Summary: Two hundred and fifty years after its publication, Adam Smith’s The Wealth of Nations remains both celebrated and misunderstood. In this episode, scholars Sandra Peart and Erik Matson help us see beyond the caricatures to discover Smith’s moral vision — one that challenges both colonial empires and modern assumptions about markets, virtue, and human equality. Why do both the Left and the Right claim him? What did he really say about slavery, monopolies, and the “sacred thirst for gold”? And what does his “oceanic” masterwork still have to teach us about navigating technological change and economic upheaval?
Note: The following transcript has been edited for clarity and accuracy.
Garrett Brown: Welcome to Humane Pursuits. My name is Garrett Brown, and I’m a research fellow in the humanities at the Mercatus Center at George Mason University and a host of this program. Today I’ve invited two guests to talk about 18th-century economist and moral philosopher Adam Smith and the 250th anniversary of the publication of his book, An Inquiry into the Nature and Causes of the Wealth of Nations. My guests today are Sandra Peart and Erik Matson.
Sandra Peart is the dean of the Jepson School of Leadership Studies and the E. Claiborne Robins Distinguished Professorship in Leadership Studies at the University of Richmond. She is the 2025 president of the Society for the Development of Austrian Economics, a past president of the International Adam Smith Society, and a past president of the History of Economics Society. Among her recent books are The Essential John Stuart Mill and two co-authored with David M. Levy: Towards an Economics of Natural Equals: A Documentary History of the Early Virginia School and Escape from Democracy: The Role of Experts and the Public in Economic Policy. Her popular articles on leadership, ethics, higher education, and economic themes have appeared in The New York Times, The Chronicle of Higher Education, USA Today, and the Washington Post.
Erik Matson is the Gibbons Fellow in Economics in the Busch School of Business at The Catholic University of America. He is the co-director of the Adam Smith Program at George Mason University and a Senior Research Fellow at the Mercatus Center. He is the coauthor with Jordan Ballor of A History of Christian Political Economy: From the Patristics to the Present, forthcoming in May 2026 from B&H Academic. The Institute for Economic Affairs published his book New Paternalism Meets Older Wisdom: Reflections from Smith and Hume on Rationality, Welfare, and Behavioral Economics in 2024. His work ranges across the history of political economy and moral philosophy, with particular attention to Adam Smith, David Hume, and the Scottish Enlightenment tradition.
Sandra and Erik, welcome to the program!
Erik Matson: Thanks for the invitation. Great to be here, Garrett.
Sandra Peart: Yes. Looking forward to it.
Brown: Excellent. I’d like to begin by asking generally: Who was Adam Smith and what do we need to know about him and his times to appreciate his major work? He was 52 years old when he published The Wealth of Nations in 1776. So that’s a lot of life.
Peart: I’ll jump in to say that he was a really important moral philosopher, which you mentioned in your introduction, but he was also a keen observer of society, of the people around him. He’s someone who takes his time, as you just suggested. He doesn’t write as quickly as someone like Bernard Mandeville, who wrote just a couple of generations before Adam Smith, and wrote very quickly and came up with all sorts of ideas. Smith is much more willing to take his time and observe what is happening; he’s writing at a time when society is about to be thrown in flux. So, lots and lots of changes, economic and social changes, have happened, but the speed with which innovation and economic development will occur will be much greater a generation after Adam Smith.
Brown: And that’s owing to the French and American Revolutions as well as the Industrial Revolution?
Peart: Yes, I was thinking more of the Industrial Revolution, but certainly there’s a lot going on across the world.
Smith and His Times
Matson: Maybe we should say just a little bit about Smith’s biography. Smith was a Scottish moral philosopher. He was educated in Glasgow first, and then he studied at the University of Oxford. He didn’t think too much of his time at Oxford. (There are some very amusing passages in The Wealth of Nations that reflect what he thought of his experience there.) Then he comes back to Scotland. He takes up a lectureship in Edinburgh. He delivers a series of public lectures sponsored by another Scot, Lord Kames, Henry Home. These lectures are very successful. He outlines a general theory of jurisprudence. He delivers some lectures on rhetoric from the success of these earlier lectures. He obtains a professorship at Glasgow University. One of the reasons that he didn’t write so much until later in life is because he had a very demanding academic schedule. So he took on many administrative duties, many teaching duties. He was a professor of moral philosophy at Glasgow until the early 1760s. Then he becomes a tutor for this man the Duke of Buccleuch. He goes on a tour of France, comes back from France, takes up residence briefly in London, leaves London, returns to Scotland.
