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Economics and its Enemies: Two Centuries of Anti-Economics
By William Coleman
Basingstoke, Palgrave, 2002, 328pp, £60, ISBN 0 3337 90014

For years I have been nagging my economist colleagues to write books defending economics against its detractors. They make three excuses: there are no professional incentives to demolish the economic fallacies of 'public intellectuals'; the arguments of such people are so incoherent they are 'not even wrong'; and that anyhow economists cannot write well enough to address the public.

It would be easy to say that they are correct on all three counts-but untrue, because some economists certainly can write well. And now this book by William Coleman shows that the other two counts are also doubtful. His refutation of the incessant attacks on the whole enterprise of economics proves to be a crushingly learned volume on the history of economic thought. This should definitely earn him professional praise.

Incorporated in the history is what amounts to an additional pamphlet replying to modern anti-economists. This part should win him praise from the public, though doubtless it will not. Altogether his work demonstrates that anti-economists are typically uninstructed, muddled or malicious, or all three, their complaints are so perennial, so vociferous and serve such a range of damaging interests that they simply cannot be dismissed as uninfluential.

By anti-economics Coleman does not mean criticism of economics per se. He means efforts to damn the entire subject as false, useless and harmful in principle. The variety of critiques is staggering, and painstakingly categorised and documented here. They include the following long list, which must serve to illustrate the scope of the author's learning: objections that assume politics is more important than economics; the Right's objection to the free market as subverting social order; the Left's objection that the market reconstituted an order based on wealth rather than rank; the relativist objection that nations, cultures and periods each deserve separate economic analyses; the totalitarian rejection of economics; contentions that economics relies on reason not emotion, vaunts egoism, ignores morality, and places human satisfactions above transcendental phenomena like the environment; arguments that claim energy, technology or work are truer paths to prosperity; the resentment of special interests at the economist's pursuit of the public interest; and more.

Coleman is able to document that economists in general do not conform to the stereotypes fastened on them by anti-economists. They are not mercenaries of the ruling class, not from elite social backgrounds, and generally not right-wing. They are concerned with reason, well-being and freedom. Admittedly they can seem overbearing and Coleman does not shy away from this, but on the other hand they tend not to be insidiously political after the modern fashion of other social science or humanities departments. Nor are they as disgracefully illogical as the anti-economists from those rookeries, given to the breathtaking boast that they have no credentials for pontificating about economic matters.

Because Coleman is at an Australian university he is confronted by the everyday anti-economic prattlings in the Australian media and academe. Economic irrationalism is a marked feature of Australian intellectual life, though perhaps not quite so prominently as elsewhere, for as he remarks, 'anti-economics is a citizen of the world, but it has a favoured domicile: France' (p.88). The Australian version is dispiriting enough and Coleman deals with it, as with all the other exasperating manifestations, very patiently indeed. Throughout the book he rarely allows himself more than the driest put-down, as when he quotes the founder of Earth First claiming that we should 'live simply'-and think simply, too, Coleman adds.

One might have thought that honest critics would be given pause if they had to admit not to understanding the central precepts of a discipline they are decrying and knowing nothing about the origins and opinions of the bulk of its practitioners. But no, Australians are constantly assailed by the dogmatic opinions of so-called public intellectuals, who by definition are exempt from peer review. These people clearly fail to understand the purpose of models in economics. They dislike the implication that all courses of action, including inaction, bear a cost. They constitute an interest group whose motive seems to be advancing an alternative establishment, untrammelled by professional scruples or the potential cost of its policy preferences.
The difficulty for Australia is not the tyranny of distance but the tyranny of small market size. In a small market competition is limited. Unreasonable views need fear little contradiction. Critical debate is restricted in scale and can become viciously personalised. Given modern communications, overseas commentators could now intervene in local debates, but even if they trouble to follow them they have little incentive to take part. The poisoned blossoms of economic irrationalism can bear fruit in the Antipodes without fear of much weed-killer.

