Who is Adam Smith?

Review: Glory M. Liu, Adam Smith’s America (Princeton University Press, 2022)

 

Adam Smith was born in 1723 in Kirkcaldy, Scotland, a small market town near Edinburgh. A life-long bachelor, Smith studied at the Universities of Glasgow and Oxford. He was elected as the Professor of Logic at Glasgow in 1751 and  as the Professor of Moral Philosophy in 1752, a position he would hold until 1766. During this time, Smith published his work of moral philosophy, The Theory of Moral Sentiments (1759). In 1776, he published perhaps history’s most famous work of political economy, An Inquiry into the Nature and Causes of the Wealth of Nations. When Smith died in Edinburgh in 1790, he remained relatively obscure. How, then, did this Scottish philosopher become an icon of the discipline of economics and American capitalism? Put differently, how did Adam Smith the man become ADAM SMITH? How did Smith transform from a technical expert in political economy to a near-biblical figure as the father of modern economics, free trade, and the free-market?

 

In her landmark new work Adam Smith’s America, Glory Liu tells this captivating story. Through a vivid reception history of Smith in America, Liu traces a fascinating narrative that says more about American politics in the last two centuries than about the Scotsman himself. Reception, for Liu, “explains the difference between what Smith might have originally meant or intended, and what subsequent readers made of his ideas;” it is a “process of active creation, invention, and transformation.” Liu’s project, then, is not an attempt to show how various readers misinterpreted Smith. Instead, it seeks to explore “the different ways in which Americans constructed meaning out of Smith’s texts and what they hoped they could gain—conceptually and politically—from doing so.” Each of the book’s seven chapters depicts one episode in Smith’s transformation from moral philosopher to capitalist icon, beginning with the immediate reception of Smith’s work in America.

 

In 1790, Thomas Jefferson claimed that Smith’s Wealth of Nations, published only months before the Declaration of Independence was signed in July 1776, was “the best book extant” to learn about political economy. Smith’s work may have been well-received by his friends and some politicians, but he had not yet attained the status he holds today; his work was seen as a significant contribution to the European ‘Science of Man’ and the discipline of Political Economy, but only one among many crucial texts. The architects of the new American nation “actively adapted and applied knowledge from the enlightenment science of man in their various endeavors, from defending the size and strength of the federal government, to directing the course of economic growth or warning against the sinister effects of wealth in society.” Both of Smith’s major works provided tools and concepts to help attain these goals. In the decades after the declaration of independence, both the Theory of Moral Sentiments and the Wealth of Nations were read and cited because they provided a scientific account of social philosophy and political economy rather than because they had some inherent ‘intellectual currency’ that gave weight to one’s ideas. But this would change in the early nineteenth century, as readers increasingly turned to Smith’s political economy.

 

Liu’s second chapter, therefore, explores Smith’s transformation from one amongst many 18^th century theorists of political economy to the founding father of economics. In the United States, political economy gained traction in colleges in the 1820s: Princeton, Harvard and Columbia introduced political economy courses between 1817-1819, while the University of Virginia “made political economy a key subject” and gave the Wealth of Nations a central role in its teaching. Antebellum teachers of political economy had a significant impact on deciding which of Smith’s ideas were worth teaching and which would be refuted. By the 1850s, however, Smith’s Wealth of Nations had been eclipsed by Say’s Treatise and J.S. Mill’s Principles of Political Economy. Smith’s status concurrently transformed from expert to ‘historical mile-marker’, as he was increasingly celebrated for creating a “science of political economy.” Concurrently, the way readers engaged with Smith’s ideas became increasingly politicised, most notably in the debate over free trade, which Liu charts in chapter three.

 

Smith’s reputation as the ‘apostle of free trade’ was forged after the War of 1812. In the nineteenth century, tariffs and trade policy became an increasingly tense and dominant point of political debate in the US: economic nationalism and higher tariffs to favour domestic manufacturing were often supported by the industrialised North and was broadly represented by Republicans, whereas southern slave-owners advocated free trade policies that, they claimed, were most stringently defended by Smith, and were broadly represented by Democrats. In the Wealth of Nations, Smith had, of course, rejected slavery on economic grounds. Liu illustrates how both sides of this debate invoked Smith: for free traders Smith was their ‘apostle’ but he was also used by economic nationalists to undermine arguments for the removal of tariffs. Below this confrontation over free trade and Smith’s legacy lay something deeper: “It was a vast gulf separating those who uncritically followed the science of political economy from those who doubted its premises, those who espoused theorizing from those who wanted to ground politics in experience, and those with a jejune attachment to Adam Smith’s intellectual authority from those who wanted to challenge it.”

 

Yet Adam Smith the ‘apostle of free trade’ would not remain the dominant vision of the Scottish philosopher for long and was soon superseded by Adam Smith the ‘vanguard of the New School’, as Liu observes in her fourth chapter. Instead of debating trade policies, this new generation of progressive economists problematised the humanistic and ethical foundations of economics.  In addition to this changed focus, the discovery of Smith’s Lectures on Jurisprudence in 1895 further undermined simplistic readings of Smith. He was no longer reduced to the doctrine of free trade, but rather “the Smith that emerged by the time of the sesquicentennial was knotty, multidimensional, and complex.” Thus, transformation was driven by “attempts to make sense of” the significant social and economic changes of this period, in which Smith and his work were reconstructed to avoid the extremes of socialism and laissez-faire; an image which would — again — not last long.