This is really when he begins drafting The Wealth of Nations, building on some of the lectures that he had developed in Edinburgh and then in Glasgow on jurisprudence and rhetoric, the observations he’d accumulated about human life and society and the cultural and the economic changes that were underway in 18th century Britain, Scotland in particular, but also in France. He finishes The Wealth of Nations in London after 1773. And it becomes a very American book in some sense. So he’s thinking about commercial and economic changes. He’s also thinking about social changes and the political developments that he observes within the British Empire and across the Atlantic in the colonies. The British, American, and Scottish contexts are important for thinking properly about Smith and the kind of project that he was engaged in.
Smith’s Earlier Work
Brown: The only other book that he published in his lifetime was The Theory of Moral Sentiments (1759). How does that book comport with what he wrote later and the work he had already done in jurisprudence and other areas of inquiry?
Peart: It’s a wonderful book and one that deserves to be read alongside The Wealth of Nations. It’s a book in which Smith describes his theory of how people become independent and moral individuals — virtuous individuals. In The Theory of Moral Sentiments, he talks about how we are all motivated by praise but not just by praise; we’re motivated by wanting to be praiseworthy. But he makes that very key distinction, which then allows him to connect more tightly to the idea of virtue, because sometimes praise is undeserved.
Praiseworthiness is an internal mechanism; it’s a mechanism by which all of us develop something that today we might think of as a conscience. Smith talks about the man within the breast as a way to describe our desire to be praiseworthy. It’s not that we’re born immediately knowing how to be praiseworthy. Smith has a lot to say about how we’re connected by bonds of imagination and sympathy, and we come to learn what would be accepted or endorsed as virtuous behavior by people around us — by the majority of people around us or even the great preponderance of people around us. We come to internalize that mechanism of imagining how people view our actions.
The Theory of Moral Sentiments is a wonderful book, a very important book that really underscores the later analysis in The Wealth of Nations. Some secondary sources in the 20th century argue that that The Wealth of Nations was independent of, and perhaps not even really consonant with, The Theory of Moral Sentiments. They said there was something called “the Adam Smith problem”: That there was Smith The Theory of Moral Sentiments writer and Smith The Wealth of Nations writer, and the two didn’t really go together. The Adam Smith problem has now been shown to have been a sort of false dichotomy, and the two works are dependent on and consistent with each other. Economists in the 20th century looked to the Smith of The Wealth of Nations and didn’t so much realize or recognize the Smith of The Theory of Moral Sentiments until about 1975 or so. For the past 50 years, we’ve been — many economists at least have been — putting the two works together, recognizing that The Theory of Moral Sentiments is an important underscoring work for The Wealth of Nations.
Matson: That was great, Sandra. One thing I’ll add is that it’s useful to think about both books as part of his broader project of moral philosophy. They’re both part of Smith’s attempt to understand society and to promote improvement within society. Smith was part of an intellectual movement that’s sometimes described as the Scottish Enlightenment. The Enlightenment was a broader phenomenon [with manifestations in England and the Continent], but a catchword of the Enlightenment is the word improvement. Enlightenment figures sought to understand the world. They sought to improve their societies and promote the welfare of ordinary human beings. Both books are part of that project.
In The Theory of Moral Sentiments, Smith presents us with a subtle and sophisticated moral psychology, a theory of ethics (a theory of how we should behave toward one another), and he gives us a sense of how the rules of society emerge. And then, at the very end of The Theory of Moral Sentiments, he announces that he plans another book, which is to be understood as a continuation of his project in The Theory of Moral Sentiments. This is the very last paragraph:
“I shall in another discourse endeavor to give an account of the general principles of law and governments, and of the different revolutions they have undergone in different ages and periods of society, not only in what concerns justice, but in what concerns police [policy], revenue, and arms, and whatever else is the object of law.”
There are actually two works that he’s pointing toward here. One of them is a work on justice. He didn’t deliver on that work, although some people look to his unpublished lectures on jurisprudence. But then at the end, he’s pointing toward The Wealth of Nations. He’s saying, my analysis of society, of commercial civilizations, is to be continued in The Wealth of Nations. So it’s really important to view them as two pieces of a joint project.
Brown: As we later see in The Wealth of Nations, was Smith trying to correct a previous view or a set of ideas that were commonly held at the time, or was he putting out a general theory that was not meant to address a particular error he perceived?
