Adam Smith: The Scot that set the moral compass

From Russia’s October Revolution of 1917 onwards, The Communist Manifesto became required reading for all those espousing socialism or communism as their political philosophy, and 170 years on, it is still a powerful work that resonates across the globe in those areas not totally dedicated to the greed of pure capitalism.

Though there was an American book called The Capitalist Manifesto published in 1958 by Louis O Kelso and Mortimer J Adler, the original manifesto for capitalism was produced here in Scotland more than 220 years previously, and its author was Adam Smith of Kirkcaldy in Fife.

I sincerely wish that all those who espouse capitalism as the system to save the world would read The Wealth Of Nations. Similarly, all those right-wingers who brandish a copy of the book and make Smith their hero of capitalism – I would force them to read his other great work, The Theory Of Moral Sentiments. Put them together and you have a manifesto for liberal and moral capitalism, not for capitalism’s excesses.

(While on the subject of manifestos, some readers of last week’s column on David Hume rushed to point out that I had misjudged the response from the Yes campaigners to the loss of the referendum in September, 2014. No I did not. My point is this – as yet no single organisation or individual has produced in one document a cohesive and comprehensive argument that deals with the five main issues on which the Yes side lost. The economy, currency, pensions, identity/nationality, and the constitutional issues such as EU membership – we need a new Scottish Manifesto that deals with these issues and all the others we need to tackle to win the argument this time. No such single manifesto exists, and if we have to suffice with a Scottish Government white paper next time, we will lose again. If the Scottish Independence Convention, for example, wishes me to do so, I would be happy to contribute to such a Manifesto for Scotland, emphasising choice as the way forward.)

Smith’s greatness, and his tragedy, is that he is remembered almost totally for The Wealth Of Nations and not for his complete works, including The Theory Of Moral Sentiments. That is largely because, as he neared death, Smith carried out an extraordinary act of immolation and burned almost all of the manuscripts upon which he had worked. It appears that since he could not complete them himself, he wanted no one else to be able to do so, and thus the world lost probably two great treatises, one on the arts and sciences and one on the theory and history of law, on which he was a noted expert in his own lifetime.

What more could Smith’s brilliant observations have told us? We know from some of his Lectures On Jurisprudence, published posthumously and taken from his lecture notes, that Smith considered the chief purpose of government to be the provision of justice, summarising that “the object of justice is security from injury”. He argued that the state must protect the individual’s right to his person, property, reputation, and social relations – all this nearly 200 years before the European Convention on Human Rights.

It is important to see Smith in context as part of the Scottish Enlightenment in which men who were not aristocrats were encouraged to learn, to conceive ideas and to disseminate them, all in a brief period from the mid-18th century to the early years of the 19th century.

In many ways, Smith was the Scottish Enlightenment’s exemplar, and he was certainly its most famous product – save perhaps for Robert Burns – during the actual period of the Enlightenment.

Born in Kirkcaldy in 1723 – the exact date is still the subject of conjecture but we know he was baptised on June 5 – Smith was the son of a solicitor and comptroller of customs, also called Adam, who died before Adam junior was born. He was raised by his mother Margaret Douglas, daughter of a landowner, and attended the Burgh School of Kirkcaldy, one of the finest schools in the land, where he learned the three Rs and Latin, history and maths.

AT 14 he went to Glasgow University and studied moral philosophy under Francis Hutcheson, who many credit as the founding father of the Scottish Enlightenment as he directly influenced so many of its leading figures with his thoughts on freedom and the “moral sense” of humans.

Upon graduation, Smith won the Snell Exhibition scholarship to Oxford University in 1740, but thought Glasgow’s teaching to be superior. He got his own back on Oxford in The Wealth Of Nations, writing: “In the university of Oxford, the greater part of the public professors have, for these many years, given up altogether even the pretence of teaching.”

He latterly suffered a mysterious illness at Oxford, possibly a form of palsy, and left before completing his scholarship to return to Scotland.

Inspired by Hutcheson, Smith turned to lecturing and teaching, though he was not a great orator by any means.