All this is dealt with so calmly that I cannot shrug off the feeling that the local irrationalists are let off lightly. Coleman is more at home dissecting the biographies and theories of 18th and 19th century anti-economists. Mischievous and bizarre though their views usually were, they at least had the merit of attempting to put up highly academic refutations of thinkers like Smith or Ricardo. Modern commentary-emotive environmentalism and the like-does not escape being scathed by Coleman's pen but its know-nothing quality is more baffling to any serious-minded author.

On reflection, this book-and I cannot begin to do justice to it in one thousand words-might have been better split into two. There is a most valuable history of economic thought here that could well have stood alone. The refutation of modern nonsenses could have appeared as a popular tract. A nice extra would be a third volume on the social pathology of the readership for anti-economics. But these are quibbles that should deter no one from reading Coleman's impressive work as it stands.

Reviewed by Eric Jones

Hard Heads, Soft Hearts: A New Reform Agenda for Australia
Edited by Peter Dawkins and Paul Kelly
Allen & Unwin, 2003, 233pp, $24.95, ISBN 1 74114 021 8

Most sensible analysts accept that 20 years of reform by Commonwealth governments have helped make the Australian economy more competitive, and hence sustainable. Some commentators also believe that the reforms were responsible for growing levels of hardship. Their conclusion? The governments that implemented the reforms possessed both hard heads and hard hearts. Ergo, somewhere out there is a possible policy mix whose advocates possess both hard heads and soft hearts.

This thesis not only ascribes the hardships directly to the reforms; it also suggests that the governments deliberately set out to cause those hardships. Both propositions are at best arguable, as is the notion that levels of hardship in Australia over the last 20 years have been abnormal, by either historical standards or by international comparison.
Consequently, and as few would describe their own views as hard-hearted, use of the motto 'hard heads, soft hearts' by the Melbourne Institute of Applied Economic and Social Research does little to distinguish it from other research institutions and faculties. Application of the motto to the book is similarly futile.

Not that the book is futile. Rather, it is little more-or less-than a snapshot of the state of economic debate in early 2000s Australia, an introduction to the thoughts of some of the main protagonists, and a signpost to further readings and research across a diverse range of policy areas.

The book documents a conference held in 2002 by the Melbourne Institute. The core of the text is based on excerpts from papers presented by around 70 delegates, most of whom are academics, senior public servants, politicians or interest group representatives. The book includes contributions by a few internationally-renowned experts such as Dr Catherine Hakim, complementing the 'who's who' of local policy-shapers.

The excerpts are woven together by editors Paul Kelly of The Australian and Peter Dawkins, director of the Melbourne Institute. Kelly and Dawkins provide introductions and conclusions to the chapters. These mostly consist of a summary of views put forward by the delegates, and of the issues that need to be resolved. In the final chapter, Kelly and Dawkins re-state these summaries and reach the less than startling conclusions that joblessness is the number one problem and that more reform is needed in most of the policy issues debated.

Few readers would complain that the volume's breadth of policy is too narrow. Taxation, population growth, employment, education, the environment, work and family, health and microeconomic reform are some of the topics on offer. Nor is the range of viewpoints presented narrow. For example, the chapter on the Kyoto protocol is debated by representatives of the Australian Conservation Foundation, BP Australasia, and two academics with opposite stances on the merits of ratification.

Unfortunately, the book's subtitle, 'a new reform agenda for Australia' is rendered redundant by a paucity of content that could be described as 'new'. Sure, there is an agenda of issues listed in the chapter titles. Anybody with a basic interest in current affairs could come up with a similar list. Nor do the conclusions offer a coherent alternative, other than recognition that policy proposals benefit from thorough research and careful implementation.

One important area not covered in the book is industry policy. Reform in this area has been glacial, with levels of protection in some sectors still high and with a raft of industry expenditure programmes providing hundreds of millions of dollars in taxpayer-funded largesse. These programmes contribute to a welfarist culture that impedes reform in some of the other areas considered in the book; therefore, some discussion of their merits would have been justified.

A frustrating feature of the book is that the contributors whose excerpts are included are listed in alphabetical order at the front of the book, but not in the index. To find the excerpt from a particular contributor, you have to guess where it would appear using the chapter titles and thumbing through the chapter, or by guessing their topic and checking the index.

