruptcy laws and his rather peculiar strategy of marketing himself: the silly hair, the admission he wants to fuck his daughter, his reputed prowess in wrestling or some such nonsense, his knowingly false allegation that Obama is a Kenyan-Indonesian Muslim and not an American Christian, and on it goes.

This marketing campaign has now gotten out of control - near permanent free business publicity in all media for the two years it takes to choose a presidential candidate has now mutated by accident into a campaign for the presidency! And now this obscene figure may genuinely think he's capable of being President of the United States! Other silly people have been president, but Reagan was asleep by 5 p.m. and Dubya wasn't allowed to play with the big toys after Iraq. Trump is different: he's as stupid as Dubya and as maniacal as Kennedy. That could spell the end for planet earth.

Magpie said...

I'm not sure how Prof. Wray interprets the "invisible hand" thing, so if one accepts Prof. Kennedy's ideas about the metaphor, the latter might still be right.

However, Kennedy is referring to a review of Wray's book "Why Minsky Matters" (penned by one Ishan Bakshi, for the Business Standard website) and seems to attribute the text to Wray.

That is, these words, which Kennedy quotes:

"He discarded Adam Smith's notion of the invisible hand guiding the market economy."

Were written by Bakshi, not Wray.

Like I said before, maybe Wray agrees on that. And maybe he is wrong. Maybe Bakshi is merely repeating what Wray wrote. I don't know.

It's just a matter of giving Caesar's what's Caesar's.

Matt Franko said...

John I'm laughing because Kennedy here is trying to school Wray about the use of figures of speech and then in the next breath recommends reading about the "theory" of another figure of speech...

Matt Franko said...

Here is the quote from Smith:

"…the invisible hand…
[The rich] consume little more than the poor, and in spite of their natural selfishness and rapacity…they divide with the poor the produce of all their improvements. They are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society, and afford means to the multiplication of the species.

The Theory Of Moral Sentiments, Part IV, Chapter I, pp.184-5, para. 10."

I dont think Wray/Bashki is being unreasonable bringing the concept of equilibrium into it...

John said...

Matt, sorry about that. I misunderstood your comment.

Smith also uses the term "invisible hand" in claiming that merchants are led by an "invisible hand" in favouring their own country over others to such an extent that they would not allow monetary considerations to effect their judgement.

What would he have made of the gutting of American manufacturing and building the same plants in China...