Published: 09 September 2010
by JOHN CALDER

ADAM Smith is one of the most iconic names in history since medieval times, together with Darwin, Marx and Freud, even more so than his close friend and colleague David Hume.

Nicholas Phillipson’s book does him more  than justice, delineating his ideas as well as his life in the Scottish Enlightenment world in which he was a central figure, so different from Dr Johnson’s contemporary London or pre-revolution Paris where the shadow of the Bastille still haunted intellectual life.

Smith’s thinking is contained in only two books, The Theory of Moral Sentiments and The Wealth of Nations, and much else that he taught in his lectures or that appeared in shorter texts was intended for treatises that might have appeared had less of his later life not been occupied in honorific official positions that took up most of his time.  

Nevertheless his investigations and conclusions about human nature and motivations have occupied a major position in ideological thinking since the 18th century. He assumed that a basic selfishness or self-love under­lies all human activity, especially where trade or commerce are concerned.  

Smith stated: “Civil government, so far as it is instituted for the ­security of property, is in reality instituted for the defence of the rich against the poor, or of those who have some property against those who have none at all.” 

To modify this view, he described “an invisible hand” that brought out an element of compassion or altruism that he assumed was buried somewhere in the human character that made us want to improve the ­general wellbeing.

Smith’s theories of the wealth-creating advantages of breaking up labour into separate or specialise units (the principle of mass production as well as skilled craftsmanship) lie at the basis of capitalism and free trade. It seems likely that Smith never fully realised the miserable consequences of a ­capitalist manufacturing industry that forced a peasant population off the land into factories where they were paid starvation wages to create a new affluent middle class and to kill the cottage industries on which so many had subsisted. 

Karl Marx was later to pick up the story where Smith left off. It is questionable whether Smith’s philosophical theories can be interpreted, as they so often are today, especially in America, by ideological right-wingers, to justify today’s globalised market economy. He apparently did not foresee that mass unemployment was the inevitable consequence of production overrunning demand.  

Smith, an enlightened figure, influenced more by the French and Scottish advanced thinking of this time – especially that of his Glasgow teachers and circle of Edinburgh friends, of whom Hume was perhaps closest and nearest to his own thinking – was mainly limited by his ignorance of the lower classes and the ­history of human cruelty and persecution. Had he lived through the French Terror which came five years after his death, he might have changed many of his ideas.

What Smith did believe in was the rule of law to control and limit human greed. The need for regulation, constantly downgraded and opposed by the financial forces who rule the world today, was something Smith largely took for granted.

Many of those who claim to admire him most today, and see him as the king of capitalist thinking and ideology, do not realise his reluctance to see the depth to which human depravity can sink and how greed only fosters more greed. 

Dr Phillipson’s book is unlikely to be bettered. It catches not just Smith’s life and ideas, but the background of the Scottish Enlightenment, on which he has already written, too little acknow­ledged in British history as a result of the Union of the crowns, to which Smith nevertheless gives credit for a temporary trade prosperity, often used as an example to justify his theories.

• John Calder is a writer and internationally renowned publisher who runs Calder Bookshop in The Cut, Waterloo.

• Adam Smith: An Enlightened Life. By Nicholas Phillipson. Allen Lane, £25