Adam Smith is generally considered the father of modern capitalism. His works are cited by Milton Friedman, Friedrich August von Hayek and many other liberal and libertarian thinkers. According to Friedman, “if he hadn’t been born in the wrong century”, Adam Smith “would no doubt have been a professor emeritus at the University of Chicago”.
But some expressed a different view. In a critically acclaimed essay, British economic historian Emma Rothschild argued that Adam Smith’s thinking was at least as much of a forerunner of what is now called ‘the left’ as it was of ‘the right’. In his test Adam Smith and the Leftthe American philosopher Samuel Fleischacker assured him that “many researchers have demonstrated the existence of leftist tendencies in Smith”.
Within the libertarian camp, the sharpest criticism came from economist Murray N. Rothbard. In his monumental essay Economic Thought Before Adam Smith. An Austrian Perspective on the History of Economic Toughht, he does not mince his words to vilify Smith, saying that the latter was in no way the defender of the market economy as he is regularly portrayed. Rothbard goes further. Due to an erroneous labor theory of value, he regards Smith as the forerunner of Karl Marx: “Marxists, with a little more justice, hail Smith as the ultimate inspiration of their own founding father, Karl Marx” . According to Rothbard, Smith failed to understand the economic function of the entrepreneur and supported a state-imposed interest rate cap, heavy taxes on luxury consumption, and extensive state intervention in the economy. ‘economy. On a personal level, Rothbard claims that Smith was untrustworthy, since after campaigning for free trade he spent the last twelve years of his life as Commissioner of Scottish Customs.
Distrust of the state
Much of this criticism is certainly justified. But it would be wrong to call Adam Smith a leftist, as evidenced by his deep distrust of the state. When the economy is ruined, it is, according to Smith, never because of entrepreneurs and merchants, but always because of the State: “Great nations are never impoverished by individuals, although they be sometimes by the prodigality and the misconduct of the public authorities”, he writes in his major work, The Wealth of Nations. And he added optimistically: “This constant, uniform and uninterrupted effort of every individual to improve his lot; this principle which is the primitive source of public and national opulence as well as of private opulence, has often enough power to maintain, in spite of the follies of government and all errors of administration, the natural progress of things to a better condition. Like the unknown principle of animal life, it often restores the health and vigor of the constitution , despite not only the disease, but also the absurd prescription of the doctor”. The metaphor says it all: private economic actors represent healthy and positive development, while politicians hamper the economy with their inept regulations.
Adam Smith would have been very skeptical today if he saw the governments of Europe and the United States intervening more and more in the economy, and politicians believing themselves to be smarter than the market. “Each individual,” wrote Smith in his magnum opus, “constantly strives to find the most advantageous employment for the capital he can command. It is his own advantage, indeed, and not that of society, that he has in view. But the study of his own advantage leads him naturally, or rather necessarily, to prefer the employment most advantageous to society”. Legislators, thought Adam Smith, should have more confidence that “every individual, it is evident, can, in his local situation, judge much better than any statesman or legislator can do for him” .
The view that Smith was a leftist may also be explained by the fact that he constantly criticized merchants, entrepreneurs and the wealthy, while advocating passionately for the improvement of living conditions. workers. However, according to Smith, the improvement in the situation of ordinary people would not come from redistribution or excessive state intervention, but would be the natural result of economic growth, which needs one thing at the above all: economic freedom. To the extent that economic freedom prevails and markets expand, people’s standard of living will also rise. Three hundred years after the birth of Adam Smith and some 250 years after the publication of his great work, we know that this moral philosopher and economist was right.
*Rainer Zitelmann is a historian and sociologist. His book In Defense of Capitalism has just been published in English.