The story we’re beginning today is a story about one man but it’s also a story about the whole world. This one man happens to be an 18th-century economist. I hope that doesn’t kill your interest. Because this is a good story. This economist was born in Scotland in 1723; next year will mark the 300th anniversary of his birth. But his ideas are still incredibly powerful today. Why?
Mariana MAZZUCATO: There’s many reasons thinking was powerful — interestingly, not the reason that most people think.
He did think like an economist.
Eamonn BUTLER: He believes in free markets and a free society. There’s no getting around that.
But he was much more than that.
Russ ROBERTS: He forces you to look at yourself and realize what makes you tick, what pushes your buttons, rings your bells, uh, tightens your shoelaces.
Here is a sentence he once wrote, which may tighten your shoelaces:
John YULE: Man naturally desires not only to be loved, but to be lovely.
He was, himself, a lovely man.
Dennis RASMUSSEN: He always had lots of friends. He was a good-natured guy, very easy to get along with.
He did have quirks.
RASMUSSEN: Very absent-minded, mumbling to himself not really paying attention to what’s going on.
But it was his ideas that mattered. And his ideas have reverberated.
Barack OBAMA: It means if you work hard, you should make a decent living. If you work hard, you should be able to support a family.
His ideas have been interpreted.
Milton FRIEDMAN: In the economic market, people who intend to serve only their own private interests are led by an invisible hand to serve public interests that it was no part of their intention to promote.
And they’ve been reinterpreted.
BUTLER: He certainly influenced Mrs. Thatcher.
Today, people are quite sure they know exactly who he was.
JACK: He was like the father or the founder of capitalism.
ROBERTS: Father of laissez-faire capitalism.
Glory LIU: The father of economics.
Craig SMITH: I do kind of groan a little when people say, “Oh, founding father of economics.” There’s more to him than that.
His name, by the way, is Adam Smith. It’s a pretty generic name — but the man was quite singular.
RASMUSSEN: He worried about the ways that wealth and an emphasis on material goods can corrupt people’s moral sentiments.
The Theory of Moral Sentiments. The Wealth of Nations. Those were the books Adam Smith left behind. Today on Freakonomics Radio, let’s take a trip to see what else he left behind.
George PROUDFOOT: What we’re looking at is where Adam Smith’s house was.
Come with us in search of the real Adam Smith. Like I said, it’s a good story — and this is the first episode in what we think will be a three-part series. It begins right now.
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If you know anything at all about Adam Smith, it probably comes from his second and most famous book, The Wealth of Nations. Full title: An Inquiry into the Nature and Causes of the Wealth of Nations. It’s a big book, with annotated editions running more than 1,000 pages.
LIU: It’s not the wealth of individuals, it’s The Wealth of Nations, right?
You may have also heard Smith’s most famous phrase, “the invisible hand,” which his disciples use to describe how the economy should work.
RASMUSSEN: They picked out the phrase “the invisible hand,” which he uses just two or three times and made that the central feature of who Smith was.
And maybe you’ve read some of Smith’s first book, The Theory of Moral Sentiments. But probably not.
ROBERTS: I thought, “Well, I don’t have to read this because it’s not economics.” It’s philosophy or psychology, you could call it. And I didn’t read it forever. Most economists don’t.
That first book — the one no one reads — it is essentially a call for what many modern liberals say they most believe in: sympathy. The second book, the famous one, is a call for what many modern conservatives say they most believe in: a free-market economy with less government involvement. Since most political people aren’t willing to hold two potentially conflicting ideas in their mind at the same time (or even ever), they often simply ignore the idea they don’t like. In the case of Adam Smith, the conservatives have done a much better job of late promoting his views than have the liberals; the liberals tend to disparage Free-Market Smith without offering Sympathetic Smith as balance. Both sides have turned him into a caricature. Here’s something the economic historian Robert Heilbroner once wrote: “No economist’s name is more frequently invoked than that of Adam Smith, and no economist’s works are less frequently read.” Obviously, that’s an exaggeration — there are plenty of dead economists that no one reads — but you get the point: this brilliant and sympathetic man has been turned into a cardboard cutout. Our mission today is to try to turn the cardboard cutout back into the real Adam Smith. So let’s begin at the beginning.
Adam Smith was born in 1723 in Kirkcaldy, Scotland.
BUTLER: So you have to pronounce it “kir-CODD-ee.” “kir-CODD-ee.”
Sorry — Adam Smith was born in 1723 in Kirkcaldy, Scotland. It’s a small port city on the east coast, in Fife County. It lies just across the Firth of Forth from Edinburgh.
TRAIN ANNOUNCER: We are now approaching Kirkcaldy. Please mind the gap when alighting from this train.
We were meeting up with another Kirkcaldy native. His name is John Yule.
YULE: Stephen, pleased to meet you.
DUBNER: Very pleased to meet you, John.
