by PAUL SAGAR
A hologram of Adam Smith adorns the British £20 note. PHOTO/Jim Dyson/Getty
He might be the poster boy for free-market economics, but that distorts what Adam Smith really thought
If you’ve heard of one economist, it’s likely to be Adam Smith. He’s the best-known of all economists, and is typically hailed as the founding father of the dismal science itself.
Furthermore, he’s usually portrayed as not only an early champion of economic theory, but of the superiority of markets over government planning. In other words, Smith is now known both as the founder of economics, and as an ideologue for the political Right.
Yet, despite being widely believed, both these claims are at best misleading, and at worst outright false.
Smith’s popular reputation as an economist is a remarkable twist of fate for a man who spent most of his life as a somewhat reclusive academic thinker. Employed as professor of moral philosophy at the University of Glasgow, the majority of Smith’s teaching was in ethics, politics, jurisprudence and rhetoric, and for most of his career he was known for his first book, The Theory of Moral Sentiments (1759). His professional identity was firmly that of a philosopher – not least because the discipline of ‘economics’ didn’t emerge until the 19th century, by which time Smith was long dead. (He died in July 1790, just as the French Revolution was getting into full swing.)
Admittedly, Smith’s reputation as an economist isn’t entirely mysterious. His oft-quoted An Inquiry into the Nature and Causes of the Wealth of Nations (1776) was undoubtedly important in the eventual formation – in the next century – of the discipline of economics. But even here things are not as straightforward as they appear. For The Wealth of Nations – a 1,000-page doorstopper that blends history, ethics, psychology and political philosophy – bears little resemblance to the ahistorical and highly mathematical nature of most current economic theory. If anything, Smith’s best-known book is a work of political economy, a once-prevalent field of enquiry that suffered a striking decline in the latter half of the 20th century.
Smith’s reputation, however, began to get away from him early on. Shortly after publication, The Wealth of Nations was fêted in the British Parliament by the Whig leader Charles James Fox. Ironically, Fox later admitted that he had never actually read it (few subsequent non-readers of the book have showed such candour, despite plenty of them citing it). Indeed, Smith suspected that those quickest to sing his praises had failed to understand the main arguments of his work. He later described The Wealth of Nations as a ‘very violent attack … upon the whole commercial system of Great Britain’. Despite this, his vocal political cheerleaders in Parliament continued to prop up the very system that Smith was railing against.
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