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Jesse Norman: Adam Smith: what he thought, and why it matters.

Jesse Norman: Adam Smith: what he thought, and why it matters

Penguin Random House, London, England

My undergraduate degree was in history and I never took a course in economics. After graduating and at my first job, I was at a meeting in Milwaukee and had some spare time. I wandered into a bookstore and found a copy of Samuel Hollander's Economics of Adam Smith. I picked it up because I had heard of this Adam Smith and thought knowing something about economics might help in a business career. I bought it, read it, found economics to be fascinating, and the rest is history. Several years ago, I tracked Samuel Hollander down (he's retired) and thanked him.

So I have an affinity for Adam Smith, his thinking, and classical economics. My second reading in economics was The Wealth of Nations and I try to read new works in these areas. I was pleased to purchase a copy of Adam Smith: What He Thought and Why It Matters by Jesse Norman. Norman is a Conservative Member of Parliament and has been a Cabinet Minister, an academic and a banker.

The literature on Adam Smith is prodigious but largely biographical. Norman's book covers Smith's life but is more comprehensive. The book can be divided into three parts: Life, Thought and Impact.

In the first part of the book, Norman provides insight into Smith the man, his life and times. He wrote at a time and place--eighteenth century Enlightenment Scotland--of innovation, globalization, and progress, as well as a great explosion of learning.

With that background in mind, the second part of the book Norman seeks

to understand how Smith's thought developed. Norman is sympathetic of Smith but is balanced. Norman examines widely accepted views of Smith and calls them myths, arguing that detractors and admirers too often distort Smith's thought. In our polarized climate, Smith's reputation often furthers the divide rather than unites. Norman defends Smith from his detractors (Smith as encouraging greed and selfishness, as pro-rich and an apologist for wealth and inequality, as a misogynist, etc.) but also releases him from his most zealous "market fundamentalism" admirers (Smith as advocate of ruthless free markets, as anti-government, etc.). Norman brings the reader back to Smith's own words, which are too often misunderstood. What emerges from his assessment is a rejection of both left- and right-wing caricatures. For example, Smith did not advocate unfettered self-interest and his use of the "invisible hand" metaphor is also misinterpreted. Some current thinkers take the term to mean that the market will always foster the best outcome. The reality to Smith was more nuanced. We learn that in reading Smith's Letters on Jurisprudence, Smith was not the misogynist suggested by some contemporary writers but that he had a slightly progressive grasp of the predicament of women in his times.

In a closing section, Norman summarizes the insights gleaned to examine how Smith's thinking is still relevant today and how he would likely react to contemporary issues such as inequality and "crony capitalism." Norman argues that Smith was convinced that monopolies are bad and that he would object to wealth concentration. He saw many instances where the market needed to be restrained. Smith believed that well-functioning markets required sound government and regulation and argued for a tax policy that would be somewhat progressive.

Norman insists that The Theory of Moral Sentiments is in every way as important as The Wealth of Nations, and that they are complements. The former looked at questions of morality and virtues that help society flourish, while the latter articulated what we would call free market theory.

In summary, Norman shows that much of what we believe about Smith is misunderstood and he effectively argues that Smith is relevant for today. I agree, and I highly recommend the book.

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Thomas Kevin Swift (1)

Published online: 19 June 2019

[mail] Thomas Kevin Swift

(1) American Chemistry Council, 700 2nd Street NE, Washington, DC 20002, USA
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Comment:Jesse Norman: Adam Smith: what he thought, and why it matters.
Publication:Business Economics
Date:Jul 1, 2019
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