Is Adam Smith a hero or a villain?
Conservatives and libertarians have long seen Smith as a champion of freedom. Recently, however, critics on the “New Right” claim free markets, neoliberalism, and “free trade” have driven the United States into the ground. They sometimes villainize Smith for our supposed ‘late-stage capitalism’ crisis. Unfortunately, straying from free markets will stifle prosperity.
Smith’s most important idea in favor of free markets and a free society was the idea of the “invisible hand.” As the economist Friedrich Hayek notes, Smith’s genius was realizing that the market whispers the needs of a neighbor miles away into the ear of a producer who can meet them. That’s why “a man’s efforts will benefit more people, and on the whole satisfy greater needs, when he lets himself be guided by the abstract signals of prices rather than by perceived needs.”
With good institutions, people acting on their own limited knowledge and in their own self-interest will advance the good of their fellow man and of society, usually without even being aware of it. An invisible hand steers them toward the social good.
Think about your Sunday dinner. Smith famously pointed out that it doesn’t appear on your table because the grocer is a saint or the baker is a philanthropist. They aren’t working out of pure charity; they’re working to put shoes on their own children’s feet. But here’s the beauty of God’s providential design: by looking out for their families, they serve yours.
Although admiration of the rich and powerful can corrupt our motives and lead us to make foolish decisions about our own happiness, in commercial societies pursuing wealth also causes us to benefit our fellow man: “The rich….consume little more than the poor [and] though the sole end which they propose…be the gratification of their own vain and insatiable desires….They are led by an invisible hand [to] advance the interest of the society.”
Some critics act like Smith promised material wealth would be a panacea—that more jobs or better healthcare would automatically fix marriages and education. And let’s be honest: the critics have a point. We see the struggle in our own churches and neighborhoods—families breaking apart and the heavy cloud of addiction. It’s easy to look at a broken culture and want to smash the economic system that sits underneath it.
We all know a bigger house or a nicer car can’t cure anxiety or greed. Prosperity isn’t a silver bullet for the soul, and Smith never claimed it was. When economists emphasize that tastes and preferences are subjective, however, they miss the weight of social and cultural problems people face. But blaming the free market is akin to blaming the stove for a burnt meal. Ditching trade won’t fix the culture; it’ll only make everyone poorer.
Whether you prefer a Ford Mustang to a Honda Civic, or chocolate to vanilla, is up to you. But Smith argued that while your car choice might be morally neutral, your lifestyle choices aren’t. Consuming illegal drugs or viewing pornography, for example, do not seem to be simply matters of taste. Nor is preferring an open marriage over a monogamous one morally neutral. We have moved beyond the vanilla/chocolate realm into something else entirely.
Unlike modern economists, Smith was aware of the tension between preferences, consumption, ethics, and happiness. He was not afraid to examine consumption through a moral lens. The simple fact that a person enjoys something is not sufficient grounds to rule that object or enjoyment as good and praiseworthy.
Smith’s approach to solving these questions is elegant: happiness involves exercising virtue, not maximizing consumption. While consumption is necessary for happiness, it is not sufficient: “Happiness consists in tranquillity and enjoyment. Without tranquillity there can be no enjoyment; and where there is perfect tranquillity there is scarce any thing which is not capable of amusing.”
By tranquility Smith does not mean a peaceful state of the world but rather a peaceful state of mind and conscience. Smith’s tranquility sounds a lot like the peace Christ promised—a peace the world cannot give and the market cannot buy. Consider Solomon’s claim that “Better is a dinner of herbs where love is than a fattened ox and hatred with it. Economics can provide the fattened ox for the table, but only a right relationship with God provides the love and peace to enjoy it.
But is it okay for some people to have enormous wealth while others don’t? Can pursuing one’s self-interest and “honest income” be virtuous? Does our devotion to the free market feed our obsession with ‘stuff’? Adam Smith suggested the process that generates greater material prosperity can address some of these concerns. He thought markets and governments were intertwined with morality and virtue.
When we work, we aren’t just inputting labor into a system. We are reflecting the Creator. We were designed from the beginning—in the Garden—to subdue and cultivate the earth. Meaningful work isn’t just about a paycheck; it’s about fulfilling our God-given dignity. Conversely, idleness destroys dignity. Harvard professor Benjamin Friedman argues that periods of economic growth see more creativity, empathy, hope, and optimism as well as greater cooperation and less racial and religious animus.
As followers of Christ, we should defend the freedom to build wealth—not so we can hoard it, but so we have the resources to love our neighbors, the dignity to provide for our families, and the character to use every blessing for His glory.
Across Europe’s fringes or the former Soviet Bloc, the hotbeds of unrest aren’t filled with professionals; they are filled with the alienated unemployed. You can find similar epidemics of frustration, resentment, resignation, and hopelessness among concentrations of unemployed people from downtown Newark to rural poverty in West Virginia, Pennsylvania, or Ohio. Poverty is complex, but economic growth—the dignity of work—remains its most potent antidote.
Free markets and free trade increase the quality and variety of goods that people can enjoy such as bread, coats, cars, semiconductors, and literally thousands of other products. These markets do more than trade goods; they push back the darkness of hunger, disease, infant mortality, and other forms of human suffering.
These are important problems for the developing world. Human flourishing includes physical well-being. We live in a world of abundance that would have been unimaginable three hundred years ago. And that abundance, which has arisen due to economic freedom, has spread to the poorest parts of the world.
The results of this economic freedom are staggering. In 1981, nearly half the world (44%) lived in dire poverty—on less than $2 a day. By 2015, that number plummeted to less than 10%. That’s a billion people who no longer have to worry about where their next meal is coming from.
Wealth not only fosters our own enjoyment and happiness, it allows us to exercise virtue and help others. Freedom to work, to form associations, and to engage in civic and philanthropic endeavors gives people opportunities to learn and to exercise virtue.
Smith knew that wealth isn’t a savior. It’s a steward’s tool, the “soil” where a good life can grow. As followers of Christ, we should defend the freedom to build wealth—not so we can hoard it, but so we have the resources to love our neighbors, the dignity to provide for our families, and the character to use every blessing for His glory.
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