This final essay under the heading “The Founders”, which is the introduction to the actually creation of the constitution, is an attempt to describe the influence of Adam Smith on the Founders’ philosophies.
Adam Smith (1723-1790) was the most influential economist of the Enlightenment and one of the most brilliant of all time. His philosophy is that of economic individualism, a term that disparaging socialists changed to “capitalism” a century later. Born at Kirkcaldy, a small village in Scotland, his widowed mother reared him. He went to the University of Glasgow on scholarship at the age of 14, then to Balliol College at Oxford.
He got on as a lecturer at the University of Edinburgh. Soon he advanced to a professorship of logic at the Glasgow College in 1751, then he became the chair of moral philosophy the following year. He earned his fame with his first book, The Theory of Moral Sentiments, published in 1759, and continued to give lectures on natural theology, ethics, jurisprudence and economics at the University of Glasgow until 1764. He left the university that year to become the tutor of a young duke in France. They traveled through Europe for two years and Smith conversed with some of the leading lights of the 18th century, including Voltaire, Rousseau and several Physiocrats.
The Physiocrats were a circle of philosophers/thinkers who were absolutely opposed to mercantilism, the economic doctrine followed by the nation-states of the time. Mercantilism was the economic system that replaced feudalism as it slowly decayed. Under mercantilism, the nation controlled and regulated virtually all economic activities. The oppressing regulations included granting monopolies to favored companies while more regulations were designed to keep colonial businesses of all type disadvantaged to the “home boys.” Nations exploited their colonists’ extraction of raw materials, then counted on them as a ready market for products manufactured in the mother country.
The Physiocrats’ economic philosophy was seated on the premise that natural laws govern economics. Nature is the real producer of national wealth. Their philosophy evolved over a few decades, but the term laissez-faire best sums up their final ideals. (Elaborated, the complete phrase translates into Let do and let alone, the world goes on of itself.) They embodied the idea that private property is sanctified and the rights of freedom of contract and freedom of competition are natural rights beyond refutation. Many of those values were embraced by American and by French revolutionists at the beginnings of their respective revolutions.
When the young duke reached his majority, his family granted Smith a lifetime pension. Smith retired to the small village into which he had been born and in 1776 he published his Inquiry into Nature and Causes of The Wealth of Nations. Smith, as the Physiocrats, was completely opposed to mercantilism. His work became the Holy Writ of economic individualists, at least during the eighteenth and nineteenth centuries.
The Theory of Moral Sentiments says that our natural psychology is a reflective sympathy, a theory he developed with his good friend, David Hume. We feel others’ pain and we feel others’ happiness; therefore, we avoid causing pain and we promote the happiness of our fellow men. In The Wealth of Nations he asserts that labor is the real source of wealth, opposing the Physiocrats’ insistence that “natural” enterprises, like agriculture, mining and fishing, are the only sources of national wealth. He argues for free markets and competition. It is through competition that self-interest will serve the interests of the national economy. “Man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only…. It is 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.” His most famous passage is this one:
“By directing that industry in such a manner as its produce may be of greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.”
Besides disagreeing with the Physiocrats about the real source of wealth, Smith finds a role for government instead of no role whatsoever for government as the Physiocrats had held. Government should protect individuals against injustice and oppression, promote education and public health and help build and maintain some enterprises too large for one private entity to tackle, like bridges and roadways and highways---an infrastructure. But the state’s role is very limited, as in Locke’s philosophy. As with Locke, Smith supports government involvement only in that which is necessary, promoting economic individualism along with all of Locke’s and others’ individualism.
To wrap this up, I will quote Robert Hessen, a senior research fellow at Stanford University’s Hoover Institute.
“‘Capitalism,’ a term of disparagement coined by socialists in the mid-nineteenth century, is a misnomer for ‘economic individualism,‘ which Adam Smith earlier called the ‘obvious and simple system of natural liberty’ (Wealth of Nations). Economic individualism’s basic premise is that the pursuit of self-interest and the right to own private property are morally defensible and legally legitimate. Its major corollary is that the state exists to protect individual rights. Subject to certain restrictions, individuals (alone or with others) are free to decide where to invest, what to produce or sell, and what prices to charge. There is no natural limit to the range of their efforts in terms of assets, sales, and profits; or the number of customers, employees, and investors; or whether they operate in local, regional, national, or international markets.”
Over the past 3 weeks or so I have tried to describe the three underpinnings of the civic values and beliefs in the people who created and accepted the US Constitution with the Bill of Right. The next step is to read and understand the thing itself. I think it is relatively easy to see Montesquieu’s separation of powers from the beginning of the document; Locke’s individualism and liberty are in some specific phrases and clauses as well as in the Bill of Rights, and economic individualism, misleadingly named “capitalism,” is in it, too.
Pam Fowler
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