The Myth of Adam Smith

Citation

Kleer, R.A. (1999), "The Myth of Adam Smith", International Journal of Social Economics, Vol. 26 No. 5, pp. 229-233. https://doi.org/10.1108/ijse.1999.26.5.229.5

This work gathers the fruits of nearly two decades of scholarship in the history of economics. It reprints eight articles on various aspects of Smith′s Wealth of Nations (a ninth is incorporated along the way). While large chunks of the original articles can still be found intact, they have been substantially re‐edited for this volume. And Rashid has added an introductory chapter and a conclusion, both entirely new, in which he spells out some of the wider concerns that have motivated his work on Smith over the years.

In the field of Smith scholarship, this book is uncommon in a number of ways. First, it concentrates almost exclusively on Smith′s economic analysis; virtually every other book written on Smith in the past decade or so has focused on his political or moral philosophy, even when discussing the Wealth of Nations. Second, it demonstrates a very wide acquaintance with the details of eighteenth‐ and early nineteenth‐century English (and European) politics and institutions, contemporary economic books and pamphlets, and the economic‐policy debates and legislation of the period. Among historians of economics this makes Rashid almost unique; even compared to intellectual historians, his knowledge of the economics pamphlet literature of the period is unequalled. Indeed, one could learn a great deal from this book just by reading the many, often extensive citations from the works and correspondence of Smith′s contemporaries. Finally, Rashid has an active dislike for Smith and his Wealth of Nations. Smith scholars as a rule admire the man and his magnum opus, and so find Rashid′s attitude rather unsettling.

Over the years, Rashid′s numerous articles on Smith have had one unrelenting aim: to prove that his reputation as an economist is vastly overrated, that he has little claim to be regarded as the founder of modern economics, and that the Wealth of Nations is not a good or particularly important book. Rashid builds his case methodically; each chapter brings a new charge against Smith. One of the ideas for which the Wealth of Nations is most celebrated, the division of labour, was widely known before Smith′s time and cannot be regarded as his intellectual property. He did not develop a very good theory of supply and demand ˆ the principal analytical device on which his claim to the paternity of modern economics rests. The factual foundation of the Wealth of Nations is very weak; Smith was not a good empirical scientist but more of an a priori theorist. The canons of taxation laid out in Book V were already well‐established by predecessors like Locke and Joseph Massie. Smith was simply wrong in asserting that government supervision of the grain trade (designed to prevent food shortages and famines) was always unnecessary and counter‐productive. If Smith became a world‐famous economist, it was not on account of the analytic merits of his work but from a perfectly contingent alignment of favourable political circumstances and his own efforts at self‐promotion. Smith saddled nineteenth‐century economists with a distorted and self‐serving view of the history of their discipline, which it took over a century to correct. And he failed to give proper credit to his intellectual predecessors, even by the looser standards of his own day.

Taken in one large dose like this, Rashid′s tone comes across as rather peevish. And he can be caught reaching to make a point, artfully stacking the deck against Smith, or indulging in rather uncharitable readings. Surely it is somewhat extreme to find fault with Smith, for instance, for having failed to anticipate the French Revolution (p. 64); revisionist historians of that and other great revolutions maintain it reflects a mistaken conception of the nature of human history to suppose that they were inevitable or predictable. Still, it must be granted that Rashid renders considerable service in questioning the great shibboleths of Smith scholars. He is surely right to question the careless manner in which they have credited an endless array of virtues and achievements to Smith. Their paeans are often merely a backhanded way of attaching more esteem to an intellectual trend they happen to value and have little or nothing to do with the actual historical record. An encounter with Rashid′s very different viewpoint, usually based on a more solid consideration of the evidence, serves as a useful corrective.

