The 'invisible hand' gets a rough shake

Adam Smith and the Pursuit of Perfect Liberty
October 13, 2006

Because of Adam Smith's honorific role as the founding father of economics, it is a common device to appeal to his writings to legitimate contestable positions. James Buchan begins his book by telling us that, in 2005, Gordon Brown presided over a visit by Alan Greenspan, the head of the US Federal Reserve, to Kirkaldy, Smith's birthplace and Brown's home town.

Greenspan praised Smith's understanding of the "invisible hand" mechanisms that underlie free-market capitalism. Later the same year, Brown was claiming Smith as a proponent of the principles of new Labour.

Buchan ridicules such opportunistic appeals. He says that Smith has had the misfortune of falling among economists and politicians "who constitute, more even than professional footballers, always the least literate sections of English-speaking society". He undertakes to "draw Smith out of the mystifications of the economists and the simplifications of the politicians and place him in view of the public".

Buchan's writing is clear and simple, if slightly self-conscious. He avoids all economic and philosophical jargon. In fact, there is almost no reference to modern economics, philosophy or Smith scholarship.

Smith's life - the courses he taught at Glasgow University, his favourite walks, even his taste for lumps of sugar - is described in engaging detail. But the real significance of his life is surely to be found in his writings. After stripping away the "mystifications" of economists, Buchan seems unable to find any systematic view of the world that he can attribute to Smith. We are told that Smith tried to find order in the social world but failed. His attempt to use the psychological mechanism of sympathy as the ordering principle for morality - the project of The Theory of Moral Sentiments - "came to grief". "Rebuffed" by this failure, he tried to find order in economics; but the system presented in Wealth of Nations was unsuccessful too. However, Buchan never engages in the systematic analysis of Smith's works that would be necessary to support these negative judgments.

Buchan's method is to give quick, unstructured synopses of Smith's major works, followed by critical comments that are often banal and anachronistic. He criticises Wealth of Nations for not discussing issues of gender. It is also faulted for having nothing to say about the role entrepreneurs would play from the late 19th century onwards, or about the power of advertising in 20th-century markets. But how could Smith, writing in 1776 - before the Industrial Revolution took hold - be expected to foresee its consequences 100 and more years later? Buchan claims that, in his later years, Smith turned away from the arguments of Wealth of Nations . The evidence we are given is, to put it mildly, thin.

In 1789, at the age of 66 and only a year before he died of a long illness, Smith was seen to fall asleep during a long and dull afternoon lecture on political economy. Buchan's ungenerous comment is: "So much for the mature Smith's interest in economics." A month before he died, Smith expressed regret that his writings had not been more substantial. These facts seem to tell us more about the effects of age and illness than about Smith's considered judgments.

Robert Sugden is professor of economics, University of East Anglia.

Adam Smith and the Pursuit of Perfect Liberty

Author - James Buchan
Publisher - Profile
Pages - 198
Price - £14.99
ISBN - 1 86197 905 3.

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