Cambridge Journal of Economics 2017, 41, 327–347
doi:10.1093/cje/bew049
Advance Access publication 18 October 2016
The concept of need in Adam Smith
Toru Yamamori*
There is no room for the concept of need in the prevailing neoclassical school of
economics. Not so, however, in classical political economy. Through close analysis
in this paper, I wish to trace the concept’s prominence in Adam Smith’s thought and
to fine-tune its definitional aspects. The thrust of Smith’s argument is to delineate
the mechanism via which the needs of the poorest in society are satisfied. Grounded
in an understanding of need as limited and exhaustive rather than infinite, like
desire or preference, his theory is one of affluence rather than scarcity. But his justification of commercial society (from which the neoclassical school only lifts the
conclusion) rests on becoming actually satisfied that these needs are, indeed, satisfied—an erroneous belief (at least according to the terms of Smith’s own definition)
and an internal contradiction in the development of his argument, occasioned, I
wish to suggest, by certain colonialist discourses. Finally, Smith’s ontology of need,
as reconstructed here, corresponds to similar enquiries recently undertaken in philosophy and in some heterodox schools of economics.
Key words: Need, Adam Smith, Ontology, Colonialism
JEL classifications: B4, B5, B12
1. Introduction
When contemporary philosopher David Wiggins wrote a canonical essay on the concept of need, he caricatured whole swathes of economists by depicting a vulgar comment by an economist he encountered as ‘a standardized professional reaction’: ‘What
do you mean by a need? Is a need just something you want, but aren’t prepared to pay
for?’ (Wiggins, 1987[1998], p. 5). Recently, a Swedish feminist economist writer has
updated this ridicule by saying: ‘Economic man never needs: he just wants’ (Marçal,
2015, p. 168). They are correct in how the concept has been treated in (or has simply
Manuscript received 28 July 2015; final version received 1 June 2016.
Address for correspondence: Toru Yamamori, Faculty of Economics, Doshisha University, Genbucho 601,
Kamigyo-ku, Kyoto, 602–8580, Japan
* Doshisha University. The initial idea of the paper came from conversations with Istvan Hont around
2005. He encouraged me to develop the idea and write in English, although he disagreed with some of
my argument. My promise to send him the paper can no longer be fulfilled as it has taken me ten years to
complete and he sadly passed away in 2013. The Faculty of Economics at Doshisha University allowed me
to have a sabbatical and Tony Lawson sponsored a visiting scholarship at the Faculty of Economics at the
University of Cambridge between 2013 and 2015. Both of these enabled me to write in an ideal environment where I benefited from stimulating discussions at the Cambridge Social Ontology Group. Daisuke
Arie, Roberto Scazzieri, Ian Gough, and Rositza Alexandrova kindly read and commented on an earlier
draft. I acknowledge all this support. I also would like to thank the anonymous reviewers for their valuable
comments and suggestions to improve the quality of the paper. Any mistakes and banality belong to me.
© The Author 2016. Published by Oxford University Press on behalf of the Cambridge Political Economy Society.
All rights reserved.
328 T. Yamamori
been absent from) neoclassical economic theory (Williams, 1974; cf. Doyal and Gough,
1991; Yamamori 1998B; Witztum, 2009)—namely—although we use the language of
‘need’ in our everyday conversation and we find a multitude of ‘need’ discourses in
policy documents as well, all these are illogical and irrational. Period.
A well-known passage from The Wealth of Nations (WN) seems to assure that Adam
Smith, too, subscribes to this view: ‘We address ourselves, not to their humanity but to
their self-love, and never talk to them of our own necessities but of their advantages’
(WN, p. 27). Pairing this statement with his famous ‘invisible hand’ metaphor, as used
to justify market economy, we are tempted to conclude that there would be no room
for the concept of need in Adam Smith at all, just as there is none for the neoclassical
school.
Contrary to superficial ‘first impressions’, however, a closer look reveals that the
concept of need plays a vital role in Smith’s writings. In fact, the very logic of the
‘invisible hand’ is reliant on this concept. But before I delve into ‘heresy’, I would like
to briefly reference previous research on the concept of need in Smith and sketch the
general outline of my argument.
Although neither economists, nor philosophers, nor historians of ideas working on
Smith have cared to make this concept their central concern, an essay titled ‘Need
and justice in The Wealth of Nations’ (Hont and Ignatieff, 1983) has led to a formidable flurry of discussion on this topic. The principal line of the authors’ argument is to
ask us to read Smith not as a civic humanist, but as a successor to natural jurisprudence writers.1 But this is not at all the part of the argument responsible for the flurry
referred to above. Rather, it is in the specifics of how Smith treated the ‘right of necessity’ that Hont and Ignatieff create a stir. They argued that Smith transferred the issue
of the ‘right of necessity’ from the sphere of justice to the sphere of political economy.
Philosopher Samuel Fleischacker, Hont and Ignatieff’s most eminent critic, sees them
as doubly wrong on this point: first in misunderstanding the concept of justice in Smith
(and in natural jurisprudence writers), and second—in dismissing Smith’s affirmation
of ‘right of necessity’ (Fleischacker, 2004B). Some authors, such as Amos Witztum
and Jeffrey T. Young, do affirm a ‘right of necessity’ in Smith (Witztum and Young,
2006; Witztum 1997, 2005, 2013); while others take the contrary view (Raphael, 2001,
ch. 11; Werhane, 1991, ch. 2; Salter, 1994, 2000, 2012).
What Hont and Ignatieff state at base, and what this paper does not disagree with,
is that WN was Smith’s answer to what they termed the ‘paradox of commercial
society’. Where opinions on all sides of the debate in fact converge is in the understanding, shared also by this paper, that The Theory of Moral Sentiment (TMS) and
WN must be read not as two different theories, but as inter-related. However, what
has been at stake in the debate above—whether Smith endorsed a ‘right of necessity’
or not—is not a principal concern for this paper. Instead, what I want to focus on is
the concept itself—the epistemology and ontology of need in Smith, with attention
to nuance or potential problematic aspects as those may arise. There is almost no
previous research on this topic, and my hope is that this paper would contribute to
facilitating further enquiry into the epistemology and ontology of need in Smith and
(more generally) in economics.
1
The defining work bringing enlightenment thinkers into the fold of a civic humanist tradition was made
in 1975 by Pocock. The paradigmatic question posed since then—whether Smith was in a civic humanist
tradition or in a natural jurisprudence tradition—was relativized by Montes in 2004.
The concept of need in Adam Smith 329
To avoid engaging at the start with too narrow a definition of need, I’d like to consider the commonalities in most of the above-mentioned authors’ definitions. In my
understanding, there are three shared characteristics: first, the failure to satisfy someone’s need is harmful to that person; second, in light of the resultant harm, there is an
imperative to satisfy the need, i.e. an element of linguistic normativity already inheres
in the word; third, given the preceding two characteristics, need cannot be reduced to
the concept of desire or want (in its purely subjective modern semantics). Thus this
paper will concentrate on foregrounding first the existence and pivotal role within
Smith’s theory of a concept of need so defined, and then will wish to throw light on
further characteristics that Smith brings to the concept.
