In our time of widespread attacks on markets from left and right, the insights from Smith and Burke are perhaps even more relevant than in their era.
The author of The Wealth of Nations and the father of modern conservatism shared an economic outlook guided by liberty and self-command.
Adam Smith was born in 1723. This year he turns 300.
To celebrate, National Review Capital Matters offers the Adam Smith 300 series. An essay on Smith will appear monthly throughout 2023, written by various students of Smith’s thought. Smith’s birthday is June 16, so the essays will appear on the 16th day of each month. Daniel Klein and Erik Matson of George Mason University are helping curate the series for Capital Matters along with Dominic Pino. To read previous months’ essays, click here.
O f all the important friendships that marked the long 18th century, one deserving more attention is that of Adam Smith and Edmund Burke. The Scottish philosopher and author of The Wealth of Nations shared many things in common with the Anglo-Irish Whig MP regarded as the progenitor of modern conservatism.
Ideas were the foundation of Smith and Burke’s friendship. Both participated in the republic of letters that characterized 18th-century Enlightenment circles. It was also through books that they came to know of each other. They did not meet in person until 1777.
In 1759, Burke was one of the small group of people sent a copy of Smith’s Theory of Moral Sentiments on David Hume’s recommendation. Hume described Burke as “an Irish Gentleman, who wrote lately a very pretty Treatise on the Sublime.” Burke wrote to thank Smith for the book and penned a favorable review in the Annual Register, a publication he edited. Here he emphasized the book’s originality and noted that Smith’s conjectures were derived from a “simple truth,” sympathy’s role in shaping people’s moral habits.
Independent Thinkers Thinking Alike
This doesn’t mean that Burke entirely agreed with Smith’s moral theories. In his letter, Burke told Smith he considered the book “a little too diffuse.” Their contemporary, the Scottish philosopher Dugald Stewart, wrote that Burke “spoke rather coldly of the Theory of Moral Sentiments” during his 1784 visit to Scotland. Burke was after all a devout Christian and a believer in natural law. Burke may have wondered about Smith’s ambiguous religious beliefs and entertained reservations about Smith’s largely empirical approach to studying morality.
One area where Smith and Burke strongly agreed concerned their commitment to liberal economic ideas at a time when mercantilist policies reigned throughout the European world. In the 1800 edition of his Life of Edmund Burke, Robert Bisset claimed that Smith told Burke that “after they had conversed on subjects of political economy, that he was the only man, who, without communication, thought on these topics exactly as he did.”
Though famous, this statement is of the anecdotal variety. Its veracity has not been corroborated by any other reference. Other sources, however, confirm that Smith and Burke were very much on the same economic page.
The most comprehensive studies of Burke’s economic thought, ranging from Donal Barrington’s 1954 Economica article “Edmund Burke as Economist” to Gregory M. Collins’s Commerce and Manners in Edmund Burke’s Political Economy (2020), provide ample proof of Burke’s attachment to commercial liberty, hostility to mercantilism, and his belief that the extension of economic freedom furthered civilizational growth. These texts also attest to Burke’s interest in what we would call economic theory to understand what was really happening. For Burke, this was a prerequisite for any improvement, to use a classic Enlightenment word, upon the status quo.
Smith’s Wealth of Nations was the text that systematized this outlook. Burke did not disguise his admiration of Smith’s intellectual achievement. Stewart reports that Burke “spoke highly of [Smith’s] Wealth of Nations,” describing it as an “excellent digest of all that is valuable in former Oeconomical writers” as well as identifying “many valuable corrective observations.”
At the same time, Burke arrived at many of his conclusions about, for instance, the importance of free prices and the damage inflicted by mercantilist policies independently of Smith. As a student at Trinity College, Dublin, Burke explored subjects like the origins of monopolies and how economic incentives shape people’s choices.
Burke drew upon these insights as an MP. When arguing for free trade between Britain and Ireland in his first parliamentary sessions in 1765 and 1766, he highlighted the problems associated with interfering with supply and demand. Burke even advanced a version of an invisible-hand argument in his 1765 Tract relating to Popery Laws. The editors of the 1800 edition of Burke’s most explicitly economic text, Thoughts and Details on Scarcity (1795), claimed that Burke was “consulted, and the greatest deference was paid to his opinions by Dr. Adam Smith, in the progress of the celebrated work on the Wealth of Nations.”
From Difference to Convergence
Tracing whose ideas influenced whose writings can be a perilous exercise. But that a basic sympathy of views concerning matters economic existed between Smith and Burke is undeniable.
Certainly, there were differences. Both saw the East India Company, for instance, as exemplifying the problems of monopoly. They disagreed, however, about how to reform it.
More generally, Burke associated his case for economic freedom with the idea that people should be permitted full use of the “natural faculties which God has given to them, and to all mankind,” as he wrote in his Two Letters on the Trade of Ireland (1778). Such appeals to a type of natural-law argument, which is repeated in Thoughts and Details, are absent from Smith’s Wealth of Nations. Burke was plainly less averse to invoking older ways of reasoning to advance a market liberal agenda than Smith; the latter preferred to advance arguments of the “science of man” empirical variety.
