Economic and Political Liberalism: Smith’s Fortunes

To say that Smith was the founder of the economic science would be wrong: before him there were authors such as Petty, Cantillon, Quesnay and many others. Perhaps, in comparison with previous authors, Smith’s distinctive characteristic was that of being an academician, dedicating great care to precise definition and accurate presentation ofhis ideas, mediating between different views and theses while capturing the positive elements in each of them. This Smithian subtlety, the rejection of clear-cut theses without qualifications and specifications, is evident in some controversies over interpretation of his writings.

The first example concerns Smith’s liberalism. Smith’s was a progressive attitude to the major political themes of his time, such as the conflict over the independence of the American colonies. In pre- and post-revolutionary France The Wealth of Nations was viewed with favour by the progressive elements of the time, while Smith was seen as a dangerous subversive by the conservative intellectuals. All these thinkers, favourable or adverse to Smith’s views, saw no difference in his thought between liberalism in the political field and economic liberalism, between the defence of political freedom and the defence of free trade.

The situation changed in the years immediately following, with a sharp negative reaction to the excesses of the French revolution (the Terror), which initially implied a growing diffidence towards Smithian liberalism. Thus in 1794 Smith’s first biographer, Dugald Stewart (1753-1828), reinterpreted Smith’s thought with the aim of making it more acceptable. To this end, he distinguished between economic and political liberalism. The latter, a politically progressive thesis bringing to the fore the need to fight concentrations of power of any kind, was transformed into economic liberalism, namely a conservative thesis - to leave maximum freedom of action to capitalists - which in the stage of industrialisation went so far as to serve to justify indifference on the part of the entrepreneurial class towards the heavy human costs of the new productive technologies and widespread indigence. This was a far cry from the sensitivity repeatedly shown by the Scottish economist for human sufferings, and from Smith’s interest in the continuous improvement of living standards for the great mass of the population.

Another interpretative issue stems from the apparently contradictory position taken by Smith towards the division of labour. In the first book, the division of labour was extolled as the foundation for increases in productivity, hence for the well-being of population and for civic progress itself; in the fifth book, in an often quoted passage referred to as the precursor of the Marxian theory of alienation, Smith stressed the negative characteristics of fragmented labour, which can make a brute of man.[1] However, the contradiction is only apparent: the division of labour has both positive and negative effects, and Smith considered as dominant the positive effects. Thus, far from raising doubts about the expediency of pursuing continuous intensification of the division of labour, he advocated recourse to elementary education as a counterweight.

There is in this respect an aspect that should be stressed, since it may well constitute the main point of difference between Smith’s social philosophy and that of Marx. Both are fully conscious of the negative implications of the division of labour and of the need for work (or ‘compulsory labour’) that accompanies them. Marx, however, held that the need for compulsory labour can be overcome in a communist society; the possibility of reaching full freedom from compulsory labour morally justifies, and renders politically acceptable, the costs in blood and tears of the proletarian revolution and of the subsequent dictatorship of the proletariat, as necessary stages (together with capitalistic accumulation) for development of productive forces, which constitutes the indispensable premise to achieve the final objective. Smith, on the contrary, considered overcoming the division of labour clearly impossible. Increases in productivity and growing economic welfare made possible by the intensification of the division of labour are the precondition for progress in human societies. This is, however, conceived as a continuous process, without any evident prospect of a ‘way out’ of the arrangement of market economies or a way to overcome their limits and defects, such as compulsory labour and the inequalities of social conditions. Progress in human societies is possible, but the perfect society remains a utopia.

  • [1] In the progress of the division of labour, the employment of the far greater part of thosewho live by labour, that is, of the great body of the people, comes to be confined to a fewvery simple operations; frequently to one or two. But the understandings of the greaterpart of men are necessarily formed by their ordinary employments. The man whosewhole life is spent in performing a few simple operations, of which the effects too are,perhaps, always the same, or very nearly the same, has no occasion to exert his understanding, or to exercise his invention in finding out expedients for removing difficultieswhich never occur. He naturally loses, therefore, the habit ofsuch exertion, and generallybecomes as stupid and ignorant as it is possible for a human creature to become.The torpor of his mind renders him, not only incapable of relishing or bearing a part inany rational conversation, but of conceiving any generous, noble, or tender sentiment,and consequently of forming any just judgement concerning many even of the ordinaryduties of private life. Of the great and extensive interests of his country, he is altogetherincapable of judging. (Smith 1776, pp. 781-2)
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