YULE: It’s a pleasure. It’s wonderful to have you here — Kirkcaldy, my hometown.
DUBNER: Born and raised?
YULE: Not born. I was born in Edinburgh, but raised in Kirkcaldy.
Yule is in his mid-70s; he’s an actor and a playwright. One of his plays is called The Invisible Hand; it’s about the life and times of Adam Smith. It is a work of history but also a work of John Yule’s imagination.
YULE: I get thrilled by this. I’m not an academic, I’m not an economist. I concluded that Smith’s just been misunderstood.
Okay, so where are we going first?
YULE: We’re going to the old Kirk, where Adam Smith was baptized.
A “kirk” being Scottish for “church.”
YULE: Yes — old, old stuff.
DUBNER: How old is Kirkcaldy?
YULE: Oh, it’s old. It was just one long town from the harbor, a long stretch, just along the coast.
DUBNER: And the industry back then, or how did people make a living — fishing?
YULE: Fishing. Salt. Mining. A lot of mining. The place was riddled with coal mining. And trade.
Trade was important to Kirkcaldy, and it would turn out to be very important to Adam Smith. Now we’re approaching the old church.
YULE: George! I hope you haven’t been waiting there!
DUBNER: George, I’m Stephen. Good to meet you.
PROUDFOOT: George Proudfoot.
DUBNER: How do you do?
George Proudfoot is chair of the Kirkcaldy Civic Society and director of the Adam Smith Global Foundation. Once we get inside the church, we also meet Rosemary Potter.
POTTER: I’m the chair of the trust that owns the Old Kirk now.
We’re visiting on a Monday morning. But, lucky for us, the church organist has come in to practice.
POTTER: So this is where Adam Smith begins. He was baptized. The only reason we know his tercentenary is next year is because of the record in the church here that he was baptized on the 5th of June. We’re in the 1807 part of the church.
DUBNER: The new part.
POTTER: The new part. But the part that Adam Smith would have known, and would have come through is the tower, which is 15th century. That’s the pulpit, so he would have been baptized in the front of the church there.
DUBNER: And you’ve got the graveyard or what you call the kirkyard outside. Are any of his relatives, maybe his father buried there?
POTTER: That we do not know, because there’s no records from that date. They were lost, they were lost in a ship.
DUBNER: In a ship? Why were the church records in a ship?
POTTER: They were taking them over to Edinburgh. So we don’t know if they were in that or if they were just not recorded. We don’t know.
Okay, so what do we know about Adam Smith and his family? His father — Adam Smith, Sr. — died shortly before Adam was born; he had worked at the port in Kirkcaldy as a customs agent — essentially, a tax collector. His death did not throw the Smiths into poverty, as Adam’s mother came from money. She was born Margaret Douglas; the Douglases were one of the oldest and most powerful families in Scotland. Adam was Margaret’s only child; they were very close, and they would remain so until her death many years later. And Adam never married, by the way. As a boy in Kirkcaldy, he got an excellent education.
PROUDFOOT: In the various biographies, it was well-recognized that he got good schooling.
That’s George Proudfoot.
PROUDFOOT: Not everywhere had a good school. Dare I say it, grammar schools would be very, very patchy. But he was fortunate. For example, it was not normal to teach Greek, but the schoolmaster recognized Smith’s intellectual talents and then taught him some Greek. And of course, that was very, very useful because when he went to Glasgow University when he was 14, some of the classes were indeed taught in Greek, so he had a head start!
That’s right: Smith enrolled at Glasgow University at age 14, and he studied under a forward-thinking philosopher named Francis Hutcheson. This would start Smith on a lifetime of study, teaching, and writing in the fields of philosophy, theology, astronomy, ethics, jurisprudence — and, yes, political economy. But why is it his voice, one of the few from 300 years ago, that still echoes in the modern era? Here, for instance, is U.S. President Ronald Reagan from a 1988 radio address:
Ronald REAGAN: The freedom to trade is not a new issue for America. In 1776, our founding fathers signed the Declaration of Independence, charging the British with a number of offenses, among them — and I quote — “cutting off our trade with all parts of the world,” end quote. And that same year, a Scottish economist named Adam Smith launched another revolution with a book entitled The Wealth of Nations, which exposed for all time the folly of protectionism.
And here’s Barack Obama, when he was president, in 2013.
Barack OBAMA: This shouldn’t be an ideological question. It was Adam Smith, the father of free-market economics, who once said, “They who feed, clothe, and lodge the whole body of the people should have such a share of the produce of their own labor as to be themselves tolerably well fed, clothed, and lodged.”
LIU: Everybody loves to quote Adam Smith. Everybody wants Adam Smith on their side.
And that is Glory Liu, a political scientist at Harvard.
LIU: People quote from the Bible to support whatever their views happen to be, right? That more or less happens with The Wealth of Nations. Like, it is very easy to quote things from The Wealth of Nations without context and to have them support their views.