Perhaps I ought to clarify at this point how this paper proposes to treat Smith’s
texts: while it is easy to find contradictory statements in Smith, some researchers try
to avoid ‘the war of quotes’ (Witztum, 2013, p. 260) and attempt ‘to explore whether
Smith offers us a logical structure within which all these apparently conflicting quotes
can be reconciled’ (Witztum, 2013, p. 258). I, too, seek to elucidate ‘a logical structure’, but by delimiting the endeavour to TMS and WN, in contrast to Witztum, who
seeks to reconcile ‘all these apparently conflicting quotes’ through all of Smith’s texts.
The fact that the sixth edition of TMS was published in 1790 and the fifth edition
of WN was published in 1789 asks us to read the two proximate texts in conjunction with one another, which emphatically would not be the case with texts Smith
didn’t publish. The paper uses two lecture notes (Smith, 1762–63[1978], LJA; Smith,
circa 1763–64[1978], LJB) and one draft (Smith, circa 1762[1978], ED), all of which
methodologically it treats differently from TMS and WN: first, I do not use quotes
from them as evidence of Smith’s coherent ‘logical structure’ for the simple reason
that, not having published them, Smith presumably thought of them as not properly
developed; second, I use them in a genealogical way when searching for clues as to
how Smith develops his ideas—a task, I believe, that even unpublished texts can rise
up to.
As outlined above, I will begin in Section 2 by examining Smith’s famous passage on
the ‘invisible hand’. My close reading of it will seek to demonstrate that his justification of commercial society is dependent on a particular ontology and epistemology of
need as well as on a factual evaluation of need satisfaction. Section 3 will be devoted
to further elaboration on those issues and in Section 4 I will touch upon the particular
mechanisms for need satisfaction according to Smith. A contradiction will become
apparent in Smith’s factual evaluation of need satisfaction, and I will also note, in two
strands of his arguments, a theoretical indebtedness to precursors and contemporaries
of his. I would like to suggest in Section 5 that one of the reasons for this contradiction
is Smith’s reliance on colonialist discourses. The conclusion, in turn, will be highlighting the relevance of the concept of need in Smith via two contemporary endeavours:
a philosophical enquiry into need and a heterodox critique of neoclassical economics.
2. ‘Invisible hand’
The famed ‘invisible hand’, often employed as shorthand justification of the market
economy, appeared in TMS. It was the first of only two occasions when the phrase
figured in Smith’s writings (as published during his lifetime), and is deemed ‘his
major statement of the “invisible hand” doctrine’ (Macfie, 1971, p. 595). The precise
passage reads:
330 T. Yamamori
It is to no purpose, that the proud and unfeeling landlord views his extensive fields, and without
a thought for the wants of his brethren, in imagination consumes himself the whole harvest
that grows upon them. … The capacity of his stomach bears no proportion to the immensity of
his desires, and will receive no more than that of the meanest peasant. … The rich only select
from the heap what is most precious and agreeable. They consume little more than the poor,
and in spite of their natural selfishness and rapacity, though they mean only their own conveniency, though the sole end which they propose from the labours of all the thousands whom they
employ, be the gratification of their own vain and insatiable desires, they divide with the poor
the produce of all their improvements. They are led by an invisible hand to make nearly the same
distribution of the necessaries of life, which would have been made, had the earth been divided
into equal portions among all its inhabitants, and thus without intending it, without knowing it,
advance the interest of the society, and afford means to the multiplication of the species. When
Providence divided the earth among a few lordly masters, it neither forgot nor abandoned those
who seemed to have been left out in the partition. … In what constitutes the real happiness of
human life, they are in no respect inferior to those who would seem so much above them. (TMS,
pp. 184–85)
It is worth unpacking the metaphor minutely. ‘Invisible hand’ here makes a paradoxical causal relationship: the selfish motivation of the rich has a positive result for
production and distribution, i.e. for the equal and sufficient satisfaction of ‘the necessaries of life’. Although ‘[t]he capacity of his stomach’ is physiologically limited, a rich
individual might overlook this limitation becoming in the process more industrious
when led by ‘the immensity of his desires’. This, in a sense, represents the productive
potential so often referred to. But the metaphor of the ‘invisible hand’ also points to
the epistemological limitation on recognising one of the ontological features of need,
that is, the ‘finiteness’ of need. Here, by ‘ontology of need’ I mean what we (or a community, a society) collectively (i.e. intersubjectively) or objectively identify as needs.2
By ‘epistemology of need’ I mean how each individual can/cannot recognise his or her
needs. But beyond what the metaphor itself stands for, let us chart Smith’s logic of the
whole passage cited above:
) The needs of the rich are limited and no greater than the needs of the poor.
1
2) Many rich people cannot distinguish their limited needs from their infinite desires.
3) This epistemological limitation causes them to organise production far more than
is sufficient for satisfying their needs.
4)Products exceeding the rich people’s satisfaction of needs get distributed to the
poor.
5) This distribution satisfies the needs of the poor.
The first step consists of two ontological features of need which Smith presumes.
One is, as noted, the finite nature of need. The other is that, quantitatively, needs
would be the same for the rich and the poor, although qualitatively they would be
different. The second and third steps illustrate how epistemological failure paradoxically increases production beyond the bare minimum of satisfying the needs of the
rich. The fourth step is equivalent to the so-called ‘trickle down theory’. However,
here (or elsewhere in TMS), there are no proper explanations as to how the resultant overabundance of products gets distributed to the poor other than the ontological finiteness on the need of the rich. The fifth step is the factual statement, and
because this statement will be referred to frequently in this paper, and also because
2
I follow the definition of ‘ontology’ in Lawson (2015). While I have also been inspired and educated by
his project on social ontology, I do not follow his particular explanation of ontology of need—trying to reveal
true need behind every expressed want (Lawson, 1997, ch. 19)—in this paper.
The concept of need in Adam Smith 331
of its centrality in Smith’s justification of commercial society, let us call it the Need
Satisfaction Thesis.3 And let us note that no empirical evidence to validate this statement is given here (or elsewhere in TMS). Moreover, there is a missing explanation
between steps four and five: if products are distributed to the poor, what guarantees
have we got that the size of each portion will be enough for need satisfaction? While
what is not explained at step four and between steps four and five constitutes a
theoretical consideration regarding Smith’s Need Satisfaction Thesis—how a commercial society satisfies the needs of the poor—the fifth step is a mere statement of
fact, which, in the absence of empirical evidence, raises the question as to whether any
commercial society does actually satisfy the needs of the poor. As far as the former,
the theoretical question of how, is concerned, some researchers on Smith recognise
this question was vital for Smith, and interpret WN as an answer to this question
(Hont and Ignatieff, 1983). As for the latter, the empirical question of ‘whether’,
while Smith himself tried to give an answer in WN, researchers on Smith seem not to
have been interested in this question at all.
To recapitulate the findings so far: in the ‘invisible hand’ passage in TMS, need
has threefold significance: need is epistemologically difficult to demarcate from desire,
need is ontologically finite (and quantitatively the same across classes) and need can
be ascertainably satisfied. Before proceeding to the questions of ‘how’ and ‘whether’,
I would like to take the chance in this next section to further discuss the ontological
and epistemological issues.
3. More ontology and epistemology of need
We have already seen that needs are finite in Smith’s ontology by examining his
TMS ‘invisible hand’ passage. Some might argue that this finiteness of need is
only in TMS (or for Smith as a philosopher) and is not applicable in WN (or for
Smith as an economist). Others might say that Smith’s depiction of the finiteness of need reflects eighteenth-century economies where the satisfaction of basic
needs was the primary concern and infinite desire did not exist or play much of
a role. By dint of this, they might conclude that Smith’s concept of need has no
relevance within twenty-first-century economies, which have people motivated by
infinite desires.
