On the Wealth of Nations Read online

  Another reason for the expansive nature of Wealth was Smith's Jamesian effort to qualify his statements in order to produce the exact hue and tint of meaning he desired. Of course Smith was dealing with reality and not a male old maid's maunderings about the wispy moods of bored rich people. Plus Smith's sentences end before the cows come home. And when the end of an Adam Smith sentence has been reached, sense has been made. For example, a passage from the aforementioned digression on silver:

  Labour, it must always be remembered, and not any particular commodity or set of commodities, is the real measure of the value both of silver and of all other commodities.6

  This can be powerfully condensed: 'Labour … is the real measure of … value.' In quoting Adam Smith, '…' is sometimes the most trenchant thing he said. And it may be that just such a trenchant ellipsis in The Wealth of Nations was what sent Karl Marx off his rocker. Notice, reading Smith's original sentence, that no grand Marxist 'value theory of labor' was created. The more so because, three hundred pages later, Smith makes the same kind of argument about food grains: 'The real value of every other commodity is finally measured and determined by … the average money price of corn.'7 Smith thus maintains that work (or something akin to it, such as our daily bread) provides a sensible index for determining how much other things are worth to us. Deciding whether to mow the lawn ourselves or pay the kid next door to do it – factoring in the likelihood that he'll eat us out of house and home at snack time and run the Toro over his foot, sue us, and we'll have to get a second job to pay the legal bills – is something everybody does all the time. Marxism, as various Marxist regimes have discovered, is something nobody ever does if he can help it. (Incidentally, if the labor theory of value were true, certain children would be less worthless than they are.)

  The labor that goes into a careful reading of The Wealth of Nations is repaid by the careful intelligence of the writing. And the reader discovers something else of value – something never hinted at by economists or scholars – Smith's sense of humor. Here is Adam Smith demolishing the notion that a nation should avoid importing goods that will be consumed and, instead, hold onto its gold and silver money, because money has enduring value:

  Nothing, therefore, it is pretended, can be more disadvantageous to any country, than the trade which consists in the exchange of such lasting for such perishable commodities. We do not, however, reckon that trade disadvantageous which consists in the exchange of the hard-ware of England for the wines of France; and yet hard-ware is a very durable commodity, and were it not for this continual exportation, might too be accumulated for ages together, to the incredible augmentation of the pots and pans of the country.8

  Where the labor of reading Wealth is not always repaid is in wading through the work Smith had to do to shape his field of thought. It's particularly difficult when Smith, the lonely pioneer, is sodbusting the vast untilled prairies of econometrics. There was hardly such a thing as a reliable statistic in the eighteenth century and certainly no set of them that went back for decades. By dint of prodigious reading and protracted correspondence, Smith could find numbers to confirm his theories. But each number had to be examined for quality and weighed for usefulness in comparisons. And we have to stay there with Smith as he sorts through these apples and oranges like the world's pickiest Jewish mother at the world's worst corner grocery.

  Smith then subjected numerical data to graphical analysis without the one thing you pretty much have to have to do this – graphs. The first useful graphic representations of statistics were drawn by Adam Smith's fellow Scottish economist William Playfair in 1786, in time for Smith's last revision of Wealth. And Smith knew Playfair, who was the young brother of a close friend. Alas, one genius didn't recognize another. Actually, two geniuses didn't. Of William Playfair's economics Jeremy Bentham said, 'Nine-tenths of it is bad writation.'9 As a thinker, rather than a draftsman, Playfair was a tyro, but one wishes that Smith had paid attention to the callow lad anyway. Hundreds of pages of The Wealth of Nations that readers skim might have been condensed into several pages that readers skip entirely.

  Another thing Smith didn't have, besides graphs, was jargon. Economics was too new to have developed its thieves' cant. When Adam Smith was being incomprehensible he didn't have the luxury of brief, snappy technical terms as a shorthand for incoherence. He had to go on talking through his hat until the subject was (and the reader would be) exhausted.

