Among the intellectual figures who have shaped the modern world Adam Smith stands out as someone who doesn’t frighten the laity, might be positively welcomed indeed by middle England. Should the neighbours catch a glimpse of the Wealth of Nations sitting on the bookshelf alongside Thatcher’s memoirs or the latest Delia Smith, there’s no risk of ostracism. Adam Smith’s endorsement of the market economy almost guarantees his ideological soundness: businessmen and politicians of the Right assume, with an understandable complacency, that the 18th-century founder of political economy was ‘one of us’. Yet Smith’s writings provide no warrant for Conservative orthodoxy. The ideological capaciousness of the scriptures of laissez-faire capitalism bears comparison with that of the Bible itself. Take Smith’s enlistment in the cause of the poll tax. Readers of Revising the Rating System (1985), published by the right-wing Adam Smith Institute, were immediately – and reassuringly, one presumes – confronted with a text drawn from the Wealth of Nations: ‘Capitation taxes are levied at very little expense, and, where they are rigorously exacted, afford a very sure revenue to the state.’ Who would guess that Smith disliked capitation taxes, that his very next sentence linked poll taxes with countries ‘where the ease, comfort and security of the inferior ranks of people are little attended to’?
The temptation to gloat should be resisted, however. Until recently, Smith was scarcely better understood within the academy. The canonical status of the Wealth of Nations as the founding text of an independent body of knowledge known as economics long presented a major obstacle to appreciating him on his own terms. In economics departments, he was understood merely as the father of the subject, his hinterland an underexplored irrelevance. All disciplines have tended to write their own histories along narrow, teleological lines, however, and economists should not be singled out in this regard, especially when, over the past thirty years or so, they have begun to show a greater awareness of Smith’s historical context and of his wider career.
Smith’s oeuvre was for long notoriously associated with the Adam Smith Problem, the supposed irreconcilability of the Theory of Moral Sentiments (1759) with the Wealth of Nations (1776). In the Theory of Moral Sentiments our capacity for ‘sympathy’, an ability to imagine ourselves in the ethical situation of another, forms the basis of moral judgment; the Wealth of Nations, on the other hand, portrays us as beings motivated largely by self-interest. To generations of scholars this sharp contrast between the sympathetic and the selfish conjured up a hermeneutic abyss. Various strategies were employed to bridge it. Had Smith’s readers confounded prescription with description, a humanistic discussion of how man ought to be with a scientific presentation of actual economic behaviour? Or had Smith himself shirked the challenge of dealing with human nature in the round, possibly changing his mind altogether as he addressed its different aspects in separate books? Modern scholarship finds the Adam Smith Problem seriously misconceived, resting as it does on the identification of sympathy as a motive for action, rather than, as Smith intended, a basis of judgment. The dissolution of the Problem has led to his ethics being reintegrated with his economics. Even the most one-sided of Smith’s late 20th-century readers came to recognise that his economic theory rested on robust ethical foundations. The infamous Thatcherite reading list which Keith Joseph circulated to his senior civil servants when he took over at the Department of Trade and Industry in 1979 included the Theory of Moral Sentiments as well as the Wealth of Nations.
Less easy to grasp was the notion that the Wealth of Nations belonged more properly to the study of politics than to economics, that Smith himself designated political economy ‘a branch of the science of a statesman or legislator’. After all, did the Wealth of Nations not stand for laissez-faire liberalism and the banishment of the state from the marketplace? Donald Winch’s major revisionist interpretation in Adam Smith’s Politics (1978) accurately mapped Smith’s intellectual project, and the important, but far from all-encompassing, role played by political economy within his scheme of statecraft. Winch, an economist disinclined to accept disciplinary pieties, reanimated the broader 18th-century debates which helped to shape the Wealth of Nations, and the lost idioms in which they were conducted. In addition, he brought out the intellectual significance of the long-known fact that central features of the Wealth of Nations were prefigured in notes taken during Smith’s historically-grounded moral philosophy lectures during the early 1760s. Smith’s historical understanding of economic change informed his sensitivity to the science of politics. Commerce was interwoven with the institutional fabric of modern Europe, its rise and continued development dependent on the impartial machinery of legal administration and centralised government which distinguished 18th-century polities from their feudal predecessors. Opulence also had to be defended from greedy competitors, one of the factors which underpinned Smith’s preference for professional standing armies over the citizen militias cherished then (and now) by those suspicious of the state’s commitment to the protection of individual liberties. Unlike its liberal capitalist caricature, Smith’s ‘natural system of liberty’ did not exclude elements of Big Government.
The casualties of this reappraisal were not confined to the laissez-faire Right, however. Smith had been appropriated on the Left as the author of proto-Marxian incunables. Ronald Meek, in particular, prized his four-stage theory of the progress of mankind – from the age of hunters to the age of commerce via the ages of shepherds and agriculture – for its materialist interpretation of history. Winch and his followers were unconvinced. They replaced political economy with natural jurisprudence as the governing element in Smith’s science of society, with the result, in Knud Haakonssen’s work, that Smith’s stadialist account of human history is recast as a juridical story of the emergence of differing conceptions of property. In what might be construed as a further refinement to the non-existent Adam Smith Problem, Haakonssen shows that his analysis of human motivation was far from materialist. Smith, he argues, ascribed man’s drives not so much to the need for subsistence, but to the ‘delicacy’, or taste, which raised him above the brute creation.