To counter the first objection, TMS is not the only place where Smith refers to
the finite nature of needs. In WN, Smith maintains this demarcation between finite
needs and infinite desires, making it vital for his argument on natural price—as I will
discuss in the next section. He argues that the incidence of tax upon necessaries is
different from the incidence of tax upon luxuries, because the lowest level of the
natural price of labour is regulated by the price of necessaries (WN, pp. 871–73).
His distinction between necessaries and luxuries ostensibly presupposes that finite
needs can be separated from infinite desires. Thus the finiteness of need plays a key
role even in WN.
3
I am not alone in persevering to unpack this operative logic within the ‘invisible hand’ passage. Hont
and Ignatieff (1983) and Witztum (2009, 2010) trace the argument along similar lines even if not naming
it the Need Satisfaction Thesis. While Smith’s concern for the predicament of the poor tends not to attract
the attention of most neoclassical economists, it did attract that of economists at the time or of close contemporaries. Thomas Robert Malthus, for instance, humorously rebuts Smith for confusing ‘the happiness
of nations’ for ‘the happiness and comfort of the lower orders of society’ (Malthus, 1798[1996], p. 303).
332 T. Yamamori
As concerns the question of how far removed twenty-first-century economies are
from eighteenth-century commercial societies, that is certainly the case. At the same
time, however, it is wrong to depict these latter as societies where unlimited desires were
not relevant. Smith himself argued that infinite desires, not finite needs, are engines of
economic production in the ‘invisible hand’ passage in TMS as we have seen in the previous section. One commonality that the society we live in and the society that Smith
observed share is certainly the sense that both are motivated by infinite desire. Unlike
the neoclassical school, however, Smith himself did not reduce the concept of need to
a concept of preference.
One of the reasons why neoclassical economists have had to dismiss the concept of
need is that some of the ontological and epistemological features of need do not square
with neoclassical thinking. While desire or preference can be purely subjective, need
cannot. Why? And if it is not subjective, then can individuals know their needs? Let us
think with the example Smith provides:
By necessaries I understand, not only the commodities which are indispensably necessary for
the support of life, but whatever the custom of the country renders it indecent for creditable
people, even of the lowest order, to be without. A linen shirt, for example, is, strictly speaking,
not a necessary of life. The Greeks and Romans lived, I suppose, very comfortably, though
they had no linen. But in the present times, through the greater part of Europe, a creditable
day-labourer would be ashamed to appear in publick without a linen shirt, the want of which
would be supposed to denote that disgraceful degree of poverty, which, it is presumed, no
body can well fall into without extreme bad conduct. Custom, in the same manner, has rendered leather shoes a necessary of life in England. The poorest creditable person of either
sex would be ashamed to appear in publick without them. In Scotland, custom has rendered
them a necessary of life to the lowest order of men; but not to the same order of women, who
may, without any discredit, walk about bare-footed. In France, they are necessaries neither to
men nor to women; the lowest rank of both sexes appearing there publickly, without any discredit, sometimes in wooden shoes, and sometimes bare-footed. Under necessaries therefore,
I comprehend, not only those things which nature, but those things which the established
rules of decency have rendered necessary to the lowest rank of people. (WN, pp. 869–70,
emphasis mine)
This quote from the passage in which Smith argues that taxation to necessaries would
increase the natural price of labour recognises two types of needs: one mandated by
nature, the other by custom. Here Smith divides commodities into necessaries and
luxuries. In many other places, however, including in other books of WN, he divides
commodities into necessaries, ‘conveniencies’ and luxuries. This raises the question as
to the nature of what Smith calls conveniencies. In his discussion of the natural price of
labour in ch. 8 of Book 1 (WN, pp. 87, 95, 103), to which the argument of the quoted
passage from Book 5 logically corresponds, Smith refers jointly to ‘the necessaries and
conveniencies of life’. It is reasonable to presuppose that in WN ‘conveniencies’ should
be understood to be part of necessaries—much in the sense, again, of the quote from
Book 5.4
4
Given this dual usage of necessaries (necessaries in Book 5 of WN are referred to as necessaries and
‘conveniencies’ in other books of WN), this author supposes that usage in TMS could be similarly interpreted. TMS sometimes makes use of ‘the necessities and conveniencies of the body’ (pp. 212, 213), sometimes ‘the necessaries of life’ (pp. 184, 185) and sometimes ‘the support and necessities of the body’ (p.
268). The author wishes to thank a referee of this journal for kindly prompting him to clarify his discussion
on Smith’s use of the word ‘conveniencies’. See also Gram (1998) for a unique interpretation of Smith’s
trichotomy of ‘necessaries, conveniencies and luxuries’.
The concept of need in Adam Smith 333
But let us return to the two types of need and exemplify the first (mandated by
nature) with, say, water. We need water in order to survive. Sometimes, we subjectively
prefer water to something else when we need water. However, even when we subjectively do not desire water, or we do not know what water is (think when you were a
baby), we still need water. So water is a necessity irrespective of preference. In this
case, we could say this need is objective.
Of the latter type, need by custom, Smith himself gives us several examples. ‘Leather
shoes’ are needed by ‘[t]he poorest creditable person of either sex’ in England.
Sometimes a person in eighteenth-century England desired this footwear when she
needed it. However, even when she subjectively did not prefer it, she still needed it in
order to be deemed a creditable person by society. Need, in this case, is neither objective in the (physiological) sense of water, nor subjective in the sense of an eighteenthcentury English casual labourer desiring diamonds, for instance. We could think of this
type of need as intersubjective because it is reliant on conventions that emerge from a
process of collective approval (and disapproval).5
The following passage in TMS can be read as Smith’s account for the mechanism of
how intersubjective needs emerge:
The poor man … is ashamed of his poverty. He feels that it either places him out of the sight of
mankind, or, that if they take any notice of him, they have, however, scarce any fellow-feeling with
the misery and distress which he suffers. He is mortified upon both accounts; for though to be
overlooked, and to be disapproved of, are things entirely different, yet as obscurity covers us from
the daylight of honour and approbation, to feel that we are taken no notice of, necessarily damps
the most agreeable hope, and disappoints the most ardent desire, of human nature. (TMS, p. 51)
A poor man’s feeling of shame is derived from the fear of being either ‘overlooked’
or ‘disapproved of ’. Why would he think he would be overlooked or disapproved of?
Because in mentally swapping places with the others, he reasons that were he not poor,
either he would not have any sympathy towards a poor person, or he would even overlook the very existence of that poor person. This manner of reasoning makes one fear
not just poverty as a state but poverty as a perception. And this is how the sentiment
of being ‘ashamed to appear in publick without them [intersubjective needs]’ (WN,
p. 870) emerges. This intersubjectivity of need which Smith mentions in Book 5 of
WN is not an isolated, irregular occurrence, but rather closely coheres with his theory
of sympathy—a moral theory developed in TMS.6
5
Whether we could call this type of need objective depends on the definition of objectivity. For an example in
the affirmative, see Doyal and Gough (1991) and Ramsay (1992). If we were to follow John R. Searle’s terminology, these needs would be ‘ontologically subjective’. See Searle (1995[1996], 2010). Searle himself refuses the
term ‘intersubjectivity’, despite acknowledging its prevailing usage in social philosophy and the social sciences.
