Dan Klein’s Open Letter on Adam Smith to Anand Giridharadas

by Don Boudreaux on February 1, 2010

in Man of System, Myths and Fallacies

My GMU Econ colleague Dan Klein does not like Anand Giridharadas’s recent piece in the New York Times on Adam Smith.  Here’s an open letter that Dan sends to Mr. Giridharadas:

Dear Mr. Giridharadas,

I read your piece with interest. I write, however, to ask you to think about some of the things I thought unsatisfactory.

In terms of your representation of Smith and his works, there were a few points.

I thought the last three paragraphs were particularly misleading. Smith’s “lustre of the future” paragraph, and the two that precede it (TMS, 63-66), are plainly about “the superior stations of life,” acted out in “the courts of princes, in the drawing-rooms of the great, where success and preferment depend, not upon the esteem of intelligent and well-informed equals, but upon the fanciful and foolish favour of ignorant, presumptuous, and proud superiors.”

Where Smith uses the passage you quote, the very next sentence gives the context: “In many governments the candidates for the highest stations are above the law …”

You twist things by implying that Smith directs the words you quote to the likes of Tiger Woods or other ambitious private entrepreneurs. Yes, Smith would never call greed or selfishness a virtue, but on the whole his attitude toward entrepreneurial, commercial ambition is not unfavorable. The famous pages about “the poor man’s son, whom heaven in its anger has visited with ambition,” leading into the mention of the invisible hand, may be taken as a tale of industrious private ambition, and Smith’s punchline is that, though delusive, the ambition motivates him to produce and to help to maintain “a greater multitude of inhabitants.” Industrious private ambition serves human utility.

This is not to deny that crony capitalists might be among the corrupt “superior stations,” but I think Smith’s text supports view that it is the government cronyism, not commerce per se, that breeds corruption. Smith repeatedly says that commerce tends to improve manners, morals, and politics (in TMS, WN, and LJ).

Regarding your penultimate, I don’t think Smith ever speaks of rage and resentment associated with anything like job-shedding and bonus-giving. And the quotations you then offer are taken from passages that pertain in no particular way to your spin.

You say that Smith believed that a healthy society “requires care for the poor.” Yet you neglect to mention that Smith remains entirely silent on the matter of tax-financed poor relief. A curious silence in the otherwise quite comprehensive Wealth of Nations.

You say that he believed a healthy society “requires regulation.” Well, Smith clearly favored government “nightwatchman” functions. He also made numerous specific exceptions to the liberty principle, some of which are much vaguer than left-interpreters claim. But, at any rate, he treated exceptions as exceptional, bearing the burden of proof. I think Jacob Viner (1927), one of the early cataloguers of Smith’s exceptions, got it right when he said that Smith propounds a presumption of liberty. All in all, I think that classical liberals and pragmatic libertarians are on pretty solid ground in claiming Smith.

The other big problem in your piece is that you associate classical liberal views with greed, selfishness, being “uncaring.” Though inveterate in some quarters, such association is illegitimate, and renders several of your paragraphs non sequitur.

Sincerely yours,

Daniel Klein

George Mason University, Professor of Economics

dklein@gmu.edu

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