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The Authentic Adam Smith: His Life and Ideas
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James Buchan is a novelist, critic, and contributor to the NYT Book Review and the NY Observer. He was formerly a foreign correspondent for the Financial Times. He won the Duff Cooper Prize for Frozen Desire, an examination of money. This was a gift book.
This book was originally published in Great Britain under the title Adam Smith and the Pursuit of Perfect Liberty. The front flap has this summary: “Since his death in 1790, Adam Smith – unable to speak for himself – has been sadly mistreated. His theories supplanted after his death by John Stuart Mill’s writings on political economy, Smith became, in our era, the puppet of conservatives, the ideological father of unregulated business and small government. Politicians such as Margaret Thatcher and Ronald Reagan promoted Smith’s famous 1776 book, An Inquiry into the Nature and Causes of the Wealth of Nations, as the bible of laissez-faire economics. In this vigorous, crisp, and accessible little book, James Buchan refutes much of what we think we know of Adam Smith and shows that, in fact, Smith transcends modern political categories. Along the way, we see Smith the man – his sometimes troubled friendship with David Hume, his urbanity, his hypochondria, and his sole Continental voyage, when he played chaperone to two of his wealthy students. Buchan has drawn this portrait from twenty-five years of research, and he demonstrates that Smith’s famous books, The Wealth of Nations and his 1759 masterpiece, The Theory of Moral Sentiments, are just the brilliant fragments of one of the most ambitious philosophical enterprises ever attempted: the search for a just foundation for modern commercial society both in private and in public. In an increasingly crowded and discontented world, the search is ever more urgent.”
The Introduction begins with a brief discussion of a speech on Feb. 6, 2006, in the Scottish town of Kirkcaldy (Smith’s home town) by Alan Greenspan, who “said that Adam Smith was a ‘towering contributor to the development of the modern world’ for his ‘demonstration of the inherent stability and growth of what we now term free-market capitalism.’ This stability and growth arises, Greenspan said, in a principle discovered by Smith and called the ‘invisible hand.’ Buchan proceeds to inform the reader of errors in Greenspan’s speech: “The praise ‘invisible hand’ occurs three times in the million-odd words of Adam Smith’s that have come down to us, and not one of these occasions does it have anything to do with free-market capitalism or awesome international transactions.” A few lines later Buchan says, ”Adam Smith is a much fought-over philosopher. Now celebrated as the apostle of capitalism and the champion of laissez faire in its rational Anglo-Saxon character, Smith was admired by Tom Paine and the French revolutionaries, inspired Karl Marx and coined the contemptuous term ‘a nation of shopkeepers’. In his best-known book, The Wealth of Nations, he wrote that ‘civil government …. is in reality instituted for the defence of the rich against the poor.’ At this point of my reading, I couldn’t help but wonder what else Buchan would have said had he waited a couple of years and heard Greenspan admit, before a governmental committee after the stock market crash in the fall of 2008, that his ideas of the ‘inherent stability and growth’ of an under-regulated and unregulated system were just plain wrong. (When I saw and heard Greenspan, I couldn’t help but feel sorry for him for his many years of misunderstanding – I wonder what James Buchan felt when he saw and heard the crestfallen Greenspan.)
Summarizing the above aspect of Adam Smith’s work, Buchan says “A close reading of The Wealth of Nations and other good evidence shows that Adam Smith was no doctrinaire free trader. He approves certain monopolies and restraints on trade, export subsidies and restrictions, sumptuary laws, penal taxation, limits on the rate of interest, and the issue of bank notes, compulsory qualifications for craftsmen, the pressing of merchant sailors and discrimination of Roman Catholics. He was expert at exploiting the system of nepotism then dominant in the administrations of Britain, India and North America. He believed that government should be involved not only in educating but in entertaining the public. The words laisser faire or laissez faire appear nowhere in his work. Though he deplored British commercial policy in Ireland, the Americas and England, he thought the solution was not independence for those countries, but federation with the mother country.”
“Yet nor was he the precocious Leftist of Gordon Brown’s imagination. Brown attributes to him the phrase ‘the helping hand’, a conjunction of words that does not occur even once in Adam Smith’s writings. …”His entire written output has been edited by able scholars in Britain, Germany, and North America and is available in cheap editions. We lack only his poetry.” …”We thus have a case of two Adam Smiths. One is cautious, voluminous, virtuous, qualified, liberal with a small ‘l’ and utterly disdained. One is brief, brash, Liberal with a large ‘L’, inaccurate, shady, and one of the most famous men who ever lived. What has happened? The vulgar answer is that Adam Smith fell among economists and politicians who constitute, more even than professional footballers, always the least-literate sections of English-speaking society.” …”A more polite answer is that a historic change in attitudes which Adam Smith helped inaugurate has misled men and women who have studied hard to remove any trace of history from their reasonings. The world in which Adam Smith was writing was not a modern economy, but had as much to do with the Roman Empire as the age of Alan Greenspan and Gordon Brown.”
After the above, which comes from the Introduction, James Buchan covers Adam Smith’s life in six chapters: Ch 1 – Fatherless World (1723-1746); Ch 2 – Cave, Tree, Fountain (1746-1759); Ch 3 – Pen-knives and Snuff-boxes (1759); Ch 4 – Infidel with a Big Wig (1759-1776); Ch 5 – Baboon in the Orchard (1776); Ch 6 – The Forlorn Station (1776-1790). Only the title of Ch 1 is directly meaningful. The others only make sense in context. There are two aspects of this personal history that Buchan left me wanting. First is that he didn’t say as much as I hoped to read about Adam Smith’s 1759 masterpiece, The Theory of Moral Sentiments. Second is that, when he told that Adam Smith kept changing some of the contents of The Wealth of Nations at least six times due to the changing political world of Britain, he did not tell me what was changed and why. But Buchan did focus on the reason this book was given to me – I had asked what led Adam Smith to write The Wealth of Nations since he was a philosopher concerned mostly with morality and ethics. I recommend this book mainly because of the superb summary in Ch 1 of how Adam Smith and his The Wealth of Nations has been misused by politicians who, as Buchan tells it, is today’s “puppet of conservatives.” He certainly deserves better treatment than that.