This collection of essays offers an interpretation of Smith’s thought that is particularly informed by Smith’s conception of rhetoric and by game theory. It is undoubtedly the claim to show that Smith’s social science is better and more clearly understood via the vehicle of game theory that will attract attention, and the authors believe this to be a key—perhaps it is the key—value-add of the book (pp. 20–21, 23). There are eight chapters, six bookended by a substantial “Introduction” and a “Conclusion.” Of the six intervening chapters, chapters 3, 4, and 6 are previously published and Chapter 5 builds upon a 1995 book chapter. Aside from the merits or otherwise of the substantive arguments of the book, it is highly commendable for its extensive documentation of, and close engagement with, much extant Smith scholarship, with detailed citations (including specific page references)—in sharp contrast to all-too-prevalent lazy citation practices that involve only a cursory pretence of engagement with the existing literature.

Chapter 2, one of the two entirely previously unpublished chapters, actually has no recourse to game theory. The authors there argue that the Wealth of Nations’ (WN) structure is governed by a rhetorical purpose, which gives a key role to the final Book V, not previously recognized (p. 32). Smith’s critique of the mercantile system and its threat to the well-being of Britain and other European nations “and the rhetorical sequencing of Books I–II, III, IV and V cannot be fully appreciated without considering the distinction between didactic discourse and rhetorical discourse that Smith very explicitly made” (p. 51; also pp. 35, 53, 59–60). As indicated in the “Introduction” (p. 7n), I have earlier expressed some skepticism towards this interpretation—in particular, to say that Smith’s supposed rhetorical purpose could only possibly be achieved with respect to readers who would read to the end of the book. The authors themselves comment that most readers would have focused on books III and IV, adding in the same sentence: “Book V, especially chapter 3 of this book, which closes the WN, is crucial to understanding the ultimate, dramatic political consequences of that system [mercantilism]: the ruin of the State and the downfall of the Empire, and thus was essential for Smith to gain the assent of his readers against the mercantile system” (p. 58).

But how many readers would be still with him by that point? Certainly it is unobjectionable to tell that exposition of theory and critique of policies that benefit powerful vested interests might sensibly deploy different rhetorical styles; but logic alone would dictate that the theoretical part of Smith’s political economy (books I and II) be presented prior to the analysis of European policy (Book III), the mercantile and Physiocratic systems (Book IV), and policy in general (Book V). The authors acknowledge some speculative elements to their argument: “conjectural” (p. 39), “seems safe to assume” (p. 41), “presumably” (p. 43), “might have led him” (p. 49).

In any case the more important issue is the game-theoretic interpretations in chapters 3, 4 (albeit less explicitly and formally), and 5. In Chapter 3, game theory is applied to “self-command” in the Theory of Moral Sentiments, with a view to showing that “one need not incorporate any concept of altruism into an explanation of why and how individuals practice self-command; self-command [as understood by Smith] can be explained sufficiently in terms of self-interest and rational choice” (p. 68). In essence, the argument is that the individual has two characters, one driven by short-term benefit and one driven by longer-term benefit, with the application of self-command being the expression of the long term prevailing over the short term. To make this argument succeed requires a particular interpretation of Smith’s notion of the individual’s desire for her moral, cooperative, or sociable behavior to be “praiseworthy,” since it is this that serves as the long-term consideration. It is important here to be clear that the individual’s desire is to be praiseworthy, not merely praised. Even supposing that moral behavior is generally praised, this is not a rational, self-interested reason for a person who wants praise for her conduct to behave morally—it is a reason merely to give the appearance of behaving morally (which is what quite a few actually existing humans do).

The authors recognize the difference and make praiseworthiness an objective of self-interested motivation by reducing it to “psychic and emotional payoffs … feelings” (p. 84). I’m good (only!) because it makes me feel good, so to speak. Since behavior induced by a desire for moral reputation need only induce deceptive behavior—the mere appearance of moral behavior—the authors have recourse to a notion of “internal reputation” (pp. 88–89): that a person cares about his own view of himself. Outside of game theory, that is more straightforwardly characterized as shame—it is not in any genuine sense about “reputation,” which is intrinsically interpersonal or social—and shame seems evidently to proceed from a self-understanding that one has failed a moral standard, rather than being merely a psychic discomfort. To make the same point another way, just as to feel good about doing good does not necessarily render doing good a self-interested act, so feeling bad about doing bad does not necessarily render not doing bad a self-interested act. The argument of this chapter is one instance of a more general view of the authors, that “many moral principles are social constructs informed by self-interested behaviour” (p. 85).