On a more positive note, there is a comprehensive reference list of books, journal articles and conference papers which allow the reader who wants more detail to follow up points of interest. This, and the reminder that many areas of policy continue to cry out for reform, make the volume worthwhile enough.

Reviewed by Peter Taft

Terror and Liberalism
By Paul Berman
New York & London, Norton, 2003, 128pp, $US21, ISBN 0 393 05775 5

Paul Berman's Terror and Liberalism is an important, readable and indeed fascinating book. It is a reflection on September 11 and on the run-up to the invasion of Iraq. But its concerns run much wider than this. Berman argues for the need to draw parallels between the phenomenon of radical Islamism and nihilistic revolutionaries and totalitarianism in the early and mid 20th century. On this basis, together with a study of the appeasement of Hitler, Berman develops an argument for engagement: military, intellectual and organisational. It is an American left-liberal's case for endorsing, and going beyond, George W. Bush. In the rest of this review, I will give an impression of Berman's argument. I will then suggest why, despite its verve and sophistication, it should be judged both misleading and dangerous.

Berman starts with a discussion of totalitarianism. Here, he revives Norman Cohn's thesis, from his Pursuit of the Millennium, that mankind is sometimes overwhelmed by non-rational attractions for millenarian ideas with totalitarian aspects to them. These have characteristic motifs of an oppressed people subject to various conspiratorial Satanic forces, and of a movement and leader who will rescue them and institute a new realm of peace. Berman makes the obvious links between Hitler, Stalin and others of that period. He also discusses the glorification of violence and of suicide in some revolutionary writers. He then considers the influence of some of these ideas and movements upon Muslim countries, and offers a fascinating and quite detailed discussion of the Islamist writer, Sayyid Qutb.

Qutb was a leader of the Muslim Brotherhood in Egypt who composed, inter alia, a massive commentary on the Qur'an, while in jail. Berman's account of Qutb's work makes him out to be an interesting and original social analyst, who brought together Islamic and Western themes in a striking way. At the same time, Berman singles out for attention some themes, such as the unacceptability of a liberal separation of church and state, and a distinctive understanding of toleration, which are standard ideas within Islam, rather than anything distinctive to Qutb.
After some further discussion of the views of Qutb and of some other Islamists, their international influence and their links to terrorism, Berman discusses attitudes towards the Nazis in France by some people on the Left in the run-up to World War II. He argues that attempts at sympathetic understanding led down a primrose path to appeasement and, eventually, to participation in the Vichy government, and to sympathy for ideas which, initially, they had set out only to explain. (One interesting feature of his book is Berman's interest in France, and his use of French writers from Camus to recent writers on Islam and international affairs.)

Berman follows this with criticism of some Western intellectuals' sympathy for terrorism. He is critical of the attempt to see terrorism as an understandable response to people's situations (rather than as a kind of madness that from time to time infects people). He briefly discusses Noam Chomsky as an example. There is then harsh criticism of those who would seek to understand and to excuse suicide bombing as a tactic against Israel, leading in turn to discussions of reactions towards September 11. (It would have been useful if Berman had also explored Muslim understandings of these issues. In particular, one needs to appreciate the extent to which what Berman depicts as non-rational terrorism can be understood as a fully rational response to people's situation. This is not to argue in its favour, but, rather, to argue that we need to understand what we are dealing with, and above all to distinguish between terrorism and self-defence.)

Berman concludes his book by drawing from his discussion of appeasement in France the moral that there should be an engagement with totalitarian ideas and movements to be found, today, within the Muslim world. He endorses George Bush's military activities, and especially his stress on women's rights, in Afghanistan. But Berman argues that Bush does not go far enough. He argues for an end to Realpolitik, and, instead, for a morally-inspired project of nation-building for the sake of human rights. After references to the Gettysburg Address, he argues for an intellectual and institutional initiative akin to that which was undertaken against Communism after World War II in favour of liberal values. In this, Foundations might take over the financial role played by American Trades Unions during the Cold War.

What is wrong with all this, and why have I called it dangerous?

