In his compilation and introductory essays to the many chapters in “The Essential Adam Smith” eilbroner succeeds by offering the reader a chance to formulate questions before and after reading the texts that allow for the ability to think critically about Smith, whom admittedly is not read so much as he is quoted. Called the “Father of economic conservatism” this timeworn moniker no longer seems to apply after a thorough read of all these texts, particularly the selections from Wealth of Nations. Before launching into Smith’s work, Heilbroner gives a brief overview essay of the historical period in which Smith was writing as well as relevant biographical information. One of the most useful elements in this short prologue was his emphasis on the importance and complexity of the Enlightenment in shaping the views of Smith and his contemporaries. As Heilbroner writes in his introduction, as An Enlightenment writer, “Adam Smith placed the passions (feelings and emotions), not reason, at the center of human nature. Moreover they [Enlightenment thinkers] placed them there not as a regrettable but as a necessary fact… Smith’s critically important conception of the Invisible Hand—an indirect intervention of the Divinity into the mechanisms of social life—is based on the instability of human reason to achieve social harmony by itself. Reason has a its role to play, but the passions are both the bedrock and the driving force of human society” (2). While Heilbroner provides a number of insights on the time period and biographical data, the majority of this study will focus on his presentation of Wealth of Nations. It is by far the most important text in the compilation and with the help of Heilbroner’s suggestions about reading and thinking about it, this essay will probe deeper into the more intricate meanings of the sections and chapters of “The Essential Adam Smith” by Robert L. Heilbroner that are presented as we move along. Still, before engaging with the textual matter, it is useful to examine the biographical and other data Heilbroner provides. While he does not necessarily analyze this information, choosing rather to give it to the reader and allow for individual interpretation, there a few important points about this information it seems necessary to address.
In his introduction, Heilbroner puts Smith in the context of other famous economists and thinks about his contributions to the field. “Smith and Marx were embarked in projects of entirely different and generally diametrically opposed kinds, but the ability to bestow a near-religious blessing by the mere invocation of their names is a privilege they share in common to a degree enjoyed by very few writers in the field” (1). It is important that Heilbroner mentions these mentions these two ideas. First of all, by stating that he is “diametrically opposed” to the works of Karl Marx, in Das Kapital and others, it situates him not only within his time period, but also within modern scholarship on the subject of economics. For a first time reader of Smith’s texts, it would be extremely useful to understand that he and Marx were not advocating the same set of ideas. Although Marx would not come along for another one hundred years, this difference in the eras is of the utmost importance. This is partially because Smith was truly a product of the lofty notions and ideas embodied by the Enlightenment. He was invested in the ideals of natural rights and equality as well as other ideas about the nature of mankind. While Marx was coming out of an age that was growing far more industrialized and unequal, Smith was writing just as the industrial revolution was making its first strong appearance. One must wonder if he would have seen the “evil” of capitalism as Marx, but then again, Smith never would have guessed the extent to which his theories could be used for personal gain. As Heilbroner astutely points out in one of the important quotes from “The Essential Adam Smith”, “Smith could speak in these seemingly radical and certainly critical term because neither he nor any of his contemporaries imagined a society in which exploitation and oppression would not be present, although their excesses might be reduced” (3). This is an excellent point and it is part of the explanation for why Smith and Marx were so different. Although they had different theories simply because they were different people, it seems that the time period that contributed to the works of both men is more significant than it may seem at first. One of the central features of Enlightenment thought that seemed to most influence Smith in his writing was the idea that human beings were (or at least should be) equal and that all were able to be educated. In this vein, it is remarkable that he wrote an extensive tract such as An Inquiry into the Wealth of Nations in relatively simple language. He was not only the father of modern economic thought, but also of writing about complex issues related to commerce in an approachable manner. This is a far cry from the thousand-page complexities of Marx’s Kapital and although it is certainly a seminal work of economic genius, it far less easy to comprehend, especially to the layman, than is Smith’s work. Again, this is an example of how the time period had a profound effect on the work that was produced and without the Enlightenment, one must consider the idea that Smith’s works might not have remained so timeless.
According to Heilbroner, Smith did not suffer a long period of anonymity. With the publication of “Smith’s first great work, The Theory of Moral Sentiments, [which] was published in 1759. Written in a highly polished, florid style, rich in anecdote, analytic and didactic by turn, the book made an immense impression” (5). This begins the first of many thoughts that will recur throughout other works such asWealth of Nations. In short, Smith examines the nature and motives of morality. While this piece does not necessarily expound many of his economic beliefs, it is important that Heilbroner made certain this was included in its entirety since it provides a window into the “soul” of Enlightenment as well as Smith’s thinking. His knowledge of Hume is clear and he sets forth his own ideas about morality that begin with the idea, “How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortunes of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it” (65). This idea will go on to influence his ideas about political economy and how it relates to human nature since he believes that oftentimes human beings react emotionally without a thought about themselves. While one would not normally associate altruism with capitalism, this is an important idea to all of the texts in this compilation. In sum, this work is also vital to an understanding of Smith because it expresses his ideas that man was interested in himself and his own preservation and was free to make his own decisions guided by these desires. While natural law may be the guiding hand in these free actions, in essence, man’s need to act according to self-reliance is the basis for all of his actions. In some ways this would seem like the perfect excuse to back up the idea of capitalism—even “rampant” capitalism that is akin in nature to the “monster” Karl Marx and some others paints it to be. It will always continue seeking more and more to replenish its ever-growing demand for greater in the way of self-interest and thus is difficult to halt. Still, this is an impression one gets so many years later. To Smith, the years before rapid and massive industrialization and capitalism he lived in would not have offered him so grim an image and in some respects, The Theory of Moral Sentiments is a highly optimistic if not somewhat outdated (in the context of his other works) piece that is useful to understanding the assumed ethics behind the principles he lays out later in Wealth of Nations. This idea of morality expressed can be seen in “Wealth” when Smith states, “It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest” (166).
