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Stuck With Adam Smith

Glory M. Liu

In 1876, free traders gathered to celebrate the 100th publication anniversary of Adam Smith’s The Wealth of Nations. In New York, public figures, journalists, academics, and Smith enthusiasts gave toasts to “commercial freedom, or the unfettered intercourse of nations” while honoring Smith’s magnum opus which many considered “among the masterpieces of genius.” In London, another political economy fete featured speakers exalting the “immortal” Adam Smith while lamenting the perception that his doctrine of free trade was still underappreciated.

Fifty years later, in 1926, a series of lectures at the University of Chicago marked the sesquicentennial of The Wealth of Nations. Another half century on, in 1976, scholars from across the globe gathered in Glasgow, Scotland to honor the book’s bicentenary. It was at that gathering that the American economist George Stigler (in)famously remarked, “I bring you greetings from Adam Smith, who is alive and well and living in Chicago.” That same year, in Cambridge, Massachusetts, a throng of economists sang a Smith-themed hymn set to the tune of “Rock of Ages.”

It's easy to chuckle (and/or cringe) at the pomp, circumstance, and kitsch of these Smithfests of yore, to treat them as quaint and unserious but ultimately harmless. Having recently participated in a series of events related to the Adam Smith Tercentenary in 2023—and not without grabbing handfuls of enameled lapel pins, postcards, tote bags, pens, ties, scarves, drinking Smith-themed cocktails, and of course, taking the obligatory selfies with Adam Smith statues in Scotland—I love a good Smith party. But in all seriousness, as someone who has written about the history of reading, interpreting, debating and yes, celebrating, Adam Smith in America, it’s difficult for me to avoid reflecting on broader historical meaning of these moments in which Smith’s life, thought, and legacy are thrown into high relief. Why are we still celebrating, not to mention, reading, the works of Adam Smith?

Matson’s essay, “Why We Read Adam Smith,” outlines several reasons why we read and ought to read Smith today.

First, reaching back into the past for wisdom is an unavoidable, almost instinctive habit. But rather than simply acknowledging it as instinctive, we ought to reflect on how that habit reveals continuities in our traditions of thought.

Second, reading Smith to understand what he could be legitimately said to have meant or intended inoculates us against “Smith abuse.”

Third, reading works like Adam Smith’s can equip us with the practical wisdom needed to tackle big questions that span disciplinary boundaries.

And finally, Smith’s works teach us something about the human condition.

I largely agree with the spirit of these reasons, but I want to press on a few points of disagreement, or at least differences of interpretive method. In doing so, I make the case for reading Smith—and readings of Smith—historically. Reading Smith historically doesn’t mean relegating Smith to the past, however. In addition to situating Smith’s writings within the appropriate historical, political, and intellectual context, reading Smith historically also means admitting that the meaning and intention of Smith’s ideas might be quite different from what we expect or want them to be.

Not all Smith use or abuse is the same. As a Smith scholar, I’m less interested in rating people’s (mis)quotations or (mis)interpretations on some scale from best to worst. Rather, I’m more interested in shedding light on the different motivations, circumstances, and forces that lead people to engage with Smith in a wide variety of ways. In doing so, the goal isn’t necessarily to “inoculate” myself (or others) against abuse, but to gain a critical awareness and understanding of what we, Smith readers, are asking Smith to do for us.

Political figures and public intellectuals have long invoked Smith’s authority and quoted from his works. In the 19th century, both free traders and protectionists used Smith as a symbol for their own partisan positions. Free trade advocates argued for the soundness of a national economy built on the free movement of goods, and they frequently based their arguments “upon the authority of Adam Smith...who...has done more to enlighten the world of political economy than any man of modern times.” Free trade skeptics and hard-line protectionists also appealed to Smith’s authority, claiming that “Free trade as an economic science, in the judgment of the world, is a dismal failure,” and that “even the highest authority on free trade” admitted that a decrease in manufacturing productivity due to trade barriers would diminish the home market. These appeals to authority use Smith as little more than a mascot, a symbol with whom one can align oneself with or distance oneself from.

We continue to see these genuflections today across the political left, right, and center. Smith’s name is dropped for recognition and a good soundbyte. Arthur Brooks, former president of the American Enterprise Institute, once argued that the Theory of Moral Sentiments was a book about “having the right morality” to “earn the right to free enterprise, to have free economics.” Just this past December, in an effort to avert a national railway strike, then-Speaker of the House Nancy Pelosi paid lip service to Adam Smith as the author of another book, The Theory of Moral Sentiments, which was about “a more compassionate capitalism” in which “the strength of our economy and the strength of our workers go hand in hand.” Setting aside whether one agrees with Brooks or Pelosi’s politics, clearly their intention in these instances is not to advance a serious interpretation of Smith’s ideas or make a claim about his authorial intentions.

Meanwhile, scholars have also been using Smith for their own particular purposes. Especially—though not exclusively—in academic economics, Smith is often conscripted into the project of constructing an intellectual tradition. Again, these tradition-making projects come in many shades. The “mainline tradition” that Matson alluded to treats Smith as an originary figure who had insight into the creative power of markets, the epistemic limitations of central planning, and the importance of institutions like private property.