First, the revival of Cohn's analysis of totalitarianism is almost embarrassing. It returns us to some of the worst Cold War scholarship with its vague parallels between ideas, and claims about irrationalism, as opposed to analysis either of why there were common features between movements that, ideologically, were prima facie different, or of the conditions under which totalitarian ideas may appeal to people. These, surely, are something that has to be explained (and, pace Berman, to offer such an explanation is hardly to offer an apology for the ideas themselves). But here one needs to look at the social conditions that made such ideas appealing. In the early and mid 20th century, fascism and Stalinism spoke to problems of unemployment and upheaval in societies in transition between tradition and modernity. It is, surely, significant that much of the Muslim world could be described as facing similar problems today.

Second, Berman has misdiagnosed some of the issues. For many Muslims, a division between church and state is intellectually problematic. With Berman, I am an enthusiastic liberal (although in my case, of the classical variety). But contemporary liberalism in Western countries has been a product of the historical marginalisation of the churches, and a privatisation of their role, in a manner that is hardly acceptable to those who are still Christian believers in anything like the traditional sense (think only of Fred Nile!). Various kinds of accommodation with what became liberalism were developed by the churches over a long period of time, and as much through the practice of politics as through abstract political thought. It is, however, exactly this practical opportunity for thinking through what Islam might mean in a modern setting, and in the context of the exercise of democratic political power, which Muslims have hardly had; not least because of colonial domination, and subsequently through the US propping up a variety of authoritarian regimes because they were willing to secure oil supplies, or to be on the right side in the Cold War.

The problems of what a democratic Muslim politics is to look like, and how Islam is to come to terms with commercial society and with Western liberalism, surely need to be thought through, and worked out in practical terms, by Muslims. The West can insist on action against genuine terrorism. We can be keen to extend a hand in friendship and assistance, and (in a tactful manner) can raise issues about human rights where these pose no religious problems. But the last thing that we should do is embark upon a kind of cultural crusade for liberalism. Muslims may subscribe, at least formally, to certain ideas that are at odds with Western liberal values. These require careful consideration if they are to be brought into co-existence with one another. Berman's approach, while well-intentioned, could easily come over as a form of cultural imperialism directed at some of the tenets of Islam itself. It could risk turning actions directed against those few Islamists who endorse terrorism into a major rift with the Muslim world as a whole. Not only may such interventions give succour to exactly the kinds of ideological movements that Berman deplores, but they may become a major liability for those Muslims sympathetic to liberal ideas.

It is worrying that someone as able and as intelligent as Berman should get things so wrong. He acutely diagnoses some of the ways in which George W. Bush's ideas, while sounding alright at home (at least to some people), do not travel. But he seems oblivious to the way in which his own views, and his proposed push for his brand of liberalism, and a particular interpretation of human rights, would equally seem problematic in a significant part of the world today. It is the very clarity, interest and plausibility of this book that makes its defects so worrying.

Reviewed by Jeremy Shearmur

Property Rights: Cooperation, Conflict and Law
Edited by Terry L. Anderson and Fred S. McChesney
Princeton University Press, 2003, 448pp, US$29.95, ISBN 0 691 09998 7

I took the opportunity to read this book whilst travelling in China and Vietnam. As my journey progressed, more and more evidence emerged of the remarkable growth these two economies continue to experience. And at the same time, it became increasingly apparent that this growth pattern can be directly related to a growing reliance on an evolving form of private property rights. For instance, Vietnam's emergence from being a rice importer to being such a successful exporter that Japan has recently decided to impose an additional barrier to trade, demonstrates vividly the impact of extended leasing rights over land to farmers. Edwin West's Chapter 1 evocation of Adam Smith's conclusion that 'well-respected property rights placed in a clear and secure legal setting, together with guaranteed liberty, were sufficient to set the wealth of nations on a course for almost perpetual growth' (pp.38-39) certainly rang true. But the question lingers: what would be possible if the bundle of rights to land in China and Vietnam was further extended to freehold status and personal liberty was guaranteed?

