Adam Smith · Economics
The Adam Smith who distrusted businessmen, championed the poor, and assigned the state essential duties - far from the free-market absolutist of legend.
Adam Smith is invoked as the patron saint of free markets, his name attached to think tanks and deregulation campaigns, his ‘invisible hand’ quoted as proof that the market should be left entirely alone. But the actual Smith - a moral philosopher who wrote far more about ethics than economics - held views that would surprise many who claim him. He distrusted businessmen, worried deeply about the poor, supported significant roles for government, and never used the phrase ‘laissez-faire’ at all. The real Smith is more interesting, and more humane, than his caricature.
Smith was no anarchist and no absolutist about leaving everything to the market. He explicitly assigned the state essential duties: national defence; the administration of justice (protecting people and property, enforcing contracts); and - crucially - the provision of public works and institutions that benefit society but that no private individual would find profitable to provide, such as roads, bridges, and, notably, education. He even supported public education partly to counteract a danger he saw in his own celebrated division of labour: that workers doing the same tiny task all day would become mentally stunted, ‘as stupid and ignorant as it is possible for a human creature to become.’
Perhaps the deepest surprise of the real Adam Smith, for those who know only the caricature, is the warmth of his concern for the labouring poor - the conviction, running through both his books, that the whole point of a prosperous economy is to improve the lives of ordinary working people, and that a society which fails to do so is a failure however rich its elite. The man supposedly indifferent to inequality wrote that ‘no society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable,’ and added, with unmistakable moral force, that it is ‘but equity’ that those who feed, clothe, and lodge the whole body of the people should themselves have a tolerable share of the produce of their own labour - that they should be decently fed, clothed, and lodged. He measured the success of an economy not by the splendour of its rich but by the condition of its poor.
This concern was not sentimental decoration; it shaped his economic judgements. He championed high wages, arguing both that they were simple justice and that a well-paid, well-fed workforce is more industrious and productive than a half-starved one - directly rejecting the prevailing view that the poor must be kept poor to keep them working. He noticed and condemned the unequal bargaining power between masters and workers. He worried that the division of labour, for all its productive miracles, threatened to degrade the workers who performed its narrow, repetitive tasks, and he wanted public education to remedy it. And he was sharply aware that laws and institutions are too often arranged for the benefit of the rich and powerful against the poor and weak - observing acidly that civil government, ‘so far as it is instituted for the security of property, is in reality instituted for the defence of the rich against the poor.’ This is not the voice of an apologist for wealth and privilege; it is the voice of a moral philosopher who valued commerce precisely because, framed by justice, it could lift the condition of ordinary people - and who judged any economic order, in the end, by whether the wealth it produced reached the many or was hoarded by the few. The real Smith wanted markets to serve the poor, not to excuse their poverty.
This is the opening of the lesson. The rest — the dialogue, the primary source, and the recall — is in the app.
You learned that Smith is widely misread as a market fundamentalist. Explain his actual views on merchants and on the proper role of government, in your own words.
Leads to John Maynard Keynes.
Begin this lesson →epoché — a humanities education that remembers you.