His lectures were successful, however, and in Edinburgh in 1750 he met his great friend and mentor, the philosopher David Hume. The following year he was appointed a professor at Glasgow University and took to his new job with relish, though he remained sceptical of academics, once writing: “The discipline of colleges and universities is in general contrived, not for the benefit of the students, but for the interest, or more properly speaking, for the ease of the masters.”

He would spend 13 years at Glasgow which he described as “the most useful and therefore by far the happiest and most honourable period” of his life. Most of them would be spent occupying the chair that had belonged to Hutcheson – the professorship of moral philosophy. That was how he wanted to live his life and be remembered – as a great and radical moral philosopher – but it was as the founder of the science of political economy that he is remembered to this day.

That is a pity, because his first book, The Theory Of Moral Sentiments, published in 1759, was a masterpiece of moral philosophy which rejected the “moral sense” tradition of his teacher Hutcheson and mentor Hume and presented Smith’s own principle of sympathy.

It begins: “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.”

Through chapter after chapter of inquiry and theory, Smith constructed a whole “sympathetic” world-view, examining what makes humans the caring people they are, and how absence of what we would call empathy is the wellspring of the “unsocial passions”. Smith had precious little of the “social passions” for he never married and there is no record of any great love affair.

The book was well received and ensured that Smith was able to take his place among the Enlightenment thinkers of the day – students flocked from abroad to take his courses. Along came the young Duke of Buccleuch with a job offer – “become my tutor and I’ll double your salary. Oh, and we can tour the continent, too,” he said.

Off went Smith with the young duke and along the way met the likes of Voltaire and Benjamin Franklin before returning to Scotland with sufficient funds to enable him to spend 10 years – mostly while staying with his mother in Kirkcaldy – writing his magnum opus, An Inquiry Into The Nature And Causes Of The Wealth Of Nations.

With its forensic examination of what makes an economy, Smith’s theory that the value of a nation’s product was its real wealth turned the existing mercantilist theories on their head. Far from being the right-wing apostle of free trade and unfettered capitalism that he is often portrayed as, Smith was concerned about the morality of trade and commerce above all.

Or else why did he write this: “What improves the circumstances of the greater part can never be regarded as an inconvenience to the whole. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.”

Or this: “The real tragedy of the poor is the poverty of their aspirations.”

He spotted that specialisms could make production better, but also that it had drawbacks: “The man whose whole life is spent in performing a few simple operations, of which the effects are perhaps always the same, or very nearly the same, has no occasion to exert his understanding or to exercise his invention in finding out expedients for removing difficulties which never occur. He naturally loses, therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is possible for a human creature to become.”

He was devastating in his criticism of protectionism: “Our merchants and masters complain much of the bad effects of high wages in raising the price and lessening the sale of goods. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people.”

And most famously he wrote: “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”

Often quoted is the sentence “Wherever there is great property, there is great inequality”, but read on: “For one very rich man there must be at least five hundred poor, and the affluence of the few supposes the indigence of the many. The affluence of the rich excites the indignation of the poor, who are often both driven by want, and prompted by envy, to invade his possessions.”

HE added later: “Labour, therefore, is the real measure of the exchangeable value of all commodities. The real price of everything, what everything really costs to the man who wants to acquire it, is the toil and trouble of acquiring it.”

He was no tax dodger: “The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities.” But he was a cynic about politicians: “There is no art which one government sooner learns of another than that of draining money from the pockets of the people.”

Above all he got back to morality and self-interest as motivation again and again: “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.”

That is why he thought free trade and competition would work better than protectionism.

From its publication in 1776, The Wealth Of Nations proved both hugely popular and influential, directly affecting government policy to prepare Britain to become a great trading nation, and Smith basked in the rewards, becoming commissioner of customs – a sinecure that was in effect a pension – and being a founder member of the Royal Society of Edinburgh.

Adam Smith died in Panmure House in Edinburgh on July 17, 1790, already acknowledged as one of the most influential Scots of all time, a reputation that has never diminished.