Rethinking Adam Smith

Excuse my lengthy introduction which I find necessary to expain my frame of mind.

I ran into a video badmouthing Adam Smith which I dismissed as just another left wing rant. uTube presented me with a pro Adam Smith video which I enjoyed. I decided to set these left wingers straight but to do that I had watch their video one more time. I found two videos about the subject by the same presenter and the same guest. The first one had been a discussion while in the second the speaker was introduced but not further interrupted. During the discussion, the first video, the presenter asked many leading questions which influenced my negative opinion. In the second the presenter identified himself as an economic historian and talked about his methodology, not just repeating the accepted wisdom but tracking down the influences that led economists to their world views. He went as far back as Cicero of Rome and Jean-Baptiste Colbert who “Lent his name to Colbertism, an economic theory that encourages state intervention and protectionism.” I had to look up some of his references which were unknown to me. Quite an educational experience. On to the subject matter.

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Two statements in the Adam Smith video struck a cord, that everyone should have copy of The Wealth of Nations in his library, I do, and that Smith’s early home overlooked a market.

The Colbertian video recounted a number of historical events many of which I was familiar with in support intervention and protectionism. One that struck a cord was about the East India Company. A presentation I watched a long time ago stressed the huge leap the world economy made during the Age of Exploration or Discovery initiated by the Portuguese in the 15th Century. These ventures by no means can be regarded as ‘free trade.’

WalMart is by no means a free market and it is one of the most successful merchandising enterprises of the 20th century. If Adam Smith is right about the market he looked upon in his youth, and I believe he was right, how come that the most notorious economic developments are not the result of free trade but of “intervention and protectionism public and private?” To reconcile Adam Smith and Jean-Baptiste Colbert one needs to turn to the Science of Complexity.

Markets evolved! From group sharing by hunter-gatherers to farmer’s markets with the advent of agriculture to the present day international trading blocks. Clearly the mechanisms to let these diverse markets function had to evolve as the markets’ complexity increased. Smith’s free market philosophy does not scale.

Curiously, democracy proper does not scale either! It worked in Athens where most inhabitants were excluded, slaves and serfs did not vote, they were not part of the ‘demos.’ America proudly declares itself a republic which is an evolved form of democracy where the demos elects intermediaries to represent them. This is another case of evolution of complex systems.

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The videos you might want to watch:

The Real Adam Smith: Morality and Markets - Full Video

Time 56:40

Free Market: The History of an Idea

Time 1:11:43

The Captain



Extremely valuable to expand anyone’s comprehension of Adam Smith is the superb book, which incidentally also traces the key roots of USA Republican ideas:

Adam Smith and his key predecessors and followers, inventing what we still think of as the key ideas of modernity, came out of the horrific (because of Scottish backwardness and English brutality) consolidation of Scotland into the United Kingdom (Bonnie Prince Charlie and all that shyte). Right along with modern comprehension of markets were the first great compilation of British Law, Political/Social theory based on the idea of evolving societies, Geological Science that comprehends the ancient and ongoing transformations of the planet, Philosophy based on reasoned skepticism rather than religion…

An indispensable book. Witty, tightly written but comprehensive. Almost all reading this will find (I did to my amazement) that most of my knowledge and personality were invented by a small group of extremely sociable often drunkard Scots.

david fb


Drunken enough to not realize they were Irish obviously.

The Irish can never get enough credit for their gifts to mankind…and more importantly womankind.

As for Adam Smith he was a full fledged liberal. By his fifth book he had “woke” up. Denouncing and make amends as a decent Irishman would for his follies. There he makes the first cries for the modern economics of the bureaucratic institutions of state to manage a level playing field and transparency in governance. Smith casts aside his one mention of the invisible hand and talks reality.

In reality The Wealth of Nations is a blundering mistake. All of it until save the fifth book could be thrown out completely and the world would run much more smoothly. The fifth book becomes the basis of modern economics.

The fifth book in English history rivals The Magna Carta in import. To discuss the Wealth of Nations from a conservative point of view is to miss the entire point of The Wealth of Nations.


Thanks for the recommendation. I just borrowed the book from my local library.