Adam Smith: An Enlightened Life, Nicholas Phillipson, Yale, 346 pages

By George Scialabba

Adam SmithIn the “Overture” to his grandly symphonic The Enlightenment: An Interpretation, Peter Gay describes the “international type” of the philosophe as a “facile, articulate, doctrinaire, sociable, secular man of letters.” On this definition, was Adam Smith a philosophe?

Yes and no. Unlike his French counterparts and even his bosom friend David Hume, he led a retired life, much of it in the small Scottish town where he was born, and he lived with his mother until she died at a very advanced age. He was shy, destroyed most of his letters, and did not seem to relish giving brilliant performances, either in print or in conversation. He never fell afoul of civil or religious authority, had no mistresses, and engaged in no public quarrels.

(A semi-public one, though. Shortly after Hume’s death, Smith met Samuel Johnson at a party. Johnson spoke slightingly of Hume, Smith defended him, and their exchanges grew increasingly heated until Johnson exclaimed, “Sir, you lie!” To which Smith retorted, “Sir, you are the son of a whore!” and stalked out.)

On the other hand, Smith was modestly sociable—he had warm relationships with Turgot, Quesnay, and Condorcet. Like most of the philosophes, he was prolific and versatile, publishing much-admired essays on law, literature, and the history of science as well as his masterpieces on moral philosophy and political economy. And although he was not openly irreligious like Hume and Voltaire, he had as little use for the Calvinist superstitions of Scotland as his French contemporaries had for Roman Catholicism.

Perhaps the main difference lies in that slightly ambiguous word “doctrinaire.” Smith was a critic and reformer, and there are plenty of doctrines in his writings, some of them strikingly original. But he was detached and scholarly by temperament, rather than ardently polemical. If he was a philosophe, he was an exceptionally philosophical one.

Adam Smith was born in 1723 in Kirkcaldy, Scotland. His father, a lawyer and civil servant, died six months before Adam’s birth. He left his family well off, and young Adam’s mother devoted the rest of her life to her son, who reciprocated her devotion. The first and only adventure in Smith’s life took place in his childhood, when he was snatched while at play by some strolling vaga bonds but was shortly afterwards rescued by his uncle and a search party.

He was sent to the excellent local grammar school and then, at 14, to Glasgow University. After three successful years there, he won a scholarship to Oxford, which was then sunk in intellectual torpor and futile scholasticism. Smith loathed it and returned to Scotland halfway through the term of his scholarship.

The academic job market was considerably brighter then than now. The 25-year-old was invited to give two series of lectures, on rhetoric and jurisprudence, at Edinburgh. They were a rousing success, leading to Smith’s appointment as professor of logic and metaphysics at Glasgow University in 1751 and professor of moral philosophy in 1752. He remained there happily until lured away, for a princely fee, to tutor and travel with a young duke. From 1767 to 1776 he largely secluded himself in Kirkcaldy, composing The Wealth of Nations. He returned to Edinburgh in 1778 as commissioner of customs, an important and lucrative post, and died there in 1790.

As Nicholas Phillipson dryly observes at the beginning of his—unavoidably—rather dry biography: “There is a general lack of visibility in Smith’s life.” Smith burned his letters, notes, and unpublished manuscripts; we don’t even have a likeness till he was past 40. Phillipson makes up for this by sketching—in sometimes gratifying and sometimes tiresome detail—the social and cultural background of the Scottish Enlightenment, the remarkable environment in which Smith thrived. Scotland’s early 18th-century prosperity produced an eager audience for lecturers like the young Smith and generous patrons for public intellectuals like the mature Smith. Perhaps equally important, Phillipson suggests, the bustle of Kirkcaldy and Glasgow, growing market towns, may have first planted in Smith’s mind the image of incessant activity, continually expanding needs, and harmonious haggling that lurks everywhere in the background of his writings.

Most important for Smith, and central to the Scottish Enlightenment, was David Hume. Smith discovered Hume while at Oxford—he was officially reprimanded when discovered reading Hume’s Treatise on Human Nature in his rooms in Balliol College—and became first a disciple, then a close friend. Smith’s brief, eloquent memorial tribute to Hume offended the orthodox and, Smith complained, “brought upon me ten times more abuse than the very violent attack I had made [in The Wealth of Nations] upon the whole commercial system of Great Britain.”