This book helps to address that question but also provides a useful input into the consideration of the related question: How might such rights emerge over time? These questions would appear to be fundamental to any understanding of economic processes yet the key insights involved in property rights analysis are frequently omitted from the teaching of undergraduate economics. Economics 1 is often founded on the explanation of the mechanisms of market models and possibly some normative component of welfare economics to allow policy analysis. But what is frequently-but of course not always-missing is the development of an understanding of what underpins economic activity. As the editors note in their introductory comments, 'in classical economics, well-defined and secure property rights were typically assumed to exist, not analysed and explained'. Whilst nothing much has changed for the novice student, there have been important developments in the discipline. This volume helps to bring those developments to the attention of a wider readership.

It was, indeed, one of the authors, Terry Anderson, who was responsible for jolting me from my perception of property rights as being exogenous from the economic system. The occasion was my presenting some thoughts on environmental economics to a meeting of the Mont Pelerin Society in the mid-1980s. I made a statement to the effect that economics was all about the allocation of scarce resources-a definition that had been drubbed into me since my earliest exposure to the discipline. Anderson (rightly) pointed out that economics was rather concerned with the allocation of the rights to resources. In other words, it's important for economists to realise the need to 'dig deeper' so that property rights are considered as part of the story and not merely a 'given'.

This 'revelation' was exceptionally valuable to me in my professional development and I hope that through my teaching endeavours it has been a useful insight for my students. It led me to the practice of teaching at least three weeks of 'institutional economics' as the front end of first year economics. It also led me to a better understanding of the importance of property rights issues in the management of environmental assets that are often classified as common property or open access resources.

The question of government involvement in the supply or management of such assets is of particular significance and one of the most important contributions of this book is its treatment of this question. The chapters that centre on government action make the point that any contemplation of government action needs to be tempered by an evaluation of all the likely costs involved. These will include recognition of the rent seeking possibilities government action would generate but would also involve an analysis of the associated transaction costs. The point made in the Harold Demsetz chapter is that property rights have not evolved in many circumstances simply because the costs of their creation and enforcement exceed the benefits resulting from their creation. The state would need to be able to demonstrate its capacity to lower these transaction costs through its intervention to the point where marginal benefits exceed marginal costs.
I'm hopeful that the publication of this book will result in many more being able to understand the critical role of property rights in economic and social analysis. My confidence in the book achieving this goal is largely due to its strength of presentation.

There are three main aspects to this.

First, the chapters are well written and highly accessible to a wide range of readers. You don't need to be a top-flight economist to get a lot out of the book. Even the chapter on economic history-an area of economics renowned amongst students for its deterrent effects-is both sufficiently clear and comprehensive to permit a thorough understanding and generate interest.

Second, and partly related to the first point, the majority of authors contributing to the book use a good scattering of practical examples to illustrate their arguments. The examples used are predominantly in the North American context yet there are enough from the rest of the world for the reader to see that the points made are not restricted in their geographic/cultural spread.

Finally, and perhaps most importantly, the book is very well structured. It is split into six separate parts, each covering a specific aspect of property rights. At the outset, the editors provide a comprehensive outline of the whole book. Then, at the beginning of each part, a further introduction is provided. What this means is that the reader can easily come to terms with the overall thrust of the book by reading just the introduction. Should a particular aspect of this 'big picture' capture the reader's attention, they can turn to the introduction to the specific part of interest. On the basis of that deeper briefing, the reader can pick up the individual chapter or chapters that deliver the detail. This is a structure that provides the reader with tremendous flexibility in how they use the information made available.

In short, I find it hard to think of anyone who would not gain from an exposure to the ideas presented in this book. From those with responsibilities for the future management of the Chinese and Vietnamese economies, through to those in Australia contemplating the future of water use in our river systems, property rights matter. This book will help to get that fundamental message across.