  But the book was going to be long in any case. The Enlightenment takes its name from what, in retrospect, seems to be a cartoon moment in intellectual history. Light bulbs – except they didn't have light bulbs – appeared over the heads of people like Adam Smith. They realized that the physical world was not a divine obscurity apprehendable only by prayer and holy contemplation. In other words, they realized that not looking at things was not the best method of looking at things. If you illuminated the machinery of nature with a little observation and thought, you could see how it worked. The universe was explicable. And Enlightenment thinkers were – Prime Mover– dammit – going to explain.

  Yet inexplicabilities have their comforts, and likewise, explanations have their pains. Take, as illustrations, two previously mentioned matters Adam Smith was explaining: (1) money has no objective value; and (2) money is a notation of subjective worth, because when one person exchanges something with another they both get the best side of the deal. It's not that we who are getting this explained to us are stupid. But every overcompensated modern CEO has tried the first explanation on us. And every car dealer tries the second when we offer him a trade-in.

  All explanations start out brief. But pretty soon Smith gets enmeshed in clarifications, intellectually caught out, Dagwood-like, carrying his shoes up the stairs of exegesis at 3:00 a.m., expounding his head off, while that vexed and querulous spouse, the reader, stands with arms crossed and slipper tapping on the second-floor landing of comprehension.

  All explanations start out brief with the exception, of course, of legal briefs. The Wealth of Nations is one of these as well. Adam Smith was serving a nine-hundred-page indictment of the mercantile system. Mercantilism was the dominant economic theory of his day, insofar as it can be called a theory. In fact, mercantilism was a ragbag of commercial regulations and tax and tariff policies resulting from special interest politics, influence peddling, and parliamentary logrolling all mixed together with some general misunderstandings about cash, capital flow, and government finances. Mercantilists held that the way to make a nation rich was to increase its exports and limit its imports. To give Smith's case against mercantilism in extreme concision: imports are Christmas morning; exports are January's MasterCard bill.

  In The Wealth of Nations the accused were all the world's potentates, politicians, and wealthy merchants. But these were also the veniremen, judges, and officers of the court. Surprisingly, acquittal of the mercantilists wasn't immediate. William Pitt the Younger, prime minister during Smith's last years, accepted the evidence and instituted some reforms suggested by Wealth. Alexander Hamilton, architect of American protectionism, did not. More than two and a quarter centuries after Wealth's publication – what with the neomercantilists running China, the opposition to globalization being voiced around the globe, and the occasional rock getting thrown through the window of a Starbucks because it doesn't foster 'sustainable development' among coffee bean growers – the jury is still out.

  Meanwhile Adam Smith continues to bear witness. The Wealth of Nations is more than an explanation, an analysis, or an argument. It is a sermon. And a fire-and-brimstone sermon at that. Smith is famous for supposedly favoring laissez-faire (a term that appears nowhere in his writing) and for allegedly trusting the 'invisible hand' of capitalist progress. But Smith knew the hand could grasp: 'People of the same trade seldom meet together … but the conversation ends in a conspiracy against the public.'10

  Smith realized that a broadly prosperous consumer-oriented economy would not change human nature: 'The pride of man
makes him love to domineer, and nothing mortifies him so much as to be obliged to condescend to persuade his inferiors.'11 Truthfully, that's how we feel every time we ask to be paid for our services or goods.

  Smith did believe free markets could better the world. He once said, in a paper delivered to a learned society, that progress required 'little else … but peace, easy taxes, and a tolerable administration of justice'.12 But those three things were then – and are now – the three hardest things in the world to find.

  Smith preached against the gravitational load of power and privilege that always will, if it can, fall upon our livelihood. The Wealth of Nations is a sturdy bulwark of a homily on liberty and honest enterprise. It does go on and on. But sermons must last a long time for the same reason that walls must. The wall isn't trying to change the roof's mind about crushing us.

