Paper 5 (3) ,Lesson 1

Ruskin
06 -JULY-13

Adam Smith,John

That was a seminar on education. The discussion was on how to save public education. The
participants were nearly unanimous that teachers in the government schools were poorly
motivated, despite drawing higher salaries compared to those in the private schools. One
participant suggested that declining moral values has been the cause for the low level of
motivation on the part of teachers. In his view, teachers did not feel morally responsible for
the welfare of the students. He wanted to say that they had become too selfish. That is to
say that selfishness of man is the problem and inculcating concern for public good is the
remedy.
Such a view is part of religious legacy of mankind: all major religions condemned selfcenteredness. But to Adam Smith (1723-90) self- centeredness is not a weakness to be
overcome but a predictable human predisposition that can lead to public good.
Smith argued that self- interest can provide sustainable basis for the economic cooperation
because 1) each one is born with it, without an exception and 2) it makes predictions
regarding economic behavior easy.
In The Wealth of Nations (1776) he wrote, 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. Their self- love
promotes public good, though it is not their intention. He neither intends to promote the
public interest, nor knows how much he is promoting it. He intends only his own gain, and
he is in this, as in many other cases, led by an invisible hand to promote an end which was
no part of his intention. Let each man pursue his interest; Smith argues, out of such selfinterest based actions, an invisible hand will emerge to take care of the society. The
arguments of the moralists against self- interest are misplaced; for they dont see the hand
that is promoting the collective good, whose fuel of motion is nothing but self-interest.
Smith even writes that actions based on self- interest lead to better outcomes than those
based on concern for public good. By pursuing his own interest he frequently promotes
that of the society more effectively than when he really intends to promote it. I have never
known much good done by those affected to trade for the public good. It is an affectation,
indeed, not very common among merchants, and very few words need be employed in
dissuading them from it.
So if there is nothing wrong in pursuing self-interest, if such a pursuit is good for the
society, then using such an ideological position how do we reform institutions? More
specifically, what would be Smiths suggestion to improve government schools in India?
Smith would argue, both good teachers and bad teachers are paid same scales in
government schools, and their employment is for lifetime, so there is no self- interest in
doing the job well. Make teachers job far less secure than it is now, let the bad ones be
forced out of the government schools, then they will try to do their job well. Moralizing is
not the solution, but making their jobs less secure is. Smith would surely propose same
solution to reduce corruption in Indian bureaucracy. Smith actually said that In the
university of Oxford, the greater part of public professors have given up even the pretence
of teaching because their salaries didnt depend on how many students were taking their
courses.
When USA did better than USSR, South Korea than North Korea, West Germany than East
Germany in creating wealth, it was proved that self - interest based systems that is what
capitalism is turned out to be better than the work-for others based. The clinching
success of market all over the world amounts to, as Buchholz calls in his New Ideas From
Dead Economists, Smiths second coming.

Paper 5 (3) ,Lesson 1

Ruskin
06 -JULY-13

Adam Smith,John

Smith favored market. He also favored free trade. This doesnt mean Smith did not see any
role to the state. He said state should have a role in erecting and maintaining certain
public works and certain public institutions which it can never be for the interest of any
individual or, or small number of individuals, to erect and maintain
Nor did he think that self-interest would do only good. About the merchants he said,
People of same trade seldom meet together, even for merriment and diversion, but the
conversation ends in a conspiracy against the public, or in some contrivance to raise
prices.
Nor he thought justice would automatically come from the market. On the complaint of the
merchants and manufacturers on rise of prices due to wage rise, he comments, they are
silent with regard to the pernicious effects of their own gains. They complain only of those
of other people. Smith recommended higher tolls for luxury carriages, which again reveals
his view that state should intervene in changing outcomes.
Think on this
In his Unto This Last, John Ruskin argued that concern for the other and not self-interest
should be the basis of economic organization. Ruskin wrote, The soldiers profession is to
defend, the pastors to teach, the lawyers to enforce justice and the merchants to
provide. Gandhi was inspired by this idea.
I think whether self-interest should be the basis of work or not depends on the work. Civil
Disobedience Movement wouldnt be possible if people narrowly calculate their selfinterest. It is based on the people who are willing to give up personal comforts.
But to think every work requires concern for the other as its primary motive is wrong. It is
easier to mobilize or coordinate long-run activities on a big scale on the basis of selfinterest.
Society requires altruism as well as self-interest. A good society is one that uses both and
at right places. In general we can take a position that self-interest should be given the first
chance altruism only when self-interest cant do the job. After all human greed is
inexhaustible and altruism is limited.

John Ruskin
John Ruskin (1819-1900) says in his Unto This Last that determining price as per demand
and supply is unjust. If you take 10 hours of work from a craftsman, you should pay him
with your 10 hours of work. If you think your skill is of a higher kind that required much
training and education, you can compensate the craftsman with fewer hours of your work.
But what you pay should not depend on how many craftsmen there are. The equity can
only consist in giving time for time, strength for strength and skill for skill This is wholly
independent of any reference to the number of men who are willing to do the work.
Ruskin thus held that demand and supply forces are fundamentally unjust. This position is
highly unorthodox.

IR classes starting from July 25th.

Few copies of my Indias Foreign Policy are kept for sale at the counter. Price: Rs. 150
The notes I give during the IR course will not include what is covered in this book.

Paper 5 (3) ,Lesson 1

Ruskin
06 -JULY-13

Adam Smith,John