Matson: Well, he engages with many thinkers over the course of The Theory of Moral Sentiments. But two figures that come to mind are Bernard Mandeville [1670–1733] and Jean-Jacques Rousseau [1712–78] who held different but related ideas about the nature of civilization. To put the matter in overly simplistic terms, both of them maintained that we’re somewhat enslaved to or overly dependent on the opinions of others, and our actions and our pursuit of virtue, these really are to be understood as kind of vanities.
Smith was really concerned with this, and he takes issue with it in the opening line of the book, but he looked to place the pursuit of virtue and the commercial civilization on sound or footing. A main part of his response to these ideas is his development of the notion of conscience, the idea of the impartial spectator, the idea that we do judge ourselves by our sense of what others think, but our sense of ourselves and our pursuit of virtue over time can be carried on independent of what other people next to us think, because we learn about rules of proper behavior, we internalize what kinds of things we ought to be doing. This is a very powerful response, or Smith’s attempt to formulate it, and it’s something that he wrestles with over subsequent editions of the book.
One thing that people should probably know is that Smith viewed The Theory of Moral Sentiments as his more important work. He revised it six times. It went through more editions. And the last thing that he published before he died was a new edition of The Theory of Moral Sentiments in 1790. And he was still very much concerned with this precise issue of moral judgment and how we can basically justify our perspectives in our pursuit of virtue.
Peart: Yes, so I would just add a couple of things to that. Since Erik mentioned Mandeville, he wrote something called The Fable of the Bees [part I in 1714/1723; part II in 1729] and The Grumbling Hive [1705]. They’re two different works, but in both works, he describes a flourishing society in which all the inhabitants (these are bees) are specialized. There’s division of labor and so on, and there’s great prosperity, but they’re rapacious, and they’re purely self-interested and also selfish and deceitful.
Smith develops something that also has self-interested individuals but ones who take others’ happiness into account. He’s developing a theory of virtue in which people are connected, connected by bonds of imagination, and generate a flourishing society.
Erik is absolutely right when he mentions improvement and an improving society. These are very different individuals than the individuals in Mandeville’s grumbling hive. Erik mentioned the opening of the book, and I’ll just read it because it’s such a wonderful and important passage:
“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.”
The reason that’s so powerful is it’s not a statement about reputation, about wanting to please others, because they might return the favor in the future. It’s none of those. It’s instead taking an interest in the happiness of others, though they will not return the favor or do anything but make the person whom the statement is about make them feel praiseworthy for having been a virtuous actor.
Matson: One of the catchphrases from Mandeville’s work is that private vices lead to public virtues. And you can think about Smith’s whole project, in a sense, as an effort to dispel this idea or take issue with it. You could think about Smith as both analyzing and offering an ethical defense of the potentialities of commercial society, maybe not defending commercial society as it happens to be at any moment in time but giving a defense of the potential virtues of a commercial society. He took many of Mandeville’s points, but he reframed them in a way that portrays modern commerce as a force of improvement, something that’s not, in fact, inconsistent with virtue and sociability.
The Work Itself
Brown: Let us step back a bit so that we can spend a little time talking about what the work is before we drill down further.
Peruvian novelist Mario Vargas Llosa called The Wealth of Nations “oceanic,” which is a term that nicely gets at its vastness and its flow. Less charitably, Robert Heilbroner [in The Worldly Philosophers] said, “The book moves with all the deliberation of an encyclopedic mind, but not with the precision of an orderly one.”
It’s not a textbook, not in the way that we think of it. So what is it? Is it a work of synthesis building on the ideas of those who’ve gone before him? Or is it really one of originality with many of his own fresh insights? It does seem as if Smith borrowed a lot of his ideas from others and not often with what we’d call proper citation.
Peart: Well, that’s a good introduction. It’s “yes and.” It’s a sprawling work. As I mentioned at the outset, Smith is an observer. Much of the sprawl comes from his observations of society and knowledge about various societies around him. Smith was extremely well read and knowledgeable, and he was trying to convince his reader about the folly of the mercantile system — a system of government interventions that, in his view, do not promote the wealth of nations. So it’s a long rhetorical project trying to make that case. And he doesn’t simply make it in a theoretical way: “Look, if we have tariffs, this is going to happen,” or “This sort of taxation will impinge and create inefficiencies and so on.” Instead, he talks about the colonies, about life in America, and how they’re growing so quickly because there’s abundant land and relative freedom to specialize in whatever one thinks is the most productive use of the land and so on. He talks about innovation, gives lots of examples of innovation — some of which might be imaginary but many of which are actual.
