Adam Smith the Mythmaker

By Gwydion M. Williams

Smith as Enemy of the New USA
Wedderburn, Smith’s Overlooked Friend
Pins and Watches
Post-Leninism
Smith’s False Hopes
A Nation Not Ruled by Shopkeepers

Back in the year 2000, I wrote a book called Adam Smith: Wealth Without Nations. Athol Books published it, and we launched it at the Labour Party conference and at the Red Rose Club in London.

Sadly, hardly anyone wanted to know. They stuck to the version of Smith they’d got from right-wing sources, even if they hated those people. They were against capitalism, or for limited capitalism, or followed Blair in saying that capitalism was unavoidable. But almost everyone had swallowed the idea that Adam Smith was the first person who correctly described the world-shaking emergence of British industrialism. Almost everyone accepted the dogma that what drove it was raw capitalism. That it was unavoidably so, as Marx was assumed to have said.

To me, it was a ruling class that was unusually open to new ideas and new inventions, so long as these did not undermine their own status or incomes. There was nothing feudal about them, except that they hung on to feudal names and forms that most of the wider public respected.

No one cared that I had exposed the myth that he discovered the Division of Labour. Showed that it was noted as far back as passing remarks by Plato and Xenophon.

No one cared that his famous example of pin making was not a product of capitalist freedom. It was a regulated trade, though there was no regular history of it.

Few have noted that Smith was dishonest about slavery. That he ignored the flourishing Atlantic slave trade which did so much to boost early British industrialism. That he was fond of sugar from Britain’s highly commercial slavery in Britain’s West Indian colonies.^[1]

He failed to mention that a huge Western European market for grain had also encouraged the regrowth of serfdom in Tsarist Russia and Constitutional-Aristocratic Poland.

Smith even removed all reference to the residual serfdom of coal miners and salt makers in Scotland, which he had mentioned in his original lectures to a purely Scottish audience.^[2] Most books that even mention them, will insist he must honestly have forgotten that they existed.

Smith as Enemy of the New USA

I found some amazing social connections. Things that the pompous pundits of the New Right have either overlooked, or chosen not to mention. And the first of these matters the most:

“Smith attached himself to three different ‘networks’ in the developing framework of 18th century Britain. Through his friends and former pupils Shelburne and Wedderburn, and later through the patronage of Viscount Townshend, he had a direct connection with the aristocratic rulers of Great Britain. Especially with the ‘King’s Friends’, the scheming politicians who provoked North America to its War of Independence.”

He didn’t just seek patronage from these rich and powerful men. (No women involved, as far as I know.) A lot of his letters have vanished, and he had most of his unfinished works and notes destroyed after his death. But we do know about a confidential memorandum he wrote in 1778. There, he advised the government of George III on how best to handle the American rebellion led by George Washington.

“The ulcerated minds of the Americans are not likely to consent to any union even upon terms the most advantageous to themselves. One or two campaigns, however, more successful than those we have hitherto made against them, might bring them perhaps to think more soberly upon the subject of their dispute with the mother country.”^[3] Adam Smith, in a confidential memorandum of 1778, advising the government of George III on how best to handle the American rebellion led by George Washington. (Correspondence, Appendix B, Glasgow Edition)

We also have a letter to him from Wedderburn:

“I have a strong persuasion that in spite of all our wretched Conduct, the mere force of government clumsily and unsteadily applied will beat down the more unsteady and unmanageable Force of a democratical Rebellion.”^[4] (Correspondence, Letter 159.)

Note that democracy was not seen as a virtue by most of the educated, and a majority of the uneducated were not then demanding it. The new USA was more democratic that the Britain it rebelled against, but had a struggle till the 1830s to establish ‘one man one vote’ as the norm. No women till 1918, and various forms of overt racial exclusion till the 1960s. Even now there is some exclusion by devious means .

Smith’s opposition to the new USA should be big news. But no one went looking for it. No one was interested, when I proved it in detail.

This link to the powerful was not his only connection, of course.

