Jerry Weintraub is a professor at the University of Pennsylvania who teaches a course on the pros and cons of economic liberalism. In this post he is critical of a post by Brad DeLong about Adam Smith which he regarded as naive. Since the long weekend in the US has limited the number of interesting posts in economic blogosphere, I thought that it would be interesting to focus some attention on some fundamental ideas that are not time bound. Weintraub is highly critical of Smith's dichotomy which limits social behavior to two motivations. The market system is based upon self interest, and a system of market exchanges, which unintentionally leads to a better result than a system based upon beneficence and intentional interventions in the market system.
I think that Weintraub's critique of Smith is well taken. He also refers to The Great Transformation by Karl Polanyi which argues that a system of market exchanges is not natural or universal. He asserts that a market system can only exist in a market society, and economic liberalism goes beyond economics. It is the philosophy of the market society. Polanyi provides a powerful critique of the limitations of the market society and the philosophy which is used to justify it.
Economic liberalism developed in 18th century Britain. Consequently, Polanyi devotes a considerable amount attention to the great transformation that was taking place in Britain. Labor is just another commodity that is priced in accordance with the market for labor. When the price of labor fell below the minimum required for subsistence an entire system of self protection was developed in reaction. It may be profitable to avoid the historical description of that system and devote more time to the rest of the book if it is of interest.