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What policies might Adam Smith advocate today?

Adam Smith’s legacy supports a more progressive public agenda. Environmental threats and rising inequalities require collective responses and investments with ethics at their heart.

Across the world, division and inequality are rife. Both the Covid-19 pandemic and climate change have been met with science denial. Accelerating migration due to war, poverty and natural disasters prompts resurgent nativism and border-building everywhere. Populism is on the rise in many countries; war has returned to Europe with Russia’s invasion of Ukraine; and explosive gun violence in the United States is met with acquiescence to the firearms industry. Undergirding all of this is the dramatic polarisation of public and private interests.

We can only speculate about how Adam Smith would respond to our current crises. What is clear is that his writing has been distorted to validate narratives, policies and practices that undermine public wellbeing in ways that contradict what he actually cared about.

Too much of the nuance in his thought has gone missing since he wrote The Wealth of Nations in 1776. His work has been reduced by the left and right alike to a manifesto for small states, trickle-down economics, privatisation and austerity.

But Smith had a lot to say about ethics, human dignity, public goods, public investment and collective responsibilities to collective interests when there are insufficient incentives in markets. His legacy supports a more progressive public agenda.

In the much-neglected Book V of The Wealth of Nations, Smith foresaw an expanded role for governance, regulation and public investment. He saw that as states grew, society would become more opulent and challenges would become more complex. The statesman played an essential role for Smith, balancing public and private considerations, investing strategically and judiciously in public goods, particularly when the market is ill-suited to do so.

Public wellbeing sometimes needs a helping hand. Smith devoted the longest section of The Wealth of Nations to elaborating public provision (notably public education), as well as progressive taxation and taxes on luxury goods. Future public investment scenarios were underspecified in Smith’s narrative, but his open-endedness is a 21st century invitation for public innovation.

For Smith, our duty of cooperation expands to the natural limits of shared interests and capacities. While he was focused primarily on the local obligations of the 18th century, our planetary interdependence today expands his interest-and-capacity-based duties to people across the world.

Covid-19 exposed the extent to which disease and deprivation in one place can affect us all. Migration has global effects. And climate change is the mother of public goods, the very foundation of collective wellbeing and prosperity.

A Smithian global public agenda would put combating climate change at its centre. It would support regulatory agendas that subordinate the short-term profits of a few to long-term collective investments that would dramatically reduce greenhouse gas emissions. Policy would focus on investments in clean energy technologies and a just labour transition.

Figure 1: Temperature change in Glasgow between 1850 and 2022

Source: Calculations using historical climate data by Denes Csala

Smith had no patience for collusion between politicians and corporations. He was among the 18th century’s most vocal critics of empire, slavery and resource exploitation abroad. Empire corrupted the European soul; and the state had become a puppet for the vile agendas of international trading companies like the East India Company.

What would he think about the agendas of multinational corporations and many governments today? How would he evaluate their resource extraction, land dispossession, labour exploitation, enslavement of the working poor (in industries like mining, textiles and agriculture) and the widespread disdain for our planet and its inhabitants?

At the tercentenary of Smith’s birth, we should reclaim these neglected dimensions of his thought because they reveal humanist instincts and palliative resources from within capitalism itself, which can change the narrative and temper some of the most pernicious effects of its unbridled global functioning. That these resources emerge from Smith’s thinking gives them added rhetorical power.

Where can I find out more?

Who are experts on this question?

  • Fonna Forman
  • Emma Rothschild
  • Craig Smith
Author: Fonna Forman
Picture by Charlie Dale for unsplash
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