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An anatomy of authority: Adam Smith as political theorist

Author(s): Elias L. Khalil

Source: Cambridge Journal of Economics , January 2005, Vol. 29, No. 1 (January 2005), pp. 57-71

Published by: Oxford University Press

Stable URL: https://www.jstor.org/stable/23603448

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Cambridge Journal of Economies 2005, 29, 57-71 doi: 10.1093/cje/bei014

An anatomy of authority: Adam Smith as political theorist

Elias L. Khalil*

Authority for Smith arises ironically from the desire to attain a high station in life. Given that most people fail, they 'free ride': they identify their ego with high-ranking agents, through 'vicarious sympathy'. Vicarious sympathy gives rise to status and, if combined with utility, would occasion political allegiance, the basis of political order (an invisible hand argument). Smith's theory challenges liberal political theory (of the classical type à la Locke or of the social type à la Bentham). It also challenges traditionalist political theory that deposits authority in the hands of selected guardians (from Plato to Strauss).

Key words: Vicarious sympathy, Social contract versus political contract, Status, Rank, Nationalism JEL classifications-. B3, D7

Introduction

What is political authority? Does authority as exercised by the state over its citizens differ from power as exercised by referees in basketball games, by hegemonic states over other states, or by monopoly firms?

Political philosophers and theorists from Socrates and Locke to Bentham and Nozick have offered divergent views on authority and how it relates to power. This paper shows that Adam Smith advances, in The Theory of Moral Sentiments (TMS), a view based on psychology that sets him apart from most political theorists. Many authors have discussed Smith's political psychology (e.g., Cropsey, 1977, 1987; Winch, 1978; Haakonssen, 1981; passim Hont and Ignatieff, 1985; Hermann, 1986; passim Jones and Skinner, 1992; Kressel, 1993; Gallagher, 1998; Griswold, 1999; Barry, 2000; Kahn, 2000; Cottam and Cottam, 2001; Rothschild, 2001; Kuklinski, 2002). However, much of the secondary literature amounts to hurried commentaries without noting, as is shown here systematically, the unpleasant implications of Smith's view with regard to both traditionalist and modern (i.e., liberal) political theories. Stated broadly, traditionalist theories—such as the Platonic/Straussian legacy—justify the

Manuscript received 21 October 2002; final version received 6 June 2003. Address for correspondence-. Konrad Lorenz Institute, Adolf-Lorenz-Gasse 2, A-3422 Altenberg,

Austria; email: [email protected]

*Earlier versions benefited from the comments of James Buchanan, Richard Posner, Walker Todd, Hans Jensen and two anonymous referees. The final version benefited also from the support of Vassar College Research Committee. The usual caveat applies.

Cambridge Journal of Economics, Vol. 29, No. 1, © Cambridge Political Economy Society 2005; all rights reserved

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58 Elias L. Khalil

primacy of the authority of élites because subjects supposedly cannot govern their own affairs. In contrast, modernist theories—such as the classical liberal legacy of John Locke and, what one may call, the 'social liberal' legacy of Jeremy Bentham and Karl Marx (Khalil, 2002)—stress the primacy of civil society because subjects supposedly can govern their own affairs. For Smith, authority, which involves allegiance, differs fundamentally from power

as wielded by monopolists, sports' referees, hegemonic states, and so on. Economists interested in collective action, in the role of constitutions, and in the behaviour of politicians and bureaucrats generally do not pay attention to political psychology. In particular, public choice theorists have broadly failed to come to grips with the phenomenon of political leadership or authority. To remedy this situation, James Buchanan and Viktor Vanberg (1989) attempted to account for leadership. They pro posed that leaders simply occupy a function in the system of division of labour, in which they specialise in the skill of constitutional construction, in no way differently from surgeons or plumbers.

