Monday, February 14, 2011

James Buchan's "The Authentic Adam Smith"

If you like chatty erudite biographies, this book is for you. There is no breathtaking insight into Adam Smith, but you do get a gritty feel for the man and his times in this concise little book. There is a lot of name dropping and the kind of intellectual history where you find who knew who and who talked to who and what ideas they exchanged.

To get a taste of the book's style, here is a bit from the introduction that nicely exhibits the pretentious ignorance of Alan Greenspan the infamous head of the US Federal Reserve system:
In his seventeen years as governor of the US central bank, Chairman Greenspan had become famous for impenetrable or Delphic sayings, but in Kirkcaldy he was clear. He said that Adam Smith was 'a towering contributor to the development of the modern world' for his 'demonstration of the inherent stability and growth of what we now term free-market capitalism'. This stability and growth arises, Greenspan said, in a principle discovered by Smith and called the 'invisible hand'.

'One could hardly imagine,' Greenspan said, 'that today's awesome array of international transactions would produce the relative economic stability that we experience daily if they were not led by some international version of Smith's invisible hand.'

Couldn't one?

The phrase 'invisible hand' occurs three times in the million-odd words of Adam Smith's that have come down to us, and on not one of those occasions does it have anything to do with free-market capitalism or awesome international transactions. One could with better justice claim that Moll Flanders, a resourceful whore in the fiction of Daniel Defoe who also uses the phrase 'invisible hand', is another towering contributor to the stability of international markets.
From that you get a sense of the meticulous pedantry of Buchan and his joy in using his deep knowledge of Adam Smith to put down those who claim a knowledge of Smith without doing the hard work. It is clear that Buchan has no love for the right wing ideologues who have taken possession of Smith as an icon of "free trade" and "laissez faire". As Buchan so skillfully shows, this is not the historic Smith nor is this what his famous writings justify. But this won't stop the ideologues from abusing poor Adam Smith.

Buchan's book fills a gap in understanding the complexities of Smith by discussing his first great book The Theory of Moral Sentiments. This is the foundation which helps the reader understand his second great book An Inquiry into the Nature and Causes of the Wealth of Nations. But right wing ideologues remain blissfully ignorant of the first book because they want to "adapt" ideas from the second that fits their fancy whether it corresponds to Smith's actual beliefs or the text of the book. This book is a good antidote by giving you a short introduction to the breadth of Adam Smith's ideas.

Finally, here's another bit from Buchan's book which will give you a real insight into Adam Smith and his ideas:
'Political economy,' Smith writes, 'considered as a branch of the science of a statesman or legislator proposes two distinct objects: first, to provide a plentiful revenue or subsistence for the people, or more properly to enable them to provide such a revenue or subsistence for themselves; and secondly, to supply the state or commonwealth with a revenue sufficient for the publick services.' In the next sentence, he prescribes the panacea of every Scots financier and charlatan since John Law of Lauriston had won over the French Regency to paper money in 1715:'It proposes to enrich both the people and the sovereign.'

How was it that the world had gained in prosperity? How was it as Voltaire had put it, that it cost little more to live in comfort under Louis XV in the eighteenth century than in discomfort under Henri IV in the sixteenth? 'The poor labourer,' Smith said in his lecture of 29 March 1763, 'bears on his shoulders the whole of mankind, and unable to sustain the load is buried by the weight of it and thrust down into the lowest part of the earth, from whence he supports all the rest. In what manner then shall we account for the great share he and the lowest of the people hav of the conveniencies of life.'

The answer is not the silver of Peru, nor the wisdom of the sovereign nor the discoveries of philosophers, but an instinctive form of industrial organisation: 'The division of labour amongst different hands can alone account for this.'
This is a delightful book. It won't teach you much economics, but it will entertain you and help you appreciate Adam Smith and the wonderful intellectual world of Edinburgh in the late 18th century.

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