OCTOBER 4, 2010.
A Wealth Of Ideas
A mind that ranged over politics, law and ethics—and produced the definitive defense of free markets.
By JEFFREY COLLINS
Having dined with Adam Smith on a number of occasions, Samuel Johnson once described him "as dull a dog as he had ever met with." Smith's biographers might be inclined to agree. The most celebrated political economist in history led a remarkably quiet life. Born in the sleepy Scottish port of Kirkcaldy in 1723, he was raised by his widowed mother and lived with her for much of his life. He studied at the University of Glasgow (which he loved) and at Oxford (which he loathed). Only once in his life did he travel outside of Britain. He wrote few letters and burned his personal papers shortly before his death in 1790. Even his appearance is a mystery. The only contemporary likenesses of him are two small, carved medallions. We know Adam Smith as we know the ancients, in colorless stone.
It is a measure of Nicholas Phillipson's gifts as a writer that he has, from this unpromising material, produced a fascinating book. Mr. Phillipson is the world's leading historian of the Scottish Enlightenment. His "Adam Smith: An Enlightened Life" animates Smith's prosaic personal history with an account of the eventful times through which he lived and the revolutionary ideas that inspired him. Adam Smith finally has the biography that he deserves, and it could not be more timely.
Smith's fame, of course, was made by the "Wealth of Nations." The book appeared in 1776, a good year in the annals of human liberty. Its teachings are so fundamental to modern economics that familiarity often dulls our appreciation of its brilliance.
Smith constructed his masterpiece on a few ingenious insights into the workings of a commercial economy. Where his contemporaries calculated national wealth in terms of gold or agricultural output, Smith measured "opulence" by the flow of consumable goods. The division of labor would accelerate the production of goods, he argued, and render manufacture ever more efficient. The division of labor itself was best determined by markets of self-interested individuals. Markets, in turn, operated best when freed of regulation and interference, thus allowing the value and price of both commodities and labor to align themselves.
Each conclusion led inexorably to the next. Smith relentlessly vindicated the value of free markets and of the individual economic freedom that made markets work. As a manifesto against protectionism, economic planning and grasping rentier behavior, the "Wealth of Nations" has never been bettered. Still, the book is often read in arid isolation, as merely a prophetic anticipation of more modern economic theory. Mr. Phillipson, by contrast, vividly describes the historical circumstances that shaped the "Wealth of Nations."
Smith's favorable account of luxury and consumption spoke for Britain's increasingly affluent middle class and its delight in the dawning age of manufactured gadgets. His attack on monopolies directly targeted at the era's crony capitalists, notably the oligarchic tobacco kings of Glasgow. His rejection of protectionism was partly an assault on the British Empire itself, which was struggling to keep its burgeoning American colonies pinned under the imperial thumb.
Adam Smith: An Enlightened Life
By Nicholas Phillipson
(Yale, 346 pages, $32.50)
Mr. Phillipson also provides a lucid account of Smith's broader philosophical ambitions, which were much more expansive than the "Wealth of Nations" alone might suggest. Smith's famed lectures and his other great book, "The Theory of Moral Sentiments" of 1759, ranged widely over politics, law, ethics and aesthetics. Inspired by his friend, the skeptic David Hume, Smith swept aside all timeless or divine notions of moral and political order. In his view, society emerged from the historical experience of a needy species driven to create conditions in which property, affection and opinions alike could be stably exchanged. Manners and morals, like goods, thus had an "economy." The material and moral economies were, indeed, linked, in that a rising material prosperity helped to encourage civility and taste. Mr. Phillipson reconstructs Smith's intricate system with erudition and imagination, often from student notes of Smith's long-lost lectures, which he had delivered in both Glasgow and Edinburgh.
Modern conservatives are fond of claiming Smith as an intellectual forebear, but they are only partly right to do so. Like Hume, Smith was a religious skeptic. Morality, to him, was not natural or divine law but a set of mere conventions, a law we give to ourselves. Unlike Edmund Burke, who knew him, Smith scorned the European aristocracy and had little time for English constitutional traditions.
Nevertheless, Smith's conservative side does emerge in Mr. Phillipson's biography. As a reformer, Smith valued prudence and gradualism. Statesmen, he wrote, should establish not "the best system of laws" but the "best that the people can bear." He found the French taste for revolutionary cataclysm repellent. And if Smith's economic ideas affronted the paternalism of the traditional Tory party, they were eventually taken up by William Pitt the Younger, the late-18th-century prime minister who is now seen as one of the fathers of free-market conservatism.
Smith's was a complex legacy, and in reading about it one is struck by its uncanny relevance. When the "Wealth of Nations" appeared, Britain staggered under massive war spending and a colossal national debt. Bad loans blighted banks across the country. Several had collapsed, leaving their investors ruined. Gold bugs abounded. In the face of international competition, well-connected manufacturing interests clamored for protective tariffs. The times called for Adam Smith, and his theories worked to stabilize and liberate the British economy as it entered the industrial age. If we need a reminder of his achievements, and of late it appears that we may, Mr. Phillipson has given us a superlative one.
Mr. Collins, a professor of history at Queen's University in Kingston, Ontario, is currently a visiting fellow at Cambridge University.
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