Smith was highly critical of such a view of authority as expressed in his day by the social contract theory of John Locke (Khalil, 1998). While other thinkers—especially in the 19th century, such as Benjamin Constant, Madame de Stael and Francois Guizot—also criticised social contract theory, they still adhered to classical liberalism. Such liberalism, though, has to become normative. While Smith criticised social con tract theory, he developed a positive account of authority that undermines the liberal project. Smith viewed the state and the citizen as involved in a symbiotic relation. Smith constructed his view by observing the natural sentiments of men in society. As men act on their natural sentiments, admiring the rich and powerful, a political order arises without their design. This is probably another example of the invisible hand (Khalil, 2000A, B). This paper reconstructs Smith's theory around four questions, discussed in four

sections. First, what is the origin of rank, i.e., the distinction accorded to successful agents, as motivated by the admiration that men hold for each other? Second, how does a particular rank become widely accepted in society, what is termed here 'social rank'? Third, how does social rank, in turn, evolve into 'status'—understood here as more or-less rigid social stratification? And fourth, the core of the paper, how does status, in turn, develop into an authority relations. The concluding section highlights how Smith's theory diverges from liberal theory, and resembles that of Joseph Schumpeter.

1. The origin of rank: admiration

Social psychologists have recorded that shyness may signal submissiveness and, hence, may play a role in relations of dominance. Shyness, as widely agreed (e.g., Kagan, 2001), expresses an innate temperament that characterises a person independently of social interaction. Shyness as an innate temperament cannot be used to explain the origin of rank, which involves social interaction. To his credit, Smith does not start with innate temperaments, which would pre-empt the theoretical effort to explain the phenomenon of authority. Smith rather commences with agents interacting with each other—and how they consequently rank one another. This ranking, with regard to a specific ability, determines the allocation of admiration (Khalil, 1996) and, as shown here, is at the core of the nature of authority.

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An anatomy of authority 59

Figure 1 summarises Smith's account of the ranking process. The spectator A (As) is equidistant, to signify neutrality or objectivity, from the stations of persons B and C. As judges whether the potential of B (Bp) with regard to a particular ability is superior or inferior to the potential of C (Cp) with respect to the same ability. A" wants to estimate the distinction of Bp, situated in the first station, in comparison to Cp, situated in the second station. The spectator, acting as a competent and impartial judge, should be able to determine which agent ranks higher than the other, i.e., which agent has more admirable potential. The agent with the capability that receives the highest ranking or admiration of spectators becomes more prominent, depending on the importance of that ability in the particular society:

At the head of every small society or association of men, we find a person of superior abilities; in a warlike society he is a man of superior strength, and in a polished one of superior mental capacity. (LJ(B) 12)1

Smith admits that it is 'very difficult' to identify the characteristics which occasion authority. However, this difficulty does not prevent him from identifying age, wisdom, physical strength, wealth, and antiquity as such characteristics (L,A) v. 129, see also LJ(B) 12).2 In another text, Smith argues that the private man who is not born into the nobility has to rely on his talents and efforts in order to distinguish himself (TMS I.iii.2.5).

2. From rank to social rank

Why does the admiration of a capability, i.e., the ranking of agents according to their capability under focus, turn into what one may call 'social rank'? Social rank involves a system that specifies what is desirable. One may classify agents according to abilities without turning the admired rank into a social rank. For instance, one may rank agents

3rd station As ► Bp 1st station

Cp 2nd station

Fig. 1. Three-station model of the comparison of capability of the other.

1 All references are to The Glasgow Edition of the Works and Correspondence of Adam Smith, which identifies the book or part, chapter, section, and paragraph numbers. The abbreviations follow the ones suggested by The Glasgow Edition: WN for The Wealth of Nations (Smith, 1976A ); TMS for The Theory of Moral Sentiments (Smith, 1976B); LJ(A) for Lectures on Jurisprudence-. Report of 1762-63 (Smith, 1978); LJ(B) for Lectures on Jurisprudence: Report dated 1766 (Smith, 1978). 2 For a detailed discussion of the four circumstances that occasion high distinction and rank, see The

Wealth of Nations (WN V.i.b.3-8).

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60 Elias L. Khalil

according to the ability to differentiate between different species of birds, paint or write poetry without turning the admired ability into a social rank, i.e., the object of desire. The sufficient condition for rank to develop into social rank is that the capability under focus becomes of particular importance, i.e., becomes the object of desire. A rank can become the object of desire given changes in technology, resource availability, organisational relations and threats that face the society. Agents must be able to exert 'imaginative sympathy' in order for an admired,

important ability to become the object of desire. The term 'imaginative sympathy', as used by Smith, denotes a different emotion from 'sympathy proper' in Smith. As argued below, and contrary to the assertion of Knud Haakonssen (1981, p. 129), the imaginative sympathy that underpins the principle of authority is dissimilar to the sympathy proper that underpins the virtues. As is well known, sympathy proper in Smith is the basis for the judgment of propriety, and the coresponding virtue of self command, and is the basis of the judgment of merit, and the corresponding virtues of beneficence, justice and prudence (see Khalil, 1990). Sympathy proper is a general capacity that 'Nature' equips humans with to enable self-preservation, propagation, and social order (TMS IV.ii.v, see also VI.ii. 1.20).

