An extraordinary name, Adam Smith, when you come to reflect upon it. It seems almost deliberately anonymous, and yet original, as in the first man meets the kingdom’s most commonplace surname. Yet this everyman figure was a person of great distinction, both as a political economist and as a philosopher. His most celebrated book – The Wealth of Nations – was published in the same year as the American revolution. (Smith took the view that colonies were more expensive than they were worth.)

Today’s Tories claim him fervently as an ancestor of “free market” economics (George Osborne recently wrote an introduction to a new edition of the book) while Gordon Brown can hardly be expected to pass up the chance of comparing his own fiscal and entrepreneurial probity with that of a fellow son of Kirkcaldy. The mild visage of Smith is now to be found on the reverse of the £5 note, putting him in the company of Elgar, Darwin and other national geniuses or, to borrow an American expression, “right on the money”.

PJ O’Rourke now profiles The Wealth of Nations in the Books that Changed The World series, to which it deservedly belongs. I should here declare that I slightly know O’Rourke, and that I contributed a book of my own to this series, on Thomas Paine’s Rights of Man. And I may as well make use of this connection to point out what Paine said, in his famous debate with Edmund Burke on the French revolution and the British constitution: “Had Mr Burke possessed talents similar to the author of The Wealth of Nations, he would have comprehended all the parts which enter into and, by assemblage, form a constitution.”

Paine, the hammer of the Tories, assumed that his artisan readers would know who this gifted author was. He also assumed that they would approve of the man who was dubious about empire, who wanted to break up mercantilist monopolies and establish what we would now call “transparency” in business, and who for good measure was a friend to the Scottish enlightenment and its secular and sceptical leaders like David Hume.

O’Rourke is a reformed hippie radical who now understands the blessings of capitalism, and he offers to be our Virgil on a guided tour of what is a dense and somewhat arid book. The price of the tour is a certain jauntiness and self-deprecation that, if you like that sort of thing, is the sort of thing that you will like: “Deciding whether to mow the lawn ourselves or pay the kid next door to do it – factoring in the likelihood that he’ll eat us out of house and home at snack time and run over his foot, sue us, and we’ll have to get a second job to pay the legal bills – is something everybody does all the time.”

Sometimes this constant joshing can get one down, but O’Rourke has done some appreciable homework and succeeds in clarifying a couple of points that are well worth making. The terms “free enterprise” and “laissez-faire”, often used almost interchangeably in recommending the capitalist mode of production, are not at all the same thing. The French “physiocrats” who thought otherwise, were wedded to a view of economics that laid all the stress on land and agriculture, and did not believe that labour added much of value to the natural order. So insistent was Smith on the importance of “the artificer” – the worker – that it is even thinkable that Karl Marx (who much admired him) may have derived the labour theory of value in part from a study of his work.

Smith was also suspicious of “the mean rapacity, the monopolising spirit of merchants and manufacturers, who neither are, nor ought to be, the rulers of mankind”. His concept of the “private” company, as against the speculative joint-stock enterprise, was predicated on what he knew about human nature and the acquisitive urge. But the same common sense impelled him to remind consumers that it was “not from the benevolence of the butcher, the brewer or the baker that we can expect our dinner, but from their regard to their own interest”.

There was some spacious thinking to be found in the years that incubated the American and French revolutions, and Smith did not confine himself to what Burke had lamented about “the age of sophists, calculators and economists” (the latter still a sort of curse-word meaning miser). In his Theory of Moral Sentiments – written 17 years before The Wealth of Nations, in 1759 – he postulated the existence of what Socrates had called a daemon, what Christians have liked to call a conscience, and what he chose to term an inward “impartial spectator”. There had to be a reason, in other words, why humans felt the call of more exalted emotions than their own ambitions. Much depends on whether one attributes this capacity to the divine, or to innate human solidarity.

On the evidence of his friendship with the unbeliever David Hume, and the general stoicism and scepticism of his prose, it is difficult to avoid the conclusion that Smith did not waste the time he spent with Voltaire and others, and that he would not have mentioned the Protestant ethic and the spirit of capitalism in quite the same breath. O’Rourke won’t concede that his hero was so faithless, and even writes that if he were still alive he would “almost certainly point out that evolution is intelligent design”. That’s complete piffle, of course, but don’t let it put you off.

The benefits of looking after number one

“There is nothing inherently wrong with the pursuit of self-interest. That was Smith’s best insight.

To a 21st-century reader this hardly sounds like news. Or, rather, it sounds like everything that’s in the news. These days, altruism itself is proclaimed at the top of the altruist’s lungs. Certainly it’s of interest to the self to be a celebrity. Bob Geldof has found a way to remain one. But for most of history, wisdom, beliefs and mores demanded subjugation of ego, bridling of aspiration, and sacrifice of self (and, per Abraham with Isaac, of family members if you could catch them).

But Smith lived in a place and time when ordinary individuals were beginning to have some power to pursue their self-interest. In book one of The Wealth of Nations, Smith remarked in a tone approaching modern irony: ‘Is this improvement in the circumstances of the lower ranks of the peple to be regarded as an advantage or as an inconveniency to the society?’

If, in the 18th century, prosperity was not yet considered a self-evidently good thing for the lower ranks of people, it was because nobody had bothered to ask them. In many places nobody has bothered to ask them yet. But it is never a question of folly, sacrilege, or vulgarity to better our circumstances. The question is how to do it.”

PJ O’Rourke: On the Wealth of Nations

THE WEALTH OF NATIONS by PJ O’Rourke
Atlantic £14.99 pp242
Buy the book here at the offer price of £13.49 (inc p&p)

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