The multiple faces of Adam Smith – 7/6/2023 – André Roncaglia

It was in the master’s degree that my awakening took place. I attended a class by Professor Jorge Eduardo Soromenho. He wrote on the board the expression “spontaneous order” and began to speak, in an almost poetic way, about the “great society” that Adam Smith worshiped in his thought.

Small independent producers pursued their interests and, without wanting to, cooperated in an impersonal way for the material support of the community. Unintended consequences of deliberately self-interested acts would form this web of social, commercial, and financial connections.

In the absence of a more cohesive explanation, Smith attributed this spontaneous order to a ghostly “invisible hand” of the market. Since then, economists have tried for decades to formalize and identify the coordination mechanisms synthesized by the curious expression.

In 2023, the 300th anniversary of the birth, in Glasgow (Scotland), of the moral philosopher who would rationalize capitalism is celebrated. His anatomy of wealth creation was detailed in “The Wealth of Nations”, at the age of 53, in 1776. That year marks the US rebellion against the British crown, which culminates in the country’s independence.

In short chapters and with abundant historical illustration, Smith simplified the “laws” of the markets, illustrated the gears of material progress, as well as highlighted its inequalities and injustices.

The famous example of the pin factory taught the power of the division of labor. Productive specialization diversified production and, via higher productivity, lower prices increased access to consumer goods. The degree of prosperity depended on the extent of the market: the greater the network of interactions, the greater the complexity of interdependence and the more sophisticated the standard of living became.

The Wealth of Nations was produced in cumulative reinforcements between productivity and technological innovation. By dedicating more resources to the production of knowledge, the economy would transform culture, societies, social relations and mentalities.

Smith projected a commercial society of free individuals into the future, in which the State would take care of collective problems, but would interfere as little as possible in the private sphere. Smith attracted the admiration of the powerful of his day and beyond. The ambiguities of his work fueled the confirmation bias that accompanies the ideology.

Understanding the historical Adam Smith, the contradictions in his thinking and his consecration as the father of Economics is the subject of countless articles and books.

It is worth reading the original work of Adam Smith, and the various revisions of his life and work. I highlight some. “Economic Sentiments”, by Emma Rothschild, portrays the historical context in which “The Wealth of Nations” is conceived. In “Knowledge and the Wealth of Nations,” David Warsh shows how economists’ emphasis on the notion of the invisible hand overlooked, for two centuries, the effects of knowledge on production, encapsulated in the example of the pin factory.

Elizabeth Anderson’s book “Private Governments” points to her rejection of large corporations as a valid organizational mechanism for promoting efficient markets.

The book “Who Cooked Adam Smith’s Dinner”, by Katrine Marçal —poorly translated to “The invisible side of the economy”—, brings a feminist reading from the life of Smith, a bachelor who lived most of his life with his mother.

Finally, the recently released “Free Market: The History of an Idea”, by Jacob Soll, not only shows that the free market needs a lot of State to function, but also reveals a naive Smith, appeased with the political and economic powers of his time. , and who became a customs inspector at the end of his life.

The real Adam Smith is much more interesting than the mythical caricature concocted by neoliberals. I invite the reader to get to know him better.

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