He suggests that ‘if intersubjectivity is a legitimate notion at all, it must amount to collective intentionality’
(Searle, 2006, p. 16). ‘Intersubjectivity’ could also be called what Harvey Gram calls Smith’s ‘socialism’, contrasting it to ‘the individualism characteristic of neoclassical’ theory (Gram, 1998, p. 162). This paper’s choice of
the term ‘intersubjectivity’ over ‘collective intentionality’ and ‘socialisim‘ is based on two reasons: first, the term
‘intersubjectivity’ is relatively wider spread in recent literature both in the research on Adam Smith (Tugendhat,
2004; Brown, 2011; Fricke and Føllesdal, 2012) and in heterodox economic theories (Fullbrook, 2002; Latsis,
2006; Zanotti, 2007), compared to the other two terms. Second, in comparison to the other two forms, the term
‘intersubjectivity’ is intuitionally clear—arising in contrast to subjectivity and objectivity.
6
I would like to thank a referee of this journal for pointedly turning my attention to the relationship
between intersubjectivity and Smith’s moral theory of sympathy. Regarding the relationship between Smith’s
intersubjective definition of necessaries and moral discourse, Richard Mason points out that Smith’s definition of necessaries, inclusive of commodities as intersubjective/customary needs, the distinctions between
necessaries and luxuries, and condemnation of the vanity of the latter’s consumption, ‘fitted well with the
orthodox moral and religious sentiments of the day’ (Mason, 1998, p. 9).
334 T. Yamamori
These objective and intersubjective aspects of need raise an epistemological issue.
As can be gleaned from the ‘invisible hand’ passages in TMS, Smith seems to endorse
the view that people mostly fail in recognising needs. In fact, he identifies this very
tendency (when the people in question happen to be rich) as a main driving force of
economic production. He also describes this failure as ‘deception’ by ‘nature’ (TMS,
p. 183). Further clarification is due here in order to distance Smith’s epistemological
stance from two other positions: one where not a single person ever can know, and a
second one, where every person always can know. Prior to coming to ‘deception’ by
‘nature’ and ‘invisible hand’, Smith discusses a ‘splenetic philosophy’ of ‘abstract and
philosophical light’, which enables one to know one’s own needs. But he also expounds
on another, ‘complex view’, that precludes that possibility—meaning people do fail in
separating needs from desires. The bottom line is that there is a possibility for some
of us to recognise needs properly. I call this position of Smith’s an ‘epistemological
limitation’ in my second section, and would like it strongly to be distinguished from
‘epistemological impossibility’.
On the other hand, we cannot ignore this ‘epistemological limitation’. Donald
Winch, referencing Michael Ignatieff, is right to point out that ‘Smith relies on a “stoic
hope” that some men at least will always be capable of distinguishing between wants
and needs’ (Winch, 1988, p. 99, emphasis mine). However, Ignatieff himself goes further than that: ‘Smith was optimistic, but it was an optimism based on a stoic hope
that the human will would prevail, and each individual would retain the capacity to
know the difference between what he wants and what he needs’ (Ignatieff, 1984[1986],
pp. 124–25, emphasis mine). Ignatieff’s simplified position is a product of his juxtaposition between Rousseau’s account as ‘the first specifically modern theory of false consciousness’ and Smith’s account as ‘paradigmatic of all critiques of false consciousness’
(Ignatieff, 1984[1986], p. 122). It is a seductive juxtaposition but not strictly correct
because for Smith, as we have seen, the ‘false consciousness’ of the rich is a driving
force for economic growth.7
Let us move on from the implications of ontology and epistemology depicted here for
historians of ideas and see how the case stands for modern mainstream economists. For
the neoclassical school, the concept of need is deemed unnecessary and is ordinarily
subsumed under the concept of utility or preference (Doyal and Gough, 1991). Even
though some dissenting voices, such as Amartya Sen, have repeatedly pointed out that
‘the concept of needs does not get adequate coverage through the information on …
utility’ understood as subjective (Sen, 1982, p. 367), little has changed overall. One of
the reasons for the continual dismissal of the concept of need is that the ontology and
epistemology of need seem difficult to square with the core of the neoclassical theory.
The ontology of need contradicts the neoclassical ‘subjectivist’ stance, while the epistemology of need contradicts the neoclassical presumption of consumer sovereignty.
Neoclassicism’s dismissal of need holds sway in the current discourse just as much
as it has also unduly influenced the interpretation of past economic theories. It is only
now that we are beginning to realize that the concept of need in Adam Smith has been
overlooked by economists through time. And Smith is not the only one whose articulation on need has been ignored. Emile Kauder argues that ‘the analysis of subjective
7
Using the juxtaposition as a stepping-stone, Ignatieff goes on to interpret Smith as a Stoic (Ignatieff,
1984[1986]). For criticism against interpreting Smith as a Stoic, see Robertson (2005). For a more nuanced
view, depicting Smith ‘as an eclectic Stoic’, see Montes (2008).
The concept of need in Adam Smith 335
elements in economic valuation starts with Aristotle’ (Kauder, 1953, p. 638). Joseph
Schumpeter also depicts a long subjectivist trajectory of the theory of value from
Aristotle, via Thomas Aquinas, to neoclassical economics (Schumpeter 1954[1994]).
However, these arguments rely on a particular interpretation of Aristotle’s and Thomas
Aquinas’ term: an interpretation of both the Greek ‘χρεία (chreia)’ and the Latin ‘indigentia’ as a purely subjective concept—as ‘want’ or ‘demand’. Although translating the
original terms to ‘want’ or ‘demand’ is perhaps not unwarranted, translating them to
‘need’ is apt as well, especially given the use of these terms by Aristotle and Aquinas,
which also fits the concept of need in this paper—a concept that is either objective or
intersubjective (Morioka, 1993; Vivenza, 2001; Theocarakis, 2006).
Both Kauder and Schumpeter project neoclassical subjectivist theory back to
Aristotle and Thomas Aquinas. In line with this type of historiography of economic
thought, not only the concept of need is dismissed, but an objectivist interpretation of the concept of utility as well. Terence Hutchison argues against Smith’s
concept of utility, which is sometimes used interchangeably with the term ‘value
in use’:
[S]uch a concept of objective utility permits the implication that values, choices, and priorities
are not to be decided by the purely subjective tastes and desires of individuals, but by objective
qualities of ≪ usefulness ≫ which experts or officials can more accurately assess and decide for
us. (Hutchison, 1982, p. 39)
From this statement, it becomes clear that there would be no room for the concept of
need; for such a concept of either objective or intersubjective need also implies that
values, choices and priorities are sometimes decided not by the purely subjective tastes
and desires of individuals, but by either objective or intersubjective qualities of need
which experts/officials or a society/community can more accurately assess and decide
on. Thus the refusal of Smith’s objective interpretation of utility goes hand in hand with
the neglect of his concept of need. For were it to be otherwise, it would have posed a
difficulty for neoclassical theory. Hutchison even calls Smith’s and other classical political economists’ non-subjectivist tendency a ‘regress’ and an ‘eclipse’ (Hutchison, 1994,
p. 195).8 His disagreement with what he calls ‘objective qualities’ seems partly derived
from the fear that paternalistic decisions could be imposed on individuals—a reasonable fear, in and of itself, as some have argued elsewhere (Fehér et al., 1983; Yamamori,
1998A, 1998B).
