Great Adam Smith

Posted by: lizwang on: May 7, 2008

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Adam Smith FRSE (Fellows of the Royal Society of Edinburgh) (baptised June 5 (OS) / June 16 (NS) 1723 – July 17, 1790) was a Scottish moral philosopher and a pioneering political economist.

He is a major contributor to the modern perception of free market economics. One of the key figures of the intellectual movement known as the Scottish Enlightenment, he is known primarily as the author of two treatises: The Theory of Moral Sentiments (1759), and An Inquiry into the Nature and Causes of the Wealth of Nations (1776). The latter was one of the earliest attempts to systematically study the historical development of industry and commerce in Europe, as well as a sustained attack on the doctrines of mercantilism. Smith’s work helped to build the foundation of the modern academic discipline of free market economics and provided one of the best-known intellectual rationales for free trade, capitalism, and libertarianism.

In 1748 Smith began delivering public lectures in Edinburgh under the patronage of the Lord Kames. Some of these dealt with rhetoric and belles-lettres, but later he took up the subject of "the progress of opulence," and it was then, in his middle or late 20s, that he first expounded the economic philosophy of "the obvious and simple system of natural liberty" which he was later to proclaim to the world in his Wealth of Nations. In about 1750 he met the philosopher David Hume, who was his senior by over a decade. The alignments of opinion that can be found within the details of their respective writings covering history, politics, philosophy, economics, and religion indicate that they both shared a closer intellectual alliance and friendship than with the others who were to play important roles during the emergence of what has come to be known as the Scottish Enlightenment; he frequented The Poker Club of Edinburgh.

In 1751 Smith was appointed chair of logic at the University of Glasgow, transferring in 1752 to the Chair of Moral Philosophy, once occupied by his famous teacher, Francis Hutcheson. His lectures covered the fields of ethics, rhetoric, jurisprudence, political economy, and "police and revenue". In 1759 he published his The Theory of Moral Sentiments, embodying some of his Glasgow lectures. This work, which established Smith’s reputation in his day, was concerned with how human communication depends on sympathy between agent and spectator (that is, the individual and other members of society). His analysis of language evolution was somewhat superficial, as shown only 14 years later by a more rigorous examination of primitive language evolution by Lord Monboddo in his Of the Origin and Progress of Language. Smith’s capacity for fluent, persuasive, if rather rhetorical argument, is much in evidence. He bases his explanation not, as the third Lord Shaftesbury and Hutcheson had done, on a special "moral sense"; nor, as Hume did, on utility; but on sympathy.

Smith now began to give more attention to jurisprudence and economics in his lecture and less to his theories of morals. An impression can be obtained as to the development of his ideas on political economy from the notes of his lectures taken down by a student in about 1763 which were later edited by Edwin Cannan, and from what Scott, its discoverer and publisher, describes as "An Early Draft of Part of The Wealth of Nations", which he dates about 1763. Cannan’s work appeared as Lectures on Justice, Police, Revenue and Arms. A fuller version was published as Lectures on Jurisprudence in the Glasgow Edition of 1776.

In 1762 the academic senate of the University of Glasgow conferred on Smith the title of Doctor of laws (LL.D.). At the end of 1763, he obtained a lucrative offer from Charles Townshend (who had been introduced to Smith by David Hume), to tutor his stepson, the young Duke of Buccleuch. Smith subsequently resigned from his professorship and from 1764-66 traveled with his pupil, mostly in France, where he came to know intellectual leaders such as Turgot, Jean D’Alembert, André Morellet, Helvétius and, in particular, Francois Quesnay, the head of the Physiocratic school whose work he respected greatly. On returning home to Kirkcaldy Smith was elected fellow of the Royal Society of London and he devoted much of the next ten years to his magnum opus, The Wealth of Nations, which appeared in 1776. The book was very well received and made its author famous.

In 1778 Smith was appointed to a post as commissioner of customs in Scotland and went to live with his mother in Edinburgh. In 1783 he became one of the founding members of the Royal Society of Edinburgh and from 1787 to 1789 he occupied the honorary position of Lord Rector of the University of Glasgow. He died in Edinburgh on July 17, 1790, after a painful illness and was buried in the Canongate Kirkyard.

