Adam Smith

[[File:AdamSmith.jpg|thumb|right|165px|"I am a beau in nothing but my books." - Adam Smith]]{{Economics}}

'''Adam Smith''' was an 18<sup>th</sup>-century Scottish [[economist]] often considered to be one of the fathers of modern economics, discussing the role of the [[free market]]. His 1776 work ''An Inquiry into the Nature and Causes of the Wealth of Nations'' contains several important ideas that continue to be relevant in contemporary [[politics]] and [[social science]], such as the "'''invisible hand'''." He is also one of the most prominent figures in [[classical liberalism]]. Like [[Machiavelli]], the poor guy's legacy is tarnished by a very unearned public perception as an evil dickhead. 

==Smith's views==
===The invisible hand===
{{cquote|The ‘invisible hand’ appears once in Smith’s ''History of Astronomy'' (Smith 1980, 95) referring to [[pagan]] and [[heathen]] [[superstition]]s about the existence of the [[Roman]] god, Jupiter; once in ''Moral Sentiments'' (184-185) referring to [[feudal]] lords divvying up their produce among their retainers and tenants in roughly the same proportions as would be distributed if the land had been divided equally; and once in ''Wealth of Nations'' (456), referring to degrees of caution about the risks associated with distant trade with the British colonies in North America, which incentivised some, but not all, merchants to act circumspectly in their preference for domestic projects, thereby unintentionally benefiting the domestic economy. This is only three times in over a million words published in his surviving essays and books, written between c.1744 and 1790.|||Gavin Kennedy<ref name=kennedy>[http://econjwatch.org/articles/adam-smith-and-the-invisible-hand-from-metaphor-to-myth Adam Smith and the Invisible Hand: From Metaphor to Myth] by Gavin Kennedy (2009) ''Econ Journal Watch'', 6(2):239-263</ref>{{rp|240}}}}

Smith used what appears to have been a common 18<sup>th</sup>-century metaphor of an "invisible hand" just three times in his writings, referring to three different things. Today, [[Chicago school]] and [[Austrian school]] economists claim that what Smith had meant in the third instance in which he is known to have used it is that when an economy is dominated by private power, an invisible hand "guides" the allocation of resources in the most efficient and optimal manner for everyone in it.<ref name=kennedy/> However, Smith himself only used the term once in ''The Wealth of Nations'' in reference to the effect of international trade on domestic trade, specifically between [[Britain]] and [[North America]]n colonies. He argued against the idea that [[Globalization|liberalized international trade]] would destroy the English economy, writing that a "home bias" among English investors who didn't speak foreign languages or have reliable contacts overseas would probably prevent this.

===Industrial Revolution===
{{main|Industrial Revolution}}
Smith's ''Wealth of Nations'' was invoked during the Industrial Revolution by entrepreneurial factory owner's who argued for ''[[laissez-faire]]'' treatment of businesses. The resulting oppression of factory workers and rapid unemployment of cottage industry workers resulted in the rise of the [[Luddite]] movement to oppose the factory owners.<ref name=merchant>''Blood in the Machine: The Origins of the Rebellion Against Big Tech'' by Brian Merchant (2023) Little, Brown and Company. ISBN 0316487740.</ref>{{rp|77-78}}

===Adam Smith: Trickle-downer?===
Smith is often invoked by [[conservatives]] and [[supply side economics|supply-side economics]] advocates ([[Alan Greenspan]], adoring Smith's "clarity to the seeming [[chaos]] of market transactions," is the most infamous) despite the fact that Smith's actual beliefs are considerably more [[moderate]] than they are often portrayed.<ref>[http://www.washingtonpost.com/blogs/monkey-cage/wp/2014/04/22/adam-smith-is-not-the-antidote-to-thomas-piketty/ Adam Smith is not the antidote to Thomas Piketty] by Deborah Boucoyannis (April 22, 2014 at 10:14 a.m. EDT) ''The Washington Post''.</ref> One of Smith's more famous quotes is:

{{quotebox|People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary.<ref name=wealth>[https://www.ibiblio.org/ml/libri/s/SmithA_WealthNations_p.pdf ''An inquiry into the Nature and Causes of the Wealth of Nations''] by Adam Smith. Metalibri digital edition, 2007.</ref>{{rp|105-106}}}}

Or: [[business]]es love to form cartels to increase profits.