“A second of Smith’s social networks was the Deistic intellectual underground that was quietly working to undermine conventional Christian faith. He most likely joined this network – which was probably not very organised or coherent – during his time at Oxford. For certain, it was there that he read the works of David Hume and abandoned his original intention of a career in the Church of England. Hume later became his closest friend and mentor, though Smith himself never published anything overtly hostile to Christianity. He worked instead on an economic doctrine which was destined to strip Christianity of most of the power and prestige it still had in his day.

“How far Adam Smith was conscious of this prospect is uncertain. Perhaps not at all, perhaps he viewed Gentry Capitalism as the highest stage of commerce. But he certainly did not share Oliver Goldsmith’s view that wealth accumulates and men decay. Observing just the same processes at work, Smith considered that both culture and production were steadily improving.

This second link does get noticed and mentioned by those New Rightists who are openly hostile to Christianity, and religion in general. But the third link is another matter.

“The third connection critical to understanding Smith was his link with the developing world of science. This link is hardly ever noticed. Economics is commonly placed on the ‘Arts’ side of academic life. It has of course created its own ‘Nobel Prize’ to give it apparent parity with the biologists and chemists and physicists. But most regular scientists view the economists much as the Church of England viewed Joanna Southcott and similar eccentric enthusiasts.” (Page 129.)

I detailed just what these scientific links were:

““At both Glasgow and Edinburgh Universities, Smith formed close friendships with gifted scientists, most notably James Hutton and Joseph Black.

““Hutton and Black seem not to be known to people on the ‘Arts’ side of academia, not even to the economists who ape the external forms of science. Hutton is normally passed over as if he were some nonentity who just happened to be an executor of Adam Smith’s last will and testament.

““Ross in his Life Of Adam Smith (Oxford 1995) is better than most on the scientific connections that shaped Smith’s world-view. But even he mentions Hutton merely as the author of Considerations On Coal And Culm. It’s as absurd as if a scientist were to have no idea of who Wordsworth or Coleridge were. Or if an historian were to mention that Oliver Cromwell employed a fellow called John Milton as a gifted writer of polemical pamphlets in Latin, and showed no awareness that this same John Milton wrote a little poetry when he found himself unemployed during the Restoration era.” (Page 130.)

As a bonus, Smith knew John Robison, who invented the Conspiracy Theories that were later used to justify the mass slaughter of Jews.^[5] Not that Smith or Robison had the least concern about Jews. Scots in the late 18^th century would probably have noticed that Jews were playing the same game within England that Scots were: finding a niche based on being clever and hard-working. His Conspirators were the Freemasons – never mind that Freemasons were found on all sides during the French Revolution, or that leading Freemasons were among those guillotined during the panic of the Great Terror.

It began with Robison’s paranoid fears about Freemasons. Jews were added later, but the improbable Freemason / Jew connection remained attached to most versions of the original myth.

Wedderburn, Smith’s Overlooked Friend

When I published the book, I had planned to do more on Smith’s friends. But I had also hoped for more interest than I got. Then I got diverted to other important matters. This included a detailed demonstration that Mao’s China had been a considerable success, a point that few disputed in the 1970s. No one then believed that Nixon and later US Presidents would have been so generous with China, had China not been fast-rising even before Deng took over. History was later re-invented, and China-boosters like Martin Jaques seemed to me to miss the point. So I did a series of studies, showing all that they had left out.^[6]

Separately from this, I for many years felt the need to show in detail that subatomic physics did not suggest that our minds just make up the world. This eventually appeared as The Muon and the Green Great Dragon.^[7] It included the interesting discovery that Schrodinger’s Cat might well have been inspired by Lewis Caroll’s enigmatic Cheshire Cat. [CW1]

There is more beyond, so I am not now likely to follow up Smith’s social connections:

“The vastly more interesting career of Alexander Wedderburn, which lacks any account beyond a few pages in the Lives Of The Lord Chancellors. Why such a neglect of a fellow whom George III called ‘the greatest rogue’ – yet apparently could not do without?” (Page 140).