Having said that, however, removing any non-subjectivist concept from the theory
cannot be the solution to this problem. For example, the language of need and the
paternalistic element in it are part of the fabric of social life. The usefulness (or harmfulness) of a particular drug is determined either objectively by scientific facts or intersubjectively by society. Against your individual preference to consume cocaine, for instance,
society might prohibit intake on the grounds that you have a need for not taking cocaine
(or rather your children have a need for a drug-free parent). It could all result in a
‘tragedy of paternalistic overprotection’—the personal drama of losing custody, drastic
social services interventions and so on. However, expelling the concept of need from
8
Similar condemnation of Smith’s objectivistic concept of utility as ‘waste and rubbish’ can be found in
Kauder (1953, p. 650). Some modern economists not only reduce the concept of need to subjectivist concepts such as preference or demand, but also ridicule other social sciences which allow the concept of need
as ‘needology’ (Williams, 1974, p. 60).
336 T. Yamamori
the theory would not give us any solution in the real world. It is therefore better to give
the concept of need its proper place in the theory and to examine its function closely in
order to avoid paternalism from prevailing more than its reasonable extent.
4. The Need Satisfaction Thesis, economic theory and competing
observations
4.1 How: division of labour and natural price
Smith’s own answer to the theoretical question posed by the Need Satisfaction Thesis—
how a commercial society can satisfy the needs of the poor—is division of labour and
natural price (Hont and Ignatieff, 1983):
Among civilized … nations … the produce of the whole labour of the society is so great … and
a workman, even of the lowest and poorest order … may enjoy a greater share of the necessaries
and conveniences of life…. The causes of this improvement, in the productive powers of labour,
and the order, according to which its produce is naturally distributed among the different ranks
and conditions of men in the society, make the subject of the First Book of this Inquiry (WN,
pp. 10–11).
The first three chapters of Book 1 are on the division of labour, which accounts for
relatively higher productivity, which in turn makes the ‘pie’ large enough. The last five
chapters of Book 1 are on natural price, which caters for a fair distribution of portions
of the ‘pie’, which ultimately ensures that the poorest have enough to satisfy their
needs.9 Smith argues that the natural price of labour would not go below the minimum
sufficient level for accommodating both natural needs and customary needs: in Book
1, ch. 8, Smith argued that the natural price of labour would not go below the subsistence level, and in Book 5, ch. 2, he argued this subsistence level consisted of not only
natural needs but also customary needs. The problem is that there are two competing
interpretations of natural price and the mainstream interpretation cannot fit in this
picture. Because a detailed analysis of this matter requires a book-length study, only a
few directly relevant points will be touched upon here.
The dominant interpretation sees natural price as a forerunner of the neoclassical
equilibrium price. This view has become a sort of common sense among mainstream
economists (Schumpeter, 1954[1994]; Samuelson, 1977; Negishi, 2000). It is shared
even by some philosophers (Fleischacker, 2004A). The following passage in WN is often
given as evidence of this interpretation: ‘The natural price … is, as it were, the central
price, to which the prices of all commodities are continually gravitating’ (WN, p. 75).10
Although limitations on space prevent me from discussing the validity of this interpretation here, what I can say is that it contradicts both Smith’s statement as an answer
to his Need Satisfaction Thesis and his explanation that the lowest level of the natural
9
Only with the former in the ‘Early draft’: ‘[t]he division of labour … can alone account for that superior
opulence which takes place in civilized societies, and which, notwithstanding the inequality of property,
extends itself to the lowest member of the community’ (ED, p. 564, emphasis mine). Thus Smith explicitly
makes a qualification that the Need Satisfaction Thesis is only a possibility, not an actual fact: ‘I do not mean
that the profits are divided in fact precisely in the above manner, but that they may be divided in such manner’ (ED, pp. 566–67, emphasis mine). This qualification disappears when he incorporates natural price as
part of his answer to the Need Satisfaction Thesis in WN.
10
For an argument that the passage should not be read in that way, see Montes (2004, ch. 5). Blaug
(2007) has qualified the interpretation of Smith as a forerunner of the Neoclassical general equilibrium as
‘a historical travesty’ (p. 188). Also see Witztum (2009, 2010) for the difference between the neoclassical
general equilibrium and the Smithian general equilibrium.
The concept of need in Adam Smith 337
price of labour is regulated by the price of necessaries (WN, pp. 871–73). The reason
for the first contradiction is that an equilibrium price of labour does not guarantee the
satisfaction of needs among the poor.
A possible alternative is to interpret natural price as the cost of production:
When the price of any commodity is neither more nor less than what is sufficient to pay the rent
of the land, the wages of the labour, and the profits of the stock employed in raising, preparing,
and bringing it to market, according to their natural rates, the commodity is then sold for what
may be called its natural price. (WN, p. 72)
This is also a conventional price because Smith acknowledges that the natural rate of
the wage of labour is determined in the bargaining process between masters and workmen, whose bargaining powers are socially and conventionally determined through
regulations and other factors (Garegnani, 1983; Martins, 2014).11 While aware of the
inequality of bargaining powers (WN, pp. 83–85), Smith nonetheless maintains that
the natural price of labour does not fall below ‘what is precisely necessary to enable the
labourer to bring up a family’ (p. 91) for any considerable time. Otherwise ‘the race of
such workmen could not last beyond the first generation’ (p. 85). Then, however, what
would ensure that each individual employer is going to care about the reproduction
of workers and thus of the whole economy? While Smith himself only vaguely suggests ‘common humanity’ (p. 86) in WN, some researchers, such as Jeffrey T. Young
and Antonella Stirati, draw our attention to Smith’s moral theory in TMS (Young,
1986, 1995; Stirati, 1994, pp. 58–65), where Smith explains the purpose of economic
activity is ‘[t]o be observed, to be attended to, to be taken notice of with sympathy,
complacency, and approbation’ (TMS, p. 50). Impartial spectator’s sympathy seems to
be at the basis of Smith’s theory of natural price (Young, 1986). In my understanding,
this interpretation is not ‘normative’ in the sense of Smith mandating people ought to
pay natural price. Rather Smith tries to explain the mechanism of how natural price
is regulated by the cost of production—where people with the usual moral sentiments
enter the market. This interpretation could fit with Smith’s seeking in natural price an
answer to his question.
This paper is by no means the place for evaluating the validity of any one interpretation. The only thing we have been able to do is identify the second interpretation as
fitting with Smith’s own explanation of the natural price as an answer to his own question. The economic theory behind the Need Satisfaction Thesis—the core of Smith’s
justification of market economy—is a theory where the cost of production tends to
regulate pricing.
4.2 Whether: Exception or contradiction?
Moving on from theoretical postulation, or from the question of how the needs of the
poor can be satisfied, to facts—whether, in fact, they do get satisfied. What I would like
to examine in particular is whether the Need Satisfaction Thesis is consistent with
some of Smith’s own observations on the predicaments of the poor in Britain.12
On this point the author acknowledges the helpful comment made by a referee of the journal.
This paper will not go on examining whether the Need Satisfaction Thesis—be it with the threshold of
natural needs, or with the threshold of customary needs—is consistent with historical evidence. It is because,
first, we will find that Smith himself acknowledges facts contrary to the thesis, which suffices for the argument of this paper; second, it is a task better suited to social and economic historians and beyond the scope
of my endeavour.