One of the key elements of ''The Wealth of Nations'' was his theory of rent. He rejected the idea that landlords deserved rent as payment for looking after and improving properties, noting that even unimproved land receives rent, and saw that an essentially antagonistic and [[Monopoly|monopolistic]] relationship exists between landlord and tenant. He deduced that the landlord will always set rent at the highest possible level at which the tenant can exist and be productive, so the tenant is left with "the smallest share <nowiki>[of his income or production]</nowiki> with which the tenant can content himself". Specifically in agriculture, the landlord seeks to leave the tenant farmer with only the basic share necessary for life and work: "Whatever part of the produce, or, what is the same thing, whatever part of its price, is over and above this share, he <nowiki>[the landlord]</nowiki> naturally endeavours to reserve to himself as the rent of his land, which is evidently the highest the tenant can afford to pay in the actual circumstances of the land."<ref>"[https://www.adamsmithworks.org/documents/chapter-xi-of-the-rent-of-land Of the Rent of Land]", Adam Smith, ''The Wealth of Nations'', Bk I Ch XI</ref> Marx praised this aspect of Smith's thought, while taking issue with Smith's views expressed elsewhere (e.g. on the value of labour).<ref>[https://www.marxists.org/archive/marx/works/1863/theories-surplus-value/ch14.htm Chapter XIV: Adam Smith’s Theory of Rent: 1. Contradictions in Smith’s Formulation of the Problem of Rent], Karl Marx, Theories of Surplus Value, 1861, at marxists.org</ref>

[[Amartya Sen]], in an article for the ''Financial Times'', notes "It is often overlooked that Smith did not take the pure market mechanism to be a free-standing performer of excellence, nor did he take the profit motive to be all that is needed." In addition, Smith supported the government intervening for the purposes of universal [[education]] or [[poverty]] relief, something agreed upon more by the center-left than conservatives.<ref>[http://www.ft.com/cms/s/0/8f2829fa-0daf-11de-8ea3-0000779fd2ac.html?nclick_check=1 Adam Smith's market never stood alone] by Amartya Sen (March 10, 2009) ''Financial Times''.</ref> 

''Wealth of Nations'' should also be understood in the context of Smith's ''Theory of Moral Sentiments'', which provided an overarching description of his [[moral]] system. ''Moral Sentiments'' argues that two of the most important guiding factors in human life are sympathy and conscience (which he referred to as "the impartial spectator") and generally explores many [[philosophical]] themes outside of economics proper.
 
It has also been pointed out that Smith basically supported some form of [[progressive tax]]ation, writing in ''The Wealth of Nations'':

{{quotebox|The subjects of every state ought to contribute towards the support of the [[government]], as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.<ref name=wealth/>{{rp|639}}}}

Smith worked for 12 years as Commissioner of Customs from 1778 to 1790,<ref>"Adam Smith in the Customhouse" by  Gary M. Anderson, William F. Shughart II & Robert D. Tollison (1985) ''Journal of Political Economy'' 93(4):740-75.9</ref> in charge of collection of customs and excise duties, during which time he recommended new taxes on inhabited property and malted barley to fund the war against the USA. This doesn't fit well with the American vision of Smith as a defender of freedom and enemy of taxation and tariffs.<ref>[http://www.econlib.org/library/YPDBooks/Rae/raeLS20.html Life of Adam Smith], John Rae</ref>

==Often ignored quotes==
{{quotebox|Civil government, so far as it is instituted for the security of property, is in [[reality]] instituted for the defence of the rich against the [[poor]], or of those who have some property against those who have none at all.<ref name=wealth/>{{rp|553}}}}

{{quotebox|Wherever there is great property, there is great inequality.<ref name=wealth/>{{rp|550}}}}

{{quotebox|Whenever the legislature attempts to regulate the differences between masters and their workmen, its counsellors are always the masters. When the regulation, therefore, is in favor of the workmen, it is always just and equitable; but it is sometimes otherwise when in favor of the masters.<ref name=wealth/>{{rp|115}}}}

{{quotebox|As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce.<ref name=wealth/>{{rp|43}}}}

{{quotebox|The violence and injustice of the rulers of mankind is an ancient evil, for which, I am afraid, the nature of human affairs can scarce admit a remedy.<ref name=wealth/>{{rp|380}}}}

