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The face of the free market

by
16 June 2023

Adam Smith was born 300 years ago on 16 June. Rod Garner celebrates his legacy

Alamy

Adam Smith’s portrait on a British £20 banknote (2007-19)

Adam Smith’s portrait on a British £20 banknote (2007-19)

ADAM SMITH was born on 16 June 1723, at the family home in Kirkcaldy, near Edinburgh. He died 67 years later, and was buried under a simple stone that recorded his name and the titles of his two great published works.

Enthusiasts, including Lady Thatcher, have hailed him as the greatest of economists, a staunch defender of free markets, and an equally fierce opponent of state intervention in economic matters. Critics continue to castigate him as the father of unfettered capitalism, a predatory “wolf of Wall Street” ahead of his age, at ease on a frenzied trading floor where profit is everything and principles count for nothing.

In the 19th century, the art critic and moralist John Ruskin summarised Smith’s philosophy as “Thou shalt hate the Lord thy God, damn his laws, and covet thy neighbour’s goods.” In 1936, Stephen Leacock, a Professor of Political Economy and humorist, was slightly more nuanced, expressing his accusation in verse:
 

Adam, Adam, Adam Smith,
Listen what I charged you with!
Didn’t you say in the class one day
That selfishness was bound to pay?
Of all your Doctrine, that was the Pith,
Wasn’t it, wasn’t it, wasn’t it, Smith?
 

Both indictments miss the mark. More importantly, they do the accused a disservice. Smith did believe that self-interest was a fundamental and undeniable element in human motivation. In the book for which he is chiefly remembered, The Wealth of Nations, he wrote: “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.”

This conviction, however, was not to be taken as an invitation to rampant selfishness as a guiding principle for life or commerce. Rather, it represented just one of the conclusions reached by Smith in a lifetime’s inquiry concerning the nature, desires, and purposes of humanity. To this enterprise he brought patient and profound thought, moral clarity, an outwardly austere manner that concealed his generosity to others less fortunate, and a private life devoid of scandal or vice. He never married, had no love affairs or children, and remained devoted to his mother until her death at the age of 90.

Opposed to slavery, he expressed contempt for those who, in every age, plundered, ruled, and traded with no regard for the common good: “All for ourselves, and nothing for other people seems to have been the vile maxim of the masters of mankind.”

 

SMITH was also famously absent-minded. An acquaintance recorded in her diary that, at breakfast one morning, he took a piece of bread and butter, rolled it round and round, put it into the teapot, and poured water upon it, before pouring it into a cup. On tasting it, he said “it was the worst cup of tea he had ever met with”.

After being awarded a scholarship from the University of Glasgow, Smith travelled in June 1740 to the University of Oxford, where he remained for six years. Disappointed by the indolence of his professors and the exorbitant college fees, he devoted himself to English literature, ancient authors, learning French and Italian, and studying history. He read voraciously, acquainting himself with everything “that could illustrate the institutions, the manners, and the ideas of different ages and nations”.

It was here that Smith laid the philosophical foundations for his later thought, including The Wealth of Nations and the equally important, if much less well-known, The Theory of Moral Sentiments, first published in 1759.

It is in the latter book — sometimes casually dismissed as Smith’s “other work” — that he addresses perennial philosophical questions. Can there be universal moral principles? Does human nature change over time? By what processes — individual, familial, or collective — do individuals become morally aware?

Influenced by the wisdom and friendship of two outstanding mentors, Francis Hutcheson (his former Professor of Moral Philosophy at Glasgow) and David Hume (the distinguished Scottish philosopher and essayist), Smith formulated his own “science of man”: an evidence-based estimation of human life in all its aspects. He did this without either resorting to the idea of some intrinsic and inviolate “moral sense“, as taught by Hutcheson, or fully endorsing Hume’s sceptical view of the limitations of our moral capacities, for ever thwarted (as Hume believed) by the controlling passion for self-gratification.

Smith thought better of human inclinations: “There are evidently some principles in man’s nature, which interest him in the fortune of others, and render their happiness necessary to him. . . Of this kind is pity or compassion.”

Empathy or fellow feeling — the capacity to place ourselves mentally in the situation of those far different or removed from ourselves — is, for Smith, the basic principle underpinning human nature. When we see others suffer, we suffer in our imagination. Conversely, when we see them happy and at ease, our imagination induces the same contentment, and inspires us to look for ways to further it, both for them and for ourselves.

Smith invokes one more requirement: the perspective of what he describes as “the impartial spectator”, the ability or capacity “to see ourselves as others see us”. Such seeing or recognition on our part approximates to a conversion of manners: “If we saw ourselves in the light in which others see us . . . a reformation would generally be unavoidable. We could not otherwise endure the sight.”

This idea is all the more intriguing because it rests on Smith’s observation that our individual moral judgements are, to a great extent, derived from looking at others. His theory proceeds not from the inside out, so to speak, but from the outside in. Because of the “impartial spectator” and our capacity for sympathy, self-conscious moral introspection becomes a realisable goal conducive to our own happiness and that of others.

Althought Smith does not entirely discount the possibilities of providence and divine assistance — Smith was, after all, a respectful Scottish Presbyterian — he saw the business of being good and upright as a markedly human enterprise.

 

ANY proper estimation of Smith on the occasion of an important anniversary should take into account his work as a moral philosopher and economic genius. Both his great books merit serious attention, and stand alongside each other without inherent contradiction.

He did endorse the human pursuit of happiness, wealth, and position, and the crucial part that trade and business played in people’s lives. No less, however, did he also insist on the importance of caring for others, and the necessity of a helping hand if a nation was to flourish and the less fortunate were not to be left behind.
 

Canon Rod Garner is an Anglican priest, writer, and theologian.

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