The 18th-century Scottish economist and philosopher Adam Smith has a bit of an image problem. His defence of free markets, epitomised by his coining of the phrase "the invisible hand" to describe unintended social benefits that can come from self-interested action, has made him a darling of neoliberals.
Yet Smith also counts among his admirers left-wing stalwarts such as Noam Chomsky. How can this be? Does Smith's language leave himself open to misinterpretation?
Political scientist Ryan Patrick Hanley says "Smith was a masterful writer, and he knew how to turn a phrase... but there's a downside to this too. When you're that good at creating visions and firing imaginations, sometimes people become too attached to the beauty of the symbol or metaphor and start growing less attuned to the complex reality underneath."
Hanley, a Boston College professor who has written a number of books on the Edinburgh-born "father of capitalism", argues that Smith is at least as important as a moral philosopher as he is an economist. In his latest book, Our Great Purpose: Adam Smith on Living a Better Life (Princeton), Hanley explains how Smith's economic outlook is bound up with certain moral insights, including the observation that human needs should be separated from wants.
In seeking esteem, do we pretend we're something we're not in order to get other people to admire us?
While he is not prescriptive, Smith encourages us to reflect on the limits of our needs and whether satisfying all our wants would really make us happy. This has added urgency in an era when technology multiplies our wants.
Our bodies tell us when we have eaten enough, says Hanley, this week’s Unthinkable guest. “But it’s not quite so easy to say – with apologies to Tolstoy – how many Twitter followers a man needs.”
Smith is often invoked as a defender of selfishness. In what way is he misrepresented?
Ryan Patrick Hanley: “Well, Smith himself has a pretty direct answer to this. All you have to do is read the first line of his first book. The Theory of Moral Sentiments opens this way: ‘How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it.’
“Here he lays it out, point-blank: human beings aren’t – or at least aren’t only – selfish. There’s more to us than that: we have within us other ‘principles’ that lead us to care about others and their well-being – indeed so much so that ‘their happiness’ becomes ‘necessary’ to us.”
Another striking thing about Smith, from your explanation, is his egalitarianism – the idea that you or I are 'in no respect better than any other' person. How did this value judgment influence his economic outlook?
“I think this is one of the most fascinating sides of Smith as both an ethicist and an economist. Smith was definitely an egalitarian, as we think about egalitarianism today – that is, he believed people were naturally equal, and he thought that just political orders needed to respect and preserve this fundamental equality.
“But Smith, I think, also does something more – something crucial – that isn’t really captured by the dry, technical concept of ‘egalitarianism’. That is, he wants to induce in us not an abstract commitment to equality, but rather to get us to see ourselves from this perspective – to see ourselves as ‘just one of the multitude in no respect better than any other in it’.
“This... has profound consequences for Smith’s economics. Smith’s measure of a good society wasn’t whether it made the rich richer, but whether it enabled the poor to become less poor.”
If Smith was around today would he be anti-capitalist? Or would he at least be rallying behind Bernie Sanders and Jeremy Corbyn?
“The answer to both questions is in fact, I think, no... Like Sanders and Corbyn, Smith was troubled by the ways in which elites could manipulate the system.
“But any suggestion that would move in the direction of greater state control of the economy would have been anathema to Smith, and indeed one of his most consistent principles is that this sort of oversight of infinitely complex markets is something for which ‘no human wisdom’ is sufficient.”
Does Smith explain how I can distinguish between my needs and wants?
“Smith himself knew that needs and wants can change, and to some degree are going to be defined in different ways by different cultures and different ages. So he’s not in the business of trying to quantify or set rules for needs and wants.
“But he does want us to start thinking about the difference between these, and to this end he tries to get us thinking not just about what it is that we need and want, or even how much of a given thing we might need or want, but rather how we go about trying to satisfy our needs and wants.
“Take esteem. Smith thinks it’s natural that we should want a good reputation and to be esteemed by the people who know us. But how do we go about trying to get this esteem?
“Do we try to earn it from the people who know us best and see us every day by working hard and being a good neighbour and good colleague and good citizen? In trying to earn it in this way, do we also do justice to our other obligations?
“Or, in seeking esteem, do we pretend we’re something we’re not in order to get other people to admire us? Are we content to earn the esteem of those who really know us and our character, or do we become obsessed with what strangers might think of us?
“The phenomenon of social media ratchets these concerns up in obvious ways. But in the end today’s social media question is just a version of the essential question: Are we pursuing esteem in a way that’s healthy, both for us and those around us, or a way that’s self-destructive?
“I think that’s the line he’s trying to get us to draw with regard to needs and wants: not just how much is enough, but how are we going about trying to satisfy these needs and wants, and our are efforts making us and those around us happier and better, or not?”