He describes in one of the early chapters, the division of labor chapter, the pin factory in which tasks are divided. And it’s a very stripped-down description. There’s not a lot of prose. He simply says: somebody straightens the metal, somebody puts the head on it, and so on. And he describes it in a way which those who lived in his time who would’ve seen a pin factory, or at least known about a pin factory, can form a visual image of the people doing various tasks in the different corners of the factory.
[Visit an interactive pin factory online here.]
So that’s one description, which as I say, doesn’t go on as he does in the digression on silver, going on and on and on. In just a page or two, he describes the effects of the division of labor. And then he says, well, this is a trifling example. So he sort of fools us: we’re all ready to say, okay, the pin factory, that’s the division of labor that there; I can see the effects of it, how we’re all more wealthy as a result of it, because we can now produce so many more pins, 240 times more pins, than we could if we were a single person trying to do all of this. But it’s trifling.
What he then wants us to think about is the fact that that division of labor actually generalizes across the entire economy. It’s not something that we can simply turn around and observe in a factory; it’s all over the place. It’s in the shipyards, and it’s in the fact that one can specialize in a particular occupation and become innovative because we know the occupation we learn by doing and so on.
His writing really takes on different styles, depending on what he’s trying to do. And he often actually is trying to teach us through a surprise. And the division of labor passage is one where, at the end of it, he surprises us. He hooks us in, we get the point, and then he says, well, this is trifling. Think about all the other examples of the division of labor that we don’t actually see. And then we’re able to appreciate — as a reader, we’re able to imagine — the enormity of the wealth of nations, of the innovation that results from the division of labor.
Matson: It’s a large, a really large book, and there are different kind of modes of inquiry and styles of writing and analysis within the work, but I think it’s important to note what the full title of the book is. That’s a really helpful way to start thinking about what Smith is up to. The full title is An Inquiry into the Nature and Causes of the Wealth of Nations. So Smith is asking: What is wealth? How should we think about wealth? And he says, many people have a misguided notion of what wealth is.
Wealth is not just the accumulation of bullion. Many political economists of Smith’s day believed that wealth consisted in the accumulation of bullion. And you can understand maybe why they thought that: if you are the state and you have more reserves of precious metals, you can pay your armies, and you can take over colonies, and you can defeat your rivals, and so forth. But Smith gives a very different answer. We should think about wealth as goods and services that people have access to. So that’s the nature. And then Smith goes into the causes of wealth.
Then there’s one other thing that I’ll just mention here. There are five books in The Wealth of Nations. The first few books, the first two books, Smith really focuses on the causes of wealth. He attempts to outline a general economic theory, a theory of growth. In the third book, Smith goes into the history, European economic history, and in the fourth book Smith turns to systems of political economy. Let me just read the introduction here:
“Political œconomy, considered as a branch of the science of a statesmen or legislator, proposes two distinct objects; first, to provide a plentiful revenue or subsistence for the people, or more properly to enable them to provide such a subsistence for themselves; and secondly, to supply the state or commonwealth with a revenue sufficient for publick services. It proposes to enrich both the people and the sovereign.”
So you can think about the rest of the book as an exercise in political economy. Smith has investigated the nature and the causes of wealth. He then turns in the fourth and fifth book to examining and criticizing the systems of political economy on offer. Then in the fifth book, he delves really into public policy and recommendations for the kinds of things that he believes the state ought to do, culminating in discussion of taxation, public debt with some really concrete recommendations for Great Britain.
The book, as a whole, is an analytical work. It’s a treatise of political economy or a treatise of economic analysis. It’s also a discussion of political economy and practical politics at once. And that’s the two facets of this work that make it such an important work. There are other reasons why it’s so important, but from a modern perspective, it’s kind of unusual. We don’t see these kinds of projects joined together in the 21st century.
Brown: I thought it was interesting that, in a letter about the death of his friend David Hume, he refers to his book as “the very violent attack I had made upon the whole commercial system of Great Britain.” That’s very strong, even audacious language to use. It is a slow burn if it is in fact a “very violent attack.” I found that argument coming on very gradually throughout the work. Did people receive it that way, as this kind of bombshell, or was it, because of the way he chose to argue the work, something that he was bringing people around to see that this was not, in fact, in the interest of the nation?