Smith’s literary executors were two old friends from the Scottish academic world; the physicist and chemist Joseph Black, and the pioneering geologist James Hutton. Smith left behind many notes and some unpublished material, but gave instructions to destroy anything that was not fit for publication. He mentioned an early unpublished History of Astronomy as probably suitable, and it duly appeared in 1795, along with other material, as Essays on Philosophical Subjects. Contemporary followers of Adam Smith include John Millar.

Adam Smith’s personal views can be deduced from his published works. All of his personal papers were destroyed after his death. He never married and seems to have maintained a close relationship with his mother, with whom he lived after his return from France and who predeceased him by only six years. Contemporary accounts describe Smith as an eccentric but benevolent intellectual, comically absent minded, with peculiar habits of speech and gait and a smile of "inexpressible benignity." His patience and tact are said to have been valuable to his work as a university administrator at Glasgow. After his death it was discovered that much of his income had been devoted to secret acts of charity.

There has been considerable scholarly debate about the nature of Adam Smith’s religious views. Smith’s father had a strong interest in Christianity and belonged to the moderate wing of the Church of Scotland (the national church of Scotland since 1690). Smith may have gone to England with the intention of a career in the Church of England: this is controversial and depends on the status of the Snell Exhibition. At Oxford, Smith rejected Christianity and it is generally believed that he returned to Scotland as a Deist.

Economist Ronald Coase, however, has challenged the view that Smith was a Deist, stating that, whilst Smith may have referred to the "Great Architect of the Universe", other scholars have "very much exaggerated the extent to which Adam Smith was committed to a belief in a personal God". He based this on analysis of a remark in The Wealth of Nations where Smith writes that the curiosity of mankind about the "great phenomena of nature" such as "the generation, the life, growth and dissolution of plants and animals" has led men to "enquire into their causes". Coase notes Smith’s observation that: "Superstition first attempted to satisfy this curiosity, by referring all those wonderful appearances to the immediate agency of the gods." However, this belief would not conflict with deism, a belief system which holds as sceptical the idea of a personal god .

In the Wealth of Nations Smith claims that self-interest alone (in a proper institutional setting) can lead to socially beneficial results. But in his Theory of Moral Sentiments Smith argues that sympathy is required to achieve socially beneficial results. On the surface it appears that a contradiction exists. Economist August Oncken referred to this in German as das ‘Adam Smith-Problem’. Austrian economist Joseph Schumpeter also emphasized this apparent contradiction in his commentary on Smith’s work.

Adam Smith himself cannot have seen any contradiction, since he produced a revised edition of Moral Sentiments after the publication of Wealth of Nations. Both sets of ideas are to be found in his Lectures on Jurisprudence. In recent years most students of Adam Smith’s work have argued that no contradiction exists. In the Theory of Moral Sentiments, Smith develops a theory of psychology in which individuals in society find it in their self-interest to develop sympathy as they seek approval of what he calls the "impartial spectator." The self-interest he speaks of is not a narrow selfishness but something that involves sympathy.

Some readers of The Wealth of Nations have assumed that when Smith speaks of "self-interest" he is referring to selfishness. Although in some contexts, such as buying and selling, sympathy generally need not be considered, Smith makes it clear that he regards selfishness as inappropriate, if not immoral, and that the self-interested actor has sympathy for others. In The Theory of Moral Sentiments Smith argues that the self-interest of any actor includes the interest of the rest of society, since the socially-defined notions of appropriate and inappropriate actions necessarily affect the interests of the individual as a member of society. Context is also useful as Adam Smith was against the idea of corporations, or "joint stock companies."

In any case, Adam Smith apparently believed that moral sentiments and self-interest would always add up to the same thing.

