The Many Dimensions of Adam Smith

Editor’s note: This essay reflects insights the author gained from reading Glory M. Liu’s “Adam Smith’s America.”

Adam Smith’s work is well-known, respected by his admirers and detractors and covers vast areas going from moral philosophy and jurisprudence to political economy and even astronomy. It is thus an ideal object to refract political and ideological trends.

Three eras

One could divide the reception of Smith in the United States into three eras. The first that lasted from Independence until the early 20th century was dominated by the discussion of free trade vs. protectionism in the Wealth of Nations.

The second era, from the early to the mid-20th century, was shaped by the debate on the roles that the tension between sympathy and self-interest played in Smith’s overall work.

The third era, which continues to this day, was dominated by the disagreement over the roles of the price system (free market) and government.

At the center of the debate

In short, the broadness of Smith’s oeuvre was such that whenever there was an important economic issue in the United States on which two sides were formed, Smith always played an important part in that debate. After all, each side could, some with justification, bring Smith’s views to their support.

This may be due to some internal inconsistencies in Smith (especially if one includes The Theory of Moral Sentiments and Lectures on Jurisprudence too, and not only The Wealth of Nations). However, the more important reason is that Smith’s work always had a pragmatic and eclectic character.

Absence of dogmatism allowed him to take nuanced positions. But this also means that there never was nor there ever will be a “real” or “true” Adam Smith. To this day, our readings of Smith will always be colored by what is the issue at hand, by our interests, location and time.

Moreover, the way that people come to Smith, precisely because his work is so vast and he influenced many, are diverse. I came to Smith through Marx. That particular channel played no role in the American intellectual discourse but illustrates the spread of Smith’s influence.

Adam Smith … and Marx

My original Smith was the one of the stadial theory of development, labor theory of value, definition of the three key classes in capitalism, their conflict over the distribution of the net product and the dumbing effect of the division of labor.

Do these themes remind you of somebody else? They do. Is this the entire Smith? No. But this is nevertheless the Smith that was, at one point of time and location, of interest.

Adam Smith, free trader

Similarly, the Adam Smith argued about in the early decades of the U.S. Republic was the one of free trade. Although there was a ritualistic invocation of Smith’s name by many Founding Fathers (there are in the book the quotes from Jefferson, Hamilton, Adams etc.), his policy prescriptions were ignored. Indeed, the young American Republic, under Hamilton’s impulse, went for protectionism.

There are ironies aplenty in the use of Adam Smith during that period. The strongest supporters of free trade were, as is well known, the Southerners. They liked Smith’s stance on free trade, but disliked his condemnation of slavery. The very opposite was true for Northern intellectuals and industrialists.

Some, in the North, might agree on abolitionism, but disagree on trade. As we see here clearly, every side took from Smith what it found convenient, and questioned, or even simply ignored what it did not like.

Adam Smith, the Chicago man?

After the mid-20th century point, the Chicago school took control of the wider image of Adam Smith. It disregarded entirely Smith’s political and moral philosophy, considering the The Theory of Moral Sentiments an inferior work.

The Chicago school took only the economic part. The older Chicago school (Frank Knight and Jacob Viner), more sensibly saw Smith not only as a partisan of laissez-faire but also ready to accept a limited role for government.

The second Chicago school (better known to us and more influential, led by George Stigler and Milton Friedman) continued with the reductionism of Smith. Not only was this Adam Smith shorn of moral philosophy, his work was now shorn of political economy as well.

It became price theory. The emphasis turned entirely to the informational role of prices, the invisible hand and (the ”granite” of) self-interest.

Conclusion

What is stunning to see, especially in the U.S. reception of Adam Smith over the centuries, is how much of a magnet for various political and economic concepts and ideologies he turned out to be.

The logical conclusion from that is that nobody can put a claim on capturing the “entire Smith“ – or the “proper Smith.”

Whether we look at the Chicago school or earlier ways (and eras) to interpret and/or capture him, Adam Smith is, surprisingly, a man for many ideological “seasons.”

Each era took key elements that were there, jettisoned the rest and created an Adam Smith that it needed for its purposes. I do not think that it is an illegitimate approach.

Simply put, every ideological movement has a penchant to “cloth” itself in earlier writers and to appropriate some of their aura.