Will the Real Adam Smith Please Stand Up?

Adam Smith's thought (the real Adam Smith, that is) has been famously characterized by the economist George Stigler as a "stupendous palace erected upon the granite of self-interest." I have long labeled this a "mischaracterization," and I am now pleased to report that I am in good company.

To be sure, "self-interest" is a real phenomenon, albeit a rather humdrum one. Of far greater significance to Smith's thought, and his intellectual legacy, was his bedrock—and spectacularly uncommon at the time—belief that individuals, even the impoverished and unschooled, knew and understood their own best interests far more keenly than the wise and virtuous classes that were then readily perceived as their betters.

This core faith in the judgment of every individual is the foundation upon which Smith rests his aversion to heavy-handed governmental intervention in the economy: It is not (just) a "positive" argument Smith is making against excessive government involvement (i.e., the argument that the government tends to get it wrong, and that its interventions have pernicious unintended consequences); rather, it is primarily a "normative" argument (namely that the intelligence and autonomy of each individual should be minimally interfered with, and then only for the most compelling reasons and where there are no meaningful "less intrusive" alternatives).

In his crystal-clear but inimitable prose:

"It is the highest impertinence and presumption... in kings and ministers, to pretend to watch over the oeconomy of private people, and to restrain their expence either by sumptuary laws, or by prohibiting the importation of foreign luxuries. They are themselves always, and without any exception, the greatest spendthrifts in the society. Let them look well after their own expence, and they may safely trust private people with theirs."

Need I add that these observations are of wide applicability today? (Can anyone say, "school vouchers," where the wise and virtuous classes would deny poor parents the educational choice they themselves enjoy for their privileged children?)

But enough editorializing for this quarter; in case you hadn't picked up on it, I am a profound and enthusiastic admirer of the original AS.

And yes, I do believe he'd have his own blog today.