Yesterday I tossed money onto Adam Smith's grave. I was not the first to do so, nor will I be the last, especially as we near the anniversary of his death: July 17, 1790. The coins at Smith's tomb pay tribute to his wisdom about morality, economics, and the role of government.
Understanding the role of government is urgent now, with Twitter wars supplanting leadership and tensions escalating within and between our political parties. This is a good time for politicians to reflect on Smith's lessons in The Theory of Moral Sentiments and An Inquiry into the Nature and Causes of the Wealth of Nations.
1. Preserve Your Impartial Judgment
To remain calm and ethical, Smith urges everyone, including politicians, to consult their "impartial spectator." To invoke this ideal judge, we step outside of ourselves and view our behavior from a distance. This process, Smith explains in The Theory of Moral Sentiments, is especially critical in "a nation distracted by faction" where only a few "preserve their judgment untainted by the general contagion" (TMS III.3.43).
Today's "hyperpartisan environment" is the target of Rep. Justin Amash in his recent statement about leaving the Republican party. He says the escalating feuds with Democrats have taken the place of the real work of government: "The parties value winning for its own sake, and at whatever cost."
Yet the price of such independence is high. Smith warns that it may inspire the ire of "the furious zealots of both parties":
A true party-man hates and despises candour; and, in reality, there is no vice which could so effectually disqualify him for the trade of a party-man as that single virtue. The real, revered, and impartial spectator, therefore, is, upon no occasion, at a greater distance than amidst the violence and rage of contending parties. (TMS III.3.43)
In fact, when politicians stop consulting their impartial spectator and give in to faction, they lose their moral compass: "Of all the corrupters of moral sentiments, therefore, faction and fanaticism have always been by far the greatest." (TMS III.3.43)
2. Focus on Constituents, Not the Beauty of Your New Systems
Politicians also lose perspective as they design systems to fix society's problems. Poverty, inequality, health care, student debt: our politicians have sweeping solutions to all of these problems, as was evident in the first and second Democratic primary debates of 2019.
As Smith warns, during times of faction, leaders propose immediate "solutions" that will "new-model" the existing system:
The great body of the party are commonly intoxicated by the imaginary beauty of this ideal system, of which they have no experience, but which has been represented to them, in all the most dazzling colours in which the eloquence of their leaders could paint it. (TMS VI.ii.2.15)
Yet the beauty of an idea is no proof of its utility or even its desirability. Mayor Bill de Blasio promises that if he were president, he would sign an executive order to guarantee equal pay for female and male athletes. Do we really want the president, rather than the market, making such decisions? Alexander Yang declares that as president he would push to institute a Universal Basic Income. Are we willing to pay a VAT (Value-Added Tax) and increase taxes on "top earners" and "pollution" to fund that?
Smith warns that the "man of system" comes to ignore the reality of individual lives, imagining he can manipulate them like pieces on a chessboard. People have their own ideas and either depart from a plan or reject it altogether. Political extremism helps no one, and "the violence of party . . . by requiring too much too frequently obtains nothing." (TMS VI.ii.2.15)
3. Reach for the Invisible Hand
Rather than focusing on handouts, politicians should reach for the "invisible hand." Smith uses this term for the process by which individuals acting in their own interest are, without realizing it, contributing to a larger system that benefits everyone.
In The Theory of Moral Sentiments, Smith argues that the rich indulge in luxuries, but their pursuit of wealth leads to products the poor also enjoy. Without intending it, the wealthy thereby advance society's interests. (TMS IV.1.10)
He expanded this idea in The Wealth of Nations, arguing that in his work:
[A man] 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. . . . By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. (WN IV.ii)
Smith's Wealth of Nations documents how the invisible hand enables wealth to grow, and subsequent economists have confirmed what Smith knew: capitalism makes us more prosperous.
In The Bourgeois Virtues, Deirdre McCloskey notes that since 1800, the world's population has increased "by a factor of six." Furthermore, "the amount of goods and services produced and consumed by the average person on the planet has risen since 1800 by a factor of about eight and a half."
Now that's worth tweeting about.
4. Resist the Pressure of Special Interests
Embracing the free market means avoiding crony capitalism. As Smith notes in The Wealth of Nations, one of the major obstacles to free markets is the alliance of political leaders and particular businessmen. He condemns laws "which the clamor of our merchants and manufacturers has extorted from the legislature, for the support of their own absurd and oppressive monopolies." (WN IV.viii.17)
Smith's point applies to all special interests, not simply manufacturers. Favoring one business or group over others harms the taxpayers, for whom politicians work.
That's right. Politicians' sweet deals with the sugar industry leave a sour taste in consumers' mouths.
5. Remember the True Role of Government
Finally, remember that our government exists to do what citizens cannot do well for themselves. For instance, Smith argues that a key role of government is to defend citizens from foreign threats. That is necessary in an age of advanced weapons.
Government is also responsible for a justice system that defends our rights and property. Ordinary people don't need guidance from the elite on what to think or drink. The gravestone at Adam Smith's tomb reminds us of this point with a quotation from The Wealth of Nations: "The property which every man has in his own labour, as it is the original foundation of all other property, so it is the most sacred and inviolable" (I.X).
But government does not exist to solve all our problems. As Samuel Fleischacker argues, Adam Smith thought ordinary people possessed common sense and the ability to determine what they needed. They did not need guidance from the elite on what to think or drink. We still don't.
Pay Tribute and Lead
So today, on the anniversary of Adam Smith's death, politicians should pause to focus on how they can lead. We need politicians who take citizens seriously rather than engaging in party skirmishes, advancing their careers, or planning our lives. We need politicians to pay the ultimate tribute to Smith: heed his advice.