George Stigler as a Reader of Adam Smith

Abstract

We consider George Stigler as a reader of Adam Smith by examining Stigler’s theory of how complicated texts ought to be edited. The editor, in his account, ought to help readers appreciate what is distant from their understanding, to appreciate what the author knows but the reader does not. Stigler drew attention to Smith’s failure to apply self-interested considerations to his theory of policy. We ask whether this apparent gap was Smith’s fault or a misunderstanding of Smith caused by lack of editorial guidance. Smith believed people come to be persuaded of what is in their interests, but that was not apparent from the texts Stigler used.

A theory of behavior, such as our profit maximizing assumption implies, could have come from psychology, but of course it did not.

In fact Smith’s professional work on psychology (in the Theory of Moral Sentiments) bears scarcely any relationship to his economics, and this tradition of independence of economics from psychology has persisted despite continued efforts … to destroy it.

George J. Stigler (1960, 44)

Earlier versions were presented at the International Adam Smith Society conference in Palermo, June 2017, at “George Stigler in the twenty-first Century” in Chicago and at the International Adam Smith Society conference in Viña del Mar, Chile. We benefitted from all the helpful comments. Stephen Stigler solved a mystery for us and Barry Weingast’s comments helped us to focus the argument. Craig Freedman gave us useful suggestions. The remaining mistakes are ours.