Reading Adam Smith
from David Ruccio
The next time some conservative economist, politician, or pundit invokes Adam Smith in favor of a “get-government-off-our-backs” argument in favor of free markets and the invisible hand, just tell them to actually read some Smith. Suggest they read the Theory of Moral Sentiments and the Wealth of Nations and then report back to you.
Or, if they don’t want to do the work, just have them read George Scialabba’s review of Nicholas Phillipson’s new book, Adam Smith: An Enlightened Life, which was published in the American Conservative.
Everyone knows, of course, what Adam Smith stood for: free trade, the division of labor, the minimal state, the invisible hand, the illimitable growth of wants and needs. “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” “Every individual … intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.” “Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice; all the rest being brought about by the natural course of things.” Case closed.
What everyone knows is seldom altogether wrong; but often it is not altogether right, either. As Emma Rothschild notes at the outset of Economic Sentiments, her superb study of Smith and Condorcet, “They think and write about self-interest and competition, about institutions and corporations, about the ‘market’ and the ‘state.’ But the words mean different things to them, and their connotation is of a different, and sometimes of an opposite, politics.” It is far from obvious that Smith would have entertained cordial feelings toward Alan Greenspan or Margaret Thatcher.
For one thing, Smith roundly mistrusted businessmen. In addition to the sallies already quoted, he insisted that businessmen, for all they may talk of freedom and fairness, “generally have an interest to deceive and even oppress the public.” . . .
Nor was Smith a proponent of the minimal state. Government has the duty of “erecting and maintaining those public institutions and those public works which may be in the highest degree advantageous to a great society,” but which “are of such a nature that the profit could never repay the expense to any individual or small number of individuals.” And as Emma Rothschild points out, “Of Smith’s great diatribes in The Wealth of Nations, only one is concerned with what would later have been understood as a principally economic activity of national government.”
Smith was, in short, a mensch. He would not feel at home in the American Enterprise Institute or the Heritage Foundation.
That’s what reading Adam Smith does: it disrupts the simple-minded, doctrinaire appropriations of his ideas that have found currency in modern economic and political debates.