Hume figures prominently in Phillipson’s biography. Smith’s lifework, he writes, was essentially to “develop a science of man on Humean principles.” Hume declined to derive claims about morality and justice from reason or from metaphysical notions about the nature of being. He looked instead to the way moral sentiments were acquired in the course of social life, to the refinement of passions by conversation and commerce, and to the growth and quickening of “sympathy,” or moral imagination. Hume was an astute moral psychologist but, Phillipson writes, never went used those insights to formulate a theory of the social origins of morality. That was Smith’s ambition.

The Theory of Moral Sentiments was Smith’s “account of the processes by which we learn the principles of morality from the experience of common life.” This approach—a natural history of sociability—was both a response to and a continuation of Smith’s predecessors Hutcheson, Hume, and Rousseau. But Smith added something new: he replaced the solitary voice of conscience and the collective voice of mankind with a hybrid, the “man within the breast,” an imaginary, impartial spectator whose judgments are not innate but formed by experience and whose sympathy is allocated with scrupulous, almost Stoic, fairness.

There is perhaps a foreshadowing of Rawls’s “veil of ignorance” in Smith’s conception. Even this contemporary echo, however, cannot much enliven Smith’s treatise, at least for this reader. It takes the literary genius of a Hume or Rousseau to make 18th-century moral psychology engaging. Equally, perhaps, it takes the scholarly flair of an Albert Hirschman or Deirdre McCloskey to make the intellectual history of moral theory absorbingly interesting. Phillipson, though amiable, is a bit pedestrian.

Even more disappointing is that, although Phillipson does an admirable job of recounting what is known of Smith’s life, he refrains from offering opinions about Smith’s afterlife, which is, after all, far more interesting. Smith has become, along with Milton Friedman and Friedrich Hayek, one of the deities in the libertarian-conservative pantheon. I suspect Smith would have firmly declined this honor, even before his more zealous devotees, the proponents of the “efficient markets” hypothesis, nearly succeeded in wrecking the economies of the United States, Britain, and their unfortunate imitators.

The Wealth of Nations appeared in the eventful year 1776. The title page described the author as “formerly professor of Moral Philosophy in the University of Glasgow.” His principal influence, Francois Quesnay, chief of the Physiocrats, was a distinguished physician. They were both amateurs, generalists, and reformers—political economists, far removed in outlook and purpose from today’s “specialists without spirit.” The celebrated sarcasms and exhortations in Wealth of Nations—“All for ourselves, and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind,” for example, or “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices”—are not incidental but central. The book might equally well have been titled The Welfare of Nations.

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.” One example out of many from The Wealth of Nations:

Our merchants and master-manufacturers complain much of the bad effects of high wages in raising the price, and thereby lessening the sale of their goods both at home and abroad. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people.

Smith did not by any means deny or gloss over class conflict. On the contrary, he was unflinchingly clear-eyed about the unscrupulousness of employers and the connivance of governments:

What are the common wages of labour, depends every where upon the contract usually made between those two parties, whose interests are by no means the same. The workmen desire to get as much, the masters to give as little as possible. The former are disposed to combine in order to raise, the latter in order to lower the wages of labour. It is not difficult to foresee which of the two parties must, upon all ordinary occasions, have the advantage in the dispute and force the other into a compliance with their terms. The masters, being fewer in number, can combine much more easily; and the law, besides, authorizes, or at least does not prohibit their combinations, while it prohibits those of the workmen. We have no acts of parliament against combining to lower the price of work; but many against combining to raise it.

Smith was concerned about more than just formal cartelization and monopoly: “Masters are always and everywhere in a sort of tacit, but constant and uniform combination, not to raise the wages of labour above their actual rate. … We seldom, indeed, hear of this combination, because it is the usual, and one may say, the natural state of things which nobody ever hears of.” And when masters do form “particular combinations” they “are always conducted with the utmost silence and secrecy, till the moment of execution, and when the workmen yield, as they sometimes do, without resistance, though severely felt by them, they are never heard of by other people.”

