Review: The Right-Wing Abuse of Adam SmithHistorians in the News
tags: conservatism, Milton Friedman, economics, intellectual history, political economy, Adam Smith, Chicago School
Kim Phillips-Fein’s latest book is Fear City: New York’s Fiscal Crisis and the Rise of Austerity Politics.
Adam Smith’s America: How a Scottish Philosopher Became an Icon of American Capitalism by Glory M. Liu
More than 245 years ago, an unassuming Scottish tutor to a young British duke published a sprawling manuscript about how, when, and why nations become materially prosperous. At first glance, An Inquiry Into the Nature and Causes of the Wealth of Nations might not have seemed likely to become an intellectual landmark. To call it wide-ranging is an understatement; the opposite of a tightly focused, logical argument, its five volumes and 1,000-plus pages range over everything from the problems with apprenticeship to the origins of money to the “discouragement of agriculture in the ancient state of Europe after the fall of the Roman Empire.”
Adam Smith, its author, looked skeptically at the mercantile policies of the European crowns, with their focus on accumulating silver and gold. But he also viewed the rising merchant class as suspect, not believing its unctuous claims to act in the public good. The Wealth of Nations is replete with contradictory ideas; in this, the book is a bit like the social and economic order that it would help shepherd into being.
But by the late twentieth century, Smith’s ideas would become fully adopted by the right—especially by libertarians and free-market conservatives. The full complexity of his thinking was reduced to the catchphrase “the invisible hand,” even though (as intellectual historian Emma Rothschild has noted) the words appeared just a few times in his entire corpus of work, and only once in The Wealth of Nations. Thanks to Milton Friedman—who enjoyed sporting a necktie emblazoned with cameo portraits of Smith—Smith’s ideas became synonymous with free-market capitalism, even though, as many Smith scholars have observed, the thinker himself was much more ambivalent toward laissez-faire than Friedman would suggest.
How did this happen? How did Smith’s ideas become so thoroughly integrated into conservative defenses of the free market against regulation? And are these the only ways of reading his work? These are the questions at the heart of Adam Smith’s America, Glory M. Liu’s intriguing account of Smith’s reception in the United States. Her capacious monograph demonstrates the variety of uses to which Smith’s work has been put since its publication in the late eighteenth century, showing how politically contested readings of Smith always have been. In so doing, she illustrates a broader point still: The vision of the free market that emerged in the late twentieth century is itself highly specific to our historical moment—it was not the way that people (even economists) thought about economic life before and likely not the only way they will conceive of it in the future.
The Wealth of Nations was published in 1776, the same year the Colonies declared their independence, and many of those who sought to break from Britain were familiar with Smith’s work—both Wealth and his earlier writing. As Liu shows, the first thinkers to make use of Smith in America were more inclined toward his musings about politics and psychology than any of his economic prescriptions. Nor did they interpret Smith in a way that narrowly aligned him with a particular political perspective.
John Adams, most notably, drew on Smith to meditate on the political power of the rich. In an argument that echoes Smith’s in The Theory of Moral Sentiments (his first major book), Adams suggested that there was a deep tendency in human psychology to defer to the wealthy and powerful and to treat them with an esteem that was unseemly for democratic citizens. Smith had warned that the poor man was “ashamed of his poverty,” while the rich man gloried in the “attention of the world” that his wealth conferred. This genuflection, Adams insisted, was still present in the new republic. Wealth had a way (as Liu puts it) of transmuting itself into power even in a constitutional order that lacked an aristocracy.
As the nineteenth century got underway, more people emphasized Smith’s economic thought. This made sense for a new nation: One of the underlying implications of The Wealth of Nations was that countries were not rich or poor simply out of geographic luck, climate and resources, or divine reward; rather, how wealthy a nation was depended upon how it organized labor—on human will, ingenuity, and effort. But how to find the best arrangement to achieve this? Smith’s ideas became heavily politicized in the contest between the slave South and the industrializing North. Although Smith had denounced the “brutality” of slavery, the planters of the South embraced him as the “apostle of free trade,” who supported the low tariffs that made it easier to sell their agricultural products—while the new industrialists of the North sought protection to support their infant industries and accordingly were more skeptical of Smith.