One possible line of reasoning he might have employed in reaching this conclusion is as follows:

the invisible hand cannot operate if there is no society, for precluding a societal construct precludes division of labor, and thus, the efficiency which comes with its manifestation. Now for society to exist, justice is a necessary condition (as pointed out in Smith’s Theory of Moral Sentiments). For justice to exist in any social setting, individuals must harbor the passions of gratitude and resentment governed by a sense of ‘merit’ and ‘demerit’ (again from Smith’s Theory of Moral Sentiments).

And finally, as Smith himself would have so vehemently argued, the sense of ‘merit’ and ‘demerit’ is almost exclusively engendered by human sympathy.

In conclusion, the invisible hand of the market is, at some level, contingent upon the ability of humans to sympathize: Smith’s self-interest is indeed in consonance with the notion of sympathy.

The Wealth of Nations, one of the earliest attempts to study the rise of industry and commercial development in Europe, was a precursor to the modern academic discipline of economics.

It provided one of the best-known intellectual rationales for free trade and capitalism, greatly influencing the writings of later economists.

During and after the bicentennial celebration of the Wealth of Nations in 1976, much more attention has been paid to The Theory of Moral Sentiments as well as to his use of rhetoric, his views on virtue, government intervention or on the provision of public health, public works and education and his opposition to slavery, morally and economically, inequality, including racial inequality, and to beliefs in the color line, the inferiority of blacks, and the poor and the Irish. Nor did Smith believe that common sense was inferior to science. Calling him a moral philosopher and scientist or economist, pointing to a need to read both of his two major works, and his lesser works as well, describing his "economic man" as also a moral man, presenting his interests in virtue and morality, identifying the effects of his definition of the separation of the church and state, and of various of forms of government, including republics, on ending or promoting slavery, war, or both, characterizing mercantilism, slavery and colonialism, monopoly, as less efficient, and more expensive than free trade, free labor, or labor not coerced by want, misery, or force, discussing his legacy as a "lost legacy", citing his enemies and those who are and have "purloined" or "cooped" his works, looking at the British’s government response to him and other English citizens who were his friends after the French Revolution, his response to religion and querying why he did not publish promised works, all were topics increasingly after 1976.

Overall, an heightened interest in Adam Smith and his works has been sustained until today. Among those reporting on such trends as more than a "speculative bubble" is economist Jonathan B. Wight in a 2004 conference paper titled "Is There a Speculative Bubble in Scholarship on Adam Smith?", presented at the Eleventh World Congress of Social Economics, Albertville, France. Wight, in addition to being the author of this paper and of other books and articles on Adam Smith and his works, also reports in 2002 that six hundred articles and thirty books had been published in the twenty seven years between 1970 and 1997. Only two articles on Adam Smith or his works were published the year before 1971 Wight also reports in a journal article, "The Rise of Adam Smith: Articles and Citations, 1970-1997".

There, in addition, has been a controversy over the extent of Smith’s originality in The Wealth of Nations. Some argue that the work added only modestly to the already established ideas of thinkers such as Anders Chydenius (The National Gain 1765), David Hume and the Baron de Montesquieu. Indeed, many of the theories Smith set out simply described historical trends away from mercantilism and towards free trade that had been developing for many decades and had already had significant influence on governmental policy. Nevertheless, Smith’s work organized their ideas comprehensively, and so remains one of the most influential and important books in the field today.

Adam Smith’s Major works:
The Theory of Moral Sentiments (1759)
An Inquiry Into the Nature and Causes of the Wealth of Nations (1776)
Essays on Philosophical Subjects (published posthumously 1795)
Lectures on Jurisprudence (published posthumously 1976)
Lectures on Rhetoric and Belle Lettres

 

Other interesting references:

Smith was ranked #30 in Michael H. Hart‘s list of the most influential figures in history. From 13 March 2007 onwards Smith’s portrait appeared in the UK on new £20 notes. He is the first Scotsman to feature on a currency issued by the Bank of England. A picture of the note is available on the Bank of England website. On June 25 2006, when Warren Buffet announced that he would donate his wealth to The Bill and Melinda Gates Foundation, he was presented with a copy of Adam Smith’s Wealth of Nations by Bill Gates.