Adam Smith’s liberalism

These days it seems that most people align themselves with either the political left or the political right. This rigid and simplistic dichotomy creates a lot of confusion as people try to dig up all the philosophers from ages past with the aim of classifying them as either left or right within the modern political lexicon. Hence the epic battle for Adam Smith’s legacy. If Adam Smith still walked the earth, would he be a left-leaning liberal or a right-leaning liberal? Is Smith's natural liberalism leftish or rightish? Does his defence of freedom mean that he was conservative? Does his defence of the poor mean that he was socialist?

At first sight these questions seem to have obvious answers. His most famous book is titled The Wealth of Nations, championing free markets, so it seems self-evident that he must be at the very least some form of capitalist.

For almost two centuries, Smith was hailed as the founding father of capitalism, with his 1776 [Wealth of Nations] seen as the definitive case for free trade and free markets.
 
James R. Otteson, ‘Adam Smith on Virtue, Prosperity and Justice’ (in JA Baker and MD White, Economics and the Virtues: Building a New Moral Foundation: OUP, 2016) 72.

But Smith's other great work, his Theory of Moral Sentiments shows that, in fact, he harboured moral sentiments. Now, this is a shocking thing to discover in relation to a capitalist because we know capitalists have no morality, hmmm. We tend to assume that capitalists are always right-wing in their politics, but we also suppose that only a left-winger would write a book about moral philosophy. So there's a real debate going on about Smith's legacy, owing to the rigidity and ridiculousness of trying to classify everybody as either Left or Right with no room for nuance or complexity.

​In the book, Prof McLean admits Smith is capable of being interpreted as belonging to the Left.

​"There are some parts of Smith's arguments to which the modern Right can legitimately lay claim. But, taking Smith's work as a whole, I think he can only be classed as an egalitarian and left-wing philosopher." 

The Scotsman, Father of Capitalism Adam Smith Would Back New Labour

But matters are not that simple. Anybody is capable of being interpreted as anything you like, depending on how you define your terms.

There is also the fluidity of modern terminology, where words generally mean the opposite of what you think, and often they carry a meaning that has no relationship to what you find stated in the dictionary. Liberal used to mean favouring free markets and limited government, but now that's labelled as Neo-liberal, so that the term liberal can be reserved for those who favour big government and state control of every aspect of human interaction.

As it developed in the late eighteenth and early nineteenth centuries, the intellectual movement that went under the name of liberalism emphasised freedom as the ultimate goal and the individual as the ultimate entity in society...

Beginning in the late nineteenth century...the term liberalism came to be associated with a very different emphasis, particularly in economic policy. It came to be associated with a readiness to rely primarily on the state rather than on private voluntary arrangements to achieve objectives regarded as desirable. The catchwords became welfare and equality rather than freedom.

​The nineteenth-century liberal regarded an extension of freedom as the most effective way to promote welfare and equality; the twentieth-century liberal regards welfare and equality as either prerequisites of or alternatives to freedom.

Milton Friedman, Capitalism and Freedom, 5.

The term progressive also doesn't mean what you think - you'd think everyone favours progress, but no, 'progressive' is simply a label to distinguish those who are not conservative in their politics.

Remember also that all these labels are often intended as insults directed at political opponents. If somebody calls you a 'bleeding heart liberal' that's not a compliment.

Similarly 'neoliberal ideology' is an insult used in relation to ideas that are deemed to be dangerous and harmful - like the idea that students are customers and the role of universities is to deliver what they paid for.

All these terms are just a form of mud-slinging from one side to the other, a short-hand way to signal that you consider the person to be quite thick.

Further confusion arises because social reform tends to revolve around the poor and vulnerable, and caring about the poor is identified these days as a key hallmark of the left-leaning liberal. “What about the poor?!” is the rallying cry by which socialists identify each other. This explains why anybody from ages past who voiced any concern for the poor now tends to be reclassified, in modern terms, as ‘progressive’. 

Now to the task of classifying Adam Smith. The fact that Smith actually voiced concerns about social and economic inequality is considered very shocking from someone who also championed free markets, due to the presumption that free markets only favour the 1%. Yet Smith saw markets as beneficial to everyone:

To hurt in any degree the interest of any one order of citizens, for no other purpose but to promote that of some other, is evidently contrary to that justice and equality of treatment which the sovereign owes to all the different orders of his subjects.

Adam Smith, Wealth of Nations.

