Excerpted with permission from AEI's new book, Economic Freedom and Human Flourishing 2016.
It is difficult to imagine two things more different, on their face, than public policy and political philosophy. One is concrete; the other abstract. One provides solutions; the other asks questions. One responds to the challenges of the moment; the other to challenges that have been with us from the earliest times.
Yet for all these differences, the divorce of political philosophy from public policy would be fatal to each. The policymaker who limits his vision to what can be done and is deaf to questions about what ought to be done seems as dangerous as the philosopher who focuses on the ideal and ignores the real conditions of human beings. Bringing the two enterprises together thus seems necessary for the success of each individually. It is especially necessary when the substantive issue at stake concerns the relationship of human flourishing to economic liberty—a relationship that was particularly well understood by Adam Smith, one of the modern world’s most careful and insightful students of both public policy and political philosophy.
The divorce of political philosophy from public policy would be fatal to each.Adam Smith is of course today famous for his defense of economic liberty and thus as a founding father of capitalism. In his book The Wealth of Nations, Smith laid out a comprehensive defense of what he called “commercial society,” analyzing at length and in detail the policies of a market society and their several advantages over more restrictive policies associated with alternative forms of economic order.
The book is today remembered largely for its images and metaphors: the pin factory that shows the remarkable advantages of divided, specialized labor and the invisible hand that generates wealth and promotes its distribution. Yet those who have read the whole book know that its primary focus is public policy—evident in the simple fact that The Wealth of Nations invokes the invisible hand only once, but cites and studies no less than 266 discrete English statutes and Scottish parliamentary acts.
Smith’s credentials as both a champion of economic liberty and a policy wonk are thus solid. But his interests hardly end here and in fact extend to the concept of human flourishing. In what follows, I argue that Smith’s credentials on this philosophical front are every bit as solid as those on the practical economic front. In particular I argue that Smith thought long and hard about the concept of human flourishing; and, most importantly, that the vision of human flourishing he developed is itself the grounds for his defense of economic liberty.
If this is right, it has implications for how we understand Smith and for how we understand the relationship of philosophy to policy. On the first front, the main implication of the view I want to defend is that Smith’s defense of the superiority of market orders rests not on concerns with simple utility maximization, but rather on the belief that markets are indispensable to human flourishing.
Put in this volume’s terms, Smith’s defense of the economic liberty fundamental to capitalism is founded on the belief that economic liberty is not an end in itself, but a means to the greater end of promoting the flourishing of both individuals and societies. And on the latter front, the main claim I want to defend is that Smith, insofar as he brings together the concerns of both policy and philosophy, remains a useful model for those of today’s legislators seeking to transcend mere ideology and instead articulate a vision for an enlightened public policy informed by political philosophy.
What follows focuses on three discrete claims that Smith advances in three separate passages. Each passage focuses on the concept of human flourishing, and analyzed and read in context, they illuminate not only Smith’s understanding of human flourishing, but also the foundations of his defense of economic liberty. Yet the three passages, while all focused on human flourishing, treat different sides of the concept, with one focused on what we might call economic flourishing, the second on political flourishing, and the third on moral flourishing.
There was a claim that higher wages for laborers would make them dissatisfied with previous conditions.We begin with the first of these: economic flourishing. Smith uses the term “flourishing” in a variety of places in The Wealth of Nations, often in the context of describing the flourishing condition of a particular trade or particular manufacture in a particular country. So far as I know, only once in the text does he invoke the explicit concept of flourishing in its traditional, philosophical sense of referring to the healthy state of a society or individual. But it is a very important reference, one that well deserves the attention of both Smith specialists and students of capitalism more generally.
The reference comes in the midst of Smith’s chapter on the wages of labor in the first book of The Wealth of Nations. Its specific context is Smith’s intervention in a current debate over the relative desirability of “improvement in the circumstances of the lower ranks of the people.” Not everyone welcomed the prospect of improvement in the condition of the poor. Smith was intimately familiar with the counterargument that higher wages for laborers would translate into a new taste for luxury, leading to dissatisfaction with previous conditions, as well as the claim that high wages would tend to sap industriousness and incentivize laziness. But Smith rejected such claims on the grounds of human flourishing:
Is this improvement in the circumstances of the lower ranks of the people to be regarded as an advantage or as an inconvenience to the society? The answer seems at first sight to be abundantly plain. Servants, laborers and workmen of different kinds, make up the far greater part of every great political society. But what improves the circumstances of the greater part can never be regarded as an inconvenience to the whole. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, clothe, and lodge the whole body of the people, should have such a share of the produce of their own labor as to be themselves tolerably well fed, clothed, and lodged.
