Ideas

The misunderstood Adam Smith gets both credit and blame for modern capitalism

The 18th-century philosopher Adam Smith is often called “the father of economics,” and sometimes “the father of capitalism.” IDEAS contributor Matthew Lazin-Ryder examines how Smith’s name has been used and abused to both defend and attack free-market economics since his death.

The 18th-century philosopher has been quoted on both sides of the economic divide

To some, Adam Smith was revered as ‘the father of economics,’ and to other’s he was ‘the father of capitalism' ⁠— it all depends what side of the economic divide you ask. (Wikimedia)
Listen to the full episode53:58

Revered as the 'father of economics' the name Adam Smith carries a lot of weight. Since the 18th century he's been quoted, misquoted, celebrated and blamed for capitalism's excesses. 

Few people have actually read his books all the way through to understand what he was really trying to say, according to Glory Liu, a post-doctoral teaching fellow at the Political Theory Project at Brown University.

"I was recently giving a talk and an economist came up to me and was like 'isn't the most common thing about Adam Smith that nobody reads him and everybody just quotes him?' And I said 'yeah', and actually there's a big story behind that," Liu told IDEAS

Adam Smith was a professor of moral philosophy. He saw himself primarily as a philosopher, not an economist. Yet his most famous book, The Wealth of Nations published in 1776, laid the foundations for the modern study of economics.

In a 1988 address about Free Trade, then-U.S. President Ronald Reagan referred to The Wealth of Nations as revolutionary, saying it "exposed for all time the folly of protectionism."

Reagan isn't the only politician to be inspired by Smith.

In 2008, The Wealth of Nations was on Barack Obama's 'essential reading' list in the New York Times. Chinese Premier Wen Jiabao carried a copy of 'Smith's book, Theory of Moral Sentiments when travelling. While organizations like the Adam Smith Institute are explicitly libertarian, social critics like Noam Chomsky claim that Adam Smith would have despised free-market capitalism. 

In 2013, then-U.S. President Barack Obama invoked Smith to argue for a higher minimum wage. 

"It was Adam Smith, the father of free-market economics, who once said, 'They who feed, clothe, and lodge the whole body of the people should have such a share of the produce of their own labour as to be themselves tolerably well fed, clothed, and lodged.' 

"And for those of you who don't speak old-English ... let me translate. It means if you work hard, you should make a decent living."


Ryan Hanley is the author of Our Great Purpose: Adam Smith on Living a Better Life.  He argues that Smith fits neither the right-wing caricature, nor the left-wing counterpart.

"What he offers is an alternative understanding of market society, and its benefits as well as its shortcomings," Hanley said.

"At a time in which both sides, left and right, seem unable to come together to acknowledge the genuine concerns that could potentially bind them together, Smith offers us an alternative way of understanding what we really want to get of a humane, decent, political order." 

Guests in this episode:

  • Glory Liu is a post-doctoral teaching fellow at the Political Theory Project at Brown University.
  • Dennis Rasmussen is an associate professor of political science at Tufts University, and author of the book, The Infidel and the Professor: David Hume, Adam Smith, and the Friendship that Shaped Modern Thought.
  • Ryan Hanley is a professor of political science at Boston University and author of the book Our Great Purpose: Adam Smith on Living a Better Life.
     


** This episode was produced by Matthew Lazin-Ryder

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