Liu just published a book called Adam Smith’s America: How a Scottish Philosopher Became an Icon of American Capitalism.
LIU: I think one reason that Smith has had such staying power is because he wrote on some of the most important questions about the human condition. What are the origins of morality? Are we selfish or are we benevolent? And then, of course, with The Wealth of Nations, how do you understand the forces of national wealth? What makes a nation happy and productive? These are questions that aren’t going away. And so I think that that is certainly one reason why Smith is timeless — because Smith’s questions are timeless.
Coming up after the break: timeless questions and, it turns out, timeless answers.
LIU: You need to pay attention to how people are producing and where they’re producing and what they’re producing.
This is Freakonomics Radio; I’m Stephen Dubner, in Scotland, in search of the real Adam Smith.
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The questions that Adam Smith was asking in the mid-18th century may not strike you as the kind of questions an economist might ask today. There’s good reason for that. In Smith’s day, he was primarily known as what’s called a moral philosopher. As the political scientist Glory Liu tells us, moral philosophy came with its own set of questions.
LIU: Where do our moral judgments come from? How do we learn what’s right and wrong? What counts as virtue?
And these are the questions that animate Smith’s first book, The Theory of Moral Sentiments.
LIU: What is it like when we see somebody in pain? How do we feel when we tell a joke, and somebody doesn’t laugh? That is actually an example in the book. And he uses all of these experiences to show how moral rules emerge from experience. I see The Theory of Moral Sentiments as showing this deeply humanistic, curious, and imaginative person, interested in what makes humans tick in all spheres of life.
In Adam Smith’s hometown of Kirkcaldy, the people planning his 300th birthday party suspect it may be easier to just call him an economist.
PROUDFOOT: A lot of people do not know who Adam Smith is, and to tell them that he is a moral philosopher — I mean, that just turns people off because they have no idea what a moral philosopher is.
George Proudfoot walks us from the old church down into the town center so we can see what Adam Smith used to see.
PROUDFOOT: This is the high street. The reason why it’s a wider part of the street is because this is where the market was. And he would see the local trading market. He would see local artisans selling their goods here.
DUBNER: What would they have been selling then?
PROUDFOOT: Mostly it would be finished products from agricultural type of activities. Things like leather-making, their local breads, ales, etc.
DUBNER: And was the market open every day or were there market days, do you know?
PROUDFOOT: There were typically market days and there were also the very special days that there would be markets. But it would be busy. Because it would attract people from the hinterland of Kirkcaldy, farms, etcetera.
DUBNER: Oh, so it was a big market town.
PROUDFOOT: Oh yes, oh yes. It was a big market town. And of course, that was very, very important from Adam Smith’s point of view, because he would observe that. He would observe the exchange of goods, the buying and selling.
Kirkcaldy wasn’t just a big market town. It was also a royal burgh; this was a designation from the British government — from the Crown, essentially — which gave certain advantages to local landowners, or burgesses.
PROUDFOOT: It didn’t cost them to sell their goods in the town. They had special privileges in terms of being able to trade.
DUBNER: That’s a big deal.
PROUDFOOT: Oh, it’s a big deal.
DUBNER: How many royal burghs were there in this neighborhood?
PROUDFOOT: Well, there was half a dozen in the Fife area. That was very, very important. But also it had another side, which Smith recognized as well, as it almost created a monopolistic situation, where it was a closed shop!
DUBNER: Right. So if you were a farmer and you had some things you wanted to come sell, unless you were part of the —
PROUDFOOT: You had to pay tolls to come into Kirkcaldy. And you also had to pay to have your stall here. Very often though, the richer farmers also were burgesses, because they had to have a house in the town. So they had the best of both worlds.
What George Proudfoot is describing here is how the landed gentry — families like Adam Smith’s family — how they stayed landed, and wealthy. They operated as a sort of cartel, kicking up taxes and fees to the Crown, which in turn let the burgesses dominate local trade. Proudfoot walks us further down the high street. Just a few hundred yards away is the wide-mouthed port where Adam Smith’s father worked as a customs officer.
DUBNER: Just a basic question. We’re looking at — it’s called the Firth of Forth, is that right? Can you explain those words? I know “of.” What’s a firth and what’s Forth?
YULE: Inlet, “firth” is the inlet, is it?
PROUDFOOT: This is the last part of the river.
DUBNER: So it’s an estuary, because it’s going both ways.
PROUDFOOT: It’s a Scottish word for —
DUBNER: And then Forth means—
YULE: The river.
PROUDFOOT: It’s the name of the river.
DUBNER: Oh, it’s the name of the river.
PROUDFOOT: The name of the river. It’s a wee bit shorter than the Hudson River.
We press on a bit further.
PROUDFOOT: What we’re looking at is where Adam Smith’s house was. And the reason why I say where it was is because it was knocked down in 1834 and replaced by the building that we see just now. So it’s most unfortunate we don’t have the actual building itself.
