Interpreting Smith at 300

political economy moral philosophy book review history of ideas intellectual history

Max Skjönsberg for AdamSmithWorks

Skjönsberg reviews Paul Sagar's edited volume of critical essays on Adam Smith. Sagar's edition shows Adam Smith continuing to be a source of insight and inspiration to political theorists, philosophers, historians, economists, and other scholars three hundred years after his birth.

December 13, 2023
Interpreting Adam Smith is a collection of fourteen essays by a roster of leading Smith scholars across several disciplines, published to mark the 300th anniversary of Smith’s birth in 1723. The book is edited by Paul Sagar, author of The Opinion of Mankind (2018) and Adam Smith Reconsidered (2022). As Sagar points out in a short introduction to this new essay collection, Interpreting Adam Smith aims to both celebrate and reflect on Smith’s wide-ranging achievements. It amply succeeds in doing both.
Smith is best known as a political economist, but as readers of know, he was a university professor in philosophy and a quintessential eighteenth-century man of letters who contributed to a range of subjects, including moral philosophy, jurisprudence, political thought, and literature. Interpreting Adam Smith ranges across these subjects.
Glory M. Liu opens the volume with a chapter on “Smith Scholarship: Past, Present, and Future.” Applying Stefan Collini’s “four-stage-model” for the attainment of the status of a classic thinker, Liu outlines the development of Smith’s reception from his own time to the present day. In the first stage, she notes that both The Theory of Moral Sentiments (TMS) and The Wealth of Nations (WN) were bestsellers in Smith’s lifetime. In eighteenth-century America, James Madison referred to Smith in a 1789 speech in Congress on export and tonnage duties, and his famous analysis of factions in Federalist No. 10 has often been called “Smithian.” Thomas Jefferson referred to WN as “the best book extant” on political economy in 1790, while Alexander Hamilton borrowed from Smith’s writings on banking and public credit in his 1790 “Report on Public Credit” and on the division of labor and productivity in his 1791 “Report on Manufactures.”
In the second stage of his reception, Smith gained disciples in the nineteenth century, as political economy became an institutionalized discipline. In the third stage, Smith became a symbol for laissez-faire economics in the last quarter of the nineteenth century; the centenary of WN was celebrated in both London and New York. As Liu argues here (and at greater length in her recent book), Smith’s name was frequently invoked as an authority on free trade, though in-depth engagement with his ideas was rare. In-depth engagement became more common in the fourth stage of Smith scholarship, when he emerged as a canonical author in the late nineteenth and early twentieth centuries. Liu ends the chapter by reflecting on some of the striking facets of the ongoing Smith’s renaissance, arguing that “the center of gravity of Smith scholarship has slowly shifted from economics and toward the fields of political science, philosophy, and history.” This is partly a result of the greater attention scholars now pay to TMS.
In the second chapter of the book, the leading Scottish Enlightenment expert Christopher J. Berry writes about “The Wealth of Nations as a Work of Social Science.” Focusing on Smith’s methodology, Berry argues that WN is a work of science in the Baconian sense that its ambition is ultimately improvement. More specifically, WN shows that the opulence enjoyed by modern commercial states enables the material well-being of all as opposed to a few (as in earlier forms of societies). It reaches this conclusion through an investigation into the connected principles that make up the commercial system based on “natural liberty,” and it is contrasted with tried alternatives, especially the mercantile system. Its underlying scientific commitment is that human behavior is not random but subject to regularities and open to causal explanation. Crucially, human behavior, for Smith, can be explained by identifying motives. A key passion guiding human beings is the desire to improve our condition, even though our main desire may not be material goods as such but rather the accompanied elevated social distinction. In this sense, WN is a work of social or moral science, though a work in which history and contingency play key roles, as its author was fully aware “that social life is a complex historical formation resistant to simplifying abstraction.” In other words, WN is truly a “science of man,” in the phrase of Smith’s friend David Hume.