Reviewed by Jeff Bennett

2001: The Centenary Election
Edited by John Warhurst and Marian Simms
University of Queensland Press, 2002, 330pp, $31, ISBN 0 7022 3303 X

2001: The Centenary Election is the third in a series of edited collections on Australian federal elections. The contributors are mainly political scientists, with the book divided into sections on the campaign, the parties, State issues and results, selected policy issues and a final section interpreting the election's outcomes.
This structure provides for a more detailed and sober assessment than other publications on this election. In downplaying the influence of Tampa as the defining electoral issue, Lynton Crosby makes reference to voters' belief that economic management and leadership were the key issues, that 'the media seemed more interested in its own issues rather than the issues of importance to Australians generally' and that a large majority of Labor voters believed the ALP should support the Government on the issue of illegal entrants (pp.120-1).

James Jupp notes that the prominence of refugee and international issues 'did not make much difference in the support for Labor in most ethnic communities' (p.268). Clive Bean and Ian McAllister argue that 'party identification continues to be the pre-eminent influence on electoral behaviour in Australia' (p.183) with the issues of immigration and education having only modest effects on voting choice. Marian Simms' chapter on the media recognised that the majority of newspaper editorial comment urged a vote for the Coalition (p.103).

Not surprisingly, the anthology is also littered with emotive, moralistic comment on the opportunism of the Coalition in its handling of border protection issues. There is stifled regret that the Government fought the campaign on these issues given the obvious support of public opinion for the government's position.

A short chapter by One Nation MLC Frank Hough criticised the hijacking of Hansonite policies and that given this, both the Government and its supporters were themselves 'racist' (p.153). Other contributors reserved criticism for the amorality of the government's tactics, preferring to cite the manipulative skill of the government than the pre-existing public support for a tough stance on border protection. Haydon Manning's chapter on cartoon comment argues that cartoonists were 'more disgusted than ever by electioneering' and 'appalled by callous opportunism', as they sought to 'get Australians to recognise the morally decent view on asylum seekers and think other than jingoistically about the war on terrorism' (p.60).

Malcolm Mackerras writes that Tampa was 'the most contemptible political stunt ever engineered by an Australian politician in my lifetime' (p.303). David Adams' chapter highlights the professionalism and skill of Howard's appeal to the electorate, benefiting from the close alignment of the electorate's emotions and self-interest with that of 'the national interest' (p.31).

The anthology itself reflects Howard's ability to sell the agenda and reap the electoral rewards. It is interesting that the editors did not accord a chapter to education policy making only passing reference to 'Knowledge Nation'. The chapters on industrial relations, women, rural interests and business all made reference to these policy issues as footnotes to international issues.

The chapters on rural and industrial relations argued that without Tampa and September 11, both issues would have been key election issues. Given the attention of some contributors to the electoral importance of sound economic fundamentals, there might have been a chapter on the government's sale of its economic credentials in the context of 'fireproofing' the economy from volatile international markets. This would clearly have fitted well with the book's accent on immigration and refugee issues.

2001: The Centenary Election is a useful compendium on polling trends, seat results and the influences on voting behaviour. It ably captures the tensions surrounding the contest through a mix of academic analysis and comment from senior party officials (Lynton Crosby, Geoff Walsh and Andrew Bartlett).

By following the series format, the editors produce a methodical account and avoid reducing interest in the election to a single issue. The book would benefit from closer analysis of the interplay of international and domestic issues and in particular, the extent to which the government's message of border protection and pursuing the national interest effectively depoliticised the rural-urban divide and continued the attack on elites and special interest groups.

Reviewed by Richard Grant

Adam Smith's Marketplace of Life
By James R. Otteson
Cambridge University Press 2002, 352 pp, US$26, ISBN 052 101 6568

Adam Smith is best known today for his great contribution to free market economics in The Wealth of Nations (WN). Indeed, Smith's economic views have become so influential that his earlier book on moral philosophy, The Theory of Moral Sentiments (TMS), tends to be overlooked. James R. Otteson attempts to enhance understanding of Smith's overall body of work by focusing on his less prominent moral theory.

Otteson's book is informed by a desire to clarify what has become known as the 'Adam Smith Problem'. The problem arises from apparent inconsistencies between Smith's moral and economic theories. In TMS, Smith argues morality rests on a natural sympathy humans feel for one another yet, in WN, he appears to advocate economic policies based on a fundamental assumption of human self-interest. Much academic discussion has been devoted to whether these apparently competing aspects of Smith's work can be reconciled.

