Facing Up To Oppression: Adam Smith and the Question of Reparations

Remy Debes for AdamSmithWorks

September 30, 2020
If the development of free societies, grounded in principles of liberty, equality, and the rule of law, is the crowning glory of the western world, then the modern history of western oppression is its bitter and enduring shame. Two basic facts of this history stand out. First, modern liberal theory – as it developed roughly from Locke to Mill – as well as the institutions and cultures it produced, emerged alongside the manifest and systematic exploitation and persecution of many kinds of peoples. The enslavements of African and Caribbean people are the most horrific examples. But the scope of this oppression has been vast: women, Native Americans, Indians, Latin Americans, Asian, the Roma, Jews, the disabled, the poor, gay and bisexual people, the gender non-conforming – all these people have endured centuries of explicit, often violent harassment and discrimination in the west.
Second, this historical oppression gave rise to entrenched patterns of inequality that persist today, and which involve a variety of interlocking forces: social, political, punitive, educational, and economic. Consider only the last as it connects to race inequalities in America. The overall wealth gap in the United States between the top quintile and everyone else has been growing since the Great Depression. And the gap between whites and people of color has been widening even faster. According to a major 2017 report from the Institute for Policy Studies, median black and Latino households witnessed 75% and 50% declines in wealth (respectively) between 1983-2013, to sit at a measly $2000. Meanwhile, the median wealth of white households at the end of the same period was $116,800.1 Nor does recent evidence suggest a change in these trends. On the contrary, by the end of 2020, white households are projected to own 86 times more wealth than black households, and 68 times more than Latino households. And by 2053, black households are projected to hit $0, with Latino households following suit two decades later.2
A commonplace defense against these two basic facts of western history, especially among right-libertarians, is to claim that this history and its present-day ramifications are essentially the product of gross and compounding errors in the practice of liberal theory, not in its principle. Unsurprisingly, those who believe this often also reject any suggestion of reparation for the past harms of western oppression.
To be sure, these people are usually quick to say that present day inequities are unfortunate. These inequities may even threaten overall social stability. Correspondingly, considerations of both benevolence and utility require those of us with means to find ways to help those on the losing side of this history.
Nevertheless, according to those who think this way, reparation is tantamount to unjust redistribution. It would require that those who aren’t personally responsible for these past harms or the present-day patterns that these harms contributed to, have their property and liberty infringed upon in ways that the foundational principles of liberalism cannot justify, and indeed condemn.
In this essay, I argue against this way of understanding liberal theory. At least, for those of us who consider Adam Smith a foundational source and guide to liberal theory, as I do, this kind of response to the facts of western oppression must be judged facile. Although Smith’s theory of liberty prima facie tells against reparations for western oppression, serious engagement with Smith’s theories of law and justice suggests that there is space for the claim. To be clear, I don’t pretend to make a conclusive case for thinking that Smith’s theory supports a call for reparations. I’m content to convince you that it might.

1. On the surface
It’s understandable that present-day readers of Smith, especially non-academic ones, sometimes conclude that Smith would rule out serious consideration of reparations. It’s indisputable that Smith uses The Wealth of Nations, which remains the work by which most people know him best (or know him at all), to emphasize what might be called the “material side” of a theory of natural liberty for individual persons. According to this theory, “Every man, as long as he does not violate the laws of justice, is left perfectly free to pursue his own interest his own way, and to bring both his industry and capital into competition with those of any other man or order of men.” (WN IV.ix.51) Correspondingly, Smith thinks that a principal goal of justice is to protect the private property of “every man” – that is, of each person, considered individually.
Furthermore, Smith repeatedly argues that one of the greatest, if not the greatest threats to the “sacred rights of private property,” are the “supposed interests of the public” (WN I.xi.c). This is because, on the one hand, it is “public interest” that in one way or other is continuously being leveraged as the justification for infringing on private property, and thus for violating the just described priority of justice. And, on the other hand, we have every reason to mistrust those who want to do this leveraging; namely, as Smith puts it, the “insidious and crafty” politicians (WN IV.ii39). Indeed, it’s surely this political use of “public interest” that Smith has in mind when he remarks, “There is no art which one government sooner learns of another than that of draining money from the pockets of the people” (WN IV.II.10; see also, WN IV.II.36)
In short, Adam Smith was deeply wary about the ways those with political power can encroach on the wealth of private individuals. And he was keen to articulate such encroachment as a violation of justice, natural liberty, and individual rights. Thus, as I said, Smith’s theory entails a prima facie prohibition on reparations.