Such combinations, however, are frequently resisted by a contrary defensive combination of the workmen; who sometimes too, without any provocation of this kind, combine of their own accord to raise the price of labour. … But whether the workmen’s combinations be offensive or defensive, they are always abundantly heard of. … They are desperate, and act with the folly of desperate men, who must either starve, or frighten their masters into compliance with their demands. The masters upon these occasions are just as clamorous upon the other side, and never cease to call aloud for the assistance of the civil magistrate, and the rigorous execution of those laws which have been enacted with so much severity against the combinations of servants, labourers, and journeymen.

Like Hume, Smith was firmly on the side of the workers, a robust partisan of full employment and high wages.

What improves the circumstances of the greater part can never be regarded as an inconveniency to the whole. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, clothe, and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves well fed, clothed, and lodged.

And another sarcasm against early capitalist apologetics, which applies equally well to later ones:

That a little more plenty than ordinary may render some workmen idle, cannot well be doubted; but that it should have that effect upon the greater part, or that men in general should work better when they are ill fed than when they are well fed, when they are disheartened than when they are in good spirits, when they are frequently sick than when they are in good health, seems not very probable.

Smith straightforwardly supported the principle underlying progressive taxation:

The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.

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.

But although Smith’s heart was in the right place, he was wrong about three large matters. Two of them have to do with the quality of life, and so are invisible to most contemporary economists. But one of them is central to their concerns: his advocacy of free trade, based on the theory of comparative advantage. No developing country, Smith asserts, should try to nurture particular “strategic” (as we now say) industries:

By means of such regulations, indeed, a particular manufacture may sometimes be acquired sooner than it could have been otherwise, and after a certain time may be made at home as cheap or cheaper than in the foreign country. But though the industry of the society may be thus carried with advantage into a particular channel sooner than it could have been otherwise, it will by no means follow that the sum total, either of its industry, or of its revenue, can ever be augmented by any such regulation. … Though for want of any such regulations the society should never acquire the proposed manufacture, it would not, upon that account, necessarily be the poorer in any one period of its duration.

This is from perhaps the most influential section of The Wealth of Nations, the one containing the reference to the “invisible hand” and the now hoary old chestnut, “What is prudence in the conduct of every private family can scarce be folly in that of a great kingdom.”

But Smith was wrong. Every successful economy, without exception, has prospered by subsidizing key industries and protecting them from foreign competition. And nearly without exception, every developed society has then, with consummate hypocrisy, preached free trade to less-developed countries. Friedrich List first refuted Smith’s development theory. For a thorough review of this issue, see the work of the contemporary Oxford economist Ha-Joon Chang, in particular Kicking Away the Ladder and Bad Samaritans.

The other important matters about which Smith was wrong were, first, his notion of indefinite progress. Smith recognized that only economic growth could sustain high wages and widely diffused prosperity without society-wide planning and cooperation. Unsurprisingly, he failed to recognize that there are inescapable limits to growth.

Second, Smith acknowledged that work in a capitalist society was liable to be stultifying for most people.

In the progress of the division of labour, the employment of the far greater part of those who live by labour, that is, of the great body of the people, comes to be confined to a few very simple operations. … The man whose whole life is spent thus … naturally loses the habit of exerting his understanding or invention, and generally becomes as stupid and ignorant as it is possible for a human creature to become … [hence] not only incapable of relishing or bearing a part in any rational conversation, but of conceiving any generous, noble, or tender sentiment, and consequently of forming any just judgment concerning many even of the ordinary duties of private life [as well as] of the great and extensive interests of his country … This is the state into which the great body of the people must necessarily fall, unless government takes some pains to prevent it.

Which is, of course, what a civilized society would do. Ours has failed miserably, indeed scarcely tried. Education in America, like virtually every other institution here, serves the purposes of business.

Still, these failures of vision are hardly Smith’s fault. He at least had a moral imagination, unlike most of those who now claim his legacy. Perhaps the finest tribute to Smith came from his noblest successor, John Stuart Mill:

For practical purposes, political economy is inseparably intertwined with many other branches of social philosophy … Smith never loses sight of this truth. … [A] work similar in its object and general conception to that of Adam Smith, but adapted to the more extended knowledge and improved ideas of the present age, is the kind of contribution which political economy at present requires.

It still is.

George Scialabba is the author of What Are Intellectuals Good For?