DUBNER: But this is incredibly central to everything.
PROUDFOOT: It’s very central living. And that’s the thing that’s got to be understood, that he would see everything which was central to how Kirkcaldy, as a town, operated. He’s an observer. He’s taking everything in. And he will have been asking questions of people as a child and trying to understand, literally trying to understand how, let’s say, trading worked.
DUBNER: I don’t mean to be rude, but how do you we know that? I mean, we could assume that he was curious and observant and asking people as a child. But we don’t really know, do we?
PROUDFOOT: Well, I would say that writings suggested that he was certainly, he was looking at things. In the early part of The Wealth of Nations, he talks about pin manufacture. That wasn’t in Kirkcaldy though, that was in the next village to here.
If you’ve read even a little bit of The Wealth of Nations, you may recall the passage George Proudfoot is talking about: the pin factory. When modern readers see the word “pin,” we think of a little thing, like the pins you remove from the packaging of a new shirt. In 18th-century Scotland, pins were hefty fasteners made of iron and used in all sorts of industrial settings.
PROUDFOOT: It would be for timber constructions. It would be for shipping. Anything attached together.
In the book, Smith describes how each of the workers at the pin factory had a specialized task: one would draw out the iron, another would straighten it, another would cut it, and so on. By dividing up the process like this, a group of factory workers could produce hundreds of pins a day. What if each worker had to make a pin from start to finish? Here’s how Smith put it in The Wealth of Nations (as read by John Yule):
READER/YULE: If they had all wrought separately and independently, and without any of them having been educated to this peculiar business, they certainly could not each of them have made twenty, perhaps not one pin in a day.
By telling a small story about the pin factory, Adam Smith was making a larger argument, about some of the ingredients required for a thriving economy: specialization in labor and the division of labor. Smith was not afraid of large arguments.
LIU: What is Smith trying to explain in The Wealth of Nations?
Glory Liu again.
LIU: If you go at it with the mindset that this is a book of economics, the way that we understand the field of economics today, you’re going to narrow your field of vision. The structure of The Wealth of Nations is not just looking at what happens at the level of individual motivations. By the time you get to Book Three, Smith is looking at institutional history from, like, the fall of Rome to the beginning of modern Europe.
DUBNER: What was Smith’s primary purpose of publishing that book, or what did he hope would come of it?
LIU: I think that Smith is hoping that educated readers will understand that national wealth is not measured in terms of gold and silver coin. And that actually, you need to pay attention to output. You need to pay attention to how people are producing and where they’re producing and what they’re producing.
The dominant economic ideology of Smith’s day was called mercantilism. Mercantilists believed that economic value was based on how much gold a country had to buy the goods it needed. This could look something like a zero-sum game: gold or coin exchanged for wool or leather or flour; wool or leather or flour exchanged for gold or coin. How these goods were produced — not only the physical inputs but the human motivation — this hadn’t been thought of as particularly relevant. Adam Smith changed that. Here’s a famous passage from the first of five books that make up The Wealth of Nations:
READER/YULE: It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love.
LIU: Ah, yes, the butcher, baker, brewer, right? We don’t get our meals out of benevolence, but out of self-interest — mutual exchange and mutual benefit. Smith in Book One is really just outlining some of the principles and observations he’s making about economic life, right? Like, how do we get our needs? We don’t get our needs from benevolence alone. We get our needs because we also care about our own interests, and it turns out everybody else does too.
This argument — that self-interest is a sort of all-purpose economic lubricant — it may seem obvious today. But in the age of mercantilism, it was not at all obvious. This is why Adam Smith is called the founder of modern economic thought.
LIU: Yes. The state of the field was not like, “I’m writing a new economics textbook for millions of college students in the United States to get their college degree.” The state of the field was, “Are we going to beggar other nations and send more gunboats out so that we can hoard more gold and coin? Or should we actually care about whether we have regulations that prevent people from working in jobs that would actually give them a meaningful way of life?
Right next to the site of Adam Smith’s house in Kirkcaldy, there’s a plaque. It’s splattered with bird poop, but George Proudfoot can still make it out.
PROUDFOOT: The sign says: “Adam Smith, 1723-1790, born in Kirkcaldy. And it also says on this site stood the home of his mother in which he lived from 1767 to 1776, and completed The Wealth of Nations. His grave is in the Canongate churchyard in Edinburgh, and the sign itself here was erected in 1953. But you see, the reference is The Wealth of Nations. It doesn’t say The Theory of Moral Sentiments, but The Theory of Moral Sentiments tells you so much more about Smith than what The Wealth of Nations does.
DUBNER: So this was erected ‘53. Who put the sign up?
PROUDFOOT: The Kirkcaldy Antiquarian Society.
DUBNER: And why do you think they didn’t acknowledge The Theory of Moral Sentiments?