​This is taxonomically problematic because, since at least the 1970s, concern for the poor has been trademarked and patented by the Left:

Since the 1970s, however, a succession of commentators has claimed that Smith was not a classical liberal after all but more like a progressive liberal: his concerns for the poor, his worries about the damage that excessive division of labor can do to workers, his criticisms of merchants and monopoly corporations, and his apparent support for progressive taxation all taken as evidence that he was no supporter of laissez-faire.
 
James R. Otteson, ‘Adam Smith on Virtue, Prosperity and Justice’ 72.

Given Smith's concern for the poor we are now given to understand that he must have been a champion of leftist politics, and actually a 'radical egalitarian' who would have mounted the barricades with the best of them:

[In his book] Iain McLean reexamines the radical legacy of Adam Smith, arguing that Smith was a radical egalitarian and that his work supported all three of the slogans of the French Revolution: liberty, equality, and fraternity.

Adam Smith, Radical and Egalitarian: An Interpretation for the 21st Century, Palgrave Macmillan, 2006.
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His redemption thus complete, it follows that Adam Smith would today be a card-carrying member of the Labour Party.

GORDON Brown is to claim that the father of modern economics and free market capitalism, Adam Smith, was spiritually an early member of New Labour, in a book published later this year.

The Chancellor had challenged Iain McLean, a professor of politics at Oxford University, to write a book on where one of the world's most famous Scots would feel "more at home" if he was alive today: on the centre-left or centre-right of politics.

And, in a foreword to Adam Smith, Radical and Egalitarian, published by Edinburgh University Press, Mr Brown makes it clear he believes the economist had a strong social conscience that would make him a political ally.

However Michael Forsyth, a former Conservative Scottish Secretary who is currently trying to raise money for a statue of Smith, said Mr Brown's attempt to snatch Smith's legacy from the hands of the Tories simply showed that Thatcherism had finally won the argument with the old Left.

The Scotsman, Father of Capitalism Adam Smith Would Back New Labour
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Gordon Brown wins that debate, as he was actually born in the same village as Adam Smith so he understands him best and has the superior claim to his legacy.

​Coming from Kirkcaldy, as Adam Smith did, I have come to understand that his Wealth of Nations was underpinned by his Theory of Moral Sentiments.

​The Scotsman, Father of Capitalism Adam Smith Would Back New Labour
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​The bar is not that high, as you can see: the discovery that any person has any semblance of philosophical or moral perspective is proof of their leftist credentials, based on the supposition that supporters of free markets are single-minded in their pursuit of mammon and crushing the poor for sport. Thus people get very surprised to discover that Adam Smith did not say 'let them eat cake' or anything remotely close to that, nor did he ever say that the poor should simply be stabbed in the back and then taken for all they're worth.

​Mr Brown writes: "Adam Smith always believed that the town centre was far more than a marketplace". 

​The Scotsman, Father of Capitalism Adam Smith Would Back New Labour
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Such staggering revelations from the Smithian annals come as a shock to many people who have all this time supposed that Adam Smith advised capitalists to be as greedy as possible, and never to leave the house to interact with other human beings unless they had something to sell to them for a vast profit.

To such people it is utterly confounding when they discover that the Wealth of Nations is not just a manual about buying and selling stuff and trampling on the poor in order to get rich as quickly as possible.

Flummoxed and winded by these revelations, the only conclusion they can draw at that point is that Smith must be a left wing 'progressive'.

Other examples: Milton Friedman and Rose Wilder Lane

Applying the same taxonomical analysis to other thinkers traditionally assumed to be classical liberal thinkers, Milton Friedman also now falls to be reclassified as a progressive leftist. After all, he thought that capitalism and freedom would create the most promising conditions for everyone to achieve prosperity and progress which would ultimately benefit the whole of society: and the whole of society includes the poor. This surely reflects a concern with the general welfare of humankind, which leads to the surprising conclusion that Friedman should rank as a leftie according to the prevailing classification.

So should all utilitarians, for that matter - in seeking the greatest happiness for the greatest number utilitarians exhibit the right elements of a 'strong social conscience'. After all, what else could 'the greatest number' mean, other than the majority of people in society, the 99%, the poor and downtrodden, those who are exploited by the 1%?
 
Rose Wilder Lane would also have to be understood today as the quintessential progressive, even though she was a great champion of capitalism, since she considered economic inequality to be infuriating and was deeply concerned about the poor. She was quite poor herself, for much of her life, and is rumoured to have spent much of her childhood wearing home-made clothes. Her family had to grow their own food, and if there was no harvest then they had to just starve or figure out some other solution because the government wouldn't be coming along to bail them out. This life of vulnerability and material hardship surely only lends greater validity to her impeccable leftist credentials. She wrote as follows about the rich in a time of inequality:

Many of them spend stupidly and wastefully as much as can possibly be spent in the most luxurious and decadent manners of living, and this spectacle is infuriating.

