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Adam Smith: an economist for his times – and ours

The University of Glasgow recently hosted a week of activities to mark the 300th birthday of the father of economics. Published as part of the celebrations, the Observatory’s latest ECO magazine explores Adam Smith’s ideas – and how they can inspire us to a better understanding of our own times.

Adam Smith – who is widely thought of as the father of economics – was born in 1723 in Kirkcaldy, a small town in Fife, Scotland. Three hundred years later, our friends at the University of Glasgow have been hosting a series of events to mark the tercentenary of his birth. In the latest issue of ECO magazine, we’ve brought together some of the top scholars who spoke at those celebratory occasions, alongside other experts in economic history, the history of economic thought and the contemporary relevance of Smith’s ideas.

Graeme Roy (University of Glasgow), who is one of our lead editors at the Economics Observatory, led the planning for the anniversary and opened a day-long Adam Smith 300 Symposium at the end of the tercentenary week. As he notes in a short ECO piece about Glasgow’s great alumnus, the 300th birthday has provided an opportunity for economists to re-engage with Smith’s ideas and to reflect on the underlying moral questions that lie at the heart of the big economic challenges we face today.

Earlier in the week, there were three public lectures in Glasgow. First, Gita Gopinath (first deputy managing director at the International Monetary Fund) considered ‘The power and perils of the “artificial” hand’. She examined how Smith would have responded to the emergence of artificial intelligence, and then discussed today’s policy challenges around technology, globalisation and international cooperation with BBC Newsnight presenter Kirsty Wark.

Next up was Deirdre McCloskey (University of Illinois at Chicago and the Cato Institute), who has written widely about economics, history, English and communication, and describes herself as a ‘postmodern, quantitative, literary, ex-Marxist, economist, historian, Episcopalian, coastie-bred Chicagoan but now Washington woman who was once not’. She talked about why she thinks of Smith as the first true liberal, concluding ‘When all said and done, ideas rule the world. Ideas matter.’

Finally, economics Nobel laureate Angus Deaton (Princeton University) delivered an address entitled ‘Economic failure or failure of economics’. Previewing a forthcoming autobiographical book, Economics in America: an immigrant economist explores the land of inequality, Sir Angus painted a bleak picture of the downside of American capitalism in the country’s deep inequalities of wealth, health and wellbeing.

He closed with a quotation from the pioneering early 20th century welfare economist Arthur Cecil Pigou, who wrote: ‘It is not wonder, but rather the social enthusiasm which revolts from the sordidness of mean streets and the joylessness of withered lives, that is the beginning of economic science’. Economics should be about understanding the reasons for and doing away with the sordidness and joylessness, Sir Angus said. But that is not how it worked out in America.

Life and times

The Observatory was originally conceived in 2020 as a way for the UK’s economic research community to answer questions from policy-makers and the public about the economics of the pandemic. But we always planned to go on to examine further global challenges: they’ve turned out to include climate change, the cost of living crisis and the effects of Russia’s invasion of Ukraine. And we’ve frequently looked back to evidence from past upheavals to see what lessons can be drawn for current policy responses.

The new issue of ECO features a timeline of three centuries of economic history from Smith’s birth to today. We also present a brief history of world trade over that period, in which Anthony Howe (University of East Anglia) outlines how economic nationalism has ebbed and flowed: from the mercantile system that Adam Smith described through waves of globalisation, backlash and battles for supremacy. And the ECO data team has pulled together some striking charts on changes in global population, life expectancy, GDP growth, carbon emissions, technology and working hours over the past 300 years.

Focusing directly on Smith’s times, we seek to learn not just from a key period of economic and social change – the early days of the Industrial Revolution, which he witnessed – but also from analysis of what was happening by the foremost minds of the age. As Benjamin Friedman (Harvard University) explains, Smith was part of the vibrant intellectual milieu of the Scottish Enlightenment, drawing on insights from science, philosophy and religion. And as Smith biographer and current UK government minister Jesse Norman emphasises, his thinking was highly influential on leading political figures of the day.

We also examine the longer-term impact of Smith’s writings on how economics is done. Mary Morgan (London School of Economics and current president of the Royal Economic Society) notes how storytelling is central to the exposition of his arguments, a practice that continues to play a key role in economic analysis.

Other contributors focus on the most famous of Smith’s vignettes: the specialised activities of pin factory workers exemplifying the efficiency gains from the division of labour; people of the same trade conspiring against the public; and the butcher, baker and brewer pursuing their own interests.

Each of these resonates today. As John Kay (University of Oxford) observes, the hollow corporations of modern supply chains reflect specialisation taken to extremes. And as Barbara Petrongolo (University of Oxford) cautions, there is a darker side to the division of labour when it comes to gaps between men and women in pay, prestige, career progression and much more. The gender division is often highly inefficient, as well as highly inequitable.

In terms of the conspiracies against the public of which Smith warned, corporate collusion to raise prices is still widespread, often now facilitated by online algorithms. Such threats are illustrated in two magazine pieces by Bruce Lyons (University of East Anglia) and Mike Walker (Competition and Markets Authority).

What of the food and drink makers’ regard for their own interests – and the implications for economic organisation? Although commonly misinterpreted as advocacy for pure laissez-faire capitalism, Smith’s metaphor of the invisible hand coordinating individual pursuits for wider social benefit remains foundational to economic theory. A recent poll of top European and US economists by the Clark Center for Global Markets at Chicago Booth confirms that as an almost unanimous view.

Picture this

The tercentenary week wasn’t all lectures, seminars and workshops. The activities during the symposium also featured the performance of a specially commissioned piece of music titled ‘The Symphony of Moral Sentiments’ by Helen Mackinnon. And actor and playwright John Yule and his theatre company presented an abridged version of their Edinburgh Fringe play Adam Smith: the Invisible Hand.

There was also an exhibition of Smith-related artefacts, including early editions of his two great works, The Theory of Moral Sentiments and The Wealth of Nations. And throughout the day, artist Graham Ogilvie created a live drawing to capture on paper the themes and discussions of the event. 

We also announced the winners of our national competition in partnership with the University of Glasgow. This invited students to redesign the front cover of one of Smith’s books for a 21st century audience, and to accompany the artwork with a short essay explaining their ideas and creative process.

The top prize went to Chizulum Ifezulike at the University of Strathclyde, who said: ‘This competition sparked my passion for purposeful design rooted in Adam Smith's timeless concepts. It provided an immersive and transformative experience as it enabled me to bring my creativity into a unique, timeless design that captures the essence of Smith's ideas.’

Author: Romesh Vaitilingam, Editor-in-chief
Photo by Ashley Lait
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