Matson: As we’ve said, it’s such a large book, so different parts of it were received in different ways. The book, I think, was immediately recognized as a monumental achievement. Smith was called the Newton of moral philosophy or the Newton of political economy. Even his critics recognized that his analysis and the way that he had systematized and synthesized ideas that had come before was really unparalleled.
There were parts of the book that people took issue with. For example, his discussion of the navigation acts and his discussion of the harms of trade with the colonies. So it was a very American book when it came out. And so that part of the book received some attention. One of the most famous reviews of the book is by a former Massachusetts governor named Thomas Pownall [1722–1805], and he praised Smith. He said [paraphrasing]: You’ve done a wonderful service in synthesizing political economy and giving us this treatise, but some of your analysis with respect to the colonies and the effect of the exclusive colonial trade on Britain seems probabilistic and unfounded and somewhat illusory. So you need to go further to establish that your analysis is, in fact, correct here.
So that’s at least as far as the bombshell reception. It depends on which part of the book.
Peart: Smith himself thought that it would be very difficult to achieve many of the recommendations he put forward in The Wealth of Nations. He understood that politics doesn’t always follow what economists or political economists might recommend; that there are vested interests in maintaining some laws; and that his recommendations might not hold weight with them as a result.
Thinking of that phrase “violent attack” . . . There are some very pointed passages and portions of The Wealth of Nations where it’s quite critical of the merchant class. For instance, he writes that they have the parliamentarians in their pocket and that, if you look at laws that protect trade, those are laws that are protecting the merchant class. Those are laws that he’s really hoping to see dismantled but also not particularly optimistic because of the relationship between politicians and the mercantile class.
He also has some startling remarks to make about the laboring classes compared to their employers. Sometimes you might think that the reputation that Smith has is of being a hyper-individualistic and hyper-pro-market and so on in The Wealth of Nations. And he does want to see the system of taxation and protection removed. So there’s a reason for that reputation. But he’s also someone who recognizes that employers might collude, for instance, to hold wages down, and that’s not a good thing for the wealth of nations.
Unlike Bernard Mandeville, who wanted to see low wages so that exports would be cheap and the country could accumulate much more bullion (as Erik suggested), Adam Smith doesn’t see that as a good thing. He doesn’t see low wages as a good thing, but in fact would like to see high wages and especially increasing wages because that’s a sign of economic growth and innovation.
And the collusion to keep wages low he would like to see broken up, although again he realizes that it’s fairly easy for the masters of men, as he calls them, to collude because there aren’t so many of them, and they have a lot more economic power than the laboring classes. But he’s someone who is very much opposed to collusion, secrecy, monopoly, and the ability to keep secrets as a result of having monopoly power. And so those are the kinds of government sanctioned policies. (Monopolies were granted by the crown.) And he would like to see those dismantled to a large extent.
Matson: There’s a great phrase I came across earlier this fall when I was looking at some parts of the book. He describes the British Empire, the impetus of the British Empire, as “the sacred thirst for gold” (IV.vii.a).
Peart: Yes, yes.
Matson: So he really believes that it is, in some sense, a “violent attack” on the policy of the British Empire. He believes that this thirst for gold is impelled conquest, attempts to conquer, and to colonize other parts of the world. This doesn’t actually increase wealth. It’s actually impoverishing the British state and loading the taxpayers with future debt obligations. And the whole thing is incredibly misguided. It’s serving the interest of a select group of individuals, a select group of merchants, who advocate for the policies, for the expansion, at the expense of the general population. This really comes together in a nice way at the end of the book. He says:
“This empire has hitherto existed in imagination only. It has hitherto been, not an empire, but the project of an empire; not a gold mine, but the project of a gold mine; a project which has cost, which continues to cost, and which, if pursued in the same way as it has been hitherto, is likely to cost immense expense, without being likely to bring any profit; for the effects of the monopoly of the colony trade, it has been shewn, are to great body of people, mere loss instead of profit. It is surely now time that our rulers should either realize this golden dream, in which they have been indulging themselves, perhaps, as well as the people; or, that they should awake from it themselves, and endeavour to awaken the people. If the project cannot be compleated, it ought to be given up.”
Peart: That’s a wonderful passage, and it’s an example of Smith’s overall position that sometimes we tend to overestimate the probability of success. So there’s this thirst for gold, and we think there’s gold out there. And we then make the case to the crown that we should be allowed to go out and discover it, and we’re so confident we’ll bring back all these riches. But, time and time again, we’re mistaken. We don’t find what we’re looking for, and yet we still keep making this overestimate of our success.