2. Conceptual Space
Having established the prima facie case against a Smithean argument for reparations, I now want to elaborate five reasons for revising these first impressions. These reasons make clear that (1) Smith’s theory ultimately allows the conceptual space for such a case (that is, Smith does not rule out reparations in principle); and (2) we should give serious consideration to such a case.

I. The first reason for rethinking what Smith would say about reparations belongs in the second category just outlined. Consider: recent empirical studies have shown that most of us, even those who claim expertise on the issue, grossly underestimate the reality of present-day inequality in the western world. For example, in a 2010 study into how well Americans understand wealth distribution in their own country, more than 90% of the 5,522 respondents — regardless of gender, age, income level, or party affiliation – thought that the correct pie chart representing the United States was one that showed the top 20% of wealth holders controlling 60% of wealth.⁠3 That was more than 25% shy of the mark. More telling still, as the sociologist G. William Domhoff points out in his remarks on the same study, is how much wealth Americans think the bottom 40% has. Most guessed 8-10%. The two dozen economists in the survey guessed 2%. In fact, it’s 0.3%.
Why is this relevant? Well, one explanation for why we might think that Smith wouldn’t take the question of reparations seriously is because we don’t take it seriously – albeit, as the result of our own ignorance. After all, if you don’t believe that there is a serious problem of inequality to begin with, the suggestion of reparations isn’t likely to seem urgent to you. In turn you’re more apt to read it out of any given theory, than to read it in.
Interestingly, Smith himself argued that we are psychologically disposed to overlook the worst off. Indeed, he labored over this point in his other great published work, The Theory of Moral Sentiments. At the heart of that theory was a concept Smith called, “sympathy,” but which today we would call empathy – namely, the ability to feel what others feel, by imagining what we ourselves would feel, were we in their situation. Smith thought we are sympathetically fascinated by the rich. That is, we relish imagining ourselves in their places. Some parts of Smith’s explanation for this fascination are mundane, like the way we imagine that the rich have outfitted their lives (their homes, their daily routines, their food and drink, etc.) to satisfy all their desires. But here’s the fundamental part:
Smith thought that one of the dearest human pleasures was the pleasure of being sympathized with – that is, of being the object of someone else’s empathy. Our humor is heightened when someone laughs with our laughter; our grief is lessened when they commiserate with our sorrow, and so on. However, this psychological fact is also a bait for vanity, which Smith understands as enjoyment in merely believing ourselves to be the object of someone’s sympathetic attention. For example, we are apt to take pleasure in merely believing that others are sympathizing with the joy we feel over some bit of good news, regardless of whether they really are (i.e. regardless of whether there is any genuine sympathy). But what’s worse, Smith thinks that this same foible is the root of why we love to imagine the lives of the rich. Because the rich are in fact the object of everyone’s attention, we’re apt to confuse this with their being the object of genuine sympathy. And from this error, it’s a quick step to fascination. Once our imagination paints the lives of the rich in these “delusive colors,” as Smith puts it, they are sure to seem “almost the abstract idea of a perfect and happy state” (TMS I.iii.2.2).
In short, Smith wouldn’t be surprised by the recent empirical study of American misperceptions about wealth inequality. He would have predicted it. “The poor man goes out and comes in unheeded,” Smith writes at one point, “and when in the midst of a crowd is in the same obscurity as if shut up in his own hovel…The man of rank and distinction, on the contrary, is observed by all the world” (TMS I.iii.2.1)