This is a striking and important passage for several reasons. Some of these concern what they reveal about Smith, while others concern their implications for how best to understand market orders and their benefits today.
On the former front, the passage especially clarifies the degree to which Smith cannot be reduced to a caricature view that defines the good society as that in which the most talented few enjoy the maximum possible opportunities for achievement and self-advancement. Smith of course values the utility of the free pursuit of self-interest, but freedom to pursue self-interest alone neither defines a flourishing society nor justifies a market order. As made clear here, what defines the flourishing society is not the condition of the few but the condition of the majority; indeed, only when the “far greater part” of a society no longer lives in a state of indigence can the society be said to flourish.
The measure of the good society is thus at least as much the state of the worst-off as that of the well-off. And as Smith here and elsewhere explains, the proper measure of this state is whether the worst-off are able to acquire goods relatively easily. In his university lectures on jurisprudence, Smith defined this state of flourishing via the concept of “comeattibleness”—that is, the relative ease by which even the most indigent can “come at,” or acquire via purchase, goods.
Freedom to pursue self-interest alone neither defines a flourishing society nor justifies a market order.Smith dropped this awkward phrase when he revised his thoughts for The Wealth of Nations. Yet the concept remains central to his published defense of market orders. In short, his argument is that the market is desirable not as an end in itself, or merely because it makes possible economic growth, but because it alleviates the condition of the poor and thereby helps to realize the flourishing society.
This is the departure point for The Wealth of Nations itself, as made clear in its opening chapter, which argues that the superiority of the well-governed society consists precisely in its capacity to achieve “that universal opulence which extends itself to the lowest ranks of the people” and thereby ensure that “a general plenty diffuses itself through all the different ranks of the society.”
Now, this view of Smith may surprise some. Within the Beltway, Smith tends to be regarded as the property of the Republicans whose ties bear his portrait rather than bleeding hearts. But recent scholars have reopened debate on this front, asking the question—to borrow the title of an important recent article—“Adam Smith: Left or Right?” The question has seen a number of prominent academic voices weigh in on either side. But perhaps the most important effect of this debate is to help us see the degree to which Smith—and especially his conception of human flourishing—transcends narrowly partisan concerns.
An anecdote may help show this. I spent the afternoon prior to delivering the first version of these remarks playing tourist and going for a walk around the Tidal Basin. My destination was the Jefferson Memorial. I had visited it several times prior, having grown up not far from Washington, D.C. But I had never before visited the Franklin Delano Roosevelt Memorial. Visiting it that day, perhaps because I was thinking of Smith, I was struck by the quotation from FDR’s second inaugural address that dominates the memorial’s “room” dedicated to the New Deal years: “The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little.”
Is FDR then a faithful follower of Adam Smith? Clearly not, in one key sense; his casting of the question as one of how “we” ought to “provide” for the poor points toward a role for political agency that much in Smith’s system resists.
Yet even if Smith and FDR stand on opposite sides of the fence on the question concerning who ought to provide for the poor and how such relief is best provided, they agree that the flourishing of a society is measured by the conditions of the poor. For all their disagreements on means, FDR and Smith envision the same ends, and together they point to a view of human flourishing that transcends familiar partisan distinctions.
Attending to Smith’s passage on flourishing in The Wealth of Nations helps clarify not only his conception of human flourishing itself, but also the way in which he understood the relationship of human flourishing to economic liberty. In particular, it helps us see that Smith defined the flourishing economic order not as that which allows only a part of society to benefit, but one that instead promotes the flourishing of society as a whole. Smith’s second key passage on flourishing points in a similar direction. This second passage is to be found not in The Wealth of Nations, but in The Theory of Moral Sentiments, Smith’s first and only other book.
