Adam Smith: What He Thought, and Why it Matters

by Jesse Norman

'A superb book' Financial Times, Books of the YearAdam Smith is now widely regarded as 'the father of modern economics' and the most influential economist who ever lived. But what he really thought, and what the implications of his ideas are, remain fiercely contested. Was he an eloquent advocate of capitalism and the freedom of the individual? Or a prime mover of 'market fundamentalism' and an apologist for inequality and human selfishness? Or something else entirely? Jesse Norman's brilliantly conceived ook gives us not just Smith's economics, but his vastly wider intellectual project. Against the turbulent backdrop of Enlightenment Scotland, it lays out a succinct and highly engaging account of Smith's life and times, reviews his work as a whole and traces his influence over the past two centuries.But this book is not only a biography. It dispels the myths and debunks the caricatures that have grown up around Adam Smith. It explores Smith's ideas in detail, from ethics to law to economics and government, and the impact of those ideas on thinkers as diverse as Karl Marx, Charles Darwin, John Maynard Keynes and Friedrich Hayek. Far from being simply an economist, Adam Smith emerges as one of the founders of modern social psychology and behavioural theory. Far from being a doctrinaire 'libertarian' or 'neoliberal' thinker, he offers a strikingly modern evolutionary theory of political economy, which recognises the often complementary roles of markets and the state.At a time when economics and politics are ever more polarized between left and right, this book, by offering a Smithian analysis of contemporary markets, predatory capitalism and the 2008 financial crash, returns us to first principles and shows how the lost centre of modern public debate can be recreated. Through Smith's work, it addresses crucial issues of inequality, human dignity and exploitation; and it provides a compelling explanation of why he remains central to any attempt to defend, reform or renew the market system.

Genres: Economics, Biography, History, Nonfiction, Philosophy, Politics, Business

369 pages, Kindle Edition

Published July 5, 2018

About the author

Jesse Norman, MP for Hereford and South Herefordshire, is a Senior Fellow at Policy Exchange, the most influential British conservative think tank based in London. He is widely regarded as one of the architects of New Conservatism, a political philosophy that stresses using traditionally conservative techniques and concepts in order to improve the general welfare of society.

Norman was educated at Eton College and Merton College, Oxford, graduating with a 2:2 in classics. He did further study at University College London, where he held an honorary research fellowship in philosophy and obtained a PhD. His books include The Achievement of Michael Oakeshott (ed), After Euclid and The Big Society: The Anatomy of the New Politics.

Reviews

[Jarvo · Rating 4 out of 5]

Perhaps the fate of all major thinkers is for their name to be taken in vain? The central theme is that whilst Smith was fully aware of the potential of markets to promote growth, and that on most occasions he was pro-market, he was also aware of their limitations and he was by means a free market fundamentalist. In the same way, Keynes saw a role for the state, especially in times of economic challenge at other times he viewed its role as quite limited.
This is a mixed but highly engaging book. It divides into three distinct sections. The first is autobiographical, and since Smith's live was dedicated to his work it includes long discussions of those of his writings that were published or survived his death. These works are notable for their range touching on rhetoric, moral philosophy, and jurisprudence as well as political economy. A major work, comparable in scope with The Wealth of Nations, but focusing on law and government was planned but never completed. A tantalizing prospect. What is clear is that Smith was never simply a political economists, nor did he give precedence to this work, and that his work is deeply embedded in C18th modes of thought and is rich in its subtleties. An amusing note, though, is his observation that Scottish universities were superior to their English counterparts because lecturers were directly dependent on student fees.
The second part of the book claims to offer a fuller exposition of Smith's work, but I think it would be better described as a description of what Smith was not. It draws sharp distinctions between Smith's views and methods and those of contemporary mainstream economics, which is criticised for being by turns reductive and irrelevant. Smith, in contrast, is deeply interested in the actual economy, for example drawing sharp distinctions between different types of market.
The final part of the book is perhaps the most intriguing. We have a conservative MP, writing about Adam Smith, whose starting point is that contemporary capitalism is in trouble. It has been hijacked by an ever smaller elite, determined to appropriate as much of the pie to themselves. The author's response is to ask 'well, what would Adam Smith do?'. I suspect the real answer is not to get into such a mess in the first place, but at least as the author makes clear, he would be fully aware that thus kind of crony capitalism was always a risk and he would not be so ideologically pro-market that he was opposed to the idea of regulation in principle.
Ultimately I think the first part of the book is the strongest (although occasionally quite difficult); the second a bit disappointing - it demolishes various 'straw men' versions of Smith but I expect a slightly fuller exposition of his main ideas; and the third is intriguing, but I am not sure that the solutions he does put forward are adequate to the problems on hand. The tripartite structure also leads to a certain amount of repetition.
But problems notwithstanding, Smith emerges as even more of an intellectual giant than you might have imagined him to be. Vast in his range, deep in his subtlety, generous and humane,

[Stephen · Rating 4 out of 5]

Adam Smith is one of those people who everyone thinks they know, but it turns out that they probably don't. I would have included myself in this bracket until I read this book. It is something of a revelation. The author manages to span the full extent of Smith's vision and accomplishment and to place him into the wider context of the Scottish Enlightenment.