{{quotebox|In the progress of the division of labour, the employment of the far greater part of those who live by labour, that is, of the great body of people, comes to be confined to a few very simple operations [...] The man whose whole life is spent in performing a few simple operations, of which the effects are perhaps always the same, or very nearly the same, has no occasion to exert his understanding or to exercise his invention in finding out expedients for removing difficulties which never occur. He naturally loses, therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is possible for a human creature to become.<ref name=wealth/>{{rp|602-603}}}}

{{quotebox|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.<ref>[https://www.ibiblio.org/ml/libri/s/SmithA_MoralSentiments_p.pdf The Theory of Moral Sentiments P. 4]</ref>}}

{{quotebox|No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.<ref name=wealth/>{{rp|66}}}}

==Adam Smith Institute==
[[File:Eamonn Butler (cropped).JPG|thumb|right|165px|Eamonn Butler in 2015]]
The {{wpl|Adam Smith Institute}} (ASI) is an extreme [[free market]] [[Neoliberalism|neoliberal]] [[think tank]] and [[lobbying]] organisation based in the UK. It calls for slashing the size of the state and leaving pretty much everything up to the market. Hence it represents the absurd caricature of Adam Smith that our article attempts to critique.

It was founded in 1977 by Madsen Pirie, Eamonn Butler, and Stuart Butler. After a year Stuart Butler moved to the US to join the [[Heritage Foundation]], while Pirie remained President and Eamonn Butler Director, positions they still hold as of 2022. It comprises three organisations: a British company, a British charity, and an American non-profit foundation.<ref name=guardian2018asi/>

In the 1980s it was closely associated with [[Margaret Thatcher]] and policies such as [[privatisation]] of state assets and the 1980s Poll Tax whose failure played a significant part in Thatcher's departure from the premiership. Pirrie was famous for saying "We propose things which people regard as being on the edge of lunacy. The next thing you know, they're on the edge of policy."<ref>[https://www.theguardian.com/politics/1987/dec/22/uk.past Adam Smith Institute's sense and nonsense], Alan Rusbridger, The Guardian, 22 Dec 1987</ref> This doesn't alter the fact that they're still lunacy.

Amongst its crazier ideas was to abolish all arts funding in the UK, and instead give every British citizen a £11 entertainment voucher that they could spend on what they liked.<ref>[https://www.theguardian.com/stage/theatreblog/2010/mar/17/adam-smith-institute-theatre-arts-funding Adam Smith Institute's proposals could mean curtains for UK theatre] by Lyn Gardner (17 Mar 2010 12.51 EDT) ''The Guardian''.</ref>

According to DeSmog, it has repeatedly argued that left-wingers and [[environmentalist]]s are panicking and exaggerating the dangers of [[global warming]], and the ASI has claimed a "mild warming" resembling natural climate change is all we can expect.<ref name=desmog/>

In 2018 it was investigated by the Charity Commission after offering contact with Conservative ministers in return for donations; it removed the offer from its website.<ref name=guardian2018asi>[https://www.theguardian.com/politics/2018/dec/01/rightwing-thinktank-deletes-offer-of-access-to-ministers-for-donors Rightwing thinktank deletes offer of access to ministers for donors], The Guardian, 1 Dec 2018</ref>

It is not transparent about its funding sources, but it has received US$ 1.4m from the [[John Templeton Foundation]].<ref name=desmog>[https://www.desmog.com/adam-smith-institute/ Adam Smith Institute] ''DeSmog''.</ref><ref name=guardian20191129>[https://www.theguardian.com/politics/2019/nov/29/the-us-donors-who-gave-generously-to-rightwing-uk-groups The US donors who gave generously to rightwing UK groups] by Rob Evans et al. (Nov 2019 01.00 EST) ''The Guardian''.</ref>

==External links==
*[http://www.bibliomania.com/2/1/65/112/frameset.html Wealth of Nations]
*[http://www.ibiblio.org/ml/libri/s/SmithA_MoralSentiments_p.pdf The Theory of Moral Sentiments]
*[http://plus.maths.org/content/adam-smith-and-invisible-hand Adam Smith and the Invisible Hand], ''Plus Magazine''
*[http://adamsmithslostlegacy.blogspot.com/ Adam Smith's Lost Legacy], a blog detailing the use and abuse of Smith's philosophy

==References==
{{reflist|2|80%}}

{{DEFAULTSORT:Smith, Adam}}
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Categories: Authors, British people, Classical liberalism, Deists, Economists, Liberals