II. You might object that my first argument seems to assume that economic inequality is necessarily unjust. And this is something Adam Smith plainly did not think. On the contrary, Smith is famous for arguing that, on the one hand, economic inequality is the by-product of an economy made up of free individuals advancing their private interests. And, on the other hand, in this kind of free marketplace, it turns out that the economically worst off are on average still far better off than they would be in a different economic arrangement. In virtue of their tireless efforts to advance themselves, Smith claimed, the wealthy are led by an “invisible hand” to help everyone else. Why? Because it takes an increasingly complicated economic engine, so to speak, to power the gears necessary to create not only the wealth itself, but also the vast array of luxuries and services that wealth is used for. In other words, in their drive to make money and then use that money to satisfy their private desires, the wealthy create all kinds of opportunities for the rest of us to make a buck. Isn’t this Smith’s view?
Yes. Roughly speaking, this is indeed what Smith said. But the premise of the objection is wrong, because it mistakes what my first argument was really about, and in two different ways.
First, my first argument didn’t aim at bringing attention to economic inequality in and of itself, as if such inequality is necessarily unjust. That would indeed beg the question against Smith. My point was to bring attention to radical economic inequality. And radical economic inequality is certainly something Smith worried about. Smith understood that radical wealth disparity corresponds with a number of indicators of economic decline and instability, or poor government policy.4 More subtly, but more profoundly, The Wealth of Nations expresses a pervasive worry about any arrangement that ends up making the challenging life of the “laboring poor” worse than it already is, although not simply because Smith had the humane interest in preventing harm. Smith thought that the harms of radical inequality too often result from the deceptions of rich merchants, who mislead us with the false claim that economic vitality is tied to high profits and low wages (See esp. WN I.9.24). That claim obviously protects the kind of radical wealth disparity we see today, and thus it’s significant that Smith rejects it.
Second, my point wasn’t simply to notice that we tend to be less than ideally informed about the actual state of economic inequality around us. My point was to provoke us, and especially you (the reader), to think more carefully about why we might be so uninformed. Indeed, in addition to everything I said already, for most of us, the facts of radical economic inequality are also an inconvenient truth. If you’re reading this essay, it’s highly unlikely that you’re in the bottom 40%. Indeed, I’d wager that you, or at least your family, is in the top 20%. If so, then the system as it exists now is working for you. Correspondingly, you disturb it at the risk of personal loss, perhaps even great personal loss. If you’re in the top 20%, you and your family are also probably white, given that whites make up 72% of the top 20%. Thus, for you to sincerely confront the facts of western economic inequality entails not only facing up to the possibility of giving up some of your wealth, but also reconciling with the ways you or your family got into the top 20% to begin with.
To be clear, I’m not suggesting that you, or your mother, or her father, or his father – that any of you did anything morally wrong or unfair to advance your lot. I’m reminding you that this truth (of your or your family’s moral responsibility) doesn’t entail that the world around you, and through which you or your forebears passed on their way to wealth, was right and fair. And if it wasn’t (and it wasn’t), then what does this mean for where you find yourself today?
To put an even finer point on this question: If your wealth wasn’t entirely self-made, then is it entirely yours? How does Smith answer this question? To answer this, we need to take up the crucial subject of justice. But first, we need a few stepping-stones.

III. Although popular appropriation of Smith’s philosophy sometimes peddles the myth that Smith was a laissez-faire libertarian who ruled out any kind of redistribution of wealth or “welfare state” provisions, anyone who has actually read The Wealth of Nations knows this to be false. As powerful as the invisible hand may be, Smith argued explicitly for some “public interests” himself (and occasionally also noted that a disproportionately greater contribution to these projects by the wealthy would be reasonable, see e.g. WN V.ii.e.6). The most important of these public interests was public education, which Smith thought not only could be paid for by the state, but should be (WN V.i.f esp. paragraphs 52-61). Moreover, this wasn’t some minimalist conception of education meant to professionalize the masses for the workforce. On the contrary, Smith’s defense of public education relied fundamentally on the need to protect and develop the capacity of the imagination in individual persons. That is, to protect the imagination from the effects of specialized labor.
Smith gave several related reasons for his concern. I’ll quickly review only two. First, a commercial society naturally inclines towards a division of labor. But that division, despite its benefits, presents the laboring poor with an acute danger, namely, of funneling them into hyper-specialized, menial, and repetitive tasks that over time numb their faculties, and in particular, their imagination.
The man whose whole life is spent in performing a few simple operations, of which the effects too are, perhaps, always the same, or very nearly the same, has no occasion to exert his understanding, or to exercise his invention in finding out expedients for removing difficulties which never occur. (WN V.i.f.50)

