Review: Skjönsberg on Sagar's Adam Smith Reconsidered

political economy moral philosophy political philosophy book review

Max Skjönsberg for AdamSmithWorks

Conjectural Historian? Moral Philosopher? Political Economist?

What is and should be Adam Smith's place in the history of ideas? 

June 29, 2022
Paul Sagar is undoubtedly one of the most penetrating readers of Adam Smith today. Smith played a pivotal role in Sagar’s first book, The Opinion of Mankind: Sociability and the Theory of the State from Hobbes to Smith (2018). As the subtitle makes clear, however, in this book Smith shares the stage with other thinkers. The other central character in the book is David Hume. Hume pioneered and Smith developed a new way of thinking about the state, the book argues. Rejecting Thomas Hobbes’s vision of human nature along with his contractarianism, Hume and Smith emphasized the “opinion of mankind” as the basis of political authority.

Sagar’s new book –Adam Smith Reconsidered: History, Liberty, and the Foundations of Modern Politics (2022) – is entirely devoted to Smith. Like Sagar’s first book, it is lucid, extensively researched, well thought-out and ingenious. It is also a book of big claims. To call it revisionist is to understate its ambitions; revolutionary might be more appropriate.

Sagar’s first major claim in the book is that Smith should not be best thought of as a conjectural historian. “Conjectural history” was a term coined by the Edinburgh professor Dugald Stewart at the end of the eighteenth century to describe a strand of historical thinking which he viewed as characteristic of the Enlightenment, particularly in Scotland. It concentrated on the early history of human beings for which there was no evidence, which the theorist had to make up for by rational reconstruction. A key example would be Jean-Jacques Rousseau’s Discourse on the Origin of Inequality (1755), which sought to explain the unrecorded history of man’s transition from the state of nature to civil society. Stewart singled out Hume’s Natural History of Religion (1757), which put forward naturalistic explanations of the origin of religion, as a significant study.

The notion of Smith as a conjectural historian has been dominant since Stewart’s well-known valedictory “Account of the Life of Writings of Adam Smith” from 1793. Stewart argued that Smith used conjectural history in his essays “Consideration Concerning the First Formation of Language” and “History of Astronomy” – both included in Smith’s Essays on Philosophical Subjects– the Wealth of Nations (WN), and his Lectures on Jurisprudence (LJ). Stewart had been Adam Ferguson’s student rather than Smith’s, and succeeded Ferguson as lecturer in moral philosophy at the University of Edinburgh. He had not attended Smith’s lectures, which of course remained unpublished until two centuries later. Thus, while he could not be certain of the nature of these lectures, he wrote that “[they] seem, from the account of them formerly given, to have abounded in such inquiries.” (p. 17). Sagar demonstrates through careful textual analysis, however, that Smith in WN and LJ did not so much rely on conjectures as on the best available evidence. In short, Smith was a historical thinker, and not a conjectural historian.

But what about the famous four-stages model – that is to say, the stadial theory that divided human development into (1) the Age of Hunters; (2) the Age of Shepherds; (3) the Age of Agriculture; and (4) the Age of Commerce – used by Smith? Rather than a conjectural history, Sagar argues that it is better understood as “an a priori explication of how human economic development might be expected to proceed in idealized circumstances under certain artificial assumptions.” (p. 20). Whilst it is conjectural, it is not meant to be historical. In other words, it is a thought experiment. Smith’s account of real European history does not follow this economic model. The purpose of Smith’s four stages was thus to show “why actual historical developments took markedly different turns from what might be expected by pure economic theory.” (p. 21). They show why history is unpredictable and why human development does not follow economic logic. History for Smith is thus not stadial but driven by contingent events and unintended consequences.

The course of European history in Smith’s terms was “unnatural and retrograde” (p. 41). Most societies struggle to escape the “second stage” of economic development, the stage of shepherding, as conflicts between societies periodically reset development. Europe escaped this stage through the rise of the Mediterranean republics in antiquity. The progress of civilization was dramatically reset, however, after Rome was overthrown by barbarian hordes, and the economically backward feudal system was established across Europe in the wake of the fall of Rome.