Otteson regards this debate as settled in favour of Smith's consistency (p.3). Nevertheless, he argues that nobody has yet provided an account of Smith's moral and economic views that satisfactorily resolves the most intractable elements of the Adam Smith Problem. He therefore sets out to clarify the most serious barriers to a unified interpretation of Smith's work, before suggesting how they might ultimately be overcome.

Aside from exploring the Adam Smith Problem, Otteson is generally concerned to offer a sympathetic reading of Smith's moral theory, which he suggests has been unjustly neglected within contemporary moral philosophy (p.1). In the opening three chapters, Otteson presents a clear and accessible account of Smith's argument in TMS, incorporating frequent references to the primary text. The central theme of Otteson's reading is that Smith depicts moral judgements as arising from a 'marketplace of morality' (p.101), an idea Otteson goes on to connect with the picture of economic markets provided in WN.

In developing the idea of the marketplace of morality, Otteson emphasises what he calls Smith's 'impartial spectator procedure' (p. 43) for forming moral judgements. For Smith, Otteson observes, our natural desire for mutual sympathy means we continually imagine ourselves in the positions of others. The consequent realisation that others do not always share our priorities of action leads us to temper our self-interest so our motivations are more likely to attract general approval. Ultimately, this desire to bring our priorities into harmony with the views of others means we develop the habit of adopting the perspective of a disinterested bystander when forming moral judgements.

In Otteson's view, the impartial spectator procedure, as described above, reflects a 'marketplace' model of morality. He argues the procedure tends to produce moral consensus in much the same way economic markets produce agreement on prices (p.114). The moral system emerging from this process of value moderation will be that which proves most conducive to social harmony. In this way, according to Otteson, Smith sees moral rules as an unintended but desirable consequence of the free interaction of individual moral agents (p.101).

Otteson's response to the Adam Smith Problem, however, does not rest solely on the common market-based model he sees at the heart of both TMS and WN. He also relies on what he calls Smith's 'familiarity principle'
(p.183), which he argues unifies the apparently competing pictures of human nature presented in Smith's two works. The familiarity principle, as developed in TMS, holds that a person's benevolence towards others increases with her or his familiarity with them. Otteson contends this principle, when applied to economic actors, yields an account of human motivation substantially similar to that provided in WN.

Smith's familiarity principle is by no means uncontroversial, as it conflicts with the widely-held philosophical view that, as far as possible, everyone's moral interests should be afforded equal consideration. From this perspective, Otteson's brief discussion of the principle (p. 210) in his otherwise excellent chapter on justifying Smithian moral standards is unsatisfying. There, as throughout the chapter, he suggests Smith's approach can be justified based on an argument from knowledge-that is, Smith's market-based model of morality tends to yield the rules that best reflect the collected wisdom of the community. In this way, Otteson suggests, the familiarity principle is justified primarily because the utility of our benevolence can be expected to increase with our level of knowledge of the circumstances of those to whom it is directed.

However, this argument seems to fall well short of justifying a general principle of directing our benevolence to those with whom we are most familiar. We can readily imagine a situation where we are very familiar with one person and only remotely acquainted with another, but still know enough to be sure our benevolence would make a much greater difference to the latter party. In such a case, shouldn't we help the person who will benefit more?

In other areas, Otteson shows a commendable willingness to acknowledge possible objections to his interpretation of TMS, going out of his way to suggest avenues of reply. He is particularly careful to present the strongest version of the Adam Smith Problem before offering his response. The result is a generally persuasive account of Smith's moral theory, which goes some distance towards resolving the apparent tensions between TMS and WN.

I strongly recommend Otteson's book. It is a clear and engaging work, suited to both advanced students of Smith and those seeking an introduction to his moral theory. The author has produced a thorough and convincing interpretation of the central themes of Smith's body of work. One leaves the book with a sense of Smith's enduring legacy-his insight into the many ways our lives are shaped by unintended systems of social order.

Reviewed by Johnathan Crowe

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