  CHAPTER 3

  The Theory of Moral Sentiments In the Augean Stables of the Human Condition, Adam Smith Tries to Muck Out the Stalls

  The unprinted subtitle of this Grove/Atlantic series on world-changing books is 'Works Which Let's Admit You'll Never Read the Whole Of'. William Kristol, editor of the Weekly Standard and a more erudite man than I, has a nice phrase for such tomes. He says he has 'read in them'. Happily, we may so do with The Wealth of Nations. Unhappily, there's Adam Smith's first book, which we do not read at all. And Wealth cannot be understood without understanding The Theory of Moral Sentiments, published by Smith in 1759.

  Adam Smith devoted most of his career to a single philosophical project, the betterment of life. A modern reader – or a modern reader who doesn't wear Birkenstocks – is tempted to laugh. It is a hilariously big job. But many of us have undertaken hilariously big jobs such as raising children. We were lured into the enterprise by the, so to speak, pleasures of conception. New beginnings are always fun. And Smith was intellectually in bed with the virgin idea of betterment. The prospect of making wholesale improvements in ordinary life was as fascinating in the eighteenth century as the prospects of making life simpler and less stressful and of blocking e-mail spam are today.

  Smith set out to discern how systems of morality, economics, and government arise and how, by comprehending the way these systems work, people could better their ethical, material, and political conditions. It was a splendid opportunity to be a blowhard. Consider a recent thinker – a Herbert Marcuse, a Newt Gingrich, an Al Franken – launching into the subject. Fortunately Adam Smith had the Enlightenment's knack for posing deep thoughts without making us cringe. His secret was to be an idealist but to not take that impertinent and annoying next step of being a visionary. Smith didn't presume to have a 'blueprint for society' and did presume that the ignorant and incompetent builders of society – he and the rest of us – couldn't follow one anyway. 'To expect, indeed,' he wrote in Wealth, 'that the freedom of trade should ever be entirely restored in Great Britain, is as absurd as to expect that an Oceana or Utopia should ever be established in it.'1

  Smith chose his absurdity comparisons with an eye to the Newt Gingriches and the too visionary visions that preceded the Enlightenment. Utopia was Thomas More's sixteenth-century made-up island with people living communally and all property held in common, its name a pun on the Greek words eutopos and outopos, 'a good place' and 'no place'. Oceana was a similar locale, concocted a hundred years later by James Harrington who mooted even more unlikely social policies such as elimination of agricultural subsidies for rich farmers and term limits. The eleventh edition of The Encyclopaedia Britannica calls Harrington's book, Oceana, 'irretrievably dull'.

  The writings of Adam Smith are never irretrievably so. In book 3 of The Wealth of Nations there's a twenty-page passage on the Corn Laws that is a trial to read. But at the end one's fugitive attention is caught and brought back by the charm of Smith's humility in postulating an ideal. He denounced the Corn Laws, the British prohibitions on the export of grain, as the crass inequity they were (and would prove to be when they starved my family out of Rosscommon seventy years later). Then Smith didn't proceed with the rant that we now expect from people who feel themselves to be, a little too obviously, in the right. Instead, Smith – keeping the inevitable follies of politics in mind – came to a humble conclusion: 'We may perhaps say of [them] what was said of the laws of Solon, that, though not the best in themselves, [they are] the best which the interests, prejudices, and temper of the times would admit of.'2

  Without this humility, reading in Adam Smith's philosophical project would be as grim as living in Kim Jong Il's philosophical project, North Korea. Smith's humble attitude extended beyond the ideal to ideas themselves, to his amour propre. In an early essay, 'The History of Astronomy', Smith wrote that he was 'endeavouring to represent all philosophical systems as mere inventions of the imagination, to connect together the otherwise disjointed and discordant phenomena of nature.'3 He went on to chastise himself for agreeing too much with Sir Isaac Newton's physics, making 'use of language expressing [their] connecting principles … as if they were the real chains which Nature makes use of to bind together her several operations.'4 It would take, literally, an Einstein to show how right Smith was.