Emma Rothschild warns us that the shadow of Right-Left divisions and the fear of revolution have haunted understanding of Smith between his death in 1790, during the early stages of the French Revolution, and the collapse of Communism in 1989-91. Only now can we begin to restore him to ‘the more innocent world’ of pre-1789 Europe, and to recapture the possibilities which the Revolution destroyed. In particular, Rothschild aims to rehabilitate laissez-faire itself in its pre-1789 form as the platform of a reformist political liberalism. Whereas we now think of Smith and his French contemporary Condorcet as ‘emblems’ of two distinct traditions, Smith of conservative laissez-faire economics, Condorcet of utopian Revolutionary Enlightenment, Rothschild recovers their shared commitment to freedom of commerce as part of a broader emancipatory project. In the 1770s and 1780s, market freedom was inextricably associated with political freedom. But in the 1790s Jacobin upheaval alienated liberal supporters of gradual change, forging a ‘two-hundred year-long coalition of laissez-faire and political conservatism’. Moreover, Rothschild aligns the consolidation of political economy as an academic discipline in the early 19th century with an ‘extended process’ of post-Napoleonic restoration. There is a wistfulness to her description of the ‘vast self-abnegation’ whereby economics departed from a Smithian trajectory, reconceptualising itself more narrowly as the science of man’s pursuit of wealth. Plagued by post-Jacobin paranoia, political economists deliberately drained their subject of its former political significance. According to George Pryme, its first professor at Cambridge, political economy was an innocuous technical tool ‘applicable alike to a despotism and to a democracy’.
By contrast, Rothschild rediscovers the ‘subversive’ project which preceded this disjunction of economic and political freedoms. Unlike his successors, who also cordoned off trade from the realm of the sentiments, Smith was not a ‘single-minded theorist of commerce’. As commerce sprang from man’s natural disposition for communication and exchange, so commercial freedom was predicated on the attainment of a range of other freedoms, civil and political. Firmly located in an 18th-century context, Rothschild’s Smith, blind to the imminent destruction of what would come to be known as the Ancien Régime, emerges as a powerful critic of the confessional fiscal-military states of 18th-century Europe, Britain by no means excluded. Smith complained of their ‘public prodigality and misconduct’, their ‘expensive and unnecessary wars’, their ‘great fleets and armies’. Nor did he care for the national prejudices which accompanied, and fuelled, warfare. Monopolies, furthermore, Smith found as unappealing in the ecclesiastical as in the commercial sphere. In place of oppressive religious establishments, he preferred the free competition of a multitude of sects. At the local level, he was keenly aware of the petty tyrannies and vexations which afflicted the ordinary person and inhibited the personal security on which commercial development rested. In particular, he disliked apprenticeship, not only for the economic inefficiencies to which it gave rise, but also for the way in which it subjected young people to the whims of a master. Smith, Rothschild reminds us, was an enemy of privilege, who, in the sixth edition of the Theory of Moral Sentiments (published in 1790), inserted a passage lamenting the corrupting effects of our disposition to worship the rich and powerful.
Rothschild marries this critique of established institutions and unwarranted privileges with Smith’s underappreciated bias towards the poor. He advocated free trade in corn, she argues, because this was less likely than tight regulation to lead to famine, but saw the importance of government intervention in other areas of the economy. Unlike his self-proclaimed disciples in today’s boardrooms, he didn’t oppose high wages for ‘servants, labourers and workmen’: on the contrary, in the second edition of the Wealth of Nations, Smith held that ‘high profits tend much more to raise the price of work than high wages.’ Above all, he hoped that a universal system of public instruction in science and philosophy would enable working people to transcend the narrow perspectives and ‘psychological inequality’ attendant on economic specialisation and the growing sub-division of labour. Here, philanthropy meshed neatly with a Humean distrust of religious enthusiasm and superstition, against which a well-educated people was more likely to enjoy some immunity. This scepticism merely reinforces Rothschild’s argument that Smith belonged, in his own times, not with the forces of conservatism who subsequently claimed him, but with the forces of progress.
It is necessary, nevertheless, to add to Rothschild’s revisionist argument a further twist, which almost subverts her case. Pre-1789 political allegiances also need to be understood on their own terms. Smith’s disciples, Pitt the Younger and Henry Dundas, whom conventional historiography labels as Tory and who led the forces of anti-Jacobin reaction during the 1790s, supported liberal reform in the 1780s, never abjured Whiggery and went on to champion the cause of Catholic Emancipation. Not only did Smith not belong to the pre-1789 Right, categories of Right and Left have no purchase on pre-1789 British party politics.
