First Minister takes Adam Smith to East and West
Speech to Tsinghua University argues social progress must accompany economic progress.
First Minister Alex Salmond has taken the moral and economic philosophies of Adam Smith to the East and the West of the globe after he delivered a keynote economic speech to a prestigious university in Beijing today.
Drawing on themes outlined in his speech to Princeton University earlier this year, the First Minister used the twin examples of Smiths’ The Wealth of Nations and The Theory of Moral Sentiments to argue that sustainable economic progress must be linked to social progress.
Mr Salmond said that Smith’s influence endured across the globe, from East to West, with the arguments in his seminal works relevant today and able to provide economic and social answers to the problems faced by all nations as they emerge from recession.
Re-emphasising the messages given to the Ivy League school in the United States in April, the First Minister said the balance between the two approaches demonstrated that the social cohesion brought about by a fairer society was crucial to building recovery that was both sustainable and balanced.
And he told the Tsinghua audience of the ambitions in Scotland's Action Plan for Human Rights, discussing how it would set out how Scotland intended to meet internationally agreed standards to build a community in which everyone can flourish.
The First Minister said:
“I want to focus today on the enduring influence of Adam Smith in instructing the affairs of nations.
“The last time I was in Beijing I spoke in the Communist Party Central School about Adam Smith, and his influence, and the lessons he had to teach us on modern day issues such as climate justice – about how his illuminate the need for countries in the developed world to address climate change, and to help countries already being severely affected by its consequences.
“I also gave a speech about Adam Smith this year at Princeton University. I’m talking about him again today because his work reflects universal values. It is relevant to east and west, to the 21st century as well as the 18th.
“Now, most people, certainly for all economists, the most famous of Adam Smith’s works is The Wealth of Nations. This book is the foundation text of economics. This is the first economics textbook, because Adam Smith founded the science of economics. Most people are aware of the pioneering and extraordinary influence and insightful nature of the work. But it has often been cited by people who don’t truly understand the full range of Adam Smith’s contribution to philosophical thought.
“In The Wealth of Nations, Smith pointed out, in a famous passage, that: ‘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 self-interest.’
“What people don’t realise is that Adam Smith had written an earlier – and to my mind equally significant work – The Theory of Moral Sentiments which gives a broader view of the foundations for his moral philosophy. He expressed the opinion that the basis for our judgements was sympathy – or empathy, as we would now call it.
“Some people argue that there is an essential conflict between the ideas expressed in The Wealth of Nations – that is, the theory of self-interest and monetary reward to produce a service – and the ideas expressed in The Theory of Moral Sentiments, which argues that human beings are motivated by something beyond self-interest, like empathy, by concern for other people.
“But actually, what Smith was arguing, and the appeal of The Wealth of Nations in particular, was not just self-interest but what he called ‘enlightened self-interest’, and that is a self-interest which recognises these responsibilities to, and feelings for, other people.
“So, what is enlightened self-interest? In China I hear people trying to express enlightened self-interest all the time. I hear it in just about every business deal where people talk about a ‘win-win’ situation. But enlightened self-interest is about more than identifying just ‘win-win’ situations. It’s about understanding that there are wider gains for society as a whole or the individual within society when society is strong and prosperous.
“So my contention is that The Theory of Moral Sentiments and The Wealth of Nations, taken together, don’t contradict each other. They balance each other. The moral philosophy of the first, and the science of economics of the second, supply many of the insights we need to confront the challenges of today.”
Citing President Xi Jinping’s ‘Chinese Dream’ policy, which draws a link between collective progress and the prosperity, well-being and rights of individual citizens, the First Minister said the astonishing economic growth experienced by China in recent decades was leading the country to think about the quality of that growth.
“Several years ago Professor Joseph Stiglitz, the US economist and Nobel Laureate who sits on my Council of Economic Advisers, referred to China’s economic policies as creating “the largest reduction in poverty in history”. The United Nations earlier in the summer also highlighted China’s success at poverty reduction.
“But inevitably, China is now considering fundamental issues about that economic growth itself – who benefits from it, what outcomes it brings, what sort of society it create.
“It could be argued that over a similar period, some countries and institutions in the west – starting from a different position – stopped considering some of these questions deeply enough. They lost sight of the importance of reducing poverty and paid too little attention to social inequality in society.
“President Obama, in a speech over the summer has been frank about the effects this has had. He pointed out ‘growing inequality is not just morally wrong, it’s bad economics’.
Concluding his speech on the issue of climate justice the First Minister said that transformational leadership on the issue from either the US or China – or both acting in concert – “would be an immensely powerful statement”.
He added: “It would be one of the most important expressions by any government at any time anywhere of the principle of enlightened self-interest.”
The full text of the First Minister’s speech to Tsinghua University is here: http://news.scotland.gov.uk/content/default.aspx?NewsAreaId=139
The text of the First Minister’s speech to Princeton University in April can be found here: http://www.scotland.gov.uk/News/Speeches/PrincetonUniversity2013
The First Minister’s address to Tsinghua University in Beijing was delivered during his trade mission to China, with delegations from the oil and gas and construction sectors comprising 30 companies undertaking business in the country over a five-day period.
At the same time as the First Minister’s visit, six Scottish companies will also attend the China Fisheries & Seafood Expo 2013 in Dalian where they will promote their produce at a Scottish Kitchen sponsored by Seafood Scotland and Scottish Development International.
The visit helps meet the targets set out in the Scottish Government’s China Strategy to increase engagement with the world’s second largest economy and builds on recent business successes, including:
From 2007 to 2012 exports from Scotland to China increased by 88% from £265m to £498m.
Over the same period, the share of Scottish exports to China increased from 2 per cent to 3 per cent of all Scottish exports.
Far East markets accounted for around 2 per cent of fresh Scottish salmon exports in the years prior to 2011, when the Scottish Government secured a new import deal with China following discussions between the First Minister and then Vice Premier Li KeQiang. Since then, the proportion of global sales to the Far East has reached 19 per cent in the first half of 2013 with a value of £37m. China accounts for more than half of the value of total sales.
In the five years between 2007 and 2012, Scotch whisky exports to China rose by 70 per cent from £42.1 million to £71.5 million, helped by the granting of geographical indication of origin status for the product in China in 2010. This followed negotiations between the First Minister and the Chinese Government during his visits to China in 2009 and 2010.
The Scottish Government’s China Strategy can be read here: http://www.scotland.gov.uk/Publications/2012/12/7734
Get news of the trade visit as it happens by following @AlexSalmond and @ScotGov on Twitter. Images will be available for use from the Scottish Government flickr channel: www.flickr.com/scottishgovernment
When available, audio can be found at www.soundcloud.com/scotgovt