Well, compare the opening sentence of the Theory of Moral Sentiments: “How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it.” The reference here to some other principles implies a lack of complete reduction to self-interest; and the concern for the fortune of others is not represented as being because he gains pleasure from seeing their happiness but in spite of gaining nothing more than that from it. I may add that there is a self-interest/altruism dichotomy assumed by the authors as well, implicitly treating them as mutually exclusive and collectively exhaustive categories of social behavior, which may be questioned. The impartial spectator of Smith’s moral theory or social psychology implies a concept of reciprocity; behavior informed by such consideration seems to me to be neither strictly self-interested nor purely altruistic.

If my above doubts are sound, then the Chapter 3 game-theoretic exercise remains useful but for showing the limits of a sophisticated application of self-interested rationality in explaining moral behavior as understood by Smith. The subsequent chapters 4 and 5, focused on economic behavior and institutions, are more plausible in a constructive sense. (Space limitations will not allow a consideration here of chapters 6 and 7 on rhetoric, language, and Smith’s modes of reasoning.)

Chapter 4 is quite convincing in claiming a unified economic logic for commodities whose economically relevant characteristics to the consumers of them cannot be known prior to consumption, leading to problems of producer “incentive misalignment” and moral hazard. The three cases considered, from the first chapter of Book V of the WN, are joint-stock companies, educational institutions, and Christian religious denominations. In relation to educational services, maintenance of reputation becomes a mechanism for enforcing teaching quality, so long as remuneration is aligned with teaching quality (pp. 100–102)— assuming that remuneration can be so aligned, one may add. This seems a valid interpretation of Smith’s reasoning there on education—and here “reputation” is deployed in a normal interpersonal or social sense—but one may wonder whether the quality of lectures can be so easily determined by students, even after the lectures have been consumed (Aspromourgos Reference Aspromourgos2012, pp. 46–47). The commodity the Christian denominations’ religious instruction is supposed to deliver is eternal life in heaven (p. 103), so certainly very difficult for the consumer to ensure “quality” ex post in this case, to put the point mildly. Smith’s account here suggests how competition via the existence of a large number of distinct Christian sects could neutralize the dangers from a single dominant denomination (pp. 105–106).

Chapter 5 applies the game-theoretic lens to the role of government in WN: a game structure is applied as an interpretation of Smith’s position on, in particular (using the authors’ latter-day language), non-excludable public goods (street lights, lighthouses), and positive externalities (infant industries, patents, copyright) and negative externalities (workers’ degradation from participation in the division of labor)—plus some other instances, including forms of collusion and repeated exchange, ambassadors, and court fees. It is concluded that Smith is “an early (and perhaps the first) analyst of incentive compatible state intervention” (p. 118). As with Chapter 4, much of this economic analysis is quite convincing; but it may be emphasized that not all the government interventions Smith favors can be assimilated to market failure in the modern marginalist sense, as is acknowledged (p. 119; compare Aspromourgos Reference Aspromourgos2009, pp. 225–228).

Keeping in mind that I have left aside two chapters concerning rhetoric, language, and Smith’s modes of reasoning, the authors of this work have aimed at “a novel way of looking at WN” and “showing how game theory can be fruitfully applied to Smith’s oeuvre” as a whole, claiming thereby a unified game-theoretic logic underpinning much of his thought (pp. 135–136). They have shown that game theory may assist in clarifying the logic of some of Smith’s economic analysis; but I’m not convinced by the more expansive claim. Game theory is not a master key for unlocking Smith’s thought as widely as the authors propose. And in all this, there is a danger of missing Smith’s “big picture” in his political economy: WN, in its theoretical aspect as first and foremost a theory of economic development, is largely absent from the book—perhaps because not so amenable to game-theoretic analysis.