For much of the past two centuries, The Theory of Moral Sentiments has been overshadowed by his much better-known treatise on political economy. But things have changed recently. The Theory of Moral Sentiments has not only gained a wide academic following, but also attracted a striking amount of popular attention for a work of 18th-century ethics, as evident in its prominent recommendations by world leaders from British Prime Minister Gordon Brown to Chinese Premier Wen Jiabao.
What explains the attractions of The Theory of Moral Sentiments to these and others today? Among other things, the book describes a world in which exchanges of sympathy encourage individuals to cultivate the sense of propriety and the ethical virtues necessary to navigate life in a modern market society. It is a complex vision, one to which we cannot do full justice here. But we can note one of its most attractive features, namely its vision of human flourishing.
Smith presents this vision most clearly in the course of comparing justice and beneficence, in which he asks us to imagine two very different kinds of societies. In the first, he explains:
All the members of human society stand in need of each other’s assistance, and are likewise exposed to mutual injuries. Where the necessary assistance is reciprocally afforded from love, from gratitude, from friendship, and esteem, the society flourishes and is happy. All the members of it are bound together by the agreeable bands of love and affection, and are, as it were, drawn to one common center of mutual good offices.
He then compares this flourishing and happy society to a second type of society:
But though the necessary assistance should not be afforded from such generous and disinterested motives, though among the different members of the society there should be no mutual love and affection, the society less happy and agreeable, will not necessarily be dissolved. Society may subsist among different men, as among different merchants, from a sense of its utility, without any mutual love or affection; and though no man in it should owe any obligation, or be bound in gratitude to any other, it may still be upheld by a mercenary exchange of good offices according to an agreed valuation.
Smith’s comparison of these two types of societies strikes to the very heart of his project—and indeed to the core concerns of political philosophy more generally.
Regarding Smith himself, these passages clearly reveal his view of what distinguishes the flourishing society: the society that “flourishes and is happy” is precisely that in which all are “bound together” into “one common center” by ties of “love and affection.” It is fundamentally distinct from the society that in conspicuous contrast cannot be said to flourish, but rather merely “subsists”—that in which men, lacking mutual love and affection, maintain minimal ties based on a “mercenary exchange of good offices according to an agreed valuation.”
Smith's challenge to our world, built on the freedom to engage in "mercenary exchange," is to never forget that this alone cannot make us "happy."What is Smith after in comparing these two societies in this way? Many have argued that his fundamental sympathies lie with the second type of society and not the first. And not without reason: in The Wealth of Nations, Smith praises the utility of exchange and criticizes benevolence in ways decidedly reminiscent of the second society described here.
Yet assuming that he somehow preferred the second society would do Smith an injustice. His description of it is of course painted in decidedly grim colors, clearly not meant to inspire enthusiasm. Indeed, the cash nexus that allows this society to persist cannot seem anything but repellant when set next to—as Smith does—the warm bonds of love and friendship that define the best society.
This in turn brings us to the second reason why these passages are important—a reason that goes beyond their simple importance for Smith and speaks rather to the more general claims of political philosophy. At least since Aristotle, it has been customary for political philosophers to distinguish the best or ideal society from the best sort of society that can be realized in practice. Something like this distinction seems to be at work in Smith’s comparison.
Smith was enough of a realist to know all too well the infinite difficulties inherent to any attempt to found the first and best sort of society here on earth; the ideal society of love asks more of us than what many of us are capable of. Our capacities and their limits compel us to live in societies of the second type rather than the first. At the same time, it would be fatal for us, amid our realism, to lose sight of the ideal that Smith aims to reawaken in us, even if that ideal cannot be fully realized in practice. Put in the terms of our main question, Smith’s challenge to our world, a world built on the freedom to engage in “mercenary exchange,” is to never forget that this alone cannot make us “happy.”
Our concerns to this point have largely focused on how Smith understood the flourishing society. Yet Smith, like Aristotle, was also concerned to describe the way in which an individual flourishes. To this end, he dedicated a large part of his book to the question of virtue—even going so far as to write, in the last year of his life, a completely new part of the book on the “character of virtue.”
Smith’s conception of virtue is itself of key significance for his project. It will also be of great interest to all concerned to define the virtues necessary for success in happiness in our own world—a world full of challenges and complications that render it quite different from the conditions of the ancient polis inhabited by Aristotle’s gentleman. A full account of this theory, however, would again require much more space than is available here. My hope instead is to end with a brief look at a third key passage in Smith on human flourishing—one particularly valuable for the way in which it connects the concepts of social flourishing to individual flourishing.