This reconsideration of Smith’s view of the four-stages model and history paves the way for a crucial but hitherto little noticed distinction between a “commercial society” and a “commercial nation”. The former is simply a society in which the division of labor has taken place so that “every man…lives by exchanging, or becomes in some measure a merchant”, as Smith put it in Book 1 of WN. A commercial nation (or country or state), on the other hand, is one that engages in international trade. What was remarkable about many Eastern nations, especially China – which, as Smith pointed out in his early draft of WN, possessed “immense opulence” (p. 42) – was that many of them did not engage in international trade. But this did not mean that they were stuck in an age of agriculture, as they grew rich from industry and internal commerce thanks to their geographical opportunities for inland navigation. China’s refusal to engage in external commerce, however, had rendered the country “stationary”, and the stadial model was accordingly as inapplicable to China as it was to Europe.

Commercial nations that engage in external trade do not belong as a sequence in a stadial process that can be predicted by a theory. They emerged “in the complexities of real history” (p. 48). Since commercial society is a much broader category and encompasses ancient republican city states as well as eighteenth-century China and Europe, it does not tell us much, if anything, about its wider social and political realities. In other words, there has never been one kind of politics for commercial societies as such since there have been so many different kinds of commercial societies throughout history. Modern Europe should not aspire to be republican, like Athens and pre-imperial Rome, not because republicanism is incompatible with commercial society, but rather because it is unsuitable for the modern European political experience, for which the post-Roman Middle Ages were more relevant than antiquity (pp. 50-51). Ancient republicanism may have been a politics of freedom for a small minority, but this minority depended on slave labor.

Sagar argues that Smith should be thought of as a theorist of freedom as non-domination. In its modern sense, the specter of domination was kept at bay by the rule of law. Smith thus agreed with Montesquieu that liberty under modern conditions entailed a feeling of security (pp. 58-9). His understanding of how this notion of freedom had arisen was historical. It depended on strong and central administration which had emerged in post-feudal Europe. Nowhere was modern freedom better realized than in England after the upheavals in the seventeenth century, according to Smith. Its constitution effectively checked the power of the monarch through the power of impeachment, habeas corpus, and the power of the elected House of Commons. Even more importantly, the common law system and its independent judiciary meant that it was in England “that a politics explicitly and genuinely geared towards freedom rather than oppression had for the first time most fully come into being.” (p. 79). Modern liberty was superior to its ancient counterpart because it, at least in theory, guaranteed security in property for all, whereas classical republicanism only secured freedom for a minority who were living from the toil of slaves. The fact that modern liberty enabled a greater number of individuals to engage in market exchange, generating levels of opulence undreamed of in antiquity, was certainly important, but not the chief reason behind Smith’s modernism, which relied to a greater degree on his aversion to domination and slavery (p. 95).

In an important footnote, Sagar stresses that Smith should not be thought of as a “classical liberal” in the conventional sense which emphasizes that liberty exists prior to the establishment of the state. Rather, for Smith, modern liberty was something that had been secured and even generated by the institution of the state. “Prior to the emergence of the rule-of-law-governed modern state”, Sagar writes, “there was no meaningful individual freedom, only extensive domination.” (p. 93).

But as should already be clear, Sagar also stresses that Smith should not be thought of as a theorist of republican liberty, as posited by Philip Pettit and Quentin Skinner. Along with Hume and Montesquieu, Smith viewed eighteenth-century civilized monarchies as setting the direction of European politics, while the republican states in Switzerland and Italy were “lucky survivors” (p. 97). His preferred mechanism for ensuring security of non-domination was not political participation but legal protection. Moreover, the main benefit of the common law was precisely that it was not controlled by the populace, but rather based on precedent and custom. Crucial for the regular administration of justice was the break of the connection between day-to-day politics and policymakers on the one hand and the judiciary on the other (pp. 101, 202). In discussing the common law, Sagar draws effectively on Smith’s account of its emergence in Lectures on Rhetoric and Belles Lettres.

As Sagar points out, this signals a fundamental disagreement between Smith and the Genevan republican political thinker Rousseau, who argued in the Social Contractthat the population must be the author of the fundamental laws in order to be free. Though this difference is well-established, much recent literature has held that Rousseau’s Discourse on the Origin of Inequality (1755) – a work Smith reviewed in the short-lived Edinburgh Review – presented a major intellectual challenge for Smith and had an impact on the Theory of Moral Sentiments (TMS) in particular (see, e.g., Rasmussen (2008), Hont (2009), and Griswold (2018)). In yet another revisionist move, Sagar argues that “Smith did not take Rousseau particularly seriously as an intellectual opponent, and instead took his positions to be neither particularly novel nor uniquely challenging.” Through a meticulous textual and contextual study, Sagar shows that Smith’s more relevant interlocutors came from his “much richer British philosophical context” (p. 114).

