More Myths About Adam Smith

Chandrabhan Prasad in the Daily Pioneer (New Delhi) writes:

“The final quarter of the 18th century was the launching pad for the industrial revolution. That phase witnessed battles between handlooms and powerlooms. The triumph of machine was facilitated by many factors, crucial being the intellectual umbrella hoisted by Adam Smith, and financial discipline administered by the London Stock Exchange.

Indisputably, as the earliest philosophical-mentor of capitalism, Smith in his book wrote about the socio-economic rational for a capitalistic order society. The London Stock Exchange accorded capital an institutional authority.

Thus, without Adam Smith and the London Stock Exchange, all discourses on the industrial revolution would be out of place. Without either of them, the machine on its own lacked any inbuilt vision. Self-mesmerised Luddites on the other hand, had their well thought of goals. They fought the machine with a purpose.”

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There is a great deal of media commentary on Adam Smith in the Indian media, much of it showing the corrupting intellectual power of the Chicago version of Adam Smith, a 20th century fable now dominant in campuses across the USA.

Chadrabhan Prasad is no exception. He also adds to these errors a number of historical statements of problematic value.

Let me hypothesise if only to separate Adam Smith’s contribution to 18th century discourse from the extravagant claims that if it had not been for his contributions the so-called ‘industrial revolution’ would somehow of ‘lacked any inbuilt vision’ (whatever that means!), or that, again somehow, Wealth Of Nations facilitated ‘The triumph of’ the machine’.

These claims are spurious. Machine innovation was quite separate from people reading Wealth Of Nations; it had not have an immediate affect on such matters.

Watt developed the improved steam engine in the 1760s without reading the unwritten Wealth Of Nations (not written until 1776). Even his improvements were made by the accidental circumstance that Glasgow’s trade guilds prohibited young Watt from working as an instrument maker, and he was appointed by Glasgow University to work as such on its equipment. Among his tasks, he was asked to repair a model Newcomen steam engine, which he did and became fascinated by its design and took three years to improve on it. The only role that Smith played in these fortuitous events was to be a member of the University Senate at the time.

None of the other inventors mentioned by Chadrabhan Prasad passed through Smith’s ambit of influence. It is unlikely that they were influenced by his ideas when they solved purely mechanical problems and applied them in a few workshops.

Wealth Of Nations was a polemic against macro-level political economy then practised by the British government and it was not for many decades that those policies were changed. The process of change that led to the ‘IR’ had been underway for many years before Smith’s ‘intellectual umbrella’ was in place.

Smith did not write his book ‘about the socio-economic rational for a capitalistic order society’. He did not use the word ‘capitalistic’ nor the word ‘capitalism’, the latter first used in English in 1854 and thereafter by Karl Marx.

Smith’s concern was with the ‘fourth age of man’, or ‘commercial society’ as distinguished from the third Age of man agriculture. Commerce grew out of agriculture when the output of farming and herding, sufficient for the entire population, was produced by half the available workforce, leaving a surplus available for the artefacts of civil society, including infra-structure, trade, ‘machines’ to augment (but not to replace) labour, the generation of knowledge and its dissemination, inventions, civil government and so on. This process got underway repeatedly across Europe and slowly and gradually created the conditions for the invention of machines that replaced labour, and lifted the division of labour and trade to levels that raised per capita incomes above subsistence.

Adam Smith studied and analysed commercial society before the 19th century; he did not invent capitalism, nor accelerate it and most of what happened would have happened if he had become a parish church minister or had died in childhood.

To lay the burden upon his legacy of being instrumental in what happened in the 19th century can only appeal to believers in the other myths invented about him from the falsified legacy of 20th century neoclassical economists.