On the subject of the complexity of the historical formation of social life, Barry R. Weingast tackles the question of religious institutionalization, indeed its “industrial organization,” as described by Smith in WN. As Weingast shows, providing a theory of institutionalized religion forms part of Smith’s larger project of developing a “science of man” encompassing politics, economics, and moral development. Since wealth created both freedom and independence, the medieval Church impeded economic growth by keeping the masses in a position of dependency, through the tools of salvation, charity and the right to work on its vast landholdings. But the rising incomes and security of the towns, charted by Smith in Book III of WN, paved the way for the decline in the Church’s authority and the rise of competitive sects, and effectively the Reformation – a development outlined in Book V.
In “Talking to My Butcher: Self-Interest, Exchange, and Freedom in the Wealth of Nations,” philosopher Samuel Fleischacker zeros in on the famous “butcher-baker” paragraph in WN, and argues that it is a fundamental misunderstanding to read Smith as having thought that people either should or inevitably do act selfishly. To get what one wants from a butcher, a consumer is required to moderate their self-centeredness and “present to them a plausible understanding of their needs, and a willingness to help fulfill those needs.” Fleischacker argues that the market, as Smith understood it, “provides a condition both for true benevolence and for the development of self-command.” The market is thus best thought of as a cooperative effort. Fleischacker further argues that Smith ties market exchange to speech and thus places trade at the heart of human freedom. In conclusion, Fleischacker sees Smith as representing an advance on Montesquieu: commerce does not only have the potential to create peace among nations, but also to foster individual freedom and self-respect.
In Chapter 5, Bart J. Wilson and Gian Marco Farese use the methodology of the Natural Semantic Metalanguage to produce semantic explications of Smith’s key principles of wealth creation. This is a methodology applied by lexical semanticists “to decompose and pinpoint the meaning of words.” In this particular case, it means that the authors have identified key sentences from the first chapters of WN that they deem to contain the fundamental economic principles underpinning Smith’s entire project. They then “turn those principles inside out to explicate what they mean using semantic primes that can be translated one-to-one into any language.” The result is a new paraphrased text that is intended to be understandable by non-experts and even children of the twenty-first century. They conclude by suggesting that a key difference between modern economists and Smith is that whereas the former make quantities of stuff the subject of their inquiries, Smith places human beings as the center of his writings.
In “Adam Smith and Virtuous Business,” James R. Otteson engages with the tension between Smith’s approval of market society and his apparent disapproval of the behavior associated with merchants and businesspeople. Otteson outlines how “the Smithian system might plausibly provide such a framework and suggest that it can offer guidance for what we might call ‘virtuous business.’” Through a close reading of Smith’s passages on the invisible hand and other key parts of both TMS and WN, Otteson argues that Smithian political economy entails that breaking one’s commitments is not only costly but also a violation of a moral mandate to treat others with respect. Such a conception of “virtuous business” would be upheld by public institutions that disincentivize extraction, incentivize cooperation, and protect persons, property, as well as voluntary contracts and promises. Otteson closes by suggesting that we may be able “to constitute an attractive Smithian vision of the moral purpose of virtuous business” that is still relevant today.
Maria Pia Paganelli’s chapter takes seriously Smith’s own description of WN in his private correspondence as “the very violent attack I had made upon the whole commercial system of Great Britain.” This means that she reads Smith’s great work as a critique of lobbying from special interest groups and cronyism. The tendency of merchants and manufacturers to seek to limit competition and erect monopolies puts their interest at odds with the rest of society. Paganelli argues that what Smith in fact advocated was not laissez-faire but government-guaranteed competition. On her reading, state capture by special interest groups is not only inefficient, but something that Smith condemned on moral grounds, as when monopolies make money through artificially high prices, they cause harm to others.