After his death, however, Smith did become a radical icon of sorts. Rothschild persuasively re-creates the early phase of the French Revolution, when he was invoked by Tom Paine and Mary Wollstonecraft, and his outlook was decried by Edmund Burke. By 1800 his ‘subversive’ persona had been marginalised. Under loyalist pressure, Dugald Stewart, whose celebrated memoir was read to the Royal Society of Edinburgh at the time of the Scottish sedition trials of 1793, rehabilitated Smith from the charge of imprudent political speculation. But there is nothing surprising about Stewart’s attempt to repackage his intellectual hero. At this stage even Jesus Christ was suspect in the eyes of the reactionary judge Lord Braxfield. When Joseph Gerrald, a radical defendant, tried to equate his actions with the reforming mission ‘of our Saviour himself’, Braxfield exploited the parallel to the full: ‘Muckle he made o’ that; he was hanget.’
Although Rothschild does not engage with Smith’s Scottish context, this is an area of enquiry where recent findings complement her interpretation. Smith belonged to a generation of modern Whigs who overturned the traditional tenets of Scottish Whiggism, in particular the doctrines of the 16th-century resistance theorist George Buchanan, which identified the nobility and clan chiefs as the guardians of Scotland’s liberties. The modern Whigs identified the nobility – with its feudal privileges and baronial jurisdictions – as the chief obstacles to the wider diffusion of civil liberties, security of property, and, by extension, incentives to economic improvement. Scotland’s rapid modernisation in the second half of the 18th century seemed to contemporaries to have followed the major anti-feudal reforms, including the abolition of hereditary franchise courts, of 1747-48. The backdrop of Scotland’s belated liberation from feudalism lends a poignancy to Smith’s discussions of how in most parts of early modern Europe overbearing feudal nobilities, backed by private armies, were transformed by the spread of commerce and their own appetites for luxury into neutered patriciates, able to maintain only a few harmless footmen.
Yet there is another side to Smith’s interpretation of the decline of feudalism which complicates his reforming credentials. To cosmopolitan Scots it appeared that most European polities, with the obvious exceptions of England and the Netherlands, had progressed to commerce and civil liberty by way of the rise of absolute monarchies, in alliance with the towns, against the forces of feudal aristocracy. The Scots were highly conscious of this process, for it seemed that they, almost alone, had remained trapped in a medieval timewarp, the nation enjoying the empty freedom of living under a limited monarchy whose powers were devolved to an oppressive baronage. Smith should not be aligned too closely with critics of the Ancien Régime. Like David Hume, he admired the way modern European monarchies, such as France, protected personal freedoms. When outlining the complex patchwork of taxes which ‘oppressed’ the subjects of the French monarchy, he felt compelled to point out that France was ‘certainly the great empire in Europe which, after that of Great Britain, enjoys the mildest and most indulgent government’. This thèse royale may appear to distance Smith from the wider world of liberal reform in which Rothschild locates him, but it identifies him all the more firmly with the forces of progress in his native land.
In his lifetime, however, as Rothschild notes, it was his connection with the irreligious Hume rather than his emancipatory political economy which won Smith most notoriety. His brief description of Hume’s cheerful un-Christian death, he recalled, ‘brought upon me ten times more abuse than the very violent attack I had made upon the whole commercial system of Great Britain.’ Rothschild rightly brings Smith’s theology, a subject on which he was very reticent, to the centre of her discussion. In particular, she asks what he meant by the ‘invisible hand’. Should we read a Christian – or Stoic – providentialism into this quintessentially Smithian trope? Certainly not, argues Rothschild, in a masterly and learned piece of revisionism, for ‘Smith himself does not seem to have attached great importance to the invisible hand, and his three references to it are all cursory.’ Instead, she demonstrates that the invisible hand belongs in large part to the 20th-century reinvention of Smith. Until the late 19th century, the subject was barely visible in writing about economics. To Smith himself, she argues, references to the hand had constituted nothing more than a ‘mild and ironic joke’. Here Rothschild displays an acute sensitivity to Smith’s classical preferences, in particular his decided admiration for Lucian (c.120-180), a Greek satirist of pagan religiosity who used irony to deflate Stoic conceptions of providence. Stoicism currently looms large in interpretations of Smith, but Rothschild takes care to plot the limits of his ‘eclectic’ adherence to Stoic doctrines.
This patient work of historical reconstruction constitutes the core of Rothschild’s book, but it is bracketed by present-day concerns. If Smith reckoned the providential order of the Stoics a delusion, his social philosophy can more easily resist assimilation to Hayekian notions of spontaneous order; if he had no confidence in the ‘timeless wisdom of institutions’, then he can be more easily detached from Burke, with whom he has been inappropriately yoked as co-founder of modern Conservatism. Unlike Winch and an earlier cadre of iconoclasts, Rothschild does not believe that ‘to look at 18th-century political economy in the setting of the 18th century is to renounce the now unfashionable possibility of using the past to illuminate the present.’ She draws parallels between the openness and fluidity of the pre-1789 and post-1989 worlds, which, she contends, share an appreciation of the ‘endless uncertainty’ consequent on commercial freedom. Smith’s elevation as an icon of anti-establishment raillery, individual independence and permanent economic insecurity strikes me as no more implausible than the accepted depiction of him as an apostle of Thatcherism. But he seems fated never to escape the clutches of the politicians. Has Smith been liberated from the shackles of the old politics, only to be press-ganged in support of the Third Way?