11
12
338 T. Yamamori
A half-starved Highland woman frequently bears more than twenty children … I have been
frequently told, in the Highlands of Scotland for a mother who has borne twenty children not
to have two alive. … In some places one half the children born die before they are four years
of age; in many places before they are seven; and in almost all places before they are nine or
ten. This great mortality, however, will every where be found chiefly among the children of the
common people, who cannot afford to tend them with the same care as those of better station.
(WN, pp. 96–97)
In the face of ‘[a] half-starved woman’ and children who ‘die before they are four years
of age’ or ‘nine or ten’, it is difficult to see how needs, however defined, can be termed
satisfied. Indeed, Smith acknowledges that the high mortality rate among ‘the children
of the common people’ is not a technological or scientific limit on medicine at that
time, but a question of the affordability of ‘the same care’ that is bestowed upon ‘those
of better station’.
Given that he sees such non-satisfaction of needs as occurring in ‘almost all places’,
it is hard to imagine Smith could consider these situations exceptions.13 The question
that imposes itself is why did he go on constructing theories of normative justification
(in TMS) and of positive mechanism (in WN) on such foundations—on the assumption
that the needs of the poorest in society are satisfied—when he observed widely prevailing a non-satisfaction of needs? In order to answer this question, the Need Satisfaction
Thesis should be situated within a constellation of eighteenth-century discourses.
4.3 Discourses of wage and need in the late eighteenth century14
As we saw in this section, the core argument sustaining the Need Satisfaction Thesis is
the natural price of labour. The argument that wages would not fall below the subsistence level is not exclusively credited to Smith—Anne Robert Jacques Turgot shared
the same view: ‘the wage of the Workman is limited to what is necessary in order to
enable him to procure his subsistence’ (Turgot, 1766[1966], p. 122). Their arguments
were part of the wider common sense that the price of labour should not be below the
subsistence levels. For Mercantilists,
So long as wages were the object of consistent regulation, and before there was any thought that
competition could operate as an impartially just distributive force, the principles appealed to in
the discussion of wages would be principles of social justice and national expediency, not those
of economic theory; the problem would be to decide how much ought to be paid in justice to the
laboring man and for the national well-being, and not how much would be paid under the operation of a given set of conditions. (Furniss, 1920[1957], p. 157)
James Steuart argues that ‘in a society, it is requisite that the individual of the
most puny constitution for labour and industry, and of the most slender genius
for works of ingenuity … should be able by a labour proportioned to his force, to
gain the lowest degree of the physical-necessary’ (Steuart, 1767[1966], p. 272,
emphasis mine)
Many British Mercantilists thought subsistence should be confined to natural/physical needs so that they could push for a lowering of wages (Furniss, 1920[1957], p. 180).
For an example of interpreting these exceptions, see Gilbert (1997, p. 289).
The purpose of my argument in the third part of this section is to show that Smith’s concept of need was
not derived from isolated speculation, but at the very least—from his response to economic writings prior
and contemporary to him. My purpose is not to present the whole historiography on discourses of wages and
need in the late eighteenth century. See Furniss (1920[1957]) and Stirati (1994) for such an attempt. The
author acknowledges a referee of the journal for a reminder to clarify and delimit the aims of the research.
13
14
The concept of need in Adam Smith 339
Interestingly, Steuart also recognises not only ‘physical necessaries’ but also ‘political
necessaries’, which roughly correspond to Smith’s natural needs and customary needs,
respectively (Steuart, 1767[1966], pp. 270–71). Both ‘physical necessaries’ and natural
needs are objective, while both ‘political necessaries’ and customary needs are intersubjective. Steuart, who is sometimes called the last Mercantilist, does recognize—exceptionally, ontologically—what he calls ‘political necessaries’, but he is still within the
Mercantilist doctrine in maintaining, with regards to subsistence wage, that only physiological necessaries should be met. The difference between Steuart and Smith lies in
that even the lowest rank of labourers have customary needs in Smith’s world, while
they do not have ‘political necessaries’ in Steuart’s world. The latter is almost equivalent
to what we call ‘positional goods’ today (Hirsch, 1977). Smith keeps the term ‘necessaries’ for the needs of even the poorest in society.15
At the same time, Smith is conscious that his concept of need is categorically wider
than the concept held not only by most Mercantilists, but also by the philosophical
proponents of commercial society who preceded him. In TMS, he criticises Bernard
Mandeville for his failure to see customary needs as needs:
Every thing, according to him [Mandeville], is luxury which exceeds what is absolutely necessary for the support of human nature, so that there is vice even in the use of a clean shirt, or of
a convenient habitation. (TMS, p. 312)
The concept of a need categorically wider than physical survival is vital for distinguishing Smith’s moral theory from Mandeville’s. This then leads to the question: why does
Smith persevere with the Need Satisfaction Thesis when he detects unmet needs even
in Mandeville’s term?
5. The ‘savage’
If Smith had only had the perspective on need that emerged from theories of wage
described in the third part of the previous section, when he observed the prevailing
predicaments of ‘the common people’, he might have recognised their non-satisfaction of needs. However, his perspective on need seems to have been complicated by
15
The difference between Steuart and Smith corresponds to the difference between the concept of need
behind the so-called ‘relative poverty’ and the concept of need behind Amartya Sen’s capability approach or
Peter Townsend’s theory of ‘Relative Deprivation’. In the first case, the concept of need is defined only quantitatively relative to an average consumption level in a society. In the latter, the concept of need is defined
rather qualitatively. Two notes for this: First, Townsend’s theory, expounded in his monumental Poverty in
the United Kingdom (Townsend 1979) and his several theoretical articles, has been considered the most influential theoretical work on relative poverty. However, what Townsend argues is significantly different from
the so-called relative poverty and its measurement, as adopted in OECD and other international statistics.
Second, in a debate between Townsend and Sen in Oxford Economic Papers (Sen, 1983, 1985; Townsend,
1985), they criticize each other. We should understand, however, that they still have the same concept of
need in mind. While Sen maintains poverty and need should be considered not at a physical subsistence
level but at a cultural and social level, he criticises theoretical discourses on relative poverty for eventually
allowing the concept of poverty to erode to the concept of inequality and the concept of need to erode to
the concept of positional goods (he cites Smith’s passage on natural needs and customary needs to this
end). Townsend misunderstands Sen’s argument in a similar fashion to Mandeville, to whom I will briefly
return a little later in this section. It is astonishing how miscommunication has happened between these two
prominent scholars, as it is astonishing how the concept of relative poverty has been undertheorised despite
having been widely accepted and circulated. The ontological analysis of need can contribute to articulating
the concept of ‘relative poverty’ in Townsend’s sense, but this is not the task of this paper. I have discussed
this briefly elsewhere along similar lines (Yamamori, 2000), and will revisit with an explicit ontological
analysis (Yamamori, forthcoming).
340 T. Yamamori
a comparison between the poorest in ‘civilized’ commercial society and the richest in
‘savage’ society. At the beginning of the so-called ‘Early draft of the Wealth of Nations’
(ED), presumed to have been written around 1762, Smith argues:
In the midst of so much oppressive inequality, in what manner shall we account for the superior affluence and abundance commonly possessed even by this lowest and most despised member of civilized society, compared with what the most respected and active savage can attain to. (ED, p. 564, emphasis mine)
A similar comparison between the ‘civilised’ and the ‘savage’ is drawn in WN, and it is
another key for the Need Satisfaction Thesis. Why is this the case?