Other differences arose from the two men’s distinct social roles. Smith was a scholar, albeit one desirous of advancing the Scottish Enlightenment’s reformist agenda throughout Britain. By contrast, Burke was a legislator, though one with an unusually deep interest in ideas. This difference in roles led to important variations in emphases and priorities.
One example concerns a 1772 bill devised by Burke that maintained bounties (what we would call “subsidies”) for exports of a particular corn. In the first edition of The Wealth of Nations, Smith argued that Parliament should have repealed the corn bounty outright for all the reasons that free-marketers advance against subsidies.
Burke didn’t disagree with Smith’s analysis. He too thought that bounties were a bad idea. In fact, his bill had sought to reduce this particular bounty’s size. But as reported by Stewart, Burke believed
it was the privilege of philosophers to conceive their diagrams in geometrical accuracy; but the engineer must often impair the symmetry as well as the simplicity of his machine in order to overcome the irregularities of friction and resistance.
Here Burke agrees that good theory matters but stresses that the business of shifting economic policy away from mercantilist arrangements is a messy process. Nota bene: At no point does Burke defend the bounty. He simply notes that the complexity of overcoming resistance makes incrementalism prudent and compromise inevitable.
Smith took the point. In the second edition of The Wealth of Nations, he inserted this observation about Burke’s legislative effort:
With all its imperfections, however, we may perhaps say of it what was said of the laws of Solon, that, though not the best in itself, it is the best which the interests, prejudices, and temper of the times would admit of. It may perhaps in due time prepare the way for a better.
In this Smith-Burke exchange, Burke the legislator recognizes the importance of sound ideas for identifying problems as well as a better state of affairs. But we also see Smith the philosopher appreciating Burke’s wisdom as a legislator in achieving what is possible in the conditions of the time.
Commerce’s Non-market Prerequisites
Smith and Burke both recognized that the expansion of commercial freedoms would introduce considerable flux and upheaval into society. The consequent expansion of wealth and economic opportunity was, they held, worth it.
Yet Smith and Burke also believed in the necessity of habits and institutions that would mediate the pressures unleashed by a dynamic economy, remind people that the fullness of human existence was not to be found in acquiring stuff, and emphasize our duties to others that go beyond contractual obligations.
Some of their recommendations concerned the role of government and legal institutions. Minimal by today’s standards, they were nonetheless real, ranging from protecting national security to the rule of law.
This is not, however, where Burke and Smith’s emphases lay. Burke looked to long-standing belief systems considerably older than the Enlightenment to temper markets. In Burke’s words, “[w]e still feel within us, and we cherish and cultivate, those inbred sentiments which are the faithful guardians, the active monitors or our duty, the true supporters of all liberal and manly morals.” Prominent among these were religion and the concrete responsibilities that it spelt out concerning those in need. These went together with cultivation of habits such as acting justly and with civility to all. Liberty and responsibility thus went hand-in-hand and would help limit the scope for hedonism, corruption, and injustice in a growing economy.
Smith arrived at similar conclusions. His conception of man was never that of homo economicus. Smith was always attuned to the other-regarding dimension of commercial exchanges. They required, Smith thought, a willingness to enter into other people’s circumstances, to put yourself in their place, even if temporarily.
It wasn’t coincidental that Smith added a new part, titled “Of the Character of Virtue,” to the sixth and final edition of his Theory of Moral Sentiments in 1790. Perhaps as he imagined a world in which economic liberty might prevail over mercantilism, privileges, and monopolies, Smith considered it necessary to outline the types of virtues needed to ensure that commercial societies remained civilized.
Smith begins by emphasizing the importance of prudence for moderating the rush toward fame and fortune associated with pursuing self-interest. But while prudence tempers our actions, Smith considered it insufficient. Prudence, he thought, doesn’t necessarily encourage us to think about others’ well-being, starting with our families, before extending to commercial interactions, and eventually to the level of our nation. This is where the virtue of magnanimity comes into Smith’s picture, especially as it manifests itself in a commitment to justice.
Yet such concerns can, Smith argues, encourage us to believe that we should rearrange matters in such a way that we establish perfect justice in the here-and-now. Magnanimity and justice, according to Smith, can degenerate into the type of conceit that characterizes “the man of system” — the individual who thinks “he can arrange the different members of society with as much ease as the hand arranges the difference pieces upon a chess-board.”
This points to the necessity of another moral habit to abate potential problems associated with magnanimity. Here Smith invokes “universal benevolence.”
On one level, this means that the “wise and virtuous man” knows that some things are more important than “his own private interest.” But it also means knowledge that “the universal happiness of all rational and sensible beings is the business of God and not of man.” Such trust in the workings of Providence, to use another common 18th-century expression, begets a willingness to focus “on the care of his own happiness, of that of his family, his friends, his country.”
When combined with prudence and magnanimity, benevolence produces the disposition of what Smith denotes as “self-command.” Another widespread Enlightenment phrase that owed much to Stoic thought, Smith regards self-command as essential if commercial society is not to facilitate decadence, injustices, and other vices that gradually discredit markets in the eyes of good people and cause them to turn to “the man of system” for deliverance.
Smith thus ended up articulating a similar message to Burke. Maintaining the habits and institutions of economic liberty, they believed, depends far more on distinctly non-commercial beliefs and practices than we realize. In our time of widespread attacks on markets from left and right, it’s an insight perhaps even more relevant than in Smith and Burke’s era.