Smith

With a subdued Thanksgiving air offering little opportunity for shrill, market related comment, the management of the gazette have suggested further exploration of previous subject matter; like some sketchy background to the great Adam Smith. By all accounts, such offers, generate fewer complaints and keep the legal team happy.

Adam Smith, not to be confused with Steve Smith the itchy albeit prolific Australian cricketer, is widely regarded to be the ‘Father of Economics’ which, given all that have dipped a toe into the dismal science over the years, is quite some accolade. Smith, Adam not Steve, was a Scottish economist and philosopher and relevant to all given the extent to which his classic works, The Theory of Moral Sentiments and An inquiry into the Nature of Causes of the Wealth of Nations shaped high-brow pow-wows at the top table of economic theory. The latter, given it is something of a mouthful, was abbreviated to The Wealth of Nations and is seen as his big one. It was the first real attempt to explain economics as a comprehensive system. For Smith, the distribution of power was not due to the whim of God but came about as a complex and dynamic interplay between natural, political, social, economic, legal, and technological factors. Even the local po-faced Vicar had to admit that the young man was on to something.   

It is through his work, that the foundations of free market economic theory were laid. Whilst The Wealth of Nations really shaped the study of economics, it was through his other endeavours that he developed the concept of the division of labour, which is as you might guess a division of labour; a concept embraced by all those who want to be more productive. The use of specialist capabilities enhances the product and ensures it all happens a lot faster. The whole shebang is more productive and then everyone moves on to the next job. Smith also expounded on how rational self-interest and competition can lead to prosperity to all. The famed ‘invisible hand’.

Smith was born in Kirkcaldy of all places, in 1723, so before central heating. Little is known of his childhood other than he got pinched by Romani travellers at some point, but by all account he was bright. He later entered Glasgow University at the age of 14, which before you quaff and mutter about the standards of Scottish Universities was, at the time, very normal. It was at Glasgow that Smith studied under the great Francis Hutcheson, the Irish-born philosopher who was one of the founding fathers of the Scottish Enlightenment, and one imagines, good for a few Guiness and a chat about life. His personality was described as ‘magnetic’. According to Hutcheson, man – or indeed woman – has a variety of senses, both internal as well as external, reflex as well as direct. Senses included the obvious ones, but also consciousness, beauty, sennus communis or public sense, honour, a sense of morality and a sense of the ridiculous. He did admit that the list was not exhaustive and there could be no limit to the number of senses. Of them all, the moral sense, for Hutchenson, was the most important part of any ethical system.

We digress.

After Glasgow, Smith won a scholarship to Balliol College, Oxford, but it was an experience he did not enjoy. He found the whole place intellectually stifling and thought the professors were too interested in punting on the Isis with hampers of pink gin and pork pies. He thought they had basically given up on teaching. Biographers have pointed out that his time at Oxford contributed very little to his lifework, which is something to watch out for should the social media people at Balliol try spinning a different line. He eventually left Oxford before his scholarship ended suffering from the shakes, in what is thought to have been some sort of nervous breakdown.

Part of Smith’s troubles at Oxford are thought to have been due to the fact he missed his man Hutchenson so much. Smith would later refer to Hutchenson in his letters as ‘the never to be forgotten Hutchenson’ a term that he used for only one other person, that person being David Hume; the equally up-there philosopher who wrote A Treatise of Human Nature and who suggested humans have no sense of self, and instead experience only a bundle of sensations. Hume, by all accounts, also had very little time for his professors at Edinburgh University, lamenting to a friend one evening that “there is nothing to be learnt from a professor, which is not to be met with in books”. Hume did not graduate, which gives those who labour to a 2.2 and graduate with £40k debt something to think about. Maybe the self would have been better off learning a trade and doing something of real economic value. Hmm.

Smith would later, ironically perhaps given his low opinion of his lot at Oxford, end up as a professor at Glasgow University teaching logic. The point of difference being that Glasgow was a Scottish University. Indeed, in Wealth of Nations Smith comments on how poor English Universities were, where the intellectual activity rivalled a stagnant pond, and where the endowments had made the teachers lazy and too comfortable with all the port and smutty jokes of high table. He suggested that they could make an even more comfortable living that ministers of the Church of England. Which was saying something.

Anyway, when the head of moral philosophy at Glasgow ceased being a being, Smith took on the top job and would thrive. It was the happiest period of his life. Indeed, his lectures became so popular that wealthy students from many other countries would arrive at the admissions office wanting to sign up to study under Smith. He would go on to publish The Theory of Moral Sentiments in 1759 which was something of a ‘Little Chef buffet’ of all his lectures, in which he elaborated on the sticky subject of how human morality depends on the sympathy between agent and spectator, or the individual and other members of society. Mutual sympathy, for Smith, was the basis of moral sentiments. This was different from Hutchenson’s moral sense, and indeed different from Hume’s notion of utility, but more on mutual sympathy; a notion that is perhaps best encapsulated in today’s bewildering world of TikTok, processed food and slippery politicians, as empathy: the capacity to recognise feelings that are being experienced by another being.  

In his later years Smith would tutor and travel and mix with many of the intellectuals of the day. He met Volatire in Geneva, and bumped into Benjamin Franklin in a tabac in Paris, where he also discovered physiocracy, an economic theory that proposed the wealth of nations derived solely from the value of land or land development. As such, agricultural products should be highly valued. Smith would later suggest that the theory “with all its imperfections is perhaps the nearest approximation to the truth that has yet been published upon the subject of political economy”.

So, there you have it.

Adam Smith died in 1790.

In a lesson to all of today’s red-cheeked youth, the father of economics apparently whispered on his death bed that he was disappointed he had not achieved more.

Aim high.