Today marks the anniversary of the publication of Adam Smith’s most famous work, The Wealth of Nations, which was published on March 9, 1776. It’s one of my favorite books.
The Wealth of Nations is a declaration of economic independence, and is just as important as Thomas Jefferson’s declaration of political independence. It is no coincidence that they were both published in 1776, the Annus Mirabilis of the Enlightenment.
In his fat magnum opus (over 1,000 pages), Adam Smith declared war on government intervention in the economy, and put on paper a universal formula for prosperity that would revolutionize economics and international trade. It promised a new world — a world of abundant wealth, riches beyond the accumulation of gold and silver — and not just for the rich, but for the common man and the poor.
Adam Smith’s solution? Give people their freedom! His “system of natural liberty” would liberate everyone from 16-hour-a-day jobs, subsistence wages, and forty-year life spans. He declared: “To prohibit a great people from making all that they can . . . or from employing their industry in the way that they judge most advantageous, is a manifest violation of the most sacred rights of mankind.”
His formula? It was very simple: “Little else is required to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, [sound money], and a tolerable administration of justice.” That’s all we need for prosperity in this country — four simple things: peace, easy taxes, sound money, and a justice system that works. It’s not that hard, President Obama!
Yet, do we have peace? Not in the Middle East.
Do we have easy taxes? Only if you don’t make any money or are on welfare.
Do we have sound money? The dollar and the price of gold say “no.”
Do we have a tolerable administration of justice? Not enough.
In short, we have a long way to go before we can declare victory for freedom and prosperity in this country.
Adam Smith’s symbol of free-market capitalism was a beautiful metaphor: the invisible hand. The idea is that when an individual is given the freedom to pursue his own interests, “he is led by an invisible hand to promote that of the society.”
Oddly enough, the “invisible hand” symbol is mentioned only once in the entire 1,000 pages of Adam Smith’s tome, and only once in his earlier work, “The Theory of Moral Sentiments” (1759). Critics have jumped on this fact and concluded that the much-touted symbol of free-market capitalism (the invisible hand) was in reality a marginal concept to Smith. In fact, they argue, Smith was really more of a social democrat and radical egalitarian who believed more in a “helping hand” to the poor than an “invisible hand” to the capitalists.
But now George Mason University’s Daniel Klein has made a fascinating discovery: Smith placed his references to the invisible hand in the dead center of both books. Professor Klein argues that Smith did this deliberately because the invisible hand doctrine was central to his work. Adam Smith has finally revealed his (invisible) hand!
I’ve written an article for the Foundation for Economic Education on Dan Klein’s discovery about the “deliberate centrality” of the invisible hand in Smith’s work, and what it all means. It will appear in print in the June issue of “The Freeman.”
On a personal note, March 9th is also the publication date of “The Making of Modern Economics” (March 9, 2001). It is not a coincidence. Adam Smith is the heroic figure of the book, which is now in its second edition. Last year it won the Choice Book Award for Outstanding Academic Title. The book is available in hardback, paperback, Kindle, and audio book — and translated into five languages.
I’m happy to announce that Professor Klein has accepted my invitation to participate in a debate at this year’s big show, FreedomFest (July 14-16, Las Vegas), on the subject: “Libertarian, Conservative, or Radical Egalitarian: Will the Real Adam Smith Please Stand Up?” Hope you will join us for this annual event (it’s the libertarian version of CPAC).
Long live free-market capitalism.
Mark Skousen is the editor of Forecasts & Strategies, and producer of FreedomFest, the world’s largest gathering of free minds.