George H. Smith [GHS]: My guest today is Dr. Adam Smith, who is best known for his masterpiece, The Wealth of Nations, published in 1776. Dr. Smith died many years ago, but his spirit has remained with us, and I am honored that his spirit has agreed to this interview.

Dr. Smith, before we begin, may I assume that your spiritual self has remained current on everything—that, for example, you know all about the modern libertarian movement, and so forth?

Adam Smith [AS]: Yes. You may assume that I know whatever you know.

GHS: Good. I don’t detect any accent. What happened to it?

AS: I strongly recommend that we not explore any of the metaphysical intricacies of this interview, lest your readers begin to doubt that you are really interviewing me. Metaphysical investigations rarely yield useful knowledge. I will speak as you speak.

GHS: Speaking of language, English was your second language. Correct?

AS: Yes, my native language was Scottish Gaelic.

GHS: I have read that you were kidnapped at a young age by a band of gypsies, and were later rescued.

AS: Yes, yes—but, please, let’s skip these irrelevancies and proceed to more important matters. The incidentals of my childhood are unimportant.

GHS: Good idea. Let’s talk for a few minutes about the environment you grew up in. You were intellectually active at the peak of what is called the Scottish Enlightenment. There has been a lot of scholarly interest in recent decades about the Scottish Enlightenment. Even so, when most people hear the word “Enlightenment,” they think of the French Enlightenment and of names like Voltaire and Rousseau. Does this bother you?

AS: Of course not. Why should it? We regarded the Enlightenment as an international movement, and we were not jingoistic. We admired Voltaire—for example, for his heroic efforts to end torture. Some of us, such as Mr. Hume, even liked Rousseau, however much we disagreed with him. Unfortunately, Rousseau had some—how should I put this?—personal problems. I assume you know how Mr. Hume attempted to help Rousseau, only to have Rousseau turn on him like a vicious dog.

GHS: You mentioned David Hume. I understand you were very good friends.

AS: Absolutely. Mr. Hume was one of my best friends.

GHS: Did you disagree politically? I ask this because you were known as a Whig, whereas Hume has frequently been called a Tory.

AS: Political labels meant very little to us. The important thing was our common desire to advance the science of man, or what today you would call the social sciences. We Scots were pioneers in economics (we called it “political economy” in those days), sociology, and social psychology (we regarded these as branches of moral science), history…well, the list goes on and on, as you know.

In point of fact, Mr. Hume and I differed very little on political and economic matters. He wrote some brilliant essays on economics years before I published anything. I believe there were only four altogether, but they contained some of the same arguments for free trade and against mercantilism that I wrote about in more detail later on. His attack on the balance of trade doctrine was brilliant and groundbreaking.

Today you think of Mr. Hume as a philosopher, but in his day he was best known as a historian. His multi-volume History of England became a best-seller and had an enormous influence.

GHS: I recall Thomas Jefferson claimed that Hume had distorted the facts in order to whitewash the Stuarts, especially Charles I, who was executed in 1649. Jefferson went so far as to say that Hume’s History, because of its popularity, dealt an enormous blow to the cause of freedom.

AS: Mr. Hume had no interest in defending either Tories or Tory principles. He felt that previous histories had lacked balance and objectivity, and he wanted to write an impartial history. Previous Tory and Whig histories had locked horns on the legitimacy of the English civil wars during the 1640s. Whig historians painted a black and white picture in which the Parliamentarians were champions of freedom who opposed the absolutism of the Royalists. These historians typically failed to mention the intolerance of the Puritans who wanted to impose their religious beliefs on others and who, after the execution of the King, shut down theaters and enacted other repressive laws.

But what most upset Mr. Jefferson and other Whigs was the position Mr. Hume took on a controversy that will seem arcane to modern readers. He argued that English despotism did not begin with the Stuarts but in fact had a long provenance in English history. In his treatment of Queen Elizabeth, for example, Mr. Hume rebutted the Whig argument that Elizabeth had respected parliamentary rights and the ancient “Saxon” liberties of Englishmen. He argued that this was nonsense, that Elizabeth was as despotic as the Stuarts were, and that the Stuarts were merely a continuation of this tradition.