 

The fifth and sixth chapters explore the perhaps most ‘sticky’ reformulations of Smith: “the Smith created in the early- to mid-twentieth century”, Liu argues, “remains the Smith of public consciousness”. Central figures in the emergence of modern laissez-faire and neoliberal economics, from Frank Knight and Jacob Viner to Friedrich Hayek, George Stigler and Milton Friedman, reconceptualised Smith as the original thinker behind the price mechanism. In so doing, they used Smith to defend two important propositions of economic thinking that had been challenged after the Great Depression: firstly, that markets could regulate and stabilise themselves; and, secondly, that self-interest supported the ‘automaticity of markets.’ The ‘Chicago Smith’, as Liu terms him, developed over several generations. Viner and Knight, for instance, read Smith as the original author of the price mechanism and as a cautious advocate of free markets, but they maintained that Smith “left substantial room for state intervention.” By contrast, in the 1960s, the Nobel-laureate Milton Friedman “meshed scientific insights with political arguments in an ideologically consistent picture of Smith;” one of Smith as a stringent supporter of free markets and economic self-interest. This was an image which, perhaps unsurprisingly, reflected Friedman’s own political and economic thought. These two chapters therefore chart the creation of the Smith we know today: the supporter of free trade, free markets, and the defender of rational self-interest. But if this construction of Smith’s views prevails in wider historical consciousness, so too has it been revised, challenged, and confronted in the scholarship on Smith in the last fifty years, to which Liu turns in her final chapter.

 

Since the second half of the 20^th century, scholars from the fields of political science, history, and economics have challenged the ‘Chicago’ reading of Smith and have recovered Smith’s moral psychology. Contrary to the Chicago Smith, Albert Hirschman, Istvan Hont, and Donald Winch sought to show that Smith was a “political thinker in his own right,” who “introduced new interpretive categories and questions about the politics that made market-oriented modernity possible.” At the same time, scholars with varying political outlooks attempted to claim Smith’s legacy for their politics: neoconservatives like Irving Kristol and Gertrude Himmelfarb, for example, constructed a version of Smith as a moral theorist of capitalism. Indeed, Liu claims, this view of Smith “has become a convenient ideological holding pen for beliefs on opposite sides of the political spectrum, with those on the “Right” appealing to Smith in order to defend conservative moral sensibilities, and those on the “Left” appealing to Smith in order to defend a view of capitalism that also promoted social justice.” Consequently, “Smith provides a way for his interpreters, past and present, to articulate their anxieties about American capitalism’s supposed moral faults without conceding its basic economic premises.”

 

Liu’s reception history thus sheds light on how Smith the icon was formed and reformed by his readers. Reception history is not a passive exercise, but rather one in which readers actively shape ideas themselves. Liu convincingly illustrates that interpretations of Smith often tell us more about the reader than about the author. That alone makes reading Adam Smith’s America worthwhile for readers outside Smith scholarship, and Liu’s book masterfully paints the vividness of political debate in America over the last two centuries through the prism of interpretations of Smith. The provocative title Adam Smith’s America (rather than America’s Adam Smith) suggests that Smith still provides the framework through which Americans think about pressing political and economic questions. Fittingly, then, the book closes with ‘who is Adam Smith?’.

 

Answering that question has become much more difficult as a result of the baggage acquired by Smith’s legacy through over two hundred years of engagement with his ideas. Is he an expert in political economy or its founder?  Or is he the apostle of free trade? The vanguard of the New School?  Could he be the Chicago Smith or the neoconservative theorist of moral capitalism?  In light of such politicised interpretations of Smith, one wonders whether we could ever truly recover what Smith meant.

 

Crucially, these questions resonate beyond academic circles and remains an important influence on how we think about economic and political issues today. Within the last few decades, for example, two American presidents have invoked Smith to support very different political agendas. Ronald Reagan, addressing the nation shortly after the signing of the US-Canada Free Trade Agreement in 1988, remarked that the same year as the American Revolution “a Scottish economist named Adam Smith launched another revolution with a book entitled The Wealth of Nations, which exposed for all time the folly of protectionism.” Twenty five years later, Barack Obama invoked Smith to support raising the minimum wage: “It was Adam Smith,” Obama argued, “the father of free-market economics, who once said, “They who feed, clothe, and lodge the whole body of the people should have such a share of the produce of their own labor as to be themselves tolerably well fed, clothed, and lodged.”  And for those of you who don’t speak old-English let me translate. It means if you work hard, you should make a decent living. (Applause.)  If you work hard, you should be able to support a family.”

 

Judging which of these readings, if any, is accurate has been the subject of significant scholarly attention in recent decades. By contrast to simplistic reductionist readings of Smith as the apostle of free trade or the father of free market economics, these interventions have painted a much more complex picture of Smith’s thought. By avoiding this ‘corrective’ approach, Liu sheds a different light on Smith still and thereby tells an important story that – rather surprisingly – has not been told before. Rather than merely guiding readers through different simplified caricatures of Smith, Liu succeeds in illustrating how multifaceted interpretations of Smith have been and how important he remains as the prism through which we understand the relationship of the economy, the individual, and the state. Liu thus tells the story of how a Scottish moral philosopher became an icon of American capitalism with style and intellectual vigour. To understand American politics and its history an understanding of how Smith’s ideas were used to frame discussions across the centuries is pivotal.

 

Image credit: Adam Smith’s America [cover] (Princeton University Press), Fair Use.