Smith championed free markets for their promotion of wealth and dignity. But it was in moral philosophy that he seemed to think persuasion was most needed.
How some of Smith’s earliest American readers highlighted the unity of his work.
Adam Smith was born in 1723. This year he turns 300.
To celebrate, National Review Capital Matters offers the Adam Smith 300 series. An essay on Smith will appear monthly throughout 2023, written by various students of Smith’s thought. Smith’s birthday is June 16, so the essays will appear on the 16th day of each month. Daniel Klein and Erik Matson of George Mason University are helping curate the series for Capital Matters along with Dominic Pino. To read previous months’ essays, click here.
T he relationship between Adam Smith’s two great books is famously complicated. The Theory of Moral Sentiments, published in 1759, and An Inquiry into the Nature and Causes of the Wealth of Nations, published in 1776, take up related but distinct subjects, and Smith never explained how he understood their connection.
Some readers see a stark tension between the books. The Wealth of Nations suggests that our naturally self-interested personal motives can be resolved into socially beneficial actions by the mechanism of market competition, while The Theory of Moral Sentiments suggests that all human beings are sympathetic by nature. Others insist that one book might fit neatly into the framework of the other, so that the market is just one of the institutions that serve the social purpose sought by Smith’s moral philosophy — “to direct vanity to proper objects,” as Smith puts it in The Theory of Moral Sentiments. How to make sense of the two books together is a challenge so complicated that some German scholars of Smith in the 19th century gave it a name: “the Adam Smith problem.”
But by noticing how a few of Smith’s earliest American readers — who included leading figures of the early republic — understood and made use of his work, we might come to a more persuasive solution to the Adam Smith problem. These Americans seemed to understand Smith’s aims in his two books rather differently from his more modern readers. They drew on The Wealth of Nations as a description of the commercial economy and on The Theory of Moral Sentiments as a prescriptive guide to living well in modern free societies. And those impressions of Smith’s books could help us better grasp how they might fit together.
Smith Was Admired Across the Post-Revolutionary Political Spectrum
Smith’s appeal as a guide to the modern economy spanned the emerging partisan divide of the early American republic. In a 1790 letter to Thomas Mann Randolph, Thomas Jefferson wrote that, “in political oeconomy, I think Smith’s wealth of nations the best book extant.” James Madison clearly drew on The Wealth of Nations in his constitutional thought, and particularly in his approach to mitigating the danger of majority faction by multiplying the number of minority factions — a view that, as Samuel Fleischacker has argued, owes much to Smith in both form and substance. Alexander Hamilton, in a series of reports to Congress during his time as Treasury secretary, drew heavily on Smith when taking up questions of public credit, trade, and manufacturing. The “Report on Manufactures,” in particular, essentially lifts entire passages from The Wealth of Nations. And, no doubt to Hamilton’s frustration, Madison referred directly to The Wealth of Nations in critiquing Hamilton’s proposals in these reports — especially the proposal to create a national bank, which Madison insisted Smith would have opposed.
That use of Smith on both sides of a foundational economic debate illustrates the peculiar way in which The Wealth of Nations was useful to America’s founding generation. It was the sheer breadth and depth of Smith’s vision — the way in which he offered a framework for political economy in a commercial republic — at least as much as the particular substantive positions Smith took on divisive economic debates in his time, that was of value to the likes of Hamilton, Madison, and Jefferson. Smith gave them crucial categories for conceiving of the sort of economy emerging in America, but he didn’t necessarily form their substantive views on trade or debt.
This was how Jefferson, who accepted the French “physiocrat” emphasis on the productive primacy of land, could think so highly of a book that was nothing if not a sustained and devastating assault on the notion that agriculture must be the key source of a nation’s wealth. And it was how Hamilton could deploy the concepts Smith had developed to defend free trade in a report arguing for tariffs on manufactured goods. Smith helped these brilliant statesmen frame the questions of a new economic era, but they felt free to pick and choose among his answers.
Description or Persuasion?
These American leaders sometimes understood The Wealth of Nations as a descriptive text more than as a persuasive one. And in this respect, they may have understood Smith better than many of his 20th- and 21st-century readers. Smith obviously had a rhetorical and political purpose — he meant to advance a distinct understanding of the commercial economy. But he believed that sort of economy was emerging, whether his arguments persuaded politicians or not. He sought to describe its character — the immense transformative power of the division of labor, the centrality of the consumer, the nature of modern trade — and his descriptions seemed true even to some readers who did not share his policy priorities. Smith wrote before socialist and communist critics of capitalism arose, and so before the market economy was attacked as fundamentally dysfunctional or immoral. In the wake of two centuries of those attacks, Smith’s descriptions of capitalism have understandably come to be seen above all as defenses of it. But to his 18th-century American readers, that was not yet quite what they were.