Stated differently, sympathy proper is not a motivation to promote propriety (the virtue of self-command) or merit (the virtues of beneficence, justice and prudence). The motivation can only be explained after understanding the role of sympathy as a mechanism that allows one to travel to the station of others. The mechanism permits the agent to judge whether the expression of emotion is within the limits of taste (propriety of action)—to which Smith dedicated part one of TMS. The mechanism also permits the agent to judge whether the action is meritorious—to which Smith dedicated parts two and three of TMS (Khalil, 1990). Smith also employed sympathy qua mechanism to account for respect and admiration; that is, how spectators judge whether others are exercising their best ability or wasting their ability in frivolous pursuits (Khalil, 1996).

This paper is interested in another meaning of the term 'sympathy', viz., imagina tive sympathy. Imaginative sympathy is the relevant concept to account for social rank and, eventually, political subordination (i.e., authority). In this role, sympathy acts as an imaginative pleasure in the sense that the benefit that comes from a higher station is imagined as happening to one's own person.

The simple ranking of ability according to any trait becomes social rank when the distinguished or admired trait is, in addition, the object of desire, i.e., the object of imaginative sympathy. One may admire the ability of a mountain climber, but such ranking becomes social rank if one also desires to be a mountain climber. Ambition amounts to the desire to achieve the distinguished trait. The desire has to be an all consuming drive, as the one that epitomises entrepreneurs (see Schumpeter, 1989; Khalil, 1997A). The mere thought of abandoning ambition, i.e., the acceptance of a lower station, is usually viewed by ambitious agents as 'worse than death' (TMS I.iii.2.1). Ambition is based on the imagined belief that the higher station expresses the perfect state (TMS VII.iv.25). The desire to attain a trait leads us to look up to distinguished people as our leaders and directors, from whom we learn the things that we admire in order to become leaders and directors (TMS VII.iv.24).

The desire for a higher station may not occasion what is discussed below as status if the low-rank agent believes that he can emulate the directors and become a leader

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An anatomy of authority 61

himself. In this case, the desired station would become the 'object of envy' (TMS I.iii.2.1). The desire for higher distinction stems from the need to be noticed. The desire does not arise from pecuniary interest, or what Smith calls 'utility' (TMS I.iii.2.1).

The term 'utility' as used by Smith, and as also used in this paper, corresponds to the notion of 'material welfare' in the sense of shelter, food, medicine, entertainment and so on. The sum of the material welfare of individuals is what Smith calls 'public benefit'. In contrast, the desire for distinction (which is at the origin of authority) corresponds to what one may dub 'symbolic welfare', which confirms one's self-image or self-esteem. The pursuit of symbolic products is well noted by economists and sociologists. But such theorists usually model such products as tools to gain status. Psychologists, though, recognise them as ends in themselves, what Ronit Bodner and Drazen Prelec (2001) call 'self-signalling' activity that the agent undertakes to signal to himself his own importance. Modern economic theory generally does not regard self-signalling or symbolic welfare as different from material welfare—both are sup posedly tastes that are fully fungible in a unified utility function (Khalil, 2000C).

Adam Smith, however, seems to regard material welfare as differing from symbolic utility, as if they stem from two separate principles. For him, the desire to become the object of emulation, to achieve the higher distinction, captures the imaginations of ordinary men:

Of such mighty importance does it appear to be, in the imaginations of men, to stand in that situation which sets them most in the view of general sympathy and attention. And thus, place, that great object which divides the wives of aldermen, is the end of half the labours of human life; and is the cause of all the tumult and bustle, all the rapine and injustice, which avarice and ambition have introduced into this world. People of sense, it is said, indeed despise place; that is, they despise sitting at the head of the table, and are indifferent who it is that is pointed out to the company by that frivolous circumstance … But rank, distinction pre-eminence, no man despises, unless he is either raised very much above, or sunk very much below, the ordinary standard of human nature … (TMS I.iii.2.8) As to become the natural object of the joyous congratulations and sympathetic attentions of mankind is, in this manner, the circumstance which gives to prosperity all its dazzling splendour. (TMS I.iii.2.9)

