Smith is often unfairly and poorly represented because of partial readings and selective and hasty interpretations driving agenda-promoting claims. Unbridled, no-nonsense capitalism, for example, is often advanced in the discourse of political economy and imbued with the vested authority of the Smithian imprimatur. In promotion of such unbounded capitalism, the most egregious abuses of Smith can be seen to fall into at least three related categories: that the market economy is self-regulating, that the profit motive drives rational behavior, and that self-interest alone guarantees “socially productive behavior.” These are not Smithian doctrines.

Excerpt taken from Adam Smith by Jav van Vliet, 4-9, P&R Publishing.

Smith’s thought and influence continue to reach across time and space. Contemporary learned and informed debate on political economy, role of government, economic policy recommendations, the interrelatedness and interdependence of humanity, and more, often resounds with his prescriptive and authoritative voice. He has a permanent seat in the public square.

A recent issue of The Economist carried an article on the perennial coexistence of both very rich and desperately impoverished nations. It was observed that the earliest economists studied this phenomenon and gave it cultural explanations. It was further asserted that Adam Smith in particular showed a concern for economic development, as is clear from the very title of his famous 1776 work, An Inquiry into the Nature and Causes of the Wealth of Nations. These concerns centered on the beliefs, preferences, and values of a society. Does culture help or hinder capitalism? How do the cultures of rich and poor nations compare? What are the norms by which a market economy thrives? The magazine faithfully interpreted the central Smithian premise — so often misinterpreted, misunderstood, and thus misrepresented — that “people would be self-interested, but that they would satisfy their self-interest by adapting to the needs of others.”⁶ Here we see Smith’s focus on the significance of social capital in moving economies forward. Even if the twenty-first century global economy is more complicated than was Smith’s point of reference, this central Smithian premise is a good place to start.

The relativism, moral decay, loss of foundational truth, and fractious public discourse characterizing twenty-first century democracies would benefit from attending to Adam Smith’s discourse on virtue, comprised of a sense of common humanity, justice, generosity, and public spirit. The enormous injustice foisted upon, above all, the trusting aged and pensioned and the perfect storm of events that brought about the Great Recession of 2007–9 and the human carnage that ensued bring to mind the need to return to a caring humanity. Smith was highly suspicious of powerful economic interests, such as monopolies. The various dimensions of the Great Recession — the poor judgment driving bankers’ issuance of subprime mortgages, the unmitigated greed behind the failures of the investment houses and banks (and the subsequent bailouts with public money), the ever-increasing housing prices based on artificially high values, and the associated insatiable appetite for material goods — all underscore a human nature playing fast and loose with historically honored principles of morality and ethics. It is time to be reminded of a moral code, and reading Smith is extremely helpful in that regard.

The world is still emerging from the throes of what has been judged to be the first pandemic (Covid-19) since the Spanish flu of 1918. The human toll has been tremendous — millions of lives lost worldwide, the associated decimation of economies and government finances, and the social and personal costs of mandated social isolation and distancing. Humans are social creatures, and Adam Smith has much to say about the interrelatedness and social interactions of all humanity, created to be interdependent.

Finally, the sheer volume and scope of the secondary literature on Adam Smith demands attention. The Oxford Handbook of Adam Smith⁷ and The Cambridge Companion to Adam Smith⁸ are both exhaustive tomes in their own right, more encyclopedic than quick reference guides. These two volumes alone demonstrate that Smith is not constrained by time, space, or interpretive philosophy. He still today insists to be read.

Smithian Hermeneutics

It is generally acknowledged by Smithian scholars that for the first two centuries or so after the publication of The Wealth of Nations (WN), a regular item on the menu of Smithian scholarship was what came to be known as the Adam Smith Problem (ASP), that is, the apparent contradiction between his formal writing on moral theory and that on political economy. The opening thesis of the former work, The Theory of Moral Sentiments (TMS) states that human motivation and action are very much influenced —if not dominated — by considerations of the well-being of one’s neighbor, while the central principle of the latter is that economic endeavor and optimal economic development are driven by the unambiguous pursuit of self-interest. Is there an earlier and a later Smith, as there are with so many historic individuals with voluminous literary output? What explains this demonstrable lack of inner coherence in what are commonly considered the magna opera of a key Enlightenment thinker? The problem apparently does not lie with Adam Smith, but rather with his interpreters, since few today believe that he postulates two contradictory principles of human action. This thesis loses some force when we realize that over the course of his life, Smith was continually engaged with his moral theory — considering its many editions and redactions — even in the penning of his political economy. Further, the discovery in 1958 of two sets of student notes on rhetoric and jurisprudence gave significant clarity to Smithian interpretation and provided a much- needed link in bridging the perceived discontinuity between TMS and WN. With this the ASP dissipated around the time of the republication, in 1976, of the highly acclaimed “Glasgow Edition” of his work and correspondence. This new edition of the Smithian corpus, timed to appear on the bicentenary of the release of his major work on political economy, both renewed interest in Adam Smith and democratized his work by making it more accessible.