I had only encountered Smith as the father of economics in the Wealth Of Nations, with a passing acquaintance with the Theory of Moral Sentiments. There is, actually, more to it than that. There was a third work on politics and jurisprudence that was unpublished during Smith's lifetime and which would have rounded the trilogy of his work about human social life. Smith's notes and papers on this third work were destroyed on his death. If only they weren't.

Most observers focus on Smith's more famous work - the Wealth Of Nations. This is often mistakenly seen as an apology for wealth and inequality, as a justification for neo-liberal free market economics, and as portraying everyone as homo economicus. This is all more untrue than true.

Smith was keen on markets as a means of undertaking commercial operations. However, he saw markets as operating in the social context and as a means of delivering fairness. He quite easily saw that regulated markets could quite easily degenerate into a form of crony capitalism that is better associated with neo-liberal economics. That is because he saw that people aren't dispassionate calculators, they are going to bring their emotions to their market transactions. He was also tolerant of inequalities in wealth, as long as everyone had a reasonable chance to accumulate wealth fairly. This would place his politics, in a modern context, as more like 'One Nation Conservatism'. A conservative with a small 'c'.

In the 250 or so years since he published the Wealth Of Nations, many have hijacked the core message to suit their factional ends. Paradoxically, even Karl Marx adopted a Smithian framework of capital accumulation in his work. Of course, Marx reached different conclusions to Smith, but that does not alter the point that Smith was a Marxist before Marx. I make the point to show that most thinkers after Smith would be able to use some of his ideas to develop their own. Such was the magnitude of Smith's work.

I quite liked this book. It is well written - which really helps - and very well researched. It has a nice pace that many academic texts lack. There were no parts that I found hard going and the author has a very accessible style. I would recommend this book to those who are interested in learning what Smith's work was actually about, rather than the cardboard cut-out that we all too readily accept.

[Laura Spira · Rating 4 out of 5]

Journalists, commentators and even academics are prone to quoting the best soundbites from The Wealth of Nations in ways that show that they haven't read the original work. The temptation is great because Smith appears to have been uncannily prescient and some of his critique seems directly pertinent to the modern economic environment. But there is much more to Smith's work than those choice morsels. In this book Jesse Norman gives a brief biography of Smith - necessarily brief as little is known about his personal life - and then places his work in its historical context, which is important to any useful interpretation. Norman then provides Smith's intellectual biography, demonstrating links contemporaneous thinking which influenced him and very effectively showing the breadth of Smith's thought and its links beyond economics. Enough of a taste of Smith's less famous writings is included to tempt the interested reader to go back to the original sources. I enjoyed reading this book very much: Norman manages to write in a way that engages the general reader but does not lose academic rigour, no easy task. I remain somewhat astonished that a serving government minister could find the time to produce a work of this nature!

(Thanks to Netgalley for the ARC)

[James Dempsey · Rating 5 out of 5]

Long worn on audiobook, seldom ever listed to - in recent time anyway. Back on the move at 1.5x. We are cooking Jesse.

[Pedro L. Fragoso · Rating 4 out of 5]

This was published as “Father of Economics” in the United States (From the book: “he was—and still is and will always be—a thinker of remarkable depth and power. He is rightly called the father of economics, conceptually because he was the first to put markets squarely at the centre of economic thought, and practically because there are few if any economists since Smith—including both Marx and Keynes—who do not stand in his intellectual debt.”). It's more obvious, but less accurate (“his political economy ranges far wider than economics alone, and he could with equal justice be considered one of the founding fathers of sociology.”) To wit:

“Like Burke, Adam Smith was at core a philosopher, but of a more theoretical stamp. He believed in the workings of providence, of harmony, of order. But for him human society—not divine revelation, rational intuition or the individual will—is the ultimate source of our moral life. His whole emphasis is on communication and community, on what free people have in common between them. In his great project, his Humean science of man, mutual recognition—working through sympathy and tempered by the impartial spectator—generates social and moral norms small and large that constantly evolve and proliferate, rise and fall, are superseded or survive. By this means Smith opens the door to a potentially unified understanding of a vast range of human activity, in all its glorious diversity. Premised as they are on free exchange, in commercial societies these norms demand the same basic things of us all, wherever and whoever we are: awareness of others, courtesy, open-mindedness, consideration, tolerance and respect. In the course of his life Smith applied this core set of ideas again and again, refining it as he went: from his early essays and work on rhetoric, through The Theory of Moral Sentiments and the unpublished, little-known but crucial Lectures on Jurisprudence to The Wealth of Nations. That is, he took it from the basis of communication itself to the foundation of moral psychology to the pursuit of scientific inquiry to the administration of justice to market exchange; and if more time had been permitted to him, he might have gone on to include artistic creation and politics too. Embedded in it all is a dynamic, future-oriented and ever-unfolding sense of human possibility.”

Lots of very interesting considerations and thoughts about this remarkable and still relevant XVIII century “natural philosopher”. Namely:

“(...) a degree of humility among those who exercise power, and a wider acceptance that success is often the result of where you start—of families, culture and capabilities—and what luck you have on the way. It means a recognition that achievement of almost any kind is dependent on the efforts of others and on the strength of society, not merely victory in some dog-eat-dog struggle in which only the fittest survive. It means a Smithian focus on human dignity and human capabilities, and on how a well-functioning society can help all its members to flourish in their lives. But it also involves a shared recognition that there is a space in every society that lies outside what is measurable or governed principally by law. That is the space of cultural values, of existing practices and habits, of reasonable social expectations, of norms of conduct, the space of what is ‘done’ and ‘not done’. (...) But a good society will find ways to defend that space of norms. Without it all that counts is law, and the dynamics of the marketplace, and these by themselves can never be enough. With it can come greater social trust, and the potential to strengthen the institutions and public standards that restrain crony capitalism. (...) Adam Smith himself belonged to no political party, and he is not the property of any one ideology or political movement. Many of his political views remain obscure. In eighteenth-century terms he combined a characteristically Scottish Enlightenment belief in the possibility of personal improvement with a (...) commitment to the idea of social progress. But he was no radical: he did not adopt key radical policies of the day, such as a universal male franchise or annual parliaments, and he avoided radical positions on such issues as militias, the American colonies and public debt. He rejected utopian thought and explanations from any supposed state of nature; he preferred the local to the global; he despised ‘faction and fanaticism’ in both politics and religion, and he excoriated the ‘the man of system’ who tries to control people and suppress human individuality and freedom. He repeatedly emphasized the importance of ‘slow and gradual’ change, and of reform over revolution; he reasoned more from cases than from first principles. He was realistic about the importance of the state, and about its weaknesses. As he wrote, ‘No government is quite perfect, but it is better to submit to some inconveniences than make attempts against it.’ In modern terms he is neither libertarian nor socialist nor social democrat, but probably on balance a moderate small-c conservative. Indeed, he and Burke can be read together as setting the terms for different but overlapping kinds of a humane and moderate conservatism.”

There is a compelling and very welcome emphasis on the remarkable era of the Scottish Enlightenment and the intellectual giants of the time: “Smith’s relationship with David Hume deserves special comment. Intellectually, these are two of the most remarkable men that ever lived.” (...) “From a strictly commercial perspective, Smith found himself eclipsed by his friend Edward Gibbon, whose The Decline and Fall of the Roman Empire, published the previous month, sold out almost immediately. Nevertheless, The Wealth of Nations did well.”

About the masterpiece: “The Wealth of Nations was published in London on 9 March 1776, in two rather expensive volumes and a print run of 500–750 copies.

The sheer range, length and brilliance of Smith’s work render any summary inadequate. But the full title of the book gives a flavour of its contents: An Inquiry into the Nature and Causes of the Wealth of Nations. This is not an economic textbook, though it is full of analysis, lessons and information. Rather, it is a book about economic processes and economic development. Nations, it argues from a vast array of evidence, can be wealthy and prosperous, or poor and struggling. But national wealth is not merely circumstantial or divinely bequeathed, it is created by human hand. It is not a stock of currency or bullion, or indeed a stock of anything, but ‘the annual produce of the land and labour of any nation’.

Moreover, what wealth really amounts to, and the causes of it, can be studied: political economy can be used to evaluate policy choices, and such choices can create or destroy wealth. An important goal of The Wealth of Nations is not merely to understand but to shape human actions; and to shape both how policy choices are made, individually and collectively, and the very idea of political economy itself. It is a contribution to ‘the science of a legislator, whose deliberations ought to be governed by general principles which are always the same’. The book’s panoramic sweep extends in space from the subsistence economy of the Scottish highlands to the developed nations of Europe and colonial trade with the Indies, and in time from ancient civilizations to contemporary events. But nowhere, it would transpire, are the effects of bad policy-making better illustrated than in the discussion of America.”