He is generally seen as a former radical who sold out to a corrupt ruling elite. Radical pamphleteer Junius wrote of him,

“As for Mr Wedderburn, there is something about him which even treachery cannot trust”.^[8]

The truth may be more complex. He appears to have been heroic once. He quit Scottish law, after refusing to withdraw a startling accusation [CW2] :

“Lockhart started up and threatened him with vengeance. ‘I care little, my lords,’ said Wedderburn, ‘for what may be said or done by a man who has been disgraced in his person and dishonoured in his bed.’ The judges felt their flesh creep at the words, and Lord President Craigie could with difficulty summon energy to tell the young pleader that this was language unbecoming an advocate and unbecoming a gentleman”^[9]

Much later, he ‘outed’ the rich and influential William Beckford, author of the fantasy-oriental novel Vathek. The man’s diverse sex life included sex with a very under-age boy.^[10]

I did wonder if part of Smith’s connections were a homosexual or bisexual network. But could get no definite answer.

The whole scene is brilliant possibility for a popularising historian or an historical novelist. And it could include some serious social history.

Pins and Watches

Smith failed to tell the whole truth about pin-making, his famous example. It is basic to his argument for what we now call capitalism. But checking old books in the British Library, I found an untold tale:

“Pin makers would have been a rare 18th century exception to the general pattern of households producing most of what they consumed. Pins would be a minor item consumed in small quantities by a very large number of households and individuals. They would also be required in large quantities by other specialist producers, dress makers and the like. Pin makers were an early example of what is now the norm – people who sell most of what they produce and buy most of what they consume.” (Page 65.)

“Smith is always bad at giving sources. The Glasgow Edition of The Wealth Of Nations – published in 1976 as a bicentenary celebration – points one towards several works, notably Chamber’s Cyclopaedia… But in the Cyclopaedia, one finds mention of a social background that Adam Smith chose to ignore – just as he left out many other facts unsuitable for AdamSmithite doctrine. Judge for yourself, from facts that neither Smith nor his followers chose to include in their economic ‘wisdom’:

“‘Pins are now altogether made of brass wire blanched: formerly they likewise made them of iron-wire, which being blanched like the others, passed for brass, but the ill effects of those Pins had quite discredited their use. The French however could not be drawn from them without several arrets of parliament. By a sentence of the lieutenant de police, July 1695, the seizure of some million of those Pins was confirmed, and the Pins condemned to be burnt by the common executioner.” (Cyclopaedia, 6th Edition 1750.)

Not quite a spontaneous outburst of unregulated commerce! And pins made of inferior materials are described by the Cyclopaedia as being a health hazard, liable to cause slow-healing wounds among those who worked with them. As for whether the extinction of Parisian pin-making was due to the fraudulent use of iron in place of brass, I don’t know. I’m not trying to write a history of pins – though if economics is ever to become a real science, it will have to be on the basis of many such detailed histories of real economic processes.” (Page 66.)

That was as far as I got. I could find no book that told of how pin making actually was organised in the 18^thcentury. One of many pieces of evidence that academic economics is driven by ideology, rather than an interest in the actual work of actual humans.

Anyone interested in the Galapagos Finches that inspired Charles Darwin can find several popular books about them. Though anyone reading about Popular Darwinism will find that most of them concentrate of things compatible with a New Right view, and ignore the rest. You are unlikely to find a mention of the awkward fact that there are more species of animal parasites than species of free-living animals. Or that almost all gene-lines for free-living animals stabilise with brilliantly adapted creatures with mindless instincts. Glimmers of intelligence are very much the exception: found among mammals, birds, and the squid / octopus kindred.

For Smith’s description of industries in Britain, there was also bias in his choice of examples of progressive methods:

“If Smith had chosen watch-making as his first and main example, this would have given a very different impression of what division of labour was all about. For the production of watches – very necessary in the new era of measured time – small workshops separately produced standardised parts that the watchmaker would then skilfully turn into a finished product. This was an environment that also produced a great diversity of original thought.” (Page 48.)

It was independent small production, and many such people were radicals. Smith supported the aristocratic elite. He dismissed watch-making as low-skill in The Wealth of Nations. But he had praised it as highly skilled in his earlier public lectures.

Post-Leninism

My book is not Marxist. It is a book by someone familiar with most of Marx’s published writings, and some of the unfinished stuff also. I am a former Anti-Revisionist Marxist – never entirely Maoist. And someone who