PROUDFOOT: I think our understanding of Smith has moved on. That would have been “the book” which people well recognized. But for Smith scholars, of course, there’s no question about it. The Theory of Moral Sentiments is an extremely important book. You see the humanity and understanding of people from The Theory of Moral Sentiments, even more so than The Wealth of Nations.
Coming up, we hear from one Smith scholar who agrees.
SMITH: The Theory of Moral Sentiments is the more interesting, the richer, in many ways, the more innovative of the two books.
And: why was all this innovation happening in Scotland? I’m Stephen Dubner; this is Freakonomics Radio. We’ll be right back.
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Okay, so Adam Smith left his hometown of Kirkcaldy when he was 14 years old, in the 1730s, to attend the University of Glasgow, roughly 60 miles away. What was the state of Scotland in the 1700s?
RASMUSSEN: They start the century as a poor, backward outpost on the fringe of Europe.
That’s Dennis Rasmussen, a political theorist at Syracuse University.
RASMUSSEN: By the middle of the century, it’s really one of the cultural leaders of the whole continent, to the point that even Voltaire admitted — I think a bit ruefully — that now it’s to Scotland, of all places, that we look for our idea of civilization.
So what happened? How did Adam Smith’s Scotland go from backward to forward so quickly?
RASMUSSEN: I’d say that Scotland was undergoing an economic boom at this time, thanks in large part to the union with England that created Great Britain in 1707 — brought with it, you know, greater access to the markets of England and the colonies.
And this economic boom — evidenced by the pin factories and the abundant ship traffic that young Adam Smith had watched back in Kirkcaldy — this helped produce what came to be called the Scottish Enlightenment, which was in full flower by the time Smith enrolled at the University of Glasgow.
RASMUSSEN: You have Francis Hutcheson, who is Smith’s teacher. The common-sense philosopher Thomas Reed. Adam Ferguson. The founder of modern geology was a guy named James Hutton. A famous chemist named Joseph Black. There was James Watt of steam-engine fame. Important artists — the painter Alan Ramsay, the architect Robert Adam. So it really spanned a whole variety of fields.
DUBNER: I want to know why this all happened in Scotland. My naive reasoning has always been, “Well, there were a lot of well-educated people, strong literacy and university tradition, and it was cold and dark for much of the year. So you might as well stay inside and ponder the nature of the human condition.” But I have no idea if that’s right, tell me.
RASMUSSEN: Yeah, maybe that’s not far off. So it was probably the most literate society in the world at that time, thanks to this innovative series of parish schools, excellent universities, lots of clubs, debating societies, a really thriving publishing industry. So there are a lot there’s a lot of cultural ferment, economic boom going on at this time. It’s a really unbelievable renaissance.
Adam Smith thrived at the University of Glasgow, studying moral philosophy under Francis Hutcheson. Upon graduation, he won a scholarship to Balliol College at Oxford University in England. Glory Liu again:
LIU: And the conditions of the scholarship are that you enter into the Episcopalian ministry afterward.
DUBNER: To be fair, a lot of university education at this point was pointed in that direction, yeah?
LIU: Exactly. So that doesn’t necessarily indicate that he was a committed Episcopalian. This was just a convenient way for him to attend Oxford.
But Smith disliked almost everything about Oxford — especially the professors, whom he found both haughty and lazy. Years later, in The Wealth of Nations, he’d blame the incentives, explaining that professors were paid well whether they taught well or not. “In the university of Oxford,” he wrote, “the greater part of the public professors have, for these many years, given up altogether even the pretense of teaching.” Smith also disliked Oxford because he was made to feel like a country bumpkin. He apparently kept to himself, almost entirely. This solitude turned out to be productive.
LIU: When he’s at Oxford, he starts reading David Hume’s Treatise on Human Nature, and gets in trouble for it because Hume is seen as like this blasphemous atheist. But Hume is also the single most important intellectual influence on Smith’s life.
RASMUSSEN: Hume is widely seen today as maybe the greatest philosopher ever to write in the English language. He was famous during his time. Sometimes it might be better to say “notorious,” because of his irreligious or anti-religious writings. He was 12 years older than Smith, and he had finished writing almost all of his philosophical works before Smith even began to write his.
As philosophers go, David Hume was an empiricist.
RASMUSSEN: Meaning that he thought that all knowledge comes through experience, through the senses, rather than through some kind of abstract reason.
DUBNER: Was he a fun guy?
RASMUSSEN: Yes, Hume was maybe the best-natured philosopher who ever lived. He was a big, jovial guy who liked to, you know, drink and eat with his friends and play cards and have fun. He was almost universally known during his time in France as Le Bon David, the Good David. So he was very well-liked by those who were close to him — including very religious people, the ministers among the Scottish literati. So it’s an interesting contrast. He was very widely hated for his blatant irreligiosity, but also very well loved by people who knew him well.