GHS: Why was this argument so important?

AS: Because the ancient liberties of Englishmen played a crucial role in the Parliamentary justification for revolting against the King and eventually executing him. Whigs argued that the Stuarts represented a radical break from previous monarchs, or at least most of them, and that absolutism was therefore a dangerous innovation that needed to be crushed in its infancy. Mr. Hume claimed that Whig historians understated both the absolutism of the Tudors and overstated the absolutism of the Stuarts, because they wanted to present the Stuarts as tyrants who were attempting to overthrow the British Constitution. This is why they exaggerated the significance of the Magna Charta, which in fact only helped out the nobles and was never intended to apply more broadly.

GHS: So why did the civil wars occur when they did?

AS: Mr. Hume gave a number of reasons, including the rise of the Puritans and other groups who would no longer tolerate traditional English practices. In short, the real innovations did not occur in the monarchy but in those malcontents.

GHS: I recall reading something you said in your lectures at Glasgow University to the effect that serious historians no longer disputed Hume’s version.

AS: Yes, and I said that early in my career. No one ever accused me of being a Tory, but because Mr. Hume was widely known for defending the same view, which was branded as Tory by many Whigs, he got stuck with the label. Yet, as I said before, we agreed on virtually every major point in history, political theory, and economics.

GHS: You mentioned the time you spent as a professor of moral philosophy at Glasgow. I understand that Scottish universities were regarded as the best in Europe at that time.

AS: Absolutely. We established, within a relatively short time, the best and most prestigious universities in Europe. People came from all over the world, including America, to attend them. They became far more respected than Oxford and Cambridge.

GHS: This is an amazing story that some of my readers may not be familiar with. What makes it so amazing is how quickly Scotland developed from what can only be described as a third world country to a great center of the Enlightenment in just a handful of decades. It was Edinburgh, not London, which was praised as a second Paris. How did all this happen so quickly?

AS: The single most significant general cause in the rapid transformation of Scotland was the Act of Union in 1707. This act made possible the rapid progress of commerce and intellectual achievements that followed.

GHS: But the Act of Union stripped Scotland of its political independence. The parliament in Edinburgh was abolished, and though you were permitted some representation in the English Parliament, the number of representatives was too small to have much influence. Most Scots opposed the Act of Union, and with great passion, believing that it was designed by the English to further their own interests. Allegations abounded that the only reason the Act of Union was approved by your politicians was because of widespread bribery.

AS: All that you have said is true. The motives of the English government were purely self-interested. They cared nothing for us. You need only look at the murderous economic restrictions they had imposed on us earlier. We were not permitted to trade with any country but England, and we were told what we could and could not produce. Those and other mercantilist restrictions kept us in abject poverty. We could not progress because the English would not let us engage in free commerce. When a famine hit Scotland in the late 1600s, it devastated our population. My countrymen starved by the thousands and tens of thousands, and dead bodies littered the streets. Even then the English would not permit us the freedom to produce and trade in a manner that served our interests instead of theirs.

So, yes, we lost the last vestige of our independence, and with it some of our pride. But we got something of much greater value in return: We got free trade. Most Scots did not foresee the long term benefits that unrestrained commerce would bring to Scotland, but those benefits were not long in coming.

The loss of our parliament actually proved beneficial as well, although these benefits were an unintended consequence. By stripping Edinburgh of its political power, the Act of Union hastened its development as a great commercial center. People now flocked to Edinburgh to make money, not to seek power or favors from politicians. A poverty stricken country cannot develop a vibrant intellectual culture and the institutions, such as universities, needed to promote that culture. These require the accumulation of capital and the leisure needed for intellectual pursuits. No one foresaw that these would be the long term effects of losing our independence—the English certainly didn’t strip us of our independence for altruistic reasons—but those were the effects nonetheless. I assume you have read the letter I wrote to Mr. Hume on this controversy.