For Smith, even the poor man, who desires to reach a higher station, but goes un noticed, finds his most ardent desires and hopes dampened (TMS I.iii.2.1). However, the desire and admiration of a trait need not occasion social rank. Social rank emerges only if the spectator also desires the admired trait. If spectators think they can attain the high-rank station, they try to emulate the distinguished. Through imaginative sympathy, low-rank agents sustain their ambition, i.e., the 'passion, when once it has got entire possession of the breast, will admit neither a rival nor a successor' (TMS I.iii.2.7). In this light, social rank is not imposed from a source that is outside the self. It rather stems from what the self wants to become.

3. From social rank to status

Social rank evolves into 'status' when a sufficient number of agents realise that they cannot attain the desired station. They can only approximate the enjoyments associated with the higher station through free riding, i.e., enjoying the station of

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62 Elias L. Khalil

others vicariously. I call such free riding 'vicarious sympathy' afforded by imaginative sympathy, in order to distinguish it from the sympathy proper mentioned above. In vicarious sympathy, the agent behaves somewhat similarly to the egocentric

actor. The agent does not transport himself to the station of others. He rather imagines the social rank or distinction of others as pertaining to his own person (TMS I.iii.2.1). In this maimer, he can capture some of the satisfaction that successful individuals are experiencing. A proud agent that refuses to bask in the shadow of successful giants may invite pain on himself in the sense of suffering from frustrated ambition. To avoid such a fate, the agent may expend some resources (such as club fees or

frivolous consumption) to imagine the distinction experienced by successful others. This expenditure of resources may not be different analytically from masochism. In both cases, there is the loss of benefit (pain) in order to gain vicariously some pleasure (in case of masochism) or some distinction (in case of status). The act of vicarious sympathy may undermine altruistic, other-directed sentiments, which Smith criticised (Khalil, 2001). However, it is the foundation of status and identification with other entities and causes.

The man with the distinction that is the object of desire becomes the centre of 'expectation', i.e., attention (TMS I.iii.2.1). The desire to attain greater distinction combined with the realisation that one does not have, for some reason, the required ability explains why low-rank agents identify with high-rank agents. Agents of less desired rank wish high-rank agents immortality to sustain the benefit of identifying with the status group, i.e., the imagined 'perfect and happy state' (TMS I.iii.2.2). Status arises when a simple rank is transformed into a social rank and, in turn, when some agents realise that they lack the ability or circumstance to succeed, i.e., to attain the desired rank:

By the admiration of success we are taught to submit more easily to those superiors, whom the course of human affairs may assign to us; to regard with reverence, and sometimes even with a sort of respectful affection, that fortunate violence which we are no longer capable of resisting. (TMS VI.iii.30)

This phenomenon of identification explains why the affairs of the noble are, for such low-rank agents, more important than the deaths of thousands of ordinary rank (TMS I.iii.2.2).

In another chapter, Smith notes that the misfortunes of kings and princes are the most interesting subjects of tragedies and romances (TMS VT.ii. 1.21). Spectators seem to give more weight to the grief of a magnificent prince than to the grief of a commoner. Humans are fascinated by the great and are less concerned with the misery of common people (TMS VI.ii. 1.20). Smith laments human nature for its lopsided disposition over the misfortune of the distinguished (TMS I.iii.2.2). As a result of this disposition, status appears and 'order of society' emerges. The admiration, desire, identification with the higher rank, and the resulting order do not hinge on utility in the sense of material welfare (TMS I.iii.2.3, see also VI.ii.1.21). Submissiveness to one's superior stems from admiration and the desire to be identified with them, rather than from any material benefit. Even when the order of society, i.e., the material interest of individuals, dictates that we should oppose the reigning king, our habit of desiring his station prevents us from the required action (TMS I.iii.2.3). That is, people may not follow 'reason and philosophy' and oppose the monarch. They usually

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An anatomy of authority 63

follow 'Nature' and submit to the monarch's authority out of symbiotic sympathy. Therefore, it requires great resolution to treat kings as men and argue with them as equals (TMS I.iii.2.3). To stand up to the king, the opposing men must be recognised as magnificent as well. Only when the conduct of the king becomes excessively injurious would the subjects become able to summon their resolve to oppose him— and even then they often lose their resolve (TMS I.iii.2.3).