DUBNER: The fact that he was called le Bon David, does that mean there was a Mal David as well?
RASMUSSEN: I don’t know of one. He was just universally known as being a good, affable guy.
So what was David Hume, le Bon David, the famous irreligious philosopher — what was he to Adam Smith? Smith began as a fan, reading Hume in his room at Oxford. Ultimately, they became friends.
RASMUSSEN: Correct. So they’re both from Scotland. Hume is from just south of Edinburgh. Smith is from just north of Edinburgh. Much of their time they actually didn’t live together in the same city. So they actually spent much less time together than you might expect, given that they were best friends, which they were.
LIU: Yes, yeah, Adam Smith and David Hume are best friends. It’s very cute.
RASMUSSEN: In their letters to one another, they call each other “my dearest friend,” which they don’t say to anyone else. It’s very clear that they regard each other as their closest friend. They both asked the other to be their literary executor when they were dying, or feared they might be dying.
Dennis Rasmussen has published a book called The Infidel and the Professor. The subtitle is David Hume, Adam Smith and the Friendship That Shaped Modern Thought. I asked him if that claim isn’t a bit bold.
RASMUSSEN: It is a bold claim. My defense of it, the reason I went with it, was that very clearly, Hume shaped every element of Smith’s thought that there is, and Smith himself shaped modern thought and the modern world in a deep way. Which is why you’re doing this podcast series on him.
Indeed, scholars like Rasmussen see David Hume’s fingerprints all over Adam Smith.
RASMUSSEN: You can trace Hume’s influence on virtually everything that Smith ever wrote.
For instance, even though Smith would become known as a champion of free trade and of a commercial society in general, his view was remarkably nuanced. He weighed not just the benefits but the costs — especially the human costs.
RASMUSSEN: He recognized the real potential drawbacks and dangers of commercial society, the ways that commerce can produce great inequalities, the ways that the division of labor can exact an immense cost in human dignity by making people feeble and ignorant. The idea being, you know, you spend your whole life making the 17th part of a pin. You don’t have any opportunity to exercise your body or your mind. He worried about the ways that wealth and an emphasis on material goods can corrupt people’s moral sentiments.
This wrestling that Smith did, with how individual humans fit into a rapidly industrializing economy — all that was to come years later. Let’s get back to his bruising experience at Oxford. From Oxford, he retreated to Kirkcaldy, where he spent the next two years living with his mother — an 18th-century version of failure to launch. Almost nothing is known about that time in Smith’s life — although John Yule, our playwright friend, suspects that Smith was in a deep funk. In his play, here’s what Yule has Smith’s mother saying to him:
Margaret SMITH: You need help. You spend hours talking to yourself, conversing with some imaginary companion. You are distracted, absent-minded. Lord, one morning you walked several miles along the seafront in your nightshirt! You don’t look at me when I talk to you. You have simply withdrawn from me. I cannot and I will not tolerate it.
However true or untrue that depiction may be, Smith did ultimately break his isolation. He was hired to give freelance lectures in Edinburgh on rhetoric and jurisprudence. And in 1751, he was offered a faculty position at the University of Glasgow, his alma mater. He soon became chair of moral philosophy, and it was the lectures he gave in that capacity which would become his first book, The Theory of Moral Sentiments. Glasgow suited him well.
RASMUSSEN: Edinburgh was the political and ecclesiastical capital of the country. This is where a lot of the decision-making was made. But it was also a very cramped, squalid, filthy, stinky place. Whereas Glasgow was the opposite. It was open and airy and well-designed. It was dominated by its first-rate university that Smith was part of.
Well, if Smith was a part of it, we wanted to be a part of it too. So we got back on the train …
ANNOUNCER: We’ll soon arrive at Glasgow Queen Street High Level, which is the last station on this route.
… and we found the most appropriate gentleman to be found.
SMITH: My name is Craig Smith. I am the Adam Smith Senior lecturer in the Scottish Enlightenment.
DUBNER: I assume the answer is no, but I would be remiss if I didn’t ask. Adam Smith, Craig Smith — no relation, I assume?
SMITH: Sadly not. No relation. Although I do say to people you can at least say you met a Scotsman called Smith and talked about The Wealth of Nations in Glasgow.
Craig Smith walks us over to what is now called the Adam Smith Business School. These are not the same buildings where Adam Smith taught in the 18th century; this campus was built in the 19th century, as the university expanded. In the entry hall of the business school, at the foot of a grand wooden staircase, there stands a marble statue of the man himself.
SMITH: So he’s standing with his hand on a book and the volumes piled up around about him. And we’re told that he was a little bit — sometimes a little bit careless of his appearance. So if you look — see the button is undone in the end of the middle of his waistcoat. So that’s supposed to have been a symbol of him. So it was Smith, the academic, essentially, this one.
DUBNER: And he was also known to be a bit forgetful or —
SMITH: Yes, yes.