GHS: Yes, I did. And what I find fascinating about your account is the role you attribute to unintended consequences, which of course was a major theme in the Wealth of Nations. There you refer to it as the invisible hand, a process whereby people who pursue their own economic gain unintentionally benefit others. People usually think of the theory of unintended consequences as an economic theory, but you have obviously applied it to historical explanations as well.

AS: My invisible hand theory has often been misunderstood. It is not an explanation per se. Rather, it is a explanatory method, one that can be adapted and applied to any attempt to explain the effects of human actions. Are you aware that I also mention the “invisible hand” in The Theory of Moral Sentiments, a book that I wrote many years before the Wealth of Nations?

GHS: Yes. As I recall, you mention it in a discussion of how the rise of commerce in England dramatically weakened the power of the feudal nobility and contributed to the creation of an independent middle class. You claim that nobles didn’t intend any of this to happen when they became obsessed with purchasing luxuries from abroad—“trinkets and baubles,” I think you call them—but in diverting their fortunes to purchase these status symbols, nobles could no longer afford to support thousands of dependents and retainers, and therefore had to put them out to fend for themselves. You then go on to explain how former dependents, by going into various trades and branches of commerce, developed a “spirit of independence” that they previously lacked and thereby contributed to the transformation of English culture. And all this because of trinkets and baubles that appealed to the vanity of nobles.

AS: Exactly. A merchant or shopkeeper does need to rely on the business of one customer alone, so he does not need to fawn over some worthless and spoiled noble brat. The merchant can tell the fellow to get lost, if wants to. But if that shopkeeper had been totally dependent on that one person, then he would need to learn the fine art of deference and groveling.

GHS: In James Boswell’s celebrated biography, he tells the story how of Samuel Johnson got angry at a lowly shoeblack who had the temerity to talk back to him. The shoeblack didn’t fear what Johnson might do in retaliation, because he had a lot of other customers. I think Johnson called the shoeblack’s behavior saucy and impertinent. Johnson goes on to blame the emergence of a commercial society for breaking down traditional class distinctions in England.

AS: I praised that new spirit of independence in the Wealth of Nations and elsewhere, as did most of my colleagues. We had had a bellyful of English arrogance. Most of the intellectuals who condemned the spirit of independence, which we regarded as essential to a free society, were English, not Scottish. By the way, James Boswell was a former student of mine.

GHS: How did you and other Scottish intellectuals feel about the English? Did you get along?

AS: There were some conflicts certainly, but we were great admirers of English culture. Who could not admire a culture that had produced Bacon, Newton, and Locke? They were our intellectual heroes, and the Scottish Enlightenment would have been impossible without them. Most of us loved living in England, especially in London, and we sometimes called ourselves North Britons rather than Scots.

One problem was our Scottish brogue and other verbal mannerisms. If you were in London with that brogue, you were instantly recognizable as a Scot. And this functioned like a green light for even the lowest of the lowlifes in London to ridicule you with an air of superiority, and perhaps even to assault you. Your achievements and your wealth counted for nothing. We were virulently despised.

The progress of Scotland had been swift, and there was considerable resentment after we had eclipsed England in intellectual achievements. As our middle class was moving up the social ladder, the English upper class was moving down. Many noble families had little left except a title, a sword, a crumbling castle they could not afford to maintain, and a bad attitude.

Some of us tried to learn to speak like good Englishman. As you may have heard, I had mixed success with my efforts. It became a source of some amusement among my students and friends to hear my unique blend of English and Scottish accents.

Mr. Hume refused to budge at all. He always spoke with a heavy brogue, and he had no intention of changing anything. He once wrote to me and expressed his desire to settle in either London or Paris. He preferred the intellectual culture of London over that of Paris, but he said—please excuse my language—he wasn’t about to take shit from anyone for being a Scot. I wrote back to tell him that I understood, but that he shouldn’t be too hard on the English. They were a great people, and their irrational prejudices against us would surely not last much longer.