Words from the man himself: “Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice; all the rest being brought about by the natural course of things. All governments which thwart this natural course, which force things into another channel, or which endeavour to arrest the progress of society at a particular point, are unnatural, and to support themselves are obliged to be oppressive and tyrannical.” Amen!

[Otto Jacobsson · Rating 4 out of 5]

Not the easiest read if you, like me, are not used to philosophical concepts and of course Adam Smith’s original English language. What I really appreciated about the book was the three different parts: biography of Smith’s life, a review of his major works as well as a discussion of the relevance and prevalence of Smith’s ideas in today’s society. The book has definitively motivated me to read Smith’s original works.

[Jeff Kaye · Rating 4 out of 5]

Bringing Adam Smith, the founder of political economics, and his writing to life, over two hundred years after his death, is a mammoth task but one that Jesse Norman has accomplished with grace, in-depth understanding and a strong attempt to reconcile Smithian thoughts to modern-day circumstances.

Although the book begins with a story of his life, the main focus is on how his two, prime books - The Wealth of Nations and The Theory of Moral Sentiments - have to be seen as two sides of the same coin; that the oft-repeated mantras taken from Smith's best-known Wealth of Nations concerning the 'invisible hand' of markets, that might suggest that he preferred libertarian economics, are incorrect; that 'moral sentiments', the grounding of economics in the political and the civil society in which it operates, are central.

Jesse Norman appears, like his view of Smith, to be a small-c conservative as well as a Tory. This comes out in his important grasp of how markets and commercial businesses should not be able to run roughshod over other elements of society and how government in a modern society has a major role to play in many areas of life. This includes regulation of markets and business, as most would agree. While it is hard to judge how Smith would have seen the 21st Century, Jesse Norman makes a good attempt at this.

This book must have seemed an enormous challenge at the outset for a writer, but the challenge has been attempted and has been successful. Smith deserves to be seen for all his writings (except the mass of material that he required to be destroyed after his death) and the important symbiosis of Moral Sentiments with Wealth of Nations is at the core. There are not two Smiths, just one. The 'one' was a remarkable Scotsman. In an age of trading rather than manufacturing (which was not to be a fundamental part of the economy for fifty years after his death), Smith understood markets, businesses, society, the differences between owners and workers and the tensions, how government should act for the common good and how laws should enable all of society to benefit, not just those at the top. All these things are important today as they were in the eighteenth century.

Jesse Norman has done a tremendous job in understanding Smith and his relationship to the modern reader. The book is rich in detail, rich in analysis, rich in understanding and a very good read.

[Sean O'Donoghue · Rating 4 out of 5]

Adam Smith: What He Thought, and Why it Matter Jessie Norman 2018 allan Lane

I occasionally stroll into charity shops to look at their book section…mostly their offerings are of bonk busters….but the experience can be serendipitous. So it was when on a recent trip to Hereford, I found this book in the Oxfam bookshop there. The author is the local MP and he is that oxymoron of Conservative MPs, an intellectual.

I knew a bit about Adam Smith, especially that for what the neoliberals celebrate him for, laissez faire economics, is a serious curtailment of his jottings. Smith was part of the Scottish Enlightenment, a philosopher and political economist, who dealt primarily in qualities rather than quantities.

Norman gives equal billing to The Theory of Moral Sentiments and The Wealth of Nations. Smith saw the function of money as the oil which lubricates the economy, not as an end in itself. He was against what he termed “menial work”, like that of servants…butlers, whose services disappear as soon as they are rendered.

Oddly enough, he despised hierarchy: what he perceived as dreadful servility which incites us to adore our social superiours and an inhumanity which disposes us to contempt and trample underfoot our inferiors.

Smith was writing at a time when the shadow of feudalism was still very much in situ and the landed gentry and their rules were still in place. He railed against landlordism and rentierism, where any surplus product of the nascent industrialist was being leeched off to build mansions for the old ruling class.

Smith was very much a statist. The State was required not just for protection against foreign invasion, but also for law and order, education, the construction of roads and canals, the creation of the legal infrastructure for capitalism to exist and a host of other services to optimise the economy.
The notion of “the minimal state” and “the invisible hand” were NEVER referred to by Smith; they were added many years after Smith died, especially by the Ordoliberals in Vienna from the 1930, who mushroomed into what we know today as Neo Liberalism.

