And now for something rather different.
Not infrequently we’re asked how, or why we named our firm Adam Smith, Esq. The short and true somewhat beside-the-point answer is that it’s a bit of wordplay on the intersection of economics (Adam Smith) and law (the historically inaccurate Esq.).
But more deeply, it reflects a profound admiration for Adam Smith himself. I confess that the thought has crossed my mind that he did more for the greatest mass of humanity–in terms of articulating the levers of economic progress and prosperity, as reflected in the incalculable growth of GDP per capita worldwide since his work through today–than any other human being in recorded history. A large claim, yes, but I think a plausile one.
Be that as it may, his name and reputation are often traduced in the name of serving interests he would view harshly and with hostility. To me, ample proof of this is simply the argument of his Theory of Moral Sentiments, which he published in 1759, 17 years before the of course much more famous Wealth of Nations. The timing tells you everything you need to know: “TMS” provided the ethical, psychological, and philosophical underpinnings to “WN.” The heart of Smith’s argument in TMS is that human beings can, and should, spontaneously and involuntarily imagine themselves experiencing what others are going through, with an act of the “spectator’s” imagination:
As we have no immediate experience of what other men feel, we can form no idea of the manner in which they are affected, but by conceiving what we ourselves should feel in the like situation. Though our brother is on the rack, as long as we ourselves are at our ease, our senses will never inform us of what he suffers. They never did, and never can, carry us beyond our own person, and it is by the imagination only that we can form any conception of what are his sensations. Neither can that faculty help us to this any other way, than by representing to us what would be our own, if we were in his case. It is the impressions of our own senses only, not those of his, which our imaginations copy. By the imagination, we place ourselves in his situation …
Perhaps the pithiest expression of this thought is here:
How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it.”
Fair enough, and amply familiar to students of Smith.
But the question looms whether Smith’s thinking can or should serve as an apologia for defenders of the predatory aspects of untrammeled capitalism–because it’s invoked to serve just that purpose widely, loudly, and promiscuously. This should be an embarrassment to those so twisting it, but evidently it has not been.
Based on what Smith himself plainly wrote about the innate equality of all human beings (including his stalwart opposition to slavery, mercantilism, and colonialism [he favored the American side in the American Revolution]), I have never believed other than that he would be classified today as a committed democratic egalitarian, in favor of generous expansion of human and civil rights, strong and effective limits on “rent-seeking” from government authorities, unearned market power, and insanely unequal compensation and wealth.
Still, I have until now hesitated–for 20 years since starting Adam Smith, Esq.–to offer up publicly any defense of what I see as the True Adam Smith.
Finally I have chanced upon a mechanism for doing that, and I am seizing the opportunity.
What follows comes from a site new and unfamiliar to me, “Liberal Currents,” which describes itself thus:
Liberal Currents offers discussion, elucidation, and defense of liberal principles and institutions. These principles—however qualified—are freedom, individualism, universalism, and pluralism, grounded in a respect for the dignity of ordinary people living ordinary lives. These principles are embedded and protected within liberal institutions: the rule of law, due process, democratic politics, private property, markets, and institutions of free inquiry and expression.
The piece I reproduce generously below is in turn “Adam Smith’s Radical Tools,” written by a thoughtful author indeed, one Paul Crider: “Paul Crider is a husband and father living in the San Francisco Bay Area. He daylights as a semiconductor engineer but otherwise likes to spend his time reading and writing. He grew up in Oklahoma before migrating to California for graduate school in chemistry.”
I republish what follows with Mr. Crider’s knowledge:
No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, cloath 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, cloathed and lodged.
It’s a regular trope—especially among left-leaning critics of capitalism—to portray Smith as a dogmatic free market ideologue, and An Inquiry Into the Nature and Causes of the Wealth of Nations (WN) a laissez-faire manifesto. To which the rote “well, actually” response: Smith cared about the poor, favored progressive taxes, and was suspicious of businessmen colluding with one another. And so on.[…]
Smith’s normative pillars of freedom, prosperity, justice, and egalitarian universalism provide a familiar liberal framework of the kind we see with many modern liberal variants. … These are: the sympathetic mechanism from the Theory of Moral Sentiments (TMS), a persistent suspicion of concentrated power, and an appreciation for the psychological mechanisms that sustain power and hierarchy.
Smith’s ideas of prosperity, freedom, justice, and equality are entwined, each often referencing the others. Consider Smith’s postcard-sized articulation of the political economy of his preferred commercial society, his “system of natural liberty”:
All systems either of preference or of restraint, therefore, being thus completely taken away, the obvious and simple system of natural liberty establishes itself of its own accord. Every man, as long as he does not violate the laws of justice, is left perfectly free to pursue his own interest his own way, and to bring both his industry and capital into competition with those of any other man, or order of men. The sovereign is completely discharged from a duty, in the attempting to perform which he must always be exposed to innumerable delusions, and for the proper performance of which no human wisdom or knowledge could ever be sufficient; the duty of superintending the industry of private people, and of directing it towards the employments most suitable to the interest of the society.
[WN IV, ix, 51]
No “system of preference” should prevent “every man” from competing with “any other man.” Equality under the law is the norm. And it is an equal freedom that the sovereign must not superintend. Equality and freedom go hand in hand under the laws of justice.
Prosperity arises organically from the natural bent of human beings to “better their condition” and the “propensity to truck, barter, and exchange.” [WN I, ii, 1] Smith condones self-directed betterment. This moral authorization—especially for the “lowest ranks”—cuts against the moral consensus of classical antiquity and medieval Christianity, up through more modern thinkers like Rousseau. Smith scholar Christopher Berry has argued that Smith recalibrated the virtues for the commercial society, downplaying martial virtues like courage in favor of probity and humanity.  Smith objects to “whining and melancholy moralists” who would dampen the “natural joy of prosperity.” [TMS III, iii, 9] Berry draws particular attention to Smith’s scorn for sumptuary laws, which restricted certain activities and kinds of dress among certain classes, thereby enforcing social hierarchy.
Smithian freedom notably has a positive dimension. In addition to negative freedom from interference, Smith referred to the human needs for food, lodging, and clothing. More interesting is his position that wages should cover not just subsistence necessities, but “whatever the custom of the country renders it indecent for creditable people, even of the lowest order, to be without.” [WN V, ii, 4, 12] Smith favored public education—a novelty in his time—to broaden the minds of workers who would otherwise be dulled by repetitive drudgery in factories.
Smith’s equality is both normative and descriptive. Throughout his work Smith assumes a basic similarity of human nature and inherent human abilities. The most famous example of this is Smith’s assertion that the differences between a “philosopher and a common street porter … arise … not so much from nature as from habit, custom, and education.”
The difference of natural talents in different men is, in reality, much less than we are aware of; and the very different genius which appears to distinguish men of different professions, when grown up to maturity, is not upon many occasions so much the cause, as the effect of the division of labour.
[WN I, ii, 4]
The liberalism of Smith can be summarized. Human beings are moral equals of roughly similar innate abilities, our diversity a function of our varied social contexts and experiences. Along with our disposition to exchange, our innate, ethical drive to better our lots by pursuing our own freely chosen ends by freely chosen means is the basis of prosperity. Equality under the law within a commercial society is the institutional context in which all persons, even the most disadvantaged, can enjoy the twin blessings of freedom of prosperity.
So far from being an unvarnished laissez faire trumpeter in the worst sense, our Adam Smith was humane, humble, generous-spirited, egalitarian, and deeply skeptical towards–if not vocally hostile to–entrenched privilege, power, and wealth.
The defense rests.