​Many a time when my bills and my debts have been piling up and my most frantic efforts have failed to dig a dollar or any hope out of this chaos, so that the nights were harder to live through than the desperate days, I have thought of those jewelled women carelessly dripping handfuls of gold pieces on the tables at Monte Carlo, of those quite charming necklaces worth a hundred thousand dollars and the fur coats for only $25,000. Did I say, infuriating? The word is mild.
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Rose Wilder Lane, Give Me Liberty
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Yet she saw capitalism and free markets as the best opportunity for the problem of inequality to be resolved.

This creates a huge amount of confusion for modern progressives who reason that anyone who is that concerned about inequality must surely be a supporter of state regulation and big strong governments? Because surely the only way for the poor to ever become less poor would be if someone from the government comes to help them.

To support both capitalism and improving conditions for the poor seems to be impossible. So, because she thought inequality was 'infuriating', Rose Wilder Lane will soon suffer the same fate as Adam Smith and be reclassified as 'progressive' in the modern sense.

You can apply the same analysis to anyone you come across, and it’s pretty much guaranteed that if they care anything for their reputation they’ll have said how much they like poor people, and thus come out as a left-leaning progressive. Have you ever heard anyone saying that they don’t care if the poor all starve to death? Me neither. Human beings do generally care about the welfare of those around them.

Unfortunately the self-appointed 'progressive' champions of the poor get very confused if they hear their political opponents discussing the plight of the vulnerable, and this confusion has led to the myth that classical liberal thinkers like Adam Smith must be some kind of closet or misunderstood progressives.
 
The Classical Liberal

How ridiculous and futile it is to try and classify ideas and thinkers into two political boxes, trying to shoehorn everybody into rigid and pointless philosophical categories. Instead, it would make more sense to evaluate ideas according to their own merit rather than trying to identify whether the writer is emitting progressive signals or conservative signals.
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Adam Smith's theory of justice was simply a version of the edict that we must ‘first, do no harm’:​

According to Smith, there are only three rules of justice: “the laws which guard the life and person of our neighbour,” “those which guard his property and possessions; and last of all come those which guard what are called his personal rights, or what is due to him from the promises of others.”
 
James R. Otteson, ‘Adam Smith on Virtue, Prosperity and Justice’ 81.
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So, don’t kill, don’t stab others in the back, don’t steal or destroy other people’s property, and keep your promises. That’s it.

To support this theory of justice you need criminal laws, maybe a prison in which to lock up murderers and thieves, a law of tort (to redress civil wrongs like fraud or negligence) and a law of contract (to catch up with those who break their promises to others).
 
It is obvious that the role played by law in a Smithian society is very different from what most people expect from the law today. We live in a time when people look to the law to fix all their personal problems and to generally ease their path through life. That's why when people want to commit suicide because they're fed up of life, they don't just go to some evocative clifftop and quietly jump into the sea, no, they campaign for laws to legalise euthanasia. Just think, if the law fails to step in and fix your problems you’d have to fix them yourself. I know, shocking.

Ideas of self-reliance which would have shocked nobody in 1776 would be considered quite unacceptable today. Two examples of how a truly Smithian world would look today will suffice:
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• There would be no Human Rights Act or Equality Act. You'd have your right to life and liberty and the pursuit of happiness and that would be it. You wouldn't be able to complain about discrimination on 'protected grounds' or anything like that, much less moan about how the 1% have more money than everyone else.
• There would be no Employment Rights Act or any form of employment protection. Unless somebody breached an actual contract they had agreed with you, you wouldn't be able to sue them.​

People would be governed in their daily interactions not by law, but by their sense of moral judgment or beneficence:

So failing in proper beneficence - a category that for Smith includes things like charity, compassion, generosity, and "humanity" - might give us a reason to disapprove of and be reasonably disappointed by another's behaviour, but it does not licence coercive punishment like retribution, jailing or fines.

James R. Otteson, ‘Adam Smith on Virtue, Prosperity and Justice’ 81.
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That sounds risky, and it really was. If you came across nasty people on your path through life, people who lacked any sort of moral compass and really couldn't be bothered about being nice to you, you'd have to figure something out as you wouldn't be able to call the police to come and take them away unless they committed an actual crime.

Risky, sure, but not anarchy or disaster because the truth is that most human beings are exactly like you - they are not interested in being nasty to other people but just want to go about their daily lives earning a living and enjoying the company of family and friends.
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