Smith’s earlier book, The Theory of Moral Sentiments, has gone through something like a mirror-image journey — from being understood by some 18th- and early-19th-century readers as a fundamentally prescriptive guide to moral living to being seen by 20th- and 21st-century readers as a descriptive theory of moral perception and analysis.
As political theorist Glory Liu notes in her fascinating recent book Adam Smith’s America, Smith’s moral philosophy was not nearly as influential in the early republic as his economic thinking. The Theory of Moral Sentiments was a work deeply embedded in a set of Scottish philosophical debates that were not always readily accessible to American readers, and those who were familiar with them tended to side with Smith’s Scottish critics. But Smith’s engaging style and his use of stories and anecdotes proved capable of reaching some intelligent readers looking for a moral framework for modern life. Particularly notable among these were some members of the Adams clan of Massachusetts.
John Adams on Smith: “A Great Writer”
Abigail Adams warmly recommended The Theory of Moral Sentiments in a letter to her son Charles in 1786. In 1790, John Adams recommended the book to his eldest son John Quincy Adams, and was clearly engaging intensely with Smith’s ideas in his own thinking about morality and society in this period. The elder Adams was intensely concerned about the danger of oligarchy, but in terms quite different from Jefferson’s peculiar sort of gentry populism. Adams was not a materialist opponent of commercial wealth. His concern was not exactly that the wealthy would conspire to direct the power of government to their advantage. Rather, true to his puritan roots, he worried about the morally corrosive power of money and status. And on this question, perhaps to the surprise of 21st-century readers, he found a profound and brilliant guide in Adam Smith.
This is particularly evident in Adams’s Discourses on Davila, which were published as a series of essays in the early 1790s. Adams frequently quotes and paraphrases The Theory of Moral Sentiments in the Discourses, referring to Smith only as “a great writer,” or “one great writer.” Adams approvingly cites Smith’s argument that the desire for status and distinction is the foremost social passion in the hearts of men, and that people pursue great wealth less to enjoy the material possessions that money can buy than to be looked upon as successful by other people. He thought that this kind of struggle for status can deform a democratic society, whether or not it actually comes to affect how formal political power is used.
For Adams, these insights about human motivation were reasons to be skeptical about the potential of a natural aristocracy of talent in a democratic society to play a role fundamentally different from that of a landed or wealthy aristocracy. He thought Jefferson’s ideal of a public-spirited leadership class would always run into the insurmountable obstacle of human nature.
The Discourses on Davila is largely a cautionary argument, if not a jeremiad. Adams does not expound extensively upon solutions to the quandary he describes. But it is clear from what he does say that he believed solutions would involve the moral formation of individuals, more than social transformation through political reform. And in this respect, too, he followed the pattern of Smith’s thought in The Theory of Moral Sentiments. “What institution of government could tend so much to promote the happiness of mankind as the general prevalence of wisdom and virtue?” Smith asked. “All government is but an imperfect remedy for the deficiency of these.”
How to Live Morally in a Commercial Society
Ultimately, as the great Smith scholar Ryan Hanley argues in his recent book Our Great Purpose, Smith’s moral philosophy offers a guide to living ethically in a free society with a commercial economy. The book takes up some of the core questions of classical ethics and proposes means for living morally in a society in which the community is not sufficiently cohesive and the government is not sufficiently assertive to effectively enforce a moral code. In conditions of freedom and diversity, people must choose to live morally, and decide how to do so.
Almost two decades before The Wealth of Nations, Smith was exceptionally clear-eyed about the moral temptations and dangers of life in a commercial society. He argued that these could be resisted and averted by recourse to one set of virtues (the “amiable virtues”) intended to make us more sensitive to the perceptions and needs of others, and another (the “awful virtues”) intended to make us less focused on ourselves. “Hence it is,” Smith wrote, “that to feel much for others and little for ourselves, that to restrain our selfish, and to indulge our benevolent affections, constitutes the perfection of human nature.”
We tend to think of Adam Smith’s lifelong project as offering a description of human relations and passions and an argument for markets. But as some of his earliest American readers understood, Smith often takes the commercial economy as a given, and looks to convince us to choose a virtuous life. He was plainly a champion of the market economy, for its ability to improve both wealth and dignity. But it was in the realm of moral philosophy that he seemed to think persuasion was most necessary.
These earliest American readings of Smith therefore offer a distinct kind of solution to the Adam Smith problem. They see Smith as offering a description of the economic framework of modern life and a prescription for its moral challenges. Theirs is a view that seems both true to Smith’s intentions and thought, and enormously valuable to all those in our time who seek a way to live morally in free societies — resisting the corrosive vices they encourage without giving up the moral and material benefits they make possible.