By invention, we must understand Smith to mean imagination. In turn, we must realize that he is warning us not only of the harm this does to the person concerned, but the harm it does to all of us. New ideas lead to new or better products, as well as new and better ways to produce them, all of which drives economic growth (History of Astronomy II.8 and III.3).
Second, for Smith a defunct imagination results in a defunct moral capacity. This follows naturally from what is sometimes called his “spectator” theory of moral judgment in The Theory of Moral Sentiments. Briefly, that account goes like this. (1) When judging another, we imagine how we would feel in their situation, as if we were someone with no personal interest in, or attachment to, any of the people involved – neither the person we are judging, nor anyone who might be affected by the outcomes. And if, having gone through this imaginative exercise, we find that we would feel the same way as the person we are judging, or at least closely enough to how they feel, then we approve of that person’s feeling. If not, then we don’t. And because actions are motivated by sentiments, we get a quick connection back to the typical subject of moral evaluation, namely, action. Thus, when we ask questions like, “What should I do?” or “Did she do the right thing?” or “What ought they to do?” — all of these come back to a question about emotion, according to Smith. (TMS I.i.1-3; esp. I.i.3.1).
So, you can appreciate why Smith would defend public education in The Wealth of Nations. Education guards against the corrosive moral effects of menial labor on the human imagination: “The torpor of his mind renders him, not only incapable of relishing or bearing a part in any rational conversation, but of conceiving any generous, novel, or tender sentiment, and consequently of forming any just judgment concerning many even of the ordinary duties of private life.” (TMS V.i.f.50). Without a healthy imagination, the “laboring poor” in a commercial society are not only uncreative and uninventive; they are morally inept. That is, “unless government takes some pains to prevent it” (Ibid.)

IV. Smith unequivocally condemns slavery. And while you might think that anyone who energetically defends the natural liberty of persons would do the same, history is replete with ugly disappointments on this point. Thus, it’s important to note formally that Smith, at least, was consistent on this point. Casual readers understandably might miss this, given that Smith’s most explicit comments were planned for his third book, as unpublished treatise on jurisprudence, which we know only through recovered student notes. These Lectures on Jurisprudence contain relatively long remarks on the harms of slavery, which he calls “very grievous in many different ways” (LJA iii.90).
This isn’t to say that Smith’s overall position on slavery was beyond complaint. For a start, Smith’s condemnation of slavery is ironically contrasted with his relative blindness to other kinds of oppression, most notably, of women. His understanding of the severity of slavery in North America, which he called “mild” (LJB, 138), was plainly mistaken. And, again, even in the Lectures, there is what you might call a “too quick” turn back to economic explanations of slavery, or a consideration of the ways that slavery undercuts the interests and efforts of free persons. Still, when his facts were correct, Smith was direct and frank in his condemnation of slavery in the Lectures, and his economic arguments against slavery are secondary to his moral and jurisprudential ones. Thus, Smith delineates the “evils” of slavery, focusing on the violation of individual liberty as well as its cruelty. The life of a slave is “miserable,” Smith says at one point in the Lectures, “Their masters had no restraint put on their cruelty, and the hardest usage was commonly practiced on them; their lives were taken away on the slightest occasion.” (LJA iii.92) Moreover, and importantly, Smith wanted to disabuse his audience of any naivete they might harbor about the state of slavery in that day, “We are apt to imagine that slavery is quite extirpated because we know nothing of it in this part of the world, but even at present it is almost universal. A small part of the west of Europe is the only portion of the globe that is free from it” (LJB 134). Alas, experts estimate there are still nearly 40 million people living in some form of slavery in the 21st century, half of whom are trapped in forced labor, more than 5 million of whom are sex slaves, and 10 million of whom are children.5