Paradoxically, even though Smith is now more accessible, he is not necessarily more read outside the scholarly world. While many claim to be Smithian experts, it is probably more accurate to say that there is only a vague familiarity with him — or, as one biographer put it, a “popular awareness.” A typical essay in the secondary literature on Smith and his thought, or his influence or legacy, opens these days with the cliché that “many quote Adam Smith while very few have read him.” In his inimitable way, economist John Kenneth Galbraith gets at the heart of this issue when commenting on Smith’s appeal in the pro-capitalist, antigovernment circles of the Reagan administration. In their opposition to government involvement in areas “not in the service of contentment . . . the presidential acolytes in Mr. Reagan’s White House wore neckties bearing the picture of the master,” even while crassly misrepresenting Smith’s thought. “It is perhaps unfortunate that few, perhaps none, who so cited Adam Smith had read his great work,” says Galbraith.⁹

But worse than being not read is being misread. Smith is often unfairly and poorly represented because of partial readings and selective and hasty interpretations driving agenda-promoting claims. Unbridled, no-nonsense capitalism, for example, is often advanced in the discourse of political economy and imbued with the vested authority of the Smithian imprimatur. In promotion of such unbounded capitalism, the most egregious abuses of Smith can be seen to fall into at least three related categories: that the market economy is self-regulating, that the profit motive drives rational behavior, and that self-interest alone guarantees “socially productive behavior.”¹⁰ These are not Smithian doctrines.

Preeminent Smithian scholar Andrew Skinner did much to consolidate Adam Smith’s place in intellectual history by rightly interpreting him as a system builder who employed the unique approach to social science then current in the philosophical milieu of the Scottish Enlightenment.¹¹ This method is empirical-historical and is seen particularly in WN. The result of this methodology is a neat, logical, and systematic assembly of the system’s component parts within the broader historical and institutional features of WN. Smith’s expertise lies in the philosophical, historical, and economic realms — and each of these dimensions appears distinctly as a crucial component of the whole. To obtain the full force of Smith’s project and to optimize its intelligibility, this system must be considered both in its systematic entirety and in its component parts — the three dimensions of Smith’s political economy.

This entire project is constructed on the foundation of TMS with key teachings from Lectures on Jurisprudence (LJ). We now see that Smith composed the model of a commercial society progressing through four stages of socioeconomic systems. This society represents a social system facilitated by the principles of human nature — the psychological attributes — observed and explained by Smith in WN. Again, in line with the philosophical and epistemological tenets of the Scottish Enlightenment, this entire process of social development was understood and communicated deductively. Thus seen, his political economy should be considered as only part of his comprehensive philosophical system centering on the nature of human behavior.

The narrative that unfolds in the present study incorporates these ingredients, some of which receive more focused attention and elaboration. It will become evident that Smith’s life and thought represent a world order shifting into modernity. As Smith scholar James Buchan has written:

Smith stands at the point where history changes direction. During his lifetime . . . the failed kingdom of drink, the Bible, and the dagger that was old Scotland became a pioneer of the new sciences. God was dismissed from the lecture hall and the drawing room. The old medieval departments of learning disintegrated. Psychology became a study not of the soul but of the passions. Political economy was separated out of moral philosophy and began its progress to respectability and then hegemony. Smith was at the heart of these changes.¹²

This excerpt is used with permission.

6. “Hard Work and Black Swans,” The Economist, September 5, 2020, 57.
7. Christopher J. Berry, Maria Pia Paganelli, and Craig Smith, eds., The Oxford Handbook of Adam Smith (Oxford: Oxford University Press, 2013).
8. Knud Haakonssen, ed., The Cambridge Companion to Adam Smith (Cambridge: Cambridge University Press, 2006).
9. John Kenneth Galbraith, The Culture of Contentment (Boston: Houghton Mifflin, 1992), 98–101.
10. Amartya Sen, “Uses and Abuses of Adam Smith,” History of Political Economy 43 (2011): 257–71.
11. Jeffrey T. Young, “Andrew Skinner, the Glasgow Edition, and Adam Smith,” Œconomia 2–3 (2012): 365–76.
12. James Buchan, “The Biography of Adam Smith,” in Adam Smith: His Life, ed. Hanley, 3.