Adam Smith Versus the Libertarians
Many libertarians think their founder was Adam Smith. In reality, it was Dr. Pangloss. So long as something is a free market outcome, it is for the best in this best of all possible worlds. That is true, according to libertarian ideology, even if it kills us.
Those libertarians who see Adam Smith’s “invisible hand” as an automatic mechanism, one that functions regardless of any other circumstances (so long as government stays out of it), misread Smith. He knew that all aspects of society, including the economy, are dependent on sound morals. In his own view, his most important book was not The Wealth of Nations but A Theory of Moral Sentiments. The amoralism of many libertarians not only separates them from conservatives, it separates them from Adam Smith as well.
Libertarian ideology also departs from Adam Smith when it comes to infrastructure, including transportation and government’s role in providing it. Libertarians demand that everything be left to the free market. Smith, in The Wealth of Nations, wrote:
According to the system of natural liberty, the sovereign has only three duties to attend to . . . First, the duty of protecting the society from violence and invasion . . . secondly, the duty of protecting, as far as possible, every member of society from the injustice or oppression of every other member of it . . . and, thirdly, the duty of erecting and maintaining certain public works and certain public institutions, which it can never be for the interest of any individual, or small number of individuals, to erect and maintain; because the profit would never repay the expense to any individual or small number of individuals, though it may frequently do much more than repay it to a great society.
That is a pretty good definition of infrastructure, including transportation infrastructure. In fact, Adam Smith goes on to discuss transportation infrastructure at some length. In his day, that meant roads, canals, and bridges.
In America, canals in particular, represented Smith’s view. Most were built with at least partial government funding. Other than the Erie Canal, few made a profit. But most of them repaid their state investors many times over. I often ride my bike on the towpath of the Ohio and Erie Canal. When it opened, the price a farmer received for a barrel of flour in the area the canal served went from 50¢ to five dollars. The cost of transport fell so much that his flour could now be shipped cheaply to New York or Europe, where it commanded a far higher price than it did locally. Cleveland grew from a village into a city. The loss the state absorbed for building and operating the canal was more than repaid.
Adam Smith departed this world before the first train arrived. But it is not unreasonable to think that he might have seen passenger trains and public transportation as part of the public works the government should undertake. Smith did want those public works to pay for their own upkeep as much as possible. Again, in The Wealth of Nations, he wrote:
The greater part of such public works may easily be so managed as to afford a particular revenue for defraying their own expenses, without bringing any burden upon the general revenue of the society.
Conservatives agree with that, so long as the demand is made equally of all competitors. The libertarian transit critics like to apply it to trains and transit but not highways, which “particular revenues” at present cover just under 52% of their expenses.
And while many libertarians demand that all infrastructure be privatized, Smith wrote:
The tolls for the maintenance of a high road cannot with any safety be made the property of private persons.
In short, Adam Smith’s views accord more closely with those of conservatives than of libertarians. He saw society’s morals and culture as more important than a free market. He believed government had a role to play in providing infrastructure, without which commerce cannot flourish. And he thought some of that infrastructure would have to be owned by government. Conservatives views all, not ideological cant.