DUBNER: Maybe not forgetful, but involved with his own mind, let’s say, yeah? He looks — this Smith looks like someone I’d want as my professor.
SMITH: He does. And he’s a good luck symbol to the students. So there’s a little tape to keep the students from touching him.
SMITH: Because the hall upstairs is used for exams, and there was a habit of touching him for good luck as you go up the stairs.
From the Adam Smith Business School we head to the Adam Smith Building, which houses the social sciences. This is where Craig Smith keeps his office. There are students rushing through the hallways, and we grab one. His name is Alvaro, he’s from Spain, and he says he’ll be writing his dissertation on the Scottish Enlightenment. I ask Alvaro what he knew about Adam Smith before coming to Glasgow.
ALVARO: Nothing at all. I’ve only heard of him in, like, mainstream media. There’s this concept that he’s an ultra-capitalist, that he’s willing to override the rights of everyone, etc. And this course has opened my mind in the sense that it’s not that simple. And Adam Smith does recognize the flaws of capitalism.
We duck into Craig Smith’s office. It’s quiet and orderly; his shelves are stuffed with philosophy books, biographies, and a vast array of Smithiania.
SMITH: I’ve always tried to introduce students to the other elements of his thought to show that he’s a richer thinker and a more complex thinker. I mean, I happen to think that of the two books, The Theory of Moral Sentiments is the more interesting, the richer, in many ways, the more innovative of the two books.
DUBNER: I’m really curious to know why you say that. I mean, I recognize that Theory of Moral Sentiments is a very moving book on the human condition, really. But Wealth of Nations really took a step back and tried to describe how the global economy worked. And this was a long time ago. So why would you give the more innovative label to Moral Sentiments?
SMITH: To be fair to Smith, I think what he does in The Wealth of Nations is radical. But he’s not the first person to try to do that. He’s not the first person to try and write a moral philosophy but he is the first person, I think, to try and understand the reality of what it is to make a moral judgment. So Smith’s moral philosophy is not about telling you, “Here’s how you should live your life. Here’s a program.” It’s predominantly about explaining to you what happens when you make a moral decision. And the way in which he does that, I think, is really, really quite striking. He’s able to point to things that readers today recognize in their own lives as reactions that they have to scenarios. And he’s able to build that and make an account, a coherent account of all of the different things that come together to make our moral lives. I think that’s a very radical thing to do in moral philosophy.
DUBNER: It almost sounds as though you’re saying that Smith described our daily behavior and our moral behavior in a similar way as he describes economic transactions, which are: there are costs and benefits to everything. And sometimes the things that we think may be beneficial to us, like being selfish, in fact, have costs in the long run that make us worse off.
SMITH: Yeah, No, I think that’s right. And I think he also points out that there’s a whole set of other considerations that people have. So cost-benefit analyses, they’re part of human life. And he explores that brilliantly in The Wealth of Nations. But it’s also true that there are other concerns that people have — about reputation, about sympathetic engagement with other people, about trying to do the right thing. And those are equally a part of human experience. You can’t have a rounded vision of what it’s like to live a human life without both of those elements being present.
DUBNER: If Smith were alive and thinking and writing and teaching today, let’s say here at Glasgow, which department would he be in?
SMITH: Oh, that’s a good question. Yeah, well he was such a polymath. So moral philosophy, as he taught it, encompasses a range of different academic disciplines now. So he had a bit of economics, a bit of ethics, a bit of political science, a bit of jurisprudence, a bit of philosophy of science, a bit of literary studies.
DUBNER: How would you describe his teaching style or his persona?
SMITH: Yeah, this is interesting. So we have notes from a student who says that when Smith started lecturing, he tried to adopt the style of his teacher, Francis Hutcheson — to be a kind of extemporary preacher, you know, to just stand and relate the work to the students. But then he discovered he wasn’t very comfortable doing that. So the description we have is of him standing with his notes and working very close to his notes and encouraging the students not to take their own notes, but to listen attentively to what he was saying. At one point he’s supposed to have said, “I hate scribblers,” because they put him off when he was giving his lectures.
DUBNER: The sound of other people scribbling, you mean?
SMITH: Yeah. He was very well thought of, though. The students admired him, as his classes were particularly large. He attracted students from around the world to come to Glasgow.
DUBNER: So on Rate My Professor, he had a good rating, yeah?
SMITH: Yes. Yeah. Well, you could buy a bust of Smith from a shop in Glasgow. So he was obviously well-regarded, well-liked by his students.
How many philosophy professors do you know who attract students from around the world, who have a bust in the campus bookstore? Adam Smith was plainly an extraordinary thinker, and writer. There are Smith scholars who wish he’d written much more than he did — or at least published more than he did. There were just the two books, The Theory of Moral Sentiments and The Wealth of Nations — multiple editions of each, since he was an inveterate reviser. He also published a few essays — on the history of astronomy, for instance; but all his unpublished writings were burned upon his death; that was a common practice at the time. There was one other published work. It’s a letter he wrote following the death of his best friend David Hume. Here again is Dennis Rasmussen.