Nevertheless, at one very important level I cannot help being disappointed with this book. He complains in the opening paragraph that “[h]istorians of economic thought have not placed Smith in context” (p. 3) and promises to do better. For many historians of ideas, the point of this exercise would be to improve our understanding of the text: to be able to apprehend better the subtle nuances of meaning and the specific problems and ways of thinking to which it was a response. But Rashid studied the context with a different purpose: to show that Smith′s economic ideas were not new and sometimes were even inferior to those of his predecessors and contemporaries. At times this objective is completely at odds with the goal of understanding Smith′s text better. Consider just two examples. Rashid alleges that “[m]uch of the inconsistency and meandering of the Wealth of Nations becomes readily explicable” (p. 9) once we suppose that Smith was never really an economist, and used economic theories only episodically to support a broader, philosophical programme. Chapter three, “Adam Smith and the market mechanism”, is dedicated to proving this in great detail. But it has always seemed to me that the appearance of inconsistency and disorganization is misleading; when one understands better the specific economic arguments to which Smith was reacting, the book suddenly begins to look much more well organized and pointed (the famous chapter on wages is a good example). Similarly, in order to prove that Smith was a poor empiricist, Rashid points to his “almost condescending” tone and “considerable sarcasm” toward “projectors” or entrepreneurs. This, he argues, is one more sign that Smith failed to appreciate the nature of the industrial revolution that was unfolding all around him. But suppose we tried to understand the Wealth of Nations as a careful study of contemporary British politics. The pre‐eminent political problem of the day, as far as Smith was concerned, was the penetration of commercial concerns into parliamentary affairs. In this context, his unkind remarks about projectors may be understood as a natural antipathy toward people whom he regarded as the main source of the problem. And should not Smith be regarded as particularly observant, even penetrating, for having seen through the rhetoric and ideologies that painted the legislative and military pursuit of commercial dominance as a matter of the highest public good?

It is not that Rashid is incapable of this more rewarding kind of intellectual history. In fact, the chapter entitled “Adam Smith′s rise to superior fame”, by far the longest in the book, is an excellent example of the genre. There Rashid challenges the common myth that Smith instantly became the leading authority in matters of economic policy and analysis on publishing the Wealth of Nations. Building on earlier studies by Willis and Teichgraeber, he demonstrates that it took a quarter century or more for Smith′s reputation to be established. In trying to explain the timing of his rise to fame, Rashid draws on a wide array of political and sociological factors: the personalities and tastes of the English and Scottish oligarchies, Smith′s general political outlook and his connections with patrons and political parties, the political values of the Radical Whigs in England, the shifting needs and priorities of British merchants and manufacturers, the impact of the French Revolution on British and European politics and institutions, and much more. Rashid′s account suffers from his eagerness to take Smith down yet another peg; a more dispassionate inquiry would probably have given more credit to Smith′s own achievements. In updating the original article (first published in 1982) for this book, he overlooked a fine essay by Emma Rothschild (Economic History Review, 1992) that pursues the very same themes to somewhat different conclusions. And specialist historians of the period could pick several large holes in the details and even some of the broad premises of his argument. But the chapter is nevertheless illuminating and thoroughly inspiring, suggesting many new lines of investigation for historians of economics.

The concluding chapter helps to explain why Rashid hasn′t applied his many scholarly talents more in this vein and has instead settled for the less rewarding calling of casting stones at Smith. There he lists several reasons why he thought it important to challenge Smith′s reputation so vociferously and repeatedly. First, the predominant hagiographic approach to that author subscribes to “the ‘hero view of history’, which says that great men do magnificent things and put posterity in their debt” (p. 210). This outlook has contributed to an implicit belief that economic analysis is really beyond most of us and descends to the masses from the great men on high, like Smith. Were his presence less prominent in the history of eighteenth‐century economic theory, we could more readily see that useful and insightful economic ideas spilled forth from people in all walks of life. This would help us to recognize that economics is not a matter for specialists, but a field of knowledge that would benefit from widespread public participation. Second, Smith′s universalist approach to economic analysis started a trend that has been particularly harmful in development economics, leading to the application to smaller countries of principles manifestly unsuited for them (some of the policies of the IMF and World Bank come immediately to mind). Third, the invocation of Smith′s name has helped to exclude the visible hand of government from situations in which it could have proven useful. “Smithian economic policy prescribes only justice and public works as the domestic concerns of the state. However if a state can be found with the integrity not to make justice a business, with the power to enforce its will, with the foresight and the benevolence to introduce only needed public works, then we can probably rely on such a government to interfere judiciously in economic affairs” (p. 213). Finally, in putting forward a labour theory of value, Smith gave a dangerous foothold to socialism, making it harder for subsequent generations to grasp the mutually‐beneficial nature of a capitalist‐style organization of economic life.

With the possible exception of the fourth, most Smith scholars share these concerns. Indeed, they motivate much of the work that has been going on in this field for the past two decades, not least by those historians who persist in hero worship. That Rashid chose to translate these principles into action by attacking rather than praising Smith illustrates one of the stranger aspects of the human mind ˆ that one and the same name or proposition can signify very different things to different people. Certainly it is possible to advance toward the same goals by other routes than his, ones less antagonistic and confining.