In a revisionist chapter, Robin Douglass takes on the term “commercial society” – Smith’s own compound word in WN for market-based society. Douglass denies that TMS is a book about commercial society, pushing back against a rich body of literature from Nicholas Phillipson and Istvan Hont to Ryan Patrick Hanley. The term commercial society, we are told, is often confused with modern Western trading states, when in fact Smith saw it as any state in which the division of labor has taken place, including China and ancient Egypt. As for Mandeville and Rousseau before him, the distinction that really mattered to Smith was that between savage and civilized states. Moreover, instead of a commentary on commercial society – a term not used in TMS – Douglass contends that Smith’s first book is better thought of as simply a treaty on moral philosophy, relevant for human beings in all settings rather than those operating within any specific economic framework. Tellingly, Smith writes that our tendency to admire wealth and greatness and not wisdom and virtue, “has been the complaint of moralists in all ages” (TMS I.iii.3.1, Douglass’s emphasis). Douglass concludes by indicating that scholars may have been inclined to impose the concept of commercial society on TMS because of the understandable but often regrettable tendency we have to read our own concerns back onto past thinkers.
In his own chapter, the book’s editor Paul Sagar argues that Smith anticipates the basic argument for sufficientarianism set out in Harry Frankfurt’s “Equality as a Moral Ideal” (1987), namely that what matters is not that everyone should have the same but that everyone should have enough. Indeed, Sagar goes further and contends that Smith offers a more advanced version of the argument, “by grounding it in an astute grasp of ordinary human psychology.” Against recent attempts to recruit Smith, Sagar holds that it is unclear whether Smith offers support for contemporary egalitarianism. His chapter hinges on a perceptive reading of Chapter 1 of Part IV of TMS, in which Smith shows how a quirk of rationality induces work and consumption. In short, Smith “holds wealth and greatness to ultimately be mere means to utility, and hence of no greater inherent worth than a box of trinkets or a tidy room.” Yet we think that they are worth more because the conveniences of wealth seem so obvious. Such a deception is a good thing at the societal level, according to Smith, because it produces economic activity and thus greater material well-being for all. This in turn creates ease and contentment for the greater number, which are concomitants of having enough, not of having more than others.
John T. Scott and Michelle Schwarze address the treatment of justice in TMS, in which Smith claimed that “We may often fulfill all the rules of justice by sitting still and doing nothing.” In contrast with the classical tradition, Smith follows modern natural law pioneered by Hugo Grotius in narrowing the remit of justice to positive harm to persons, property, and reputation. On this understanding, justice is distinguished from beneficence. In Grotius’ terms, we have perfect rights, enforceable by law, as well as imperfect rights, whose observance is voluntary. Smith’s fellow Scotsman Lord Kames, meanwhile, distinguished primary duties from secondary ones. Smith’s originality, Scott and Schwarze argue, consists in combining this “narrow” sense of justice taken from the modern natural law tradition with an account of resentment as the passion that undergirds our concern with injustice. In this respect, Smith was evidently indebted to the English theologian Joseph Butler.
In Chapter 11, Lisa Hill argues that the rival Hellenistic philosophical schools of Stoicism and Epicureanism – which claimed that happiness (or rather, eudaimonia) could be achieved by virtue and pleasure, respectively – are both united in Smith’s thought. Drawing on Mizuta (rev. ed. 2000), Hill begins by noting that all the key Stoic and Epicurean works were present in Smith’s library. On Hill’s reading, “[Smith] enlists Stoic theodicy to reconcile Epicureanism with Stoicism and to put apparently selfish drives to socially productive uses.” A theodicy is an attempt to bring together the existence of evil with an omnipotent and beneficent God. Before Christians resorted to free will to resolve the conundrum, Stoics had denied the existence of evil altogether. In this vein, Smith viewed less rosy human characteristics as wisely implanted by a benevolent Deity so that they can perform beneficial social functions. Notably, our craving for social recognition is a powerful incentive leading to productivity, innovation, and prosperity. Furthermore, the Stoic noble dreams of global peace and cosmopolitanism can only be approximated, according to Smith, by self-interested economic means.