He’s trying to tell us that, in fact, the way to achieve the wealth of nations is, as I say, to dismantle the monopoly preferences, the privileges, that have been offered by the Crown — to remove impediments to the division of labor to allow innovation to flourish. There are, of course, more details than that, but that’s sort of his overall stance.
Matson: Yeah, he coins the phrase “the liberal plan of equality, liberty, and justice,” the plan in which each person is free to “pursue his own interest, his own way” (IV.ix). It’s very strong language. That kind of language occurs a few times in the book, and in some respects it’s not exactly a plan because it doesn’t come with a specific set of policy recommendations, but it is a kind of moral vision that Smith plants at the heart of the work.
Brown: It’s that moral vision that is really the grounding for both the market process and its corrective mechanisms and also his condemnation of these colonial enterprises, which included not just the American early colonies but also the East India Company, right? Doesn’t he have strong words for that enterprise? Those two things extend out of that moral vision. Is that also how you see it?
Matson: Yeah.
Peart: That’s right. And he does a bit of comparative analysis as well and suggests that things are better in the colonies in North America than they are in the East India Company, because there is more freedom within North America for people to choose their religion, to choose their occupation, (again, to use that word) to innovate, to be productive. Whereas the East India Company is really a monopoly that’s been granted something like a quasi-governmental status and is preventing some of those freedoms from flourishing.
Matson: He notes that the colonies can trade freely with each other. He uses the colonies to establish the model that he develops in the earlier part of The Wealth of Nations. The colonies are developing, they’re growing rapidly, they have access to land. Agriculture is developing. First, they have relative freedom of trade with one another. They’re innovating, wages are rising, population is increasing. So he points to the American colonies as a case of the potentialities of this liberal plan. But, of course, he would like to extend the freedom of trade between the colonies and the United Kingdom and Great Britain.
Brown: What did Smith have to say about slavery and the slave trade?
Peart: He thinks slavery is morally vicious, corrupt on a moral level first. It’s also not, in his view, particularly economically productive. But the important argument is that it’s, as I say, just morally vicious. He talks about slavery as opposed to the situation with coal miners in Scotland, where coal miners were in some sense enslaved, in the sense that they had no labor mobility. They were indentured for their working life. He says slavery is much worse than that, because slaves can’t choose their religion. They’re sexually abused. He compares it to death and says it’s basically commensurate with death. So really, really strong statements against it.
You mentioned earlier that citation policies were different. It’s not that people always say, well, Adam Smith said this, but when William Wilberforce [1759–1833], the great anti-slavery advocate, speaks in parliament, he uses language that’s very similar to Smith’s. He uses the sympathetic connection and the imaginative connection that we have among people in his speech. And then David Ricardo [1772–1823] also speaks in parliament and uses very similar language as well. He’s a much later an economist whose main work [Principles of Political Economy and Taxation] is published in 1817, before slavery is abolished in the empire.
Matson: I’ve come prepared with a few Smith quotations. I want to give you one more just to give listeners a sense of the man’s writing. I think the most powerful condemnation of slavery appears in The Theory of Moral Sentiments. It’s a brief passage that others have taken notice of. In the fifth part of the book, Smith writes:
“There is not a negro from the coast of Africa who does not . . . possess a degree of magnanimity which the soul of his sordid master [the slaveholder] is too often scarce capable of conceiving. Fortune never exerted more cruelly her empire over mankind, than when she subjected those nations of heroes to the refuse of the jails of Europe, to wretches who possess the virtues neither of the countries which they come from, nor of those which they go to, and whose levity, brutality, and baseness, so justly expose them to the contempt of the vanquished.”
Really powerful language . . .
Brown: Did those lines appear in the first edition of 1759, or were they added in a later edition?
Matson: Yes, it was in the first edition.
The other thing I’ll mention briefly about slavery. This is something that Sandra has worked on quite a bit. Classical economic analysis in general proved to be quite important in debates about race going forward in the 19th century.
Sandra, would you like to say something about that, because you’ve done so much work on this topic?
Peart: Absolutely. Smith presumes that people are basically the same. Slaves have the potential to be the same as a person in Scotland. But early on in The Wealth of Nations, he says, we’re all born basically so similar that our parents can’t really distinguish between us. Being a parent, I’m not quite sure I’d go that far. But it’s what David Levy and I have referred to as institutions, luck, and history — the division of labor, basically — which then causes us to be quite different once we reach our adult years.