But claims about the economic tradition that Smith allegedly founded or to which he properly belongs have also been disputed. In the late nineteenth century, for example, a generation of historically-minded economists argued that Smith had to be historicized in at least two ways. Not only did Smith’s ideas have to be understood as products of their time—Smith’s call for trade liberalization was part of his attack on corporate monopoly and the mercantile system of Great Britain, not a universal proposition—but Smith himself was a historical thinker. But historicizing Smith was more than a purely methodological claim for these economists; in making Smith part of the “new school” of economics, they were also trying to make the case that Smith was sympathetic to labor, and would have advocated for a more active state to improve social outcomes.

To be sure, though academic economists have played an outsized role in shaping Smith commentary, they’re not alone. Political theorists, philosophers, literary scholars, and many others in the most recent wave of revisionist scholarship have produced a wide variety of Smiths, too, some of which have had the misfortune of being labeled “Left” or “Right.” My point is not to adjudicate among these many Smiths, to sort out the “good” ones from the “bad” ones, to call out his readers as either worthy legatees or shout “liar, liar, pants on fire!” Instead, I want to make sense of the patterns underlying these uses of Smith.

One feature that many of these uses have in common is that they admit a degree of ahistoricism. The politician quoting Smith disregards context—textual and historical— for rhetorical effect and intellectual legitimation for his or her political position. In these instances, what matters is not what Smith stood for in his time, but what Smith can stand for in our time. In the cases where Smith is assimilated into a particular tradition in economic science, a transhistorical continuity is presumed: there are stable, universal principles of economic science that some people in the past—like Adam Smith, for instance—had special ability to see. Whether Smith could have reasonably endorsed the positions he has gotten enlisted in isn’t so relevant in many of these cases; what is relevant is his present utility judged by an ideal-typical version of what people want Smith to have believed.

I don’t think politicians are wrong per se to quote Smith; nor are economists or philosophers wrong to construct traditions of thought through and around his ideas. But the historian in me is still convinced that we can and should read Smith differently, and more precisely, read him in a way to better understand how and why he thought the things he did, and how and why some of his ideas nevertheless still speak across the time and place in which they were originally conceived.

Take just one small example. Book IV of The Wealth of Nations contains a wide range of topics in political economy for which Smith is (in)famous—everything from Smith’s critique of the mercantile system, his analysis of colonial relations, his reconstruction and critique of physiocracy, and of course, the mention of the invisible hand. For many readers, this is where Smith’s arguments in favor of free markets culminate. And if one approaches Book IV with that preconception, it’s easy to pick out the bits and pieces of economic insight to support that position.

When I teach this part of The Wealth of Nations, however, I start with the following question: what is the “commercial system of Great Britain” at the time Smith is writing? What is he seeing in the world he lives in, and how is that informing his line of inquiry?

Smith was living in a time and place in which the globe was becoming increasingly connected by intricate networks of commerce. But many of those networks were created if not dominated by a very small group of private merchant corporations, the British East India Company (EIC) being the most notorious. By the time Smith was starting to write The Wealth of Nations in the 1760s, the EIC controlled 50% of global trade.

Moreover, its raw economic power was matched by its political power. In 1757, the EIC had become de facto ruler over the Indian subcontinent—note, as a private corporation, not as a government—ruling over some 100 million subjects. With their own army, ambassadors, currency, and privileges guaranteed by the British Crown, the EIC was the embodiment of corporate rule at home and misrule abroad. Smith was unrelenting in his criticism of the EIC throughout The Wealth of Nations. “A company of merchants,” he wrote, “seems incapable of considering themselves as sovereigns, even after they have become such. Trade, or buying in order to sell again, they still consider as their principal business, and by a strange absurdity, regard the character of the sovereign as but an appendix to that of the merchant…”

The point here is not to just acquaint oneself with facts and figures. Rather, it is to underscore that Smith bore witness to the transformation of the relationship among commerce, wealth, power, and sovereignty at both local and global scales—a transformation that demanded a new type of social, political, and economic theorizing. And while these changes were particular to the time and place he lived in, they are nevertheless relevant to the way we attend to contemporary versions of the questions and problems that he was implicitly raising in The Wealth of Nations: Who or what has power in an age where relations among people and nations are increasingly entangled in impersonal market forces? How do companies become sovereigns, and what are the consequences of that kind of rule? What is the relationship between local and global commerce, local and global politics? And what does rule by and for merchants do to economic growth? Today, as we grapple with how multinational corporations and tech giants are challenging the boundaries of governance, Smith’s questions seem more timely—and timeless— than ever.

Reading Smith in this way can illuminate the power of Smith’s ideas to travel across time, even if he didn’t intend them to. It reveals that Smith’s most profound insights cannot simply be distilled into a list of axioms or timeless principles; what Smith generated was a line of inquiry, a set of questions and problems born in a world where commerce was reshaping the nature of power and sovereignty. Matson is right that we should still read Smith. But the way we read Smith matters, and the lessons we take away can tell us as much if not more about ourselves as they do about Smith himself.

Glory Liu is Assistant Director for the Center for Economy and Society and Assistant Research Professor at the SNF Agora Institute at Johns Hopkins. She is author of Adam Smith’s America: How a Scottish Philosopher became an Icon of American Capitalism (Princeton, 2022).

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