WILL THE real Adam Smith stand up,
please? There certainly are plenty of phoney versions on parade
whenever his name is mentioned.
Some on the Right brazenly saw in
Smith’s name an authority against much of what he opposed on moral
grounds. He was cited to oppose shorter working hours, to continue
employing women and children in coal mines and dark satanic mills,
even in defence of slavery. Smith allegedly advised against
interference in the business of business.
The cries went up - Laissez faire!
Leave the mine and mill owners alone! They know best. The invisible
hand will come right in the end. It’s all in Smith’s Wealth of
Nations. Interfere at your peril.
Some on the Left naively saw Smith as a
compelling authority in favour of state intervention. Wilberforce
quoted him against slavery, a practice Smith opposed on moral and
economic grounds. Others quoted his support for the government to fund
a school in every village so that each child would become literate and
numerate. But they did not like his moral sentiments or his political
economy.
The distortions of Smith’s views have
conquered popular discourse. Libertarians on the Right vie with voices
on the Left and sling quotations out of context - they long since gave
up reading his books.
The distortions began shortly after
Smith died in 1790. The bloody excesses of French Terror in 1793
rocked the British establishment. Ten years earlier, the Americans had
forced Britain out of its 13 colonies. While the American Republic was
far away, the French version was only a few miles from Dover.
A panicky state investigated Smith’s
friends, searching for evidence that his books were likely to incite
British mobs to follow the French example. For his friends it was too
close for comfort. Leaders of mobs got 14 years’ transportation and
there was no assurance Smith’s supporters would fair better, for
social ostracism in their world was as serious as a voyage to Botany
Bay.
Adam Smith was a moral philosopher who
also wrote about political economy. Over the years economics has
become a branch of applied mathematics. Smithian moral sentiments were
dumped, along with his political economy. His Wealth of Nations adorns
the shelves of academe, safely unread by those who should know better.
Like his grave just off the High Street in Edinburgh, his legacy is
neglected. Worse, it has been purloined.
Smith never wrote a word about
"capitalism", yet he is hailed as the "high priest of
capitalism". He is the "father of modern economics"
though he would find much in today’s economics unrecognisable as his
progeny . He is alleged to be an advocate of "Laissez Faire"
though he never used these words and claims that he used English
equivalents are tenuous. He did not believe it advisable to leave
merchants and manufacturers alone, because they were likely to form
monopolies, restrict supply and raise prices.
Smith took the long view of society’s
development. He was never in favour of quick fixes. He considered
stability in society more important than correcting even serious
deficiencies too quickly. He took a historical view and his books are
full of references to classical Greece and Rome and what they taught
about government, moral conduct and economic growth, and the need for
natural liberty and justice.
The "new" economy he
discussed in Wealth of Nations was not new to him. He saw a growing
commercial society as a revival of the commerce of western Europe that
had been overrun by barbarian hordes. His inquiry into the wealth of
nations was like a one-man Royal commission, a tour de force, drawing
on evidence over the millennia since the fall of Rome and from
contemporary evidence he analysed in painstaking detail.
Commerce was a revival, not a new
revolution. From commerce, established on a prosperous and improved
agricultural base, opulence would spread deep into society, itself
poverty-stricken to a degree we cannot imagine today. Scotland was a
backward, ignorant and fractious country; England was slightly better.
But both would rise out of their stagnation if commerce was unburdened
from the mercantile politics lasting since the Middle Ages.
Smith disapproved of colonies as
expensive ways to buy what could be bought in markets. Unnecessary
wars to revenge slights on the King’s ministers rather than matters
of substance were on a scale of prodigality he railed against. He
preferred investment and jobs in productive activity that increased
wealth. Not that he was a pacifist. Defence was the "first duty
of the government" to protect society from barbaric neighbours.
He saw society as becoming naturally
harmonious through the intense dependence of each person on the labour
of every other person and taught that the propensity to "truck,
barter and exchange" led to people serving their own interests
best by serving the interests of others from whom they needed daily
necessities.
That is his true legacy, the melding of
his moral sentiments with liberty, justice and his economics. It is
time his legacy was claimed back.
• Gavin Kennedy is a
professor at Edinburgh Business School and author of Adam Smith’s
Lost Legacy, published today by Palgrave Macmillan.