Some have argued that Smith’s justification of commercial society is a response to
Jean-Jacques Rousseau’s condemnation of it (Hont and Ignatieff, 1983; Robertson,
2005). Indeed, the comparison between the ‘civilized’ and the ‘savage’ exists in
Rousseau’s discourse and it is conceivable Smith sought to respond.16 In the Discourse
on the Origin and Foundations of Inequality Among Men, Rousseau contrasts ‘Savage
man’ in ‘the state of Nature’ to ‘Civil man’ in ‘the state of society’. In the state of
nature there is no property, so social inequality does not exist either. His ‘savage man’
arises not only from philosophical speculation but also from historical conjecture (at
least partially) based on discourses on Indians in the Americas. Rousseau describes
‘savage man’ as ‘a free being, whose heart is at peace, and body in health’ (Rousseau,
1755[1997], p. 150). He calls this era ‘the best for man’ (p. 167). In contrast to this
noble image of ‘savage man’, ‘civil man’ is depicted as ‘deprave[d]’ (p. 133), ‘ruined’
(p. 168) and ‘miserable’ (pp. 150, 197).
Smith’s evaluation of ‘civilized’ society and ‘savage’ society is completely contrary
to Rousseau’s. In Smith’s view, ‘the savage nations’ are ‘so miserably poor, that, from
mere want, they are frequently reduced, or, at least, think themselves reduced, to the
necessity sometimes of directly destroying, and sometimes of abandoning their infants,
their old people, and those afflicted with lingering diseases, to perish with hunger, or
to be devoured by wild beasts’ (WN, p. 10).
This representation of the ‘savage’ is, contrasted to the ‘noble savage’, labelled ‘ignoble savage’ by Ronald Meek (Meek, 1976). Why did Smith take such a contrary view?
Two reasons: one is theoretical, the other—genealogical.
The theoretical reason is that the two thinkers differed in their understanding of
the ontology of need. Rousseau acknowledges the difference of needs between ‘savage
man’ and ‘civil man’: the former has only ‘very limited needs’, while the latter has new
needs, which were once just luxuries but have ‘degenerated into true needs’ by becoming habitual (pp. 164–65). This recognition of difference enables Rousseau to contrast
‘savage man’, who peacefully satisfies his or her needs, to ‘civil man’, who miserably
struggles to meet his or her needs. It is a view that constitutes a type of evolutionary
ontology of need and which, in the context of natural price theory, Smith also shares
(as can be inferred from the lengthy passage cited in Section 3). So, on the one hand,
Smith recognises customary needs and their variability over time and space. However,
when colonialist notions of the ‘savage’ enter the discussion, he seems to be sometimes
espousing diametrically opposed views, smuggling alongside the evolutionary ontology
of need a type of static ontology too.
16
Smith published his review on Rousseau’s second discourse (Rousseau, 1755[1997]) in the Edinburgh Review
(Smith, 1756[1980]), which contains his own translation of the three chosen passages: The second passage is
about the evolution of needs, which will be explained shortly in this paper. For the evolutionary characteristic of
need in Rousseau, see Fridén (1998). For ‘Smith’s multi-faceted response to Rousseau’, see Schliesser (2006).
The concept of need in Adam Smith 341
We have available to us two surviving students’ notes from Smith’s lectures on jurisprudence at Glasgow University in the early 1760s. Both shed light on Smith’s ontological confusion over the ‘natural wants of mankind’. One gestures towards the evolutionary strand:
[T]hese necessities [of a savage] can be supplied without great difficulty in some tollerable manner and by the industry of each individual. (LJA, p. 335)
The unassisted industry of a savage can not any way procure him those things which are now
become necessary to the meanest artist [in a civilized society]. (LJA, p. 340)
According to this note, Smith clearly recognises that a savage’s needs are different
from those of ‘the meanest artist’ contemporary to him. However, in the other note,
his words seem to favour the static strand:
In general … the necessities of man are not so great but that they can be supplied by the unassisted labour of the individual. (LJB, p. 487)
Smith then goes on to say:
In an uncivilized nation, and where labour is undivided, every thing is provided for that the
natural wants of mankind require; yet when the nation is cultivated and labour divided a more
liberal provision is allotted them; and it is on this account that a common day labourer in Brittain
has more luxury in his way of living than an Indian sovereign. (LJB, p. 489, emphasis mine)
Here, the needs of ‘a common day labourer in Brittain’ and of ‘an Indian sovereign’
seem to be co-terminous. So, the same commodities that a poor person in Britain
enjoys are described as luxuries in this quote from LJB, but branded necessities in the
passage quoted from LJA. Smith once acknowledged the evolutional ontology of need
in his lecture in spring 1763, then constructed an argument reliant on the static ontology of need in his lecture delivered the next academic year.17
To recap, Rousseau sees an evolution of need—technological and other changes
engender new desires and a certain period of customisation turns these new desires
into true needs—and if the condition of ‘civil man’ is one of misery, it is so because he
or she could not properly meet these new needs. Smith’s confusion on this point arises
from his trying to follow two dissonant ontologies: he rather relies on a static ontology when attributing misery to ‘the savage’ and ‘exempting’ from misery the poorest
in contemporary society, even though at other times he follows Rousseau’s evolutionary view.18 But he then relies on a dynamic one on occasion when he appears to
17
LJB is dated 1766 on its cover, but it is considered a note of Smith’s last lecture held between October
1763 and January 1764 (Meek et al., 1978, pp. 5–6). Smith’s different ontologies of need could also explain
another contradictory explanation between the two lecture notes. In LJA, Smith says:
Indeed to supply the wants of meat, drink, cloathing, and lodging allmost the whole of the arts and sciences
have been invented and improved. (LJA, p. 337)
However, he says in LJB:
The whole industry of human life is employed not in procuring the supply of our three humble necessities,
food, cloaths, and lodging, but in procuring the conveniences of it according to the nicety and [and] delicacey of our taste. (LJB, p. 488)
While there could be multiple reasons for the contradictions in the two lecture notes, a good candidate
for one such reason could be the evolutional ontology of need in LJA and the static ontology of need in LJB.
18
This endorsement of Smith’s of the evolutional ontology of need is interpreted by some authors as evidence that Smith doesn’t have a concept of need different from the concept of desire. For example, Nicholas
Xenos argues that ‘his [Smith’s] analysis is consistent with the notion that by the eighteenth century it was
possible to see no significant difference between human needs and desires’ (Xenos, 1989, p. 11). However,
the whole argument of this paper shows that this is not the case.
342 T. Yamamori
acknowledge an evolution of need. As will be clear by now, this ontological confusion,
or even cognitive contortion, enables Smith to make sense of his Need Satisfaction
Thesis and to be blind to the evidence he observes.
What does this ontological confusion stem from? A genealogical inquiry is warranted here: as soon as they were ‘founded’ by Europeans, the Americas became the
place for European man to look to find the state of nature. This was not a practice
invented by Rousseau and Smith in the eighteenth century, but a discourse that had
been gradually introduced throughout the seventeenth century (Meek, 1976). Thomas
Hobbes, in Leviathan, refers to ‘the savage people in many places of America’ as proof
of how the state of nature would be (Hobbes, 1651[1991], p. 89). The same comparison, as Smith’s, between the poorest in Britain and the richest in (native) America can
be found in John Locke’s Two Treatises of Government:
There cannot be a clearer demonstration of any thing, than several Nations of the Americans
are of this, who are rich in Land, and poor in all the Comforts of Life; whom Nature having
furnished as liberally as any other people, with the materials of Plenty, i.e. a fruitful Soil, apt to
produce in abundance, what might serve for food, rayment, and delight; yet for want of improving it by labour, have not one hundreth part of the Conveniencies we enjoy: And a King of a
large and fruitful Territory there feeds, lodges, and is clad worse than a day Labourer in England.