The text of The Wealth of Nations takes up well over half of Heilbroner’s compilation, which is only fitting because of the scope and importance of the work. In his introduction, Heilbroner mentions that his text was immediately well received and its publication brought Smith a great deal of fame and notoriety. Furthermore, it is only natural that this work persists as it does into our modern times. Although some of the more minor points explored are not quite as relevant today as they were for those in Smith’s time, certain key ideas such as those related to the idea of “the invisible hand” as well as mercantilism are still quite important. Without meaning to skip over large portions of the text, this study will focus on these two aspects since they are both relevant today and given a great deal of attention by Smith. To preface this analysis of Smith’s greatest work, it should be noted that the reason so much attention was given to foregrounding this book is because these two ideas have changed the course of economic history. What does set this work apart from others in the field is its remarkable ability to relate complex ideas in simple uncluttered language. It is easy to imagine that part of the reason why Smith’s wide and appreciative readership was so vast was because he did he not attempt to alienate readers by thick philosophical jargon. Rather, his ideas are clearly presented and he illustrates his most complex sentiments, such as the idea of the invisible hand, with images that help the reader envision a concept rather than attempt to think abstractly about it.
The concept of the Invisible Hand comes up frequently throughout the text, although it is not mentioned explicitly. It is not until one has finished reading the entirety of the text that all of the references begin to come together and make sense. In order to simplify this analysis, there are two different ways the analogy or image of the invisible hand is used. First of all, it is a concept that can be applied to morality (such as is discussed above). This idea makes a more general statement about the individual within society. The second sense the concept is used is in relation to actual economics, which will be explored after this first point is demonstrated. In term s of the moralistic sense, in essence, the principle behind the invisible hand is that people benefit their peers simply by acting out of their own selfish interest instead of acting according to some deep sense of altruistic motivation. In other words, it is the self-interest of individuals that almost by default creates the general interest. This is not always a popular idea, even today, since there are many who believe that it is right and natural to do the right thing for the good of the whole rather than according to base self-interest. What seems to be missing in this modern moralist’s argument, however, is that it does not seem as though Smith is actually saying that people should act out of self-interest, but rather that this is something inherent to human nature and is just a “fact of life” instead of a base decision. What is also slightly confusing about Smith’s assertions that people act of self-interest is the idea that he does not think that this it is always a great thing for people to act on their own selfish desires, even if the majority of this behavior goes to benefit the community. In fact, Smith was not supportive of those who were greedy or overtly selfish. There is a fine distinction built into Wealth of Nations that is not immediately clear becomes more so throughout a close reading of the text.
The second and most recognized meaning of the invisible hand in Smith’s Wealth of Nations concerns the ability for a particular market or economy to regulate itself without the aid of an outside influence, most notably, the government. Interestingly, this is a more interpretative form of the invisible hand since Smith did not appear to use this as part of his definition. Still, the idea went on to form the basis for laissez-faire economics, which was based on Smith’s notions of “natural price.” In short, this refers to the idea that if there was a lack of a certain item that was in demand, the price of that product would rise. This would mean that there would be increased competition among manufacturers and the increase in supply would lower the price to its normal production cost (with a small amount of profit factored in) and this would constitute the “natural price” of an item. Because of human self-interest, this kind of competition would be beneficial for society as a whole. It is clear how this would later form the basis for modern economic systems and rationality and in sum, it sounds like an excellent ideal for any economy to work towards. What is interesting to note, however, is that Adam Smith was not quite as optimistic as it might seem. Even though he had a firm faith in human beings, simply by acting on their own motivations, this was by no means a completely idealistic theory. Although commerce may regulate itself through the simple act of natural market stabilization, this does not mean that there are not problems inherent in the system of political economy Smith presents. He recognizes what Marx would later go on to realize and states, “Commerce, which ought naturally to be, among nations, as among individuals, a bond of union and friendship, has become the most fertile source of discord and animosity… The violence and injustice of kings and ministers is an ancient evil, for which, I am afraid, the nature of human affairs can scarce admit a remedy. But the mean rapacity, the monopolizing spiting of merchants and manufacturers, who neither are, nor ought to be the rulers of mankind, thought it cannot perhaps be corrected, may very easily be prevented from disturbing the tranquility of anybody but themselves.” He recognizes the flaws that would later come as a result of growing industrialization and it almost seems for a moment as if he is able to predict the problems rapid industrialization and capitalism might cause—even with a human nature that was overall working to help the good of the whole. In sum, while Adam Smith may have been slightly idealistic, his ideas about the future market and economic systems were very accurate and Heilbroner did an excellent job of showing modern readers how he fits into the larger spectrum of academic and economic thought and history.
Other essays and articles in the Main Archives related to this topic include : Summary and Analysis of Das Kapital by Karl Marx • Marx and Locke: Comparison of Views on Government, Property and Labor • Analysis and Summary of Principles of Political Economy by John Stuart Mill • The Impacts of the Industrial Revolution on the New England Family
