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Adam Smith's identity crisis
December 3, 2001

Adam Smith's identity crisis
Scholarly tug-of-war: Left wing lays claim to founding father of the free market

Jeet Heer
National Post

Although Adam Smith is usually considered to be the founding father of right-wing free market economics, a rising chorus of left-wing academics are claiming him for their own. The scholars, who argue Smith was a radical critic of the establishment of his day, would place the famed Scottish economist next to Jean Jacques Rousseau and Karl Marx and the pantheon of left-wing thinkers.

Smith is usually associated with conservative politics. In England, the Adam Smith Institute is a bulwark of Thatcherism. In the United States, The Leadership Institute markets an Adam Smith necktie that is proudly worn by such conservative luminaries as House Majority Leader Dick Armey, former U.S. attorney-general Edwin Meese, Nobel laureate Milton Friedman and National Right to Work Committee president Reed Larson.

But in the recent book Chomsky on Miseducation, the well-known linguist and political radical Noam Chomsky describes his own world view as belonging to "the Left libertarian tradition" which he traces back to Adam Smith.

Chomsky, who has long criticized capitalism, sharply distinguishes between Smith and his conservative followers, writing that: "It's quite remarkable to trace the evolution of values from a pre-capitalist thinker like Adam Smith, with his stress on sympathy and the goal of perfect equality and the basic human right to creative work, to contrast that and move on to the present to those who laud the new spirit of the age, sometimes rather shamelessly invoking Adam Smith's name."

Chomsky's own invocation of Smith is part of a larger trend where scholars writing from a variety of left-wing perspectives argue that Adam Smith's ideas have been wrongly appropriated by free marketers. For example, the May/June issue of the New Left Review includes an article by Michael Watts, a University of California, Berkeley geographer, who notes that "in his own day Adam Smith was considered a friend of the poor, a free-thinker ... a voice for liberty -- not just of trade -- in the widest sense."

Adam Smith, born in Scotland in 1723, is widely regarded as the founder of modern economics. Prior to Smith, the dominant school of economics was mercantilism, which promoted the use imperialism and protective trade barriers to enrich wealthy imperial capitals such as London and Paris. In his landmark work The Wealth of Nations (1776), Smith made the case that free trade, rather than centralized imperial control of the economy, was the road to enrichment.

However, left-wing scholars note that advocating free trade was merely one small part of Smith's larger agenda, which was aimed at promoting economic and political equality.

David McNally, a professor of political thought at York University in Toronto and an active member of Canada's New Socialist Party, agrees there is "a more progressive dimension to Smith's work, which really has been systematically neglected in the mainstream liberal and neo-liberal tradition." McNally points out that, for Smith, prosperity was measured by a rise in living standards for the working class. This sets Smith apart from other free market advocates who believed a low-wage economy was the key to economic development. Smith believed that economic policy should be secondary to moral and ethical concerns such as equality.

"Smith had a through-going mistrust of capitalists," notes McNally. "He says over and over again in The Wealth of Nations that whenever possible they will collude to corner the market, to raise prices, and to deceive the public."

The argument that Adam Smith had a progressive dimension has been bolstered by the recent publication of Emma Rothschild's Economic Sentiments: Adam Smith, Condorcet, and the Enlightenment (Harvard 2001) a widely praised book that links Smith to the radical French intellectuals of his day, who were instrumental in creating the French Revolution. According to Rothschild, Smith was considered a radical because he was "critical of religious establishments, of war, of poverty, and of the privileges of the rich." In the years immediately following his death, Smith was regarded with such fear that four of his Scottish followers were found guilty of treason and transported to penal colonies.

But by the end of the 18th century, Smith had been appropriated by conservatives who focused on his advocacy of free trade but ignored his criticism of established institutions. More recently, the conservative interpretation of Smith has been advanced by the late Nobel prize winning economist Friedrich Hayek in his influential account of the history of economic thought, written in the early decades of the last century.

According to both Rothschild and McNally, Hayek was guilty of conflating Smith's moral defence of the market with the amoral celebration of self-interest found in other economic theories. Hayek, who was a product of Freud's Vienna, defended capitalism because it encompassed human irrationality. As an enlightenment thinker, Smith would have found such an argument alien to his sensibility. "Smith definitely does not have the sort of Hayekian contempt for human reason," says McNally.

The revisionist view of Adam Smith advocated by McNally and Rothschild is being echoed from a surprising corner: Some free market economists are willing to concede that Smith was not an advocate of pure capitalism. "Adam Smith was an advocate of free enterprise, but he qualified it very severely," says Walter Block, a libertarian professor of economics at Loyola University, in New Orleans, La. "Adam Smith should be seen as a moderate free enterpriser who appreciated markets but made many, many exceptions. He allowed government all over the place."

If they agree in their overall view of Smith, the left-wing admirers of the Scottish economist often disagree about how Smith fits into contemporary left-wing politics and economics. McNally and Rothschild are more careful than Chomsky to stress the ways in which Smith is different from the contemporary left. For McNally, Smith is the intellectual forefather of a futile attempt to make capitalism more humane.

Rothschild, a self-described "liberal in the American sense," is more ambivalent. As a historian, she resists attempts to categorize Smith in contemporary terms. "In England [my] book has been thought to have connections with New Labour, which is very strange for me since I haven't read any of the manifestoes about the third way or New Labour."

Yet Rothschild does believe Smith can teach us to have a more expansive view of economic life. Smith and his contemporaries believed discussion and debate were part of economic life, a concept Rothschild believes has a renewed relevance at a time when bartering on the Internet is replacing a world of fixed prices. For McNally, it is more a matter of placing Smith in his historical context.

"We need to read Smith historically and recognize that he is neither an apologist for capitalism nor is he an anti-capitalist critic," McNally argues. "He is ultimately in the tradition of those who aspire towards a humane, decent, polite version of capitalism. I have no problem when people like Chomsky want to point that out, but I don't think we do ourselves or our historical understanding a service if we repackage Smith in contemporary guise."


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