V. To reiterate, Smith does argue for the “natural” liberty and rights of persons. But by “natural” he did not mean that liberty and rights were guaranteed to us by some eternal law, or by the will of God, or anything similarly metaphysical. There is no transcendental truth of the universe that makes it unjust to infringe upon the will of other persons. Instead, for Smith, as for Hume before him, morality, justice, and law are all artificial: they are products of human interaction. That is, they have social origins, including our rights against infringement.
So, what did Smith mean by “natural”? He meant something closer to “taken for granted”; that is, “assumed to be true of people.” As the eminent scholar of Scottish philosophy and natural law theory Knud Haakonssen explains, “When Smith counts the rights to personal integrity as natural despite their social origins, it is because they are obvious and therefore pervasive; they come, as it were, naturally to people.”6 Or, as Smith put it, the rights of protection against injury and personal liberty are what, “no body doubts” (LJB 11). For the same reason, these rights aren’t what is true of humans per se, but what is true for humans like us, with a history like ours, in times like these. They are based on what we, collectively, have come to recognize as injuries to one another. They are generalizations over the innumerable moral judgments we make as spectators to one another.
In the case of justice, our judgments center on the injury one person causes another (LJB 6; see also TMS I.i.I.5). But, following Smith's spectator theory of moral judgment, what counts as injury depends on how we (as spectators) judge the sentiments that motivate one person to harm another, as well as the potential resentment felt by the one who is harmed. Thus Smith writes, “Actions of a hurtful tendency, which proceed from improper motives, seem alone to deserve punishment; because such alone are the approved objects of resentment, or excite the sympathetic resentment of the spectator” (TMS I.i.1.1). In other words, injustice is what (1) does harm through a motive that we cannot, as spectators, empathize with; or (2) does harm that excites our impartial resentment (that is, our resentment as spectators on behalf of the one harmed).
The upshot here is twofold. First, and more generally, it’s plain that Smith would condemn any kind of oppression. A spectator – a genuinely impartial one, anyway - can never sympathize with oppressive motives, and moreover will always empathize with the resentment of those who suffer from such oppression. Second, although it’s true that over time we reach stable expectations of what counts as injury, and, in turn, of what our rights are (this is why Smith will talk of what “all mankind” would or would not approve), all these ideas are essentially tied to the sentiments and judgments of actual human people. They are always for Smith, at least in a broad sense, context-sensitive. Hence, there’s no sense in insisting that redistributing wealth or other resources to meet the demands of reparations is necessarily unjust, if the force of this “necessarily” is supposed to be “without reference to facts of the given situation or culture or history in which the reparation claim was made.” To say otherwise is to mistake “generality” for “universality.”

4. Reparation & Repair
Contrary to some popular ways of reading Adam Smith, the foregoing five reasons reveal that there is conceptual space for a serious discussion of how Smith would answer a call for reparations. But where should this more serious conversation go next? I cannot attempt to answer this question here, other than to say that the wrong way to answer it now seems plain. A Smithean solution to the legacy of oppression could never be one that entrusts itself wholly to the power of private beneficence, on the grounds that Smith makes some categorical genuflection to the ideal of individual liberty. Smith’s moral theory is estranged by such a suggestion. His economic theory contradicts it. And his jurisprudence explicitly pushes the other way. Maybe it won’t make sense in the end to call the Smithean solution, ‘reparations.’ But the arguments I’ve presented make clear that Smith would at least call for a serious and substantive strategy of repair. The impartial spectator can rest with nothing less.

Related Links:
Maria Pia Paganelli and Anne-Pauline de Cler, Would Adam Smith Protest in a Pandemic?
Jack Weinstein, Adam Smith on Slavery

  1. Asante-Muhammad, Dedrick, Emanuel Nieves, Chuck Collins, Josh Hoxie. “The Road to Zero Wealth: how the Racial Wealth Divide is Hollowing Out America’s Middle Class.” Prosperity Now. September 2017. See also, Matt Bruenig “Wealth Inequality Across Class and Race in 5 Graphs,” People Policy Project. March 5, 2019.
  2. See also, Jamiles Lartey, “Median wealth of black Americans will fall to zero by 2053”. The Guardian, Sep. 13, 2017.
  3. Norton, M. I., Ariely, D. (2011). Building a better America—One wealth quintile at a time. Perspectives on Psychological Science, 6, 9–12.  Cited in William Domhoff, “Wealth Income, and Power.” p.9. WhoRulesAmerica.net. Retrieved May 24, 2018.
  4. For a more scholarly analysis, see D. Boucoyannis, “The Equalizing Hand: Why Adam Smith Thought the Market Should Produce Wealth Without Steep Inequality,” Perspectives on Politics, 11:4 (2013) pp. 1051-70.
  5. For global estimates of modern slavery, see https://delta87.org/index.php. For a focus on labor, see “U.N. International Labor Organization: Profits and Poverty, The Economics of Forced Labor,” (Geneva: International Labour Organization, 2014 ).
  6. Knud Haakonssen, “The Lectures on Jurrisprudence,” in Adam Smith: His Life, Thought, and Legacy, Ed. Ryan Hanley (Princeton, NJ: Princeton University Press, 2016) p. 56.