Lauren Kopajtic’s chapter contributes to the growing body of scholarship on Smith’s interest in literature, and in particular the mid-eighteenth-century prose fiction that Smith singled out as the best moral teachers in TMS. The particular authors of novels Smith referred to in this context were Samuel Richardson, Pierre de Marivaux, and Marie Jeanne Riccoboni, who all wrote famous epistolary novels treating the relationships of family, friendship, and romantic love. While novels were often castigated in the eighteenth century for the distracting powers they could exert over the young, it was also generally recognized that the right kind of novels could improve the morality of readers. As Kopajtic notes, “the ability to suppose and occupy the perspective of an impartial spectator, and so to correct for the natural imbalance in our sentiments, is learned and developed.” For Smith, the imagination helps us to understand and empathize with the situation of others. But the imagination needs material, and novels, through their vivid representations of the human condition, are excellent tools for people “to gather the experiential input sufficient to allow the [impartial] spectator to imagine the situations of others and subsequently to sympathize with them.” Kopajtic goes on to show that the epistolary novels written by Richardson, Marivaux, and Riccoboni proliferate with different perspectives and different characters, making them ideal for broadening one’s imagination and for exercises in moral sympathy.
In an intriguing chapter, Kathleen Mccrudden Illert zones in on Sophie de Grouchy, the French eighteenth-century translator of TMS. Mccrudden Illert portrays Grouchy as an “activist” interpreter of Smith, whose “modifications” to Smith’s philosophy, put forward in her Letters on Sympathy (1798) that accompanied her translation, “were directly spurred by the period in which she was writing, and were often deeply political.” But her critique of Smith was also theoretical. Her first modification of Smith, we are told, was to remove the impartial spectator, who “introduces an unhelpful degree of emotional distance into moral calculations.” She further took aim at Smith’s argument that we have a tendency to sympathize more with those in higher stations. And in disagreement with Smith, she claimed that it was equality rather than inequality that was the cause of stability in societies. Unlike Smith’s preference for a system of “natural liberty” – according to which the rich would “make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants” (TMS IV.i.10) – Grouchy favored government-led redistribution of wealth. In the end, then, Mccrudden Illert’s Grouchy comes across as quite an un-Smithian figure. But as the chapter makes clear, Grouchy’s translation was the standard one in French until well into the twentieth century, exerting a lasting influence on Smith’s reception in France.
In the closing essay of the volume, Craig Smith argues that “Smith saw philosophy as a specific and limited activity that formed but a small part of the moral life of the individual”: indeed that Smith “warned of the intellectual, social, and political dangers of too much philosophy.” Craig Smith briefly speculates that his namesake’s awareness of the dark side of philosophy may have been related to the mental breakdown he suffered from excessive study in his youth. Like his friend Hume, who had a similar mental breakdown, Smith held that it is the society of everyday life that leads to contentment, whereas philosophy can be unsettling. For him, it is life rather than philosophy that teaches morality, since philosophical thought favors system over the “contextual appreciation that Smith believes is constitutive of moral life.” This is why Smith’s moral pedagogy in TMS concentrates on ordinary examples and character descriptions to show virtuous behavior. “The role of the philosopher is not to guide moral judgment, but rather to prepare his students for a life of participation and judgment,” concludes Craig Smith.
Sagar writes in the introduction that the collections’ “results are necessarily highly incomplete: Smith simply wrote too much about too many issues, and it has not been possible to cover even close to all the topics he addressed.” While this is undoubtedly true, this new book earns a place alongside other invaluable essay collections (including Haakonssen 2006, Berry et al. 2013, and Hanley 2016) that are required reading for those who are interested in all facets of Smith. Though the chapters in Interpreting Smith are written by scholars from different disciplines – political theory, philosophy, history, economics, and linguistics – they are united by an interest in what it was that Smith intended to say (and how that may differ from the way in which he has sometimes been read). But curiously enough, the better we understand Smith as a man of the eighteenth century, and the better we learn to separate him from his reception and reputation, the more urgently, if sometimes indirectly, he appears to speak to us today.