So he says that a street porter — who at the time would’ve been someone whose job it was to carry large parcels, and so on, on his back, a hundred pounds of something across town in Glasgow or wherever else, from one place to another — is essentially the same as a philosopher, but the philosopher comes to think that he’s superior to the street porter. Smith says that’s simply the vanity of the philosopher. It’s not that they’re naturally different, but it’s their education division of labor and so on that made them quite different.
That really important view that people are roughly the same, in terms of their capacity to make economic and political choices, is something that is taken into the 19th century by Smith’s followers — first James Mill [1773–1836], David Ricardo, and then John Stuart Mill [1806–1873], the really important person who takes this up. But the idea becomes contested in the 19th century. It’s contested earlier, but it becomes contested in an important way in the 19th century when those who are not friendly to the economists, those who oppose this view, put forward another view which said, actually there are racial differences that exist naturally and cannot be overcome by education, by training, and so on. And some of the people who made that case made it with respect to the Irish. I’m talking about Ireland being inferior. And, of course, the Great Famine occurs in the 1840s and becomes an important backdrop to all this.
Some said that the English, and especially the Scots (being the part of the Enlightenment), are the top of the hierarchy of individuals, of groups, and that slaves or former slaves after slavery ended in the empire — former slaves in Jamaica, for instance — are inferior people who will never work as much as they should in the labor market. Someone whose name you might recognize, Thomas Carlyle [1795–1881], an important historian, wrote that. And, in the 19th century, very important debates that Erik just alluded to over the nature of different groups of people — women, Irish, former slaves, and so on — and Smith’s side is that we’re all essentially about the same. And John Stuart Mill’s side is that we’re all about the same. So he follows Smith in this respect.
The Wealth of Nations in Retrospect
Brown: Let’s pivot to talk about the influence of The Wealth of Nations but also its afterlife, how it gets invoked now. One of the first things I wanted to return to was what you mentioned earlier: the seismic changes that would be brought by the Industrial Revolution. Some of the main technological advances, such as the power loom in 1785 and the cotton gin in 1793, were not anticipated in his work. How much did those changes, really affect the way that his arguments were received? Or did they make them less relevant because of the pressing, need to deal with these new realities and also the conditions really in the factories and whatnot, which become a central preoccupation of the mid 19th century?
Peart: Yeah, that’s a great question. He, as you say, doesn’t foresee those enormous changes, but his followers do. I mean, they live through it. David Ricardo, whose work I mentioned earlier, is published in 1817, he adds a chapter to his principles in 1821 called “On Machinery.” And that chapter is about whether there can be overall displacement or displacement within particular industries. When a new invention like the cotton gin is brought into production, the emergence of the factory system becomes an important point of discussion in the 19th century as well.
The paradigmatic example of this is the handloom weavers who, early in the 19th century, are almost entirely displaced by mechanized weaving. So much so that they petition parliament. And, in 1841, a report is generated whose lead author is Nassau William Senior [1790–1864], who’s an important economist of the time and very much in the tradition of David Ricardo, John Stuart Mill, and so on.
The central point of the report and of the petition is what happens when a way of life is essentially eradicated because of the discovery of new ways of producing things. Handloom weavers had produced in their cottages, on the second floor of their cottages. They had a great deal of skill, because they had to be able to make the patterns using handlooms. With mechanized production, the need for that skill was reduced. The need for strength was somewhat reduced as well. And so a lot of women were able to work in factories, but they had also worked as handloom weavers.
Senior and the group who studied the problem came down on the side of “this is of course not of your making. However, there’s no way we can go back to a handloom situation and the kinds of policies that might protect you.” So tariffs on mechanized weaving and so on, or taxes, or immigration. “You can all go to the colonies.” Those potential solutions are not particularly helpful. But what we would recommend would be, offering education to displaced workers. [Not] satisfying solution, but it’s a realistic one. And it’s one that economists think in terms of second best: if you can’t go back to something, what is it that you can do to mitigate this just incredible hardship that the handloom weavers faced?
It’s the first time in my knowledge that I know of a suggestion for compensation. So the handloom weavers in their petition to parliament said: we deserve compensation for this; it wasn’t our fault. The authors of the report don’t go that far, but they do advocate for some policy spending in order to help the weavers out.
Matson: In response to your question, Garrett, I think there are maybe two things that we should separate. The first is the question of whether industrialization in the past 250 years of economic history have invalidated Smith’s economic analysis. And then there’s another question about whether the past 250 years change how we think about Smith’s moral vision, the liberal plan.