Good overview, well written by a fan, whose previous book was a biog of Edmund Burke

[Maria Petrenko · Rating 4 out of 5]

A good insight into Adam Smith's life and philosophy! I learnt many things about this talented and intelligent person, and I was really surprised that he was in fact humanist and eligalitarian. I really changed my mind about Adam Smith’s personality, whom previously I considered as a greedy father of capitalism. His ideas can be applicable to modern society challenges, and now I can be proud that I studied at the University of Glasgow Business School named after Adam Smith.
Though it can be a difficult reading if English is not your native language.

[Vera · Rating 5 out of 5]

This book is excellent - a fascinating exploration of Adam Smith's works, his background and philosophy. It did take me two weeks as the language is on the academic side, so I often had to re-read sentences to make sure I understood, but ultimately it is very accessible. Jesse Norman is great at providing context, meaning we also gain insight into the 'why it matters'.

[WaldenOgre · Rating 4 out of 5]

这部作品大大超出了我的期待。

由于作者兼具了哲学的学术背景、金融业的从业履历以及英国议院和内阁的从政经验，本书因此也不仅仅是一部人物传记，更是横跨了哲学、经济、历史、政治学、社会学和心理学诸领域。所以，与以赛亚·伯林的《卡尔·马克思》类似，它更适合被称作一部亚当·斯密的学术传记。

但不同之处在于，作者自身的形象几乎与传主本人一样强势。此外，他更将亚当·斯密与晚至罗尔斯、桑德尔的海量思想史线索一一纳入叙述之中，在挑战读者阅读习惯的同时，也对他们的知识储备提出了小小的要求。

唯一的不足之处，便是作者对亚当·斯密的思想遗产的维护和推崇过于热情，偶尔会显得有些牵强。但作为一位传记作者，这或许也是最容易得到谅解的缺点了吧。

[Farhan Ahmed · Rating 4 out of 5]

A good book if you're really interested in Adam Smith.

First half was a biography & the latter half debunked common assumptions about Smith.

The focus of the book is primarily on markets, but I did feel the conclusion on why it matters could have been more impactful.

Nonetheless, a well structured & well researched book.

[Donna Holland · Rating 4 out of 5]

A very good introduction to Adam Smith : the first part of the book is about his life which I found fascinating and the second part is how his ideas need to be adopted today in economics more than ever .

[Prasanta · Rating 4 out of 5]

Excellent book on Adam smith and his life, ideas and also its relevance in modern world economy by Jesse Norman.

[Brian Asequia]

Good

[James Hogg · Rating 2 out of 5]

A better title would have been 'Capitalism for dummies'.

[Robin Michael · Rating 4 out of 5]

great intro to Smiths life and work

[Supriya · Rating 4 out of 5]

Lovely book. Illuminating and worth reading

[James Huskinson · Rating 5 out of 5]

Loved the biography portion, but it was a little long in his discussion of Smith's legacy. Five stars because of how amazing Adam Smith was.

[Peter Wood · Rating 5 out of 5]

A very interesting and thorough explanation and analysis.
(I was surprised to see that the author is a senior Tory MP as he seems a very caring and empathetic person!)

[Jason Falinski · Rating 5 out of 5]

really good

[David Walsh · Rating 4 out of 5]

Adam Smith (1723-1790) has been widely recognized as the father of economics. The passage of time has clearly diminished the potential of everything that his work could offer us, as we evaluate our current economic system.

Jesse Norman does an excellent job in fleshing out the totality of Smith's life experience and moral philosophy that influenced his ideas and writings. Norman does this in a concise way and gives us a perspective of what Adam Smith's critique would be of our current cultural values and capitalist system. I recommend it as one of several books that could serve as a source for creating a prism for evaluating the necessary changes that we need to make to our system of capitalism in order to create a sustainable and flourishing life for the generations to follow.

[Marty Ohlhaut · Rating 5 out of 5]

There are several fairly lengthy summary reviews already posted here on this work, so I would only add briefly:
- fabulous overview and analysis of Smith's economic philosophy
- an engaging book, but you have to pay attention through every page
- some of the most salient aspects of Smith's economics insights were not evident until many years later as a true global economy developed. Norman does a valiant job of translating Smith's thoughts from the 1780's into the twentieth and twenty-first century financial world.

[Pcbernhard · Rating 4 out of 5]

Brings Adam Smith back to its real meaning as opposed to the image portrayed of him by the ultra rigth politics. Economy can never be neutral and separate from its enveloping society, and cannot operate without a proper government.