Adam Smith's Marketplace of Life

I just finished reading Adam Smith's Marketplace of Life by James Otteson. I recommend the book highly. Otteson is a philospher who looks carefully at Smith's Theory of Moral Sentiments. He argues that Smith developed a theory of markets to explain the evolution of moral actions and codes in a society, that later enabled to explain the operation of economic markets in The Wealth of Nations. The same approach underlies both books. Otteson uses the term marketplace rather than the more common term, "spontaneous order." The idea is the same though.

I will be teaching the History of Economic Thought for the first time next semester, and Otteson's book is a great resource in preparation for the class.

Happy New Year

It is now 2010. Is that "twenty-ten" or "two thousand ten"? Who decides? Unlike France, there is not an official organization to keep the purity of the language. Instead, we rely on usage, although the media has a lot to do with what ends up being used. Another way of putting it is that the development of the English language follows an evolutionary process--a process that could be called "spontaneous order." France relies on a government-endorsed process. When I was in Germany on sabbatical, VW ran ads in German magazines that used an English term. (I don't remember the term, unfortunately). When the ads were run in French magazines, the German company could not use the English term in the ads.

We seem to be becoming more like France in our approach to the economy. Johnson Controls will soon be starting a new facility to manufacture batteries for hybrid autos. They are also getting subsidies from the government because the government thinks it knows the technology is promising and should be supported. This government-supported approach sometimes works and sometimes doesn't; although usually follows paths endorsed by politically-important constituencies of the party in power.

It is the increasing reliance of government leadership in the economy that makes me most nervous about the coming year and beyond. Hopefully, I will be wrong and a sustainable recovery will occur.

[I leave tomorrow for Atlanta and the American Economic Association meetings so probably will not post anything new until I return. Again--Happy New Year!]