Adam Smith Society Opening Blog

Adam Smith Society Opening Blog

5 February 2017

1776. Most Americans will immediately think of the Declaration of Independence as the seminal document written in this year that has profoundly shaped the intellectual trajectory of modern society as we know it. There was a second document, however, that has arguably done as much, if not more to shape our thinking of political economy and the role of man in society. That is An Inquiry into the Nature and Causes of the Wealth of Nations by Adam Smith. We, of the Michigan Ross chapter of the Adam Smith Society, believe it is worth exploring the philosophical and ideological underpinnings of not just Smith’s magnum opus, but also his greater body of work and the fantastic advancements of ideas in the circles in which he traveled at the time in which he lived.

Those who have even passing familiarity with Smith’s work may be familiar with such concepts as “the invisible hand”, or the role of self interest in promoting societal good as illustrated by the quote “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” Smith, however, was no cold-hearted miser with a transactional view of the world. He saw our behavior in the marketplace as a large part of the story of human behavior, but he also understood that many other factors motivated mankind. Those who have more than a passing familiarity with Smith also know that the work that preceded Wealth of Nations by 17 years, titled The Theory of Moral Sentiments, dealt with how humans regard themselves as moral beings, where charity and benevolence originate, and the nature of our feelings towards what is right and wrong. Smith only came around to laying the groundwork that made him the father of modern economics after grappling with moral issues and human societal relations for decades.

Indeed, Adam Smith had many contemporaries grappling with these ethical, philosophical, and moral questions. Although Smith’s frameworks, concepts, and conclusions were his own, these 18th century thinkers were mostly seeking answers to the same questions. What is liberty and who grants it? What emphasis should be placed on equality? How do you balance liberty with social order?[1] David Hume, Jean-Jacques Rousseau, John Locke, and Voltaire[2] would all come up with radically different and possibly opposing answers to these questions. It is through the exercise of asking these questions, however, that great advancements were made in how people came to view themselves in relation to their livelihood, their society, their government, and the wider world that was quickly getting smaller by the day.

While this is all well and good and an interesting philosophical exercise, one may wonder what this has to do with us today. I would like to share a quote taken from lecture notes while Smith was a professor at the University of Glasgow in 1755:

Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism but peace, easy taxes, and a tolerable administration of justice: all the rest being brought about by the natural course of things.

 This is a useful starting point from which to view how best to obtain the ordered liberty on which society thrives. I personally find it very compelling and it informs the way in which I view policy today, from border adjustment taxes to occupational licensing, from criminal justice reform to agricultural subsidies.

That being said, the above quote is not all that controversial. I could see any politician today on either side of the aisle translating that into tweet form and having broad agreement. His statements immediately afterward, however, may prove somewhat more divisive:

All governments which thwart this natural course, which force things into another channel, or which to arrest the progress of society at a particular point, are unnatural, and to support themselves are obliged to be oppressive and tyrannical.

 What does this mean? What constitutes “thwarting”? Is “oppressive and tyrannical” an overstatement? Smith would likely have a lot to disagree with on both sides of the political aisle as evidenced by this quote. We at the Adam Smith Society would love to have the conversation. Are Smith’s thoughts outdated? Could he not have anticipated our current world, the rise of globalism on a massive scale, or the way in which society and government have evolved? I would personally argue no, but I believe it is a conversation worth having. We at the Adam Smith Society at Michigan Ross will strive to sponsor events on campus that foster this conversation. We hope that you will join us.


Matthew Maughan

President, Adam Smith Society, Michigan Ross chapter.

 

[1] The structure of these questions is borrowed from the introduction to a collection of writings called What Adam Smith Knew: Moral Lessons on Capitalism from its Greatest Champions and Fiercest Opponents Edited and Introduced by James R. Otteson, Encounter Books, 2014.

[2] A one word pen name, his birth name was actually Francois-Marie Arouet

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