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What did Adam Smith Believe In?

April 29, 2020 by

Adam Smith

If the name Adam Smith is familiar to you, it probably makes you think of a dead old white guy from the eighteenth century who donned powdered wigs, likely wore knee breeches, and had a stern Scottish demeanor. Oh, and came up with this idea about an “invisible hand” that guides a free market economy – whatever that means. Smith’s intellectual legacy, Homo economicus steps out of the grit and grunge of the Industrial Revolution as a utility-maximizing machine, dropping the dictates of deontology, swatting away the social structure, destroying man in the pursuit of profits.

The “dismal science” is … well, dismal.

You may think the world has gleaned enough from Smith: he’s done enough damage; it’s time to move on. Perhaps. Perusing Smith’s books, I was startled to find a confluence of the ideas of Adam Smith and Eberhard Arnold, a founding member of the Bruderhof. The overlap might be small but it’s interesting coming from such intellectual foils.

Perhaps it is also relevant given the current political climate. My generation is showing increasing levels of discontent with the existing economic system. Many young people don’t believe it’s working for them: they think it’s rigged; they gravitate toward leaders such as Jeremy Corbyn and Bernie Sanders whose antiestablishment platforms would shake the economic and political systems to a degree not seen for decades. A growing number favor some form of socialism to capitalism.

I’m not going to engage in a comparison between economic systems, but I think it is worth returning to the writings of Adam Smith, the father of capitalism, whose work was foundational in many countries’ transition from a mercantilist economic system to a free market capitalist one. Most invocations of Smith neglect his comments on happiness and on the division of labor in the context of capitalism – both thoughts are counterintuitive and seemingly paradoxical coming from the man who was arguably the most influential advocate for capitalism.

If you have many hours and an interest in tedious eighteenth century prose, it’s worth reading Smith’s books The Wealth of Nations and The Theory of Moral Sentiments since my account is by no means complete. Until then, here’s my rambling synthesis of Smith’s thoughts.

According to Smith, nothing could be “added to the happiness of the man who is in health, who is out of debt, and has a clear conscience.” In fact, “our happiness in this life is … dependent upon the humble hope and expectation of a life to come: a hope and expectation deeply rooted in human nature; which can … illumine the dreary prospect of its continually approaching mortality, and maintains its cheerfulness under all the heaviest calamities.”

Power and riches are only “enormous and operose machines contrived to produce a few trifling conveniences to the body,” which, in spite of our best intentions, “are ready every moment to burst into pieces, and … crush in their ruins their unfortunate possessor.”This seems straightforward enough, but Smith takes an unexpected turn – happiness, he posits, is almost totally divorced from material acquisition. What is more, Smith goes on to say that “the person under the influence of those extravagant passions” – by which he means avarice that overrates the difference between poverty and riches – “is not only miserable … but is often disposed to disturb the peace of society, in order to arrive at that which he so foolishly admires.” Happiness does not come from wealth and greatness, which Smith refers to as “mere trinkets of frivolous utility.” Power and riches are only “enormous and operose machines contrived to produce a few trifling conveniences to the body,” which, in spite of our best intentions, “are ready every moment to burst into pieces, and … crush in their ruins their unfortunate possessor.” It is this deception, according to Smith – the deception that wealth will usher in some sort of utopia – that “rouses and keeps in continual motion the industry of mankind.”

But this ruse is devastating. This same deception when “pursued with that passionate ardor … drives us to violate the rules either of prudence or of justice.” Without avarice “a well-disposed mind may be equally calm, equally cheerful, and equally contented.” Apart from the “frivolous pleasures of vanity and superiority” that the wealthy possess, those in the “most humble station” have “every other which the most exalted can afford.” Indeed, “perfect tranquility” which is the “principle and foundation of all real and satisfactory enjoyment” is not to be found in the “pleasures of vanity and superiority” at all.

This is not a novel idea, of course, especially in traditional Christian doctrine. It’s found in the Sermon on the Mount, and Eberhard Arnold spoke and wrote much on the topic. But it’s odd coming from Smith the man who promulgated a system that generated wealth beyond anything seen before. Farewell Homo economicus.

After visiting factories (something the famous critic of capitalism, Karl Marx, failed to do), he commented on the effects of the division of labor. Anyone “whose whole life is spent in performing a few simple operations. . . has no occasion to exert his understanding or to exercise his invention in finding out expedients for removing difficulties which never occur.” The result? Such a person becomes “as stupid and ignorant as it is possible” for someone to become, since the “torpor of his mind renders him, not only incapable of relishing or bearing a part in any rational conversation, but of conceiving any generous, noble, or tender sentiment.” (Such people become “mentally stultified,” Arnold says.) Again, this is from the great promoter of capitalism who recognized that the division of labor was what generated the wealth in the economic system he championed.

Where Smith and Arnold diverge, of course, is in their solution: Smith comes down on the side of free market capitalism, and his defense in spite of the above mentioned deficiencies is certainly worth reading; while Arnold advocates for a life where “everything physical becomes holy and all activity in manual work a joy; where there is zest, the bubbling vigor or enthusiasm in work, there is the kingdom of the future.” In short, he pleads for community – Homo reciprocans, if you will. He believed Smith’s “humble hope and expectation of a life to come” could be lived out, but not through capitalism or socialism. Arnold understood that it is perhaps possible to “see the materialist claims made by the socialist movement as the economic substructure of Christianity,” but that “this kind of revolutionary movement … can never be confused with a Christian movement of awakening” because “the sewers of human weakness, the whirlpools of animal bloodthirst, the bottomless abyss of petty egoism, and the demonic thirst for power present in the socialist wave” run against what is truly required – “a renewal of man’s inner life.”


Jeff Maendel is a student living at Peckham Community, a Bruderhof house in Lewisham, London.

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