This explains why, for Smith, revolutions are rare. In public choice theory (Olson,1965), the scarcity of revolution is blamed on the free riding problem. For Smith, to oppose the king or, in current modern democracies, to oppose the national consensus concerning issues of profound importance is rare because it would be stigmatised as non-patriotic and even treacherous in the case of imminent foreign invasion. Smith seems to argue that the consensus of the body politic, as expressed in the flag or the king, is so great and enormous that it takes tremendous courage for even magnificent people to dissent.

In short, status does not depend only on the distinction of the trait, but also on what the agent would have liked to become, but cannot achieve for one reason or another. So, high-rank agents who are the object of desire and emulation act, in effect, as the alter-ego of the low-rank agents who cannot attain the high-rank station. Such high status agents wield authority, in the sense of influence, as others act in awe of their ability or possessions. This idea entails that high-rank agents signify the alienated desire of low-rank agents who submit to their station. Such a view has an important implication for the theory of the state as reviewed below.

Interestingly, Smith dedicated a chapter (TMS I.iii.3) to expressing ambivalence towards the origin of authority. For Smith, the disposition to admire the rich and neglect persons of poor and mean conditions 'is necessary both to establish and maintain the distinction of rank and order of society'. The disposition, however, is, at the same time, 'the great and most universal cause of the corruption of moral sentiments' (TMS I.iii, 3.1). Donald Winch (1978), who traces Smith's intellectual development, takes it to mean that Smith was later critical of what I call vicarious sympathy. A close examination of the chapter, however, reveals the source of Smith's concern (Khalil, 2002). For Smith, people may become too weak, and their admir ation of authority may become excessive. People may start to follow appearances of distinction rather than what the appearances are supposed to signify, namely, true distinction of character. In this chapter, Smith was not critical of vicarious sympathy per se, but rather critical of its excesses. Smith was afraid that the populace might become less critical and, consequently, uphold an unworthy ruling élite that might have outlived its distinction (Khalil, 2002).

4. From status to political subordination

4.1 The dual principles of utility and authority When does status develop into political subordination or political contract? This development involves the mutation of authority, based on status relations, into subordination. Vicarious sympathy with a high-status agent involves an authority relation, in which the low-status one emulates the wishes and actions of the high-status agent. Such emulation does not entail subordination until a political contract is entered into between the two. One may desire the station of an entrepreneur, and

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64 Elias L. Khalil

realise that one cannot attain it, without it leading one necessarily to enter what is termed here an 'organisational contract' with the entrepreneur, i.e., employment.

In the political contract, what Smith calls 'allegiance', the principle of interest has to balance the principle of authority:1

This principle of duty of allegiance seems to be founded on two principles. The 1st we may call the princij (LJ(A) v.l 19) call the principle of authority, and the 2d the principall of common or generall interest.

For Smith, authority does not stem from utility as stipulated in the social contract theory of John Locke and others. Given the independent source of authority, however, the principle of authority can be balanced with the principle of utility as illustrated in the employment contract and the political contract. For Smith, who was greatly influenced by the argument of David Hume (2000),2 the balance of the principle of authority and the principle of utility is at the origin of allegiance, even when authority fails to satisfy the interest of the subjects. Note that the balance may tip in favour of revolution when the subjects no longer admire authority, even when that authority succeeds in satisfying their interest. This balance is a precarious affair, and it would be outside the scope of the paper to discuss it further. Smith maintained that low-rank agents are supposed to express, at least implicitly,

allegiance towards high-rank agents under whom the low-rank agents enlist their services. As shown below, such allegiance, for Smith, is not unconditional. It is rather based on the belief that the leader or the authority is concerned with the interests of the

subordinated subjects. If one is to distinguish allegiance from loyalty, the belief that imbues the allegiance expressed by members of the state or the firm differs from the trust that permeates loyalty as characterised in the bond between friends, inter-firm relations and inter-nation allia

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