In his review of Rousseau’s Second Discourse, Smith noted that it was the second volume of the Anglo-Dutch physician Mandeville’s Fable of the Bees that had inspired Rousseau’s “system”, even though the Genevan “softened, improved, and embellished” what had been proposed by the notorious Dutchman by introducing the concept of “pity” as being capable of generating virtue (p. 119). By this time, in 1755, most of Smith’s TMS had most likely been written already, and he had by then read and digested a debate about sociability and the capacity of fellow-feeling that had been going on for decades in Britain. In this debate, thinkers such as Shaftesbury, Bishop Butler, and Francis Hutcheson sought to rescue human dignity from the “selfish” philosophy of Hobbes and Mandeville. Hutcheson famously did this by appealing to an innate moral sense.

The key participant in this debate from Smith’s perspective was his friend Hume, who put forward a theory of sympathy in his Treatise of Human Nature(1739-40) and in the Enquiry Concerning the Principles of Morals(1751). The capacity for sympathy made human beings desire society, Hume argued in opposition to Hobbes. Yet, Hume believed that human beings were also competitive, and their search for advantage threatened to destabilize societies. The artificial principle of justice, arising spontaneously, was thus needed to co-ordinate groups of individuals who were both self-interested and capable of sympathy (p. 120). This was the crucial intellectual backdrop to Smith’s TMS, in which the younger Scot endorsed his friend’s conclusion with some technical modifications. By comparison to Hume and this rich British debate, with many nuances which I have not had space to go into here, Rousseau’s principle of “pity” could hardly have mattered much to Smith, Sagar concludes.

Liberating Smith from being read as responding to Rousseau enables us to consider his writings in a different way. We no longer need to regard the primary aim of TMS as “[defending] economically advanced societies from the charge that such arrangements are morally corrupting of the individuals who live in them, as well as being themselves normatively suspect for essentially the same reasons.” (p. 150). This is a picture that has been distorted by reading Smith through a Rousseauvian lens, Sagar claims. Most of TMS does not say anything about the alleged corrupting effects of luxury and inequality. For instance, when Smith is writing about the desire to seek riches and avoid poverty, he is addressing what he regarded as a universal tendency based on human psychology (p. 155). Unlike for Rousseau, there is therefore little evidence to suggest that Smith looked on modern Europe as peculiarly corrupting. As Sagar forcefully writes: “Smith has no time for philosophical conjectures about an economically egalitarian, psychologically harmonious paradise lost.” (p. 161). As Smith notes in WN, material inequality was very prominent in older societies, including pre-commercial ones. It is true, however, that he was acutely aware that workers are prevented from achieving maximum flourishing in societies in which the division of labor had taken place, due to the nature of their work, as he described in memorable terms (in WN.V.i.f.50). But this was not a unique problem for advanced European nations, but rather for all commercial societies, including in antiquity or eighteenth-century China, for reasons already discussed.

In general, Sagar challenges the view that Smith’s approval of commerce was a balance-sheet assessment in which the good (prosperity and freedom) outweighs the bad (vanity and inequality). It is indeed not vanity, the craving of unwarranted approval of others, but utility, or rather the means rather than the ends of utility, which is the driver of market consumption (p. 178). One of Smith’s most original discoveries and significant qualifications of Hume in TMS was “the quirk of rationality” according to which human beings are more preoccupied with the means of promoting utility rather than its ends. This is the “deception” Smith had in mind in Part IV of TMS, Sagar writes. By acquiring more means of utility, we are deceived into thinking that we will become satisfied. Even though this is indeed a deception, markets are not normatively problematic as they are not driven by vice (vanity) but a curious and self-defeating sense of utility, one which most are able to keep in check (p. 181).