(Locke, 1690[1960/1988], pp. 296–97)
This comparison is employed at the critical moment of Locke justifying his labour theory
of property. Here, the perceived ‘fact’ of kings in America being poor in spite of their
fertile land is used as proof for the argument that value is mainly derived from labour,
not from land, so that labour could bestow property rights to a person who laboured over
communally owned land. In one unequivocal symbolic phrase ‘in the beginning all the
World was America’ (Locke, 1690[1960/1988], p. 301), this labour theory of property is
made total.
This identification of the state of the American Indians with the state of nature not only
underpins the labour theory of property, but also justifies colonial invasion and dominion. While ‘in Land that is common in England … no one can inclose or appropriate any
part, without the consent of all his Fellow-Commoners’, colonials in America can do
so because that common American land is assumed to be in the state of nature (Locke,
1690[1960/1988], p. 292). This assumption has been deplored not only by anthropological or historical research in the twentieth century (cf. Driver, 1969; Jennings, 1975),
but has been recognised as problematic also in the seventeenth century, by colonials like
Roger Williams and William Penn, to whom it was apparent that this was not the state of
nature and who sought consent from American Indian communities for their colonies.19
Although Smith denies the historical existence of the state of nature (LJB, p. 398), he
inherited from Locke all these ‘ignoble savage’ imaginaries: the comparison between a
British labourer and an Indian king; the static ontology of need that Locke and Smith
judge the predicament of a British labourer a better lot to have than that of an Indian king;
an unjustified assumption of non-existence of any sovereignty in America (‘there is properly neither sovereign nor commonwealth’, WN, p. 690). What transpires from this, therefore, is that in confusing his ontology of need, Smith is influenced by strands of colonialist
discourse that deny Indians sovereignty and property rights and depict them as ‘ignoble
savages’.20
For more on Locke and colonialism, see Tully (1995) and Arneil (1996).
Smith mentions Pierre-François-Xavier de Charlevoix and Joseph-François Lafitau as the writers ‘who
give us the most distinct account of the manners of those nations’ (LJA, p. 200). While Smith had many
19
20
The concept of need in Adam Smith 343
6. Conclusion
Let me summarise the concept of need in Smith and its relation to his theoretical
framework, as outlined so far.
First of all, Smith’s view of the human condition is one where the individual has needs
and must engage in economic and social activities in order to satisfy those needs. This
view is radically different from the ‘rational economic man’ of neoclassical economic
theory. Second, in Smith’s world, an individual’s needs are not satisfied by becoming
subsumed into a language of need, or into a principle such as ‘right of necessity’ or ‘distribution according to needs’. People are deceived and motivated by unlimited desire,
and this trick of nature makes them industrious and furthers the progress of economies,
so that the needs of the people (including the poorest in society) are consequentially satisfied. So, the epistemological limitation on distinguishing between need and desire is the
cause for the satisfaction of needs. Third, Smith thought that the needs of the least well
off in society were sufficiently satisfied. This is the key point for his justification of the
market economy in TMS. In WN, he tried to clarify how the market economy could satisfy needs. Fourth, there is an ontology of need in Smith. A need is limited—in contrast
to unlimited desire. A need is either objective or intersubjective—as opposed to subjective desire and preference. These ontological features shape Smith’s theory as fundamentally different from the neoclassical school: the limitedness of need makes his theory one
of abundance, not of scarcity, and the objectivity or intersubjectivity of need locates his
theory outside of subjectivism. Fifth, according to Smith, there are not only biological
(or natural) needs, but also social (or customary) needs. Sixth, in spite of the third point,
Smith himself notes the fact that the needs of some poor people are not satisfied. So
there exists a precariously grounded assumption as regards the satisfaction of the needs
of the poor. It is a confusion in the factual evaluation of need satisfaction which arises
from a slippage between the two ontologies of need, evolutional and static. And it is a
slippage that can be attributed to the influence exerted upon Smith’s static ontology of
need by colonialist discourses comparing the ‘savage’ to the poor in ‘civilised’ societies.
These six points all correspond to topics discussed in the contemporary literature
on need by philosophers and heterodox economists. The first point corresponds to
feminist economist critiques of ‘rational economic man’ (Ferber and Nelson, 1993).
The second point, which is mainly epistemological, is aligned, on the one hand, with
an argument about the ‘false consciousness’ of need (Heller, 1976), and on the other
hand, with heterodox economics’ reinstalling of the concept of need (Lawson, 1997;
Hodgson, 2013) against mainstream economics’ relegation of need to preference.
Interrogating the validity of the third point is relevant to the starting point or concern
for many proponents of the Basic Need approach or the Capability approach (Sen,
1993). The fourth point, which is ontological, references the arguments of some analytical philosophers, such as David Wiggins, and the endeavours also of critical realist
books on the Americas (Mizuta, 2000), he denies the credibility of records showcasing the relative advances
of civilisations outside Europe. One example is his denial of the existence of Azteca and Inca civilisations
with ‘sober judgment’ (WN, p. 221). This ‘sober judgment’ is predicated on his ‘conjectural history’, and in
turn this conjectural history is reliant on equating the American Indians with the primitive stage of history,
if not with the state of nature. Takemoto (2005) depicts Smith’s way of treating the records on civilisations
outside Europe as being close to ‘discursive imperialism’ (pp. 314–15). For a comprehensive history of the
identification of the American Indians with ‘natural man’ in the sixteenth and seventeenth centuries, see
Pagden (1982). For representations of North American Indians in the Scottish Enlightenment, see Bickham
(2005, ch. 5) and Meek (1976).
344 T. Yamamori
economists such as Tony Lawson (Wiggins, 1987[1988]: Lawson, 1997). The fifth
point has affinity with what many proponents of the Capability approach, including
Amartya Sen himself, tried to make, as well as with some sociological arguments (Sen,
1983; Townsend, 1985). The sixth point speaks to recent efforts in redefining absolute
and relative poverty (Sen, 1983, 1985), and in introducing postcolonial theory into
economics (Zein-Elabdin and Charusheela, 2004).
Apart from the relevance of the findings to current discussions on the concept of
need, what relevance do they have, more generally, for the history of economic thought,
and for conceptions of the nature of economics? Focusing on the intersubjective aspect
of need can serve to re-examine the dichotomy between subjectivism and objectivism.
Genealogically speaking, abandoning the concept of need was essential for establishing subjectivist neoclassical theory (Yamamori, forthcoming). Neoclassical theory as
a theory of scarcity is only possible when based upon unlimited desires—it struggles to incorporate limited needs. With the traditional dichotomy, the alternative has
been classical political economy as surplus theory (Martins, 2014). Then, should we
embrace the so-called objectivist theory of value—labour theory of value? Focusing on
the intersubjective aspect of need could facilitate a new way of constructing an alternative theory of economics, as well as of interpreting history of economic thought beyond
the dichotomy of subjectivism and objectivism. I like to think this paper could signal
inroads into this new territory and contribute towards theorising an alternative to neoclassical economic theory—recasting the history of economic thought by reclaiming a
forgotten intersubjective concept in Adam Smith.21
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