As to the first question, I think that industrialization really validated much of what Smith said. We see that the division of labor is, in fact, limited by the extent of the market. And when you have hyperconnected markets, when you have transportation infrastructure and railroads and communication, there’s massive market demand. Firms can take advantage of huge economies of scale. They can accumulate capital; they can build factories. Prices of goods will go down. Wages in the long run will go up as worker productivity increases. I think that’s all of a piece with Smith’s analysis. I think his, most of his analysis, I think, makes it through industrialization.
Some of it, of course, doesn’t. And economists have different views on which parts of his thought are still relevant and productive and which parts aren’t. And then as for the liberal plan, that’s a little bit of a different question, of course. And this is a large discussion about how we should think about liberalism in the face of technological change and development. There are some discussions in The Wealth of Nations about worker displacement. And Smith does seem relatively confident that flexible markets will be able to accommodate displacement when people move from one sector of the economy to another. But he was writing before some of these really large-scale displacements took effect.
So it’s difficult to know what he would’ve advocated for if he were alive a hundred years after the publication of The Wealth of Nations. But his work does give us, like I said, insight into the nature of the market process and the nature of innovation. And so, in that respect, I think it’s very much relevant.
Brown: Why is it that in contemporary debates Smith seems to be invoked by both the Left and the Right?
Matson: Smith is a moral egalitarian, as we’ve discussed. He prioritizes the wellbeing of ordinary individuals. And that’s very much the why he promotes economic growth, why he’s in favor of the progress of opulence, because he sees that it improves the lives, not of the land-owning aristocracy, not of the political elites, not of those who have connections, but just of ordinary people. And that’s a claim that resounds with those on the political Left.
At the same time, he saw the means toward this improvement to be limited government and the “liberal plan of equality, liberty and justice” (IV.ix). And so those on the Right are attracted to this aspect of his thought. But Smith himself really bridges the gap where he doesn’t see there to be a tension between these two points of view because, as I said, he does view the liberal plan. He does view economic growth as the means by which those who are least well off can actually improve. He sees commerce as a liberalizing, as a civilizing, as an equalizing force in society, with some caveats.
Peart: I think Erik has described it really well.
Brown: Excellent. As we close out our conversation today, what are good ways that our listeners can further engage with Smith’s ideas? I should note that James Otteson at Wake Forest University has a volume in the same series as Sandra’s (on Mill), called The Essential Adam Smith, which strikes me as an excellent next step. What other resources do you recommend on the Smithian tradition in political economy?
Peart: Well, Jim’s book would be a really good start. So that’s a great suggestion. You mentioned that The Wealth of Nations is sprawling and so on, but I would suggest reading a little bit of Smith. Smith can be quite readable. You might want to go to the Liberty Fund website, EconLib, and look for descriptions of Smith’s work and engage with them. They have some quite interesting seminars and so on that they offer about reading Smith.
The first six chapters of The Wealth of Nations read very well. I’ve had students read it, who do not find it difficult to read, and it’s always good to go to the source.
Matson: Yeah, absolutely. I think much of book four of The Wealth of Nations is readable. It’s classic. It’s timely. It’s where he discusses the colonies. It’s 1776. Of course, it’s the anniversary of the publication of The Wealth of Nations coming up in March. It’s also the anniversary of the Declaration of Independence. So there’s a lot of great American material, a lot of classic Smithian material, discussions of protectionism in part four of the book. And the first four chapters of The Wealth of Nations, maybe the first six, but the first four are really wonderful.
There’s a Liberty Fund website called Adam Smith Works. A lot of great resources there that you can look to.
I was just looking at this book earlier today. It’s a relatively short intellectual biography by Nicholas Phillipson called Adam Smith: An Enlightened Life [2012]. It gives you a great sense of Smith and his times, and it’s not too long. I think it’s intended for more of a general audience. So that’s a great resource as well.
Brown: Excellent. Well, thank you, Sandra Peart and Erik Matson, for joining Humane Pursuits. I think you’ve given our listeners a feast of insights about Adam Smith and his “oceanic” work.
Matson: Thank you, Garrett.
Peart: Thank you. Enjoyed it.
Brown: If you like today’s program, be sure to subscribe to the Humane Pursuits Substack newsletter for regular updates and to share what you’ve liked or learned on social media. We’re glad to hear from you.
Thank you for listening.