For Sagar, Smith did not see the threats to European modernity as coming from moral corruption but rather from the political dangers presented by the merchant and manufacturing classes conspiring against the rest of the nation. Once again, Sagar offers a distinctly fresh and illuminating perspective of an aspect of Smith’s thought which might have been thought of as well-rehearsed and familiar. As Sagar highlights, while Smith was clear that merchants were dangerous to modern commercial nations, he was equally convinced that they were necessary to their flourishing. Just as merchants were bad sovereigns who governed in their own interest – as famously illustrated by the East India Company after the Battle of Plassey in 1757 – sovereigns were poor merchants (p. 207). Commercial activity was needed to produce both opulence and freedom. The “science of the statesman or legislator” then involved striking a balance between allowing enough freedom for merchants to create wealth for the nation and ensuring that they were not able to promote private gain at the public’s expense.

Smith’s arguments against the “spirit of system” and the “spirit of faction”, added to the final edition of TMS in 1790, were not, at least not exclusively, a response to the French Revolution. Smith’s main point, that a political leader had to exercise judgement about when reform was necessary as opposed to when the existing order needed to be protected, has of course much broader relevance, and it was a longstanding concern for Smith (p. 208). In this context, Sagar stresses that Smith’s thought is anything but ideological, and – in agreement with Craig Smith and Ryan Patrick Hanley – that his politics does not map on to the labels of “right” or “left”. It is simply too philosophical.

In the conclusion, Sagar elaborates the point that it is misleading to view Smith as offering a defense of “commercial society, which would have made little sense for him. Writing in the eighteenth century, there was no attack on commercial society, at least not one which Smith took seriously. Moreover, there was no alternative to it, as all advanced societies were commercial societies in the sense that the division of labor had taken place, even though not all of them had international trade. This remains true today, as Sagar closes the book by observing that it would be unrealistic and reckless to aspire to go back to a simpler time prior to the division of labor. Moreover, communism in practice did not turn out as Karl Marx in his rare utopian moments thought it would, writing in the century after Smith, but before forms of communism were implemented at state levels in the twentieth century. According to Sagar, even though we can be confident that Smith would have been horrified by twentieth-century communism, there is no evidence available that can tell us what mode of capitalism on offer in the modern world he would have preferred. The relevance of his thought springs from another source: “It urges us to resist the siren song of those who think that the choice we face is between commercial society and some impossible alternative, as well as (on the other side) those who claim that commercial society can be composed only in one very particular way if it is to function correctly” (p. 219).

Alongside his first book, Adam Smith Reconsidered is undoubtedly among the best books ever written about Smith’s political thought. While it is compulsory reading for anyone interested in any aspect of Smith’s thought, it has the potential to give a new direction within Smith studies, one that concentrates on Smith not as an economist or a moral philosopher but as a historically sensitive political thinker and perhaps even a political philosopher. In his discussion of Smith and Rousseau, Sagar notes that the latter is certainly part of any canon of great historical political thinkers in the Western tradition, while Smith “is not typically granted inclusion” (pp. 117-8). In light of the fact that Smith was dismissive of Rousseau, Sagar suggests that this is something we may want to reconsider.

In a series of lectures delivered at Harvard in 1958, Michael Oakeshott identified three levels of political thinking, which are fundamentally concerned with different questions. The first level is the kind of political thinking that goes on in the middle of political activity, for instance, about the formation of policy. The second level looks back and seeks to understand politics in terms of general principles, often by using shorthand expressions such as democracy, nationalism, capitalism, fascism, and republicanism. A great deal of political thinking is of this kind, and this is perhaps also what most history of political thought deals with. But finally, there is a third and more unusual level of political thinking, one that is concerned neither with policy nor with making sense of political action through general principles, but rather seeks “to consider the place of government and political activity on the map of human activity in general” (Oakeshott, The Morality and Politics of Modern Europe (New Haven: Yale University Press, 1993 [1958]), p. 14). This level of political thinking is concerned with questions such as “what are we really doing when we are engaged in political activity?” and “what really is this activity called governing?” Such enquiries are sometimes called political philosophy, and according to Oakeshott, this is what we find in Plato, Spinoza, Hobbes, Hegel, and a few others, but crucially not that many. One of the things that makes Smith such a difficult political thinker is that he appears to have contributed to all three levels identified by Oakeshott, especially in WN which deals with specific policies, history, general principles as well as the human condition at large. While doing justice to this complexity, the power of Sagar’s scholarship shows especially why we must take Smith seriously as a political philosopher.