Source of our bounty: What Adam Smith the economist really thought

By DAN BARNETT

Adam Smith (1723-1790), author of "The Wealth of Nations," one of the most famous unread books ever published in English, has been co-opted by liberals and conservatives alike as either "the apostle of capitalism and the champion of laissez faire" or one who called on government to intervene in organizing the financial affairs of a country. Both pictures are inaccurate, at least according to novelist and critic James Buchan, formerly a foreign correspondent for the Financial Times and author of "Frozen Desire," a book about the nature of money.

Buchan has written an enlightening and wry little treatise called "The Authentic Adam Smith: His Life and Ideas" ($23.95 in hardcover from Atlas Books/W.W. Norton). In Smith's time "neither economics nor capitalism existed as mental entities. Smith was brought up in a backward corner of an unmechanised world, where the steam engine had not yet been brought to bear on the textile industry let alone transportation, where wages were so low it was cheaper to knit stockings by hand than by machine. ... Smith's estimate of British national income was ... less than the revenues of a large London or New York department store. ... Smith thought the most beneficial deployment of capital was in agriculture."

In 2005, visiting Kirkcaldy, Scotland, Smith's birthplace, then Federal Reserve Chairman Alan Greenspan called Smith "a towering contributor to the development of the modern world." Perhaps. What really happened, Buchan writes, is that Smith "fell among economists and politicians who constitute, more even than professional footballers, always the least-literate sections of English-speaking society."

This Thanksgiving, we are thankful for Buchan's small masterpiece in evoking an Adam Smith rarely seen. As Smith revised "Wealth of Nations," famous for its focus on the division of labor, he added a telling chapter to Book One. "He wrote," says Buchan, "that the 'disposition to admire, and almost to worship, the rich and the powerful,' while to an extent natural and conducive to the peace of society, was 'at the same time the great and most universal cause of the corruption of our moral sentiments.'"

While "Wealth of Nations" secured his fame, Smith's most important work, Buchan claims, is "The Theory of Moral Sentiments." "It is through sympathy," Buchan writes, "that we imagine the happiness of the rich and successful, follow the fashions they set, pursue ambition beyond our animal requirements and submit to distinctions of social class." Our sympathetic feelings judge what Smith called the "propriety" of others -- and of ourselves. "We sympathise more strongly with displays of social or benevolent emotions," Buchan says, "than with shows of resentment or hatred." There is no divine "moral sense" here, but only social arrangements, and that, says Buchan, "leaves society prey to manipulation."

Smith, friend of the irreligious but contented David Hume, rarely attended church and rarely quoted scripture. The "invisible hand" in "Wealth," describing how individual self-interest serves the public good, is not a reference to some divine "magic" but, says Buchan, points merely to "human faculties," what Smith calls "the private interests and passions of individuals." These, and the quest for respect from equals, are, in Buchan's summary, "what drive commercial society." Perhaps, Smith writes, God has ordered even our misfortunes on this "forlorn station of the universe," but that is not for us to speculate on. We must concern ourselves with our own happiness.

This is Smith's real legacy to the modern world. It is not an unmixed blessing.

Dan Barnett teaches philosophy at Butte College. To submit review copies of published books, please send e-mail to dbarnett@maxinet.com. Copyright 2006 Chico Enterprise-Record. Used by permission.