RASMUSSEN: This letter ended up being maybe the most controversial thing that Smith ever wrote. It came in this very highly charged atmosphere because of Hume’s irreligiosity. Few people in 18th-century Britain were as forthright in their lack of religious faith as Hume was. And as a result, as he neared his end, everybody wanted to know how he would face death. Would he show remorse? Would he maybe even recant his skepticism? And so Smith wanted to tell this story for people. He wrote what was effectively the authorized version of the story of Hume’s death. Smith doesn’t explicitly call attention to Hume’s impiety in the letter, but he does make very clear that Hume died with remarkable good humor and without religion. He chronicles — maybe even flaunts — Hume’s cheerfulness and equanimity during his final days. He depicts Hume telling jokes, and playing cards, and conversing cheerfully with his friends. He also emphasizes the goodness of Hume’s character. He concludes the letter in one of the most fateful sentences that Smith ever wrote. He says that Hume, his unbelieving friend, “He approached as nearly to the idea of a perfectly wise and virtuous man as perhaps the nature of human frailty will permit.” And so this letter — I mean, this isn’t nearly as well known, of course, as his two books today — but this caused an absolute uproar in Smith’s time. Smith later very famously said that “This letter brought on me ten times more abuse than the very violent attack I’d made on the entire commercial system of Great Britain” — meaning, of course, The Wealth of Nations.
Wait a minute: The Wealth of Nations is an attack on the entire commercial system of Great Britain? That is not how The Wealth of Nations is read today. It’s read as a tribute to free-market economics. And an attack on, if anything, government interference. So, next week on the show, how did that happen? And where did it happen?
RASMUSSEN: The Chicago School picked up a few aspects of Smith’s thought and made it the whole of Smith’s thought.
How the invisible hand was made very visible — and was used to slap around anyone who disagreed.
BUTLER: Oh, absolutely. We worked with Mrs. Thatcher on privatization, for example, and contracting out local services.
Part 2 of our search for the real Adam Smith. That’s next time on the show. Until then, take care of yourself and if you can, someone else too — because, as Smith says, we naturally desire not only to be loved, but to be lovely.
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Freakonomics Radio is produced by Stitcher and Renbud Radio. This episode was produced by Zack Lapinski. We had help in Scotland from Josh Nixon and Upload Studios; thanks also to John Yule for reading Adam Smith and Claire Darbyshire for reading Margaret Smith. Our staff also includes Neal Carruth, Gabriel Roth, Greg Rippin, Rebecca Lee Douglas, Morgan Levey, Julie Kanfer, Ryan Kelley, Katherine Moncure, Eleanor Osborne, Jasmin Klinger, Jeremy Johnston, Daria Klenert, Emma Tyrrell, Lyric Bowditch, Alina Kulman, and Elsa Hernandez. Our theme song is “Mr. Fortune,” by the Hitchhikers; you also heard a bit of “I’m In Love With Margaret Thatcher,” by NotSensibles, from 1979; special thanks to them. Our regular music is composed by Luis Guerra. You can follow Freakonomics Radio on Apple Podcasts, Spotify, Stitcher, or wherever you get your podcasts.
- Glory Liu, a political scientist at Harvard.
- Rosemary Potter, chair of Kirkcaldy Old Kirk Trust.
- George Proudfoot, chair of the Kirkcaldy Civic Society and director of the Adam Smith Global Foundation.
- Dennis Rasmussen, a professor of political science at Syracuse University.
- Craig Smith, Adam Smith Senior Lecturer in the Scottish Enlightenment at the University of Glasgow.
- John Yule, Scottish actor and playwright.
- Adam Smith’s America: How a Scottish Philosopher Became an Icon of American Capitalism, by Gloria Liu (2022).
- “The Misunderstood Adam Smith Gets Both Credit and Blame for Modern Capitalism,” by Matthew Lazin-Ryder (C.B.C., 2019).
- The Infidel and the Professor: David Hume, Adam Smith, and the Friendship That Shaped Modern Thought, by Dennis C. Rasmussen (2017).
- What Adam Smith Knew: Moral Lessons on Capitalism from Its Greatest Champions and Fiercest Opponents, by James R. Otteson (2014).
- How Adam Smith Can Change Your Life: An Unexpected Guide to Human Nature and Happiness, by Russ Roberts (2014).
- The Essential Adam Smith, edited by Robert L. Heilbroner (1986).
- Free to Choose: A Personal Statement, by Milton Friedman and Rose Friedman (1990).
- An Inquiry into the Nature and Causes of the Wealth of Nations, by Adam Smith (1776).
- The Theory of Moral Sentiments, by Adam Smith (1759).