  Adam Smith intended to publish three 'inventions of the imagination': The Theory of Moral Sentiments, The Wealth of Nations, and a third on jurisprudence, that is, on those most inventive and imaginary connections, law and government. The last was never finished, and just before Smith died he had his notes and drafts burned. Perhaps with reason. Many of Smith's ideas about law and government are apparent in Moral Sentiments and Wealth. The students' notes recording the lectures he gave on jurisprudence in the 1760s do not add much to the sum of Smith's thinking. Let us defer to his superior wisdom. Doing good and doing well should be enough for us. That we then should be obliged to listen to campaign speeches, make campaign contributions, and vote for fools is asking too much. As Smith himself declared in Moral Sentiments, 'We may often fulfil all the rules of justice by sitting still and doing nothing.'5

  And it is from a certain kind of sitting still and doing nothing that, according to The Theory of Moral Sentiments, our sense of right and wrong arises. The foremost invention of our imagination is morality.

  Adam Smith begins Moral Sentiments with the riddle upon which all our well-being depends: '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.'6 The root of these principles is, according to Smith, sympathy. We are sympathetic creatures. We possess one emotion that cannot be categorized by cynics as either greed or fear. And it isn't love. We may love without any fellow feeling, the way John Hinckley 'proved his love' for Jodie Foster.

  Our sympathy makes us able, and eager, to share the feelings of people we don't love at all. We like sharing their bad feelings as well as their good ones. We enjoy, in a daytime-TV way, commiserating with the sorrows of perfect strangers. And we are so eager to have the most trivial of our own feelings shared that, Smith wrote, 'We are even put out of humour if our companion laughs louder or longer at a joke than we think it deserves.'7

  This sympathy, Smith argued, is completely imaginative and not, like most emotions, a product of our physical senses. No matter how poignantly sympathetic the situation, we don't feel other people's pain. In a preemptive rebuttal of a future president of the United States, Smith used the example of seeing one's brother being put to the rack. (Although the brother of Roger Clinton might have chosen a more poignantly sympathetic case.) 'Our senses,' Smith declared, 'never did, and never can, carry us beyond our own person.'8 It is our imagination that generates sympathy and gives sympathy its power.

  People have the creative talent to put themselves in another person's place and to suppose what that other person is feeling. Even very shallow and frivolous people have this creative talent. We call them actors.

  But sympathy by itself – be it for humans, animals, or Clintons – can't be the b
asis of a moral system. Otherwise a person who watched daytime TV all day would be regarded as a saint. 'He must not be satisfied with indolent benevolence,' Smith wrote, 'nor fancy himself the friend of mankind, because in his heart he wishes well to the prosperity of the world.'9

  Imagination, already working to show us how other people feel, has to work harder to show us whether what they feel is right or wrong. Then there's the problem of whether we're right or wrong. We'll always have plenty of sympathy for ourselves. 'We are not ready to suspect any person of being defective in selfishness,' Smith wrote. 'This is by no means the weak side of human nature.'10 Morality can't be just a bunch of good feelings, or I know a pill we can swallow to be moral.

  Our imaginations must undertake the additional task of creating a method to render decent judgments on our feelings and on the feelings of others and on the actions that proceed from these feelings. Adam Smith personified these conscious imaginative judgments and named our brain's moral magistrate the 'Impartial Spectator'. Perhaps this was a sly nod to the early eighteenth-century Spectator essays by Joseph Addison and Richard Steele in which 'Mr Spectator' made the diffident claim of taking 'no practical part in life'. That was like Oprah Winfrey saying she takes none. With the Impartial Spectator, Smith had, indeed, predicted daytime TV hosts, spreading sympathy in all directions and acting as sympathy's referees. Of course he was technologically premature. Oprah herself would have to wait until division of labor had gone so far that we had specialists to do our imagining for us.

  The Impartial Spectator produced a show for a more serious age: 'Today, utilitarian philosophers who suffer from Christian agape!' The Theory of Moral Sentiments is daytime TV if daytime TV were produced by PBS, featuring a host who is like Bill Moyers, except intelligent.