Smith in fact thinks that an individual can be happy and flourish only when others around him are happy and flourish.In this passage, Smith makes one of his boldest claims about human nature—a claim that itself subverts certain easy and common assumptions about his project. Smith’s popular reputation as an ostensible champion of selfishness persists despite the repeated and conclusive debunking it has received from many scholars. Indeed, one need read only the first line of The Theory of Moral Sentiments to see how far he is from a defender of selfishness.
“How selfish soever man may be supposed,” Smith begins, “there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it.” Smith’s opening has deservedly received much scholarly attention, especially in recent years.
I want to focus on only one aspect of it here. At least one of Smith’s aims, in starting his book this way, is to make clear from the outset that our happiness and the happiness of others around us are intimately bound up with each other. On some deep level, Smith in fact thinks that an individual can be happy and flourish only when others around him are happy and flourish.
This claim reappears several times in the book, perhaps nowhere more directly than in a second key passage on human flourishing. A few pages into the chapter that begins with the comparison, examined earlier, of the flourishing and merely subsisting societies, Smith again invokes the concept of human flourishing in a striking way:
Man, it has been said, has a natural love for society, and desires that the union of mankind should be preserved for its own sake, and though he himself was to derive no benefit from it. The orderly and flourishing state of society is agreeable to him, and he takes delight in contemplating it. Its disorder and confusion on the contrary is the object of his aversion, and he is chagrined at whatever tends to produce it. He is sensible too that his own interest is connected with the prosperity of society, and that the happiness, perhaps the preservation of his existence, depends on its preservation.
Smith makes a functionalist claim here: our existence depends on the existence of society. But another claim is also at work here, namely that our happiness depends on society’s happiness. In this sense, he tells us, the “orderly and flourishing state of society” is something that we “delight in contemplating.”
It is a striking claim and indeed one that suggests some sensitivity on Smith’s part to the joys of contemplation and the claims of philosophy. But for now we need to limit ourselves to a single but important observation: namely that Smith thinks that we flourish when we see others around us flourish. Once again, Smith gives reasons for us to wonder whether our happiness can in fact be separated from the happiness of those around us.
Adam Smith, we can conclude, was not only a champion of economic freedom, but also a champion of human flourishing. In his view, economic freedom was not a mere end in itself, but rather the indispensable means to a greater end, namely that of promoting human flourishing in its economic, political, and moral dimensions. In addition, Smith saw these three dimensions of human flourishing as all emanating from the same core principle: the superiority of a society joined together by the ties that bind to a society of disconnected and disaffected individuals.
Is the society to come, the one in which extreme global poverty has been overcome, likely to be able to sustain the bonds necessary for flourishing?But what implication does all of this have for us today? Much of course has happened in the quarter millennium since the publication of Smith’s books. But in some sense, Smith’s concerns remain ours. In particular, much of what Smith most hoped for as a theorist of social order continues to be realized.
This is particularly evident in the remarkable progress that has been made in overcoming extreme global poverty. Recent predictions suggest that in the next 15 years, we are likely to witness the virtual eradication of extreme global poverty, defined as living below $1.25 USD per day. This accomplishment would constitute one of the most significant achievements of human civilization, one that reflects both the influence of Smith’s ideas and the realization of one of his deepest hopes.
At the same time, this achievement is likely to bring in its wake a challenge of its own—a challenge that Smith’s thoughts on human flourishing can help clarify. As we have seen, the core principle at the heart of Smith’s various statements on the nature of human flourishing concerns the bonds that connect individuals to societies and different orders of society to each other when they flourish. One thus wonders: is the society to come, the one in which extreme global poverty has been overcome, likely to be able to sustain these bonds?
The question may well come down to the degree to which our principal focus is soon likely to shift from concerns about poverty to concerns about inequality. Put bluntly, economic freedom, insofar as it has to now served to mitigate poverty, has to now promoted human flourishing. At the same time, economic freedom, were it to encourage inequality in the future, may diminish future human flourishing. If so, it may be that one of the most urgent tasks that liberals and conservatives each will soon have to face will be to explain whether and how an unequal society can hope to remain, in Smith’s words, “bound together” around “one common center.”