Adam Smith (1723–1790)
Scottish moral philosopher. Held the Chair of Moral Philosophy at the University of Glasgow. A central figure in the Scottish Enlightenment, close friend and intellectual companion of David Hume.
Smith is almost universally misread today — claimed as the founding father of free-market economics, when he was a moral philosopher who wrote about political economy as one dimension of a larger inquiry into human social life.
Theory of Moral Sentiments (1759)
This is Smith’s foundational work, not the Wealth of Nations. He revised it throughout his life; the sixth edition appeared the year he died. If you want to understand Smith, start here.
The core mechanism is sympathy (what we would now call empathy or perspective-taking). We come to moral judgments by imaginatively projecting ourselves into another person’s situation and asking whether we would feel and act as they do. Moral approval is the correspondence between our sympathetic feelings and the feelings of the person we observe.
But Smith doesn’t stop at approval from others. He introduces the impartial spectator — an internalized, idealized observer whose judgment we consult when actual social feedback is unreliable. The desire to be worthy of approval, not merely to receive it, is what distinguishes genuine moral development from mere conformity. This is a more sophisticated picture than he usually gets credit for.
Moral imagination is doing real work here. Ethics for Smith is not about following rules or calculating consequences — it is about cultivating the capacity to see from another’s position. This makes him a sentimentalist in the tradition of Hutcheson and Hume, but with a social-constructive dimension that goes beyond either.
Wealth of Nations (1776)
The Wealth of Nations is not a celebration of capitalism. It is a critique of mercantilism — the system of state-granted monopolies, colonial extraction, and trade restrictions that dominated 18th-century European economies.
The “system of natural liberty”: Smith’s argument is that when you remove mercantilist distortions — monopoly charters, trade barriers, legal privileges for specific industries — economic life naturally tends toward greater productivity and broader prosperity. This is an argument against concentrated economic power, not an argument for unregulated markets in the abstract.
Absolute advantage: Smith argued that nations benefit from specializing in what they produce most efficiently and trading freely. (Ricardo’s comparative advantage came later.)
The critique of monopolies and cronyism runs throughout. Smith is scathing about merchants and manufacturers who conspire to rig markets: “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public.” He distrusts concentrations of private power as much as concentrations of state power.
The division of labor’s costs: Smith is famous for the pin factory as an illustration of productivity gains from specialization. What is less often quoted is his warning that the same process mentally destroys workers — a person who spends their entire life performing one simple operation “becomes as stupid and ignorant as it is possible for a human creature to become.” He saw this as a serious social problem, not a tolerable trade-off.
Public goods: Smith explicitly supports state provision of education (especially for workers damaged by the division of labor), public infrastructure (roads, bridges, canals), and institutions that the market will not provide because no individual profit motive is sufficient. He is not a libertarian.
The Invisible Hand — In Context
The phrase appears exactly once in the Wealth of Nations (Book IV, Chapter 2) and once in the Theory of Moral Sentiments. In context, the WN passage is about domestic versus foreign investment: merchants who prefer to invest locally, out of self-interest, happen to increase domestic industry. That’s it. It is not a general theory of market self-regulation. The phrase was elevated into a foundational economic principle by later interpreters, not by Smith.
The 20th-Century Appropriation
The disciplinary split between economics and moral philosophy in the late 19th and early 20th centuries made selective reading possible. Once the Wealth of Nations was severed from the Theory of Moral Sentiments, Smith could be conscripted into projects he would not have recognized.
Hayek and Friedman built their arguments for market liberalism partly on Smith’s authority, emphasizing the self-regulating tendencies of markets while ignoring his warnings about monopoly power, his support for public goods, and his insistence that economic life is embedded in moral relations. The Mont Pelerin Society (founded 1947 by Hayek, with Friedman as a key member) was instrumental in constructing the intellectual infrastructure of neoliberalism, and Smith was made its patron saint.
Thatcher’s appropriation was cruder — Smith reduced to a slogan for privatization and deregulation. The Adam Smith Institute, founded in 1977, took his name for a program of policy advocacy that Smith’s own writings frequently contradict.
The enabling condition for all of this was the fracture between economics and moral philosophy. As long as Smith is read only as an economist, the selective reading holds. Read him as what he was — a moral philosopher — and the appropriation becomes visible.
Marx’s Engagement with Smith
Marx took Smith seriously and built on him directly. Smith’s labor theory of value — the idea that the value of a commodity is related to the labor required to produce it — became the foundation for Marx’s own analysis. Where Smith observed that workers do not receive the full value of what they produce (profit accrues to the owner of capital), Marx named this surplus value and made it the central mechanism of capitalist exploitation.
Marx’s move was to take Smith’s observations to their logical conclusions. If the division of labor degrades workers, if profit depends on paying workers less than the value they create, if capital accumulates through extraction — then the system is not merely imperfect but structurally exploitative. Marx saw himself as completing an analysis Smith had begun but could not finish, given his historical position.
Chomsky’s Reading
Noam Chomsky has repeatedly argued that Smith, read honestly, is a critic of concentrated power in all forms — state and private. Chomsky emphasizes Smith’s hostility to monopolies, his recognition that the “masters” (employers) hold structural advantages over workers in wage negotiations, and his awareness that policy in commercial societies tends to reflect the interests of merchants and manufacturers rather than the public.
Chomsky’s point is that the people who claim Smith’s authority are often advocating for exactly the concentrations of private power Smith warned against.
Class Background
Smith was middle-class. His father was a customs official (who died before Smith’s birth) and his mother came from a landowning family. He studied at Glasgow (where he encountered Hutcheson’s lectures) and then at Oxford on a scholarship — he hated it, finding the teaching lazy and the intellectual life dead compared to the Scottish universities.
He held the Chair of Moral Philosophy at Glasgow (1752–1764), then left to serve as tutor to the young Duke of Buccleuch on a Continental tour — a position that came with a generous lifetime pension. He spent ten years writing the Wealth of Nations before taking a position as Commissioner of Customs in Edinburgh.
Comfortable but not aristocratic. Close enough to the commercial world to observe it carefully, independent enough (thanks to the pension) to write honestly about it.