Book Review: Rethinking, Reclaiming & Rescuing the Real Adam Smith

Book Review: Rethinking, Reclaiming & Rescuing the Real Adam Smith

Name of the book: ‘Adam Smith: What He Thought and Why It Matters’
Author: Jesse Norman
Published by: Penguin, 2019


Mystery, ambiguities and misunderstandings often overshadow the real selves of great thinkers and reformers. Admirers, as well as adversaries, understand and interpret great men’s teachings and writings according to their own intellectual capabilities, preconceived notions and prejudices to justify their own justifiable and unjustifiable intents. The case of Adam Smith, known as the father of economics, is no different. On the one hand, free marketers trace the lineage of their thought to the philosophical spring-well of Smith, from which the virtues of free-market and human liberty flourish. On the contrary, anti-capitalists take it as a cause unto itself to convict him for the vices of capitalism such as ruthless competition, commendation of greed and self-interest, value-neutral economic and political structure, and predilection of efficiency and general equilibrium of markets over human welfare. The result being that the persona of Adam Smith, while a rallying point for both sides, has become highly mystified and lost in the fog of intellectual, academic and political discussions and deliberations. “What Smith said doesn’t matter as long as he said something I can beat the other side with,” is what the whole argument ends up as.
Jesse Norman in his book ‘Adam Smith: What He Thought & Why it Matters’ has endeavoured to demystify before the reader the historical and contextual evolution of Smith’s moral and economic thought, its impact, relevance and misrepresentation. The author has divided the book into three broad themes/parts: Life, Thought, and Impact. The first part is a biographical sketch of Smith’s life, informing us of what made the man that would go on to be possibly the most debated figure in all of economics. It reveals the intellectual springs of his thought, describes the commercial and political atmosphere of Europe of his time, the intellectual revolution of the Enlightenment and the Newtonian method of investigation having an impact on the prevalent socio-politico-economic thinking.
The second part presents a holistic overview of the thoughts and writings of Smith, the work that he did, and how he came to the conclusions that he arrived at. It highlights the implicit coherence in his writings which otherwise might appear on the surface as being inconsistent. Moreover, it sheds light on and dispels the myths that surround and obfuscate his personality.
The final part of the book draws attention to the importance and relevance of Smith’s thought, to tackle the challenges and vices of contemporary crony capitalism such as income inequality, climate change, corporate lobbying, rise and power of the corporate giants like Facebook, Google, and Apple.
The book begins by picturing the world of a young Smith dominated by the Hobbesian notion of humans as brutish and nasty; hostile foreign commercial policies of Europe that sprung from the premise of mercantilism; and intensification of wars and colonisation by the European powers. However, Smith was deeply influenced by his teacher Hutcheson at Glasgow who was a firm believer in the “innate goodness and sociability of humans”. But the Jacobean revolution of 1745 and its brutal suppression by the government shook the young Smith’s beliefs and convictions about human nature. As Norman has put it: “the carnage of Jacobeans might have deeply disturbed the sensitive soul of young Smith”. Further, Norman writes, “this carnage must have raised deeper questions in the mind of Smith about the very basis of human sociability”. The deep curiosity about the make-up of human nature nudged him to find answers beyond “divine providence” and Hutcheson’s “moral sense”.
Before moving to Oxford, Smith had immersed himself in Newtonian physics in his last years at Glasgow, which served as the bedrock in the development of his moral view in ‘The Theory of Moral Sentiments’. Norman maintains that “though Smith was not impressed with Oxford, England’s developed agriculture and industries might have fascinated young Smith’s mind and spirit”. However, in six years at Oxford, he devoted himself to reading literature and acquainted himself with the great continental thinkers such as Machiavelli, Pascal, Descartes, and Voltaire. He also didn’t dither from reading the infamous infidel David Hume for which Smith was many times reprimanded. David Hume’s “New Science of Man” had a deep influence on Smith and later they became lifelong friends, first readers and sincere critics of each other’s writings.
Smith grounded his moral view on social selection rather than on natural selection or divine providence. He maintained that innumerable human interactions could yield vast unintended consequences, social benefits, and social evils. For him, human values are inconceivable beyond the boundaries of social interaction. Norman ascribes Smith’s genius to his acute observation of the socio-political order of the day and his ability to draw anecdotes, general rules and lessons. When he went to France during the 1760s, his interaction with Physiocrats, who advocated non-interference of government in functioning in the markets, germinated the seeds of his magnum opus, ‘The Wealth of Nations’. In this book, he criticised the British policy that restricted free trade competition and encouraged guilds to resort to using covert tactics against the general public by rising prices. On the contrary, he advocated trade on a rational economic basis, promotion of free competition and a “system of liberty”, and the building of a society based on justice and equality.
Norman asserts, in the second part, that the Smith of ‘The Wealth of Nations’ has eclipsed the Smith of ‘The Theory of Moral Sentiments’. Furthermore, he argues that Smith would have serious reservations concerning about the aphorisms of modern economics such as the existence of a rational man, the General Equilibrium Theory, Efficient Market Hypothesis that have been borrowed selectively from his lifetime of work. Moreover, he would have been equally baffled to see economics approaching and claiming itself as hard science where mathematical models are not used merely as tools of analysis but rather used to frame the questions of economics per se, without paying any regard to actual human interactions.
Norman has further argued that the “economic man” is not the creation of Smith but of Malthus, Ricardo, and Mill. Furthermore, Norman has tried to dispel the other myths surrounding Smith, such as Smith’s advocacy of the “selfish man”, his being pro-rich and anti-government, and more importantly that there exists an inconsistency between the Moral Smith and the Economic Smith.
In the third part, while making a case for reclaiming Adam Smith and deriving guidance from his writings to tackle contemporary problems of the market economy, Norman has subtly turned the discourse in favour of and in defence of capitalism. He asserts that income inequality, corruption, greed, rent-seeking, information asymmetry and corporate lobbying are offspring of crony capitalism rather than of capitalism per se. Moreover, he identifies and blames many evil variants of capitalism with prefixes such as Monopoly-Capitalism, License-Capitalism, Khaki-Capitalism, and Narco-Capitalism. The author advocates capitalism, which he also refers to as a commercial society, as a panacea to the contemporary vices, and acquits it of all blame under the garb of the grand aura of Adam Smith’s thought.
However, the author has not provided a single example of pure market-based capitalism which can be considered as the zenith and ideal of capitalism. The author seems more interested in defending Western Capitalism against China’s State-backed Capitalism which he considers as the real threat.
However, Norman proposes the need for a rethinking of economics and the creation of a new narrative that would reflect the truth of our own times. In the reconstruction process, he thinks that Smith’s writings possess foundational value on which the new apparatus of a new economics should be built. However, relying only on Smith would be a too narrow and short-sighted approach, resulting in the loss of the innumerable diversities and complexities of the contemporary socio-economic reality. Thus, the need is to draw ideas and insights from the various thinkers that represent diverse cultures, viewpoints, and experiences, such as Karl Marx, David Hume, Antonio Gramsci, Ibn Khaldun, Shah Walli-Ullah, J.M. Keynes, etc. Such great thinkers should be widely read and understood, and their ideas enmeshed with the realities of our own times. However, the truth remains that while the great thinkers and reformers are worshipped and demonised in equal measure, they are seldom read and understood. Therein lies the crux of the problem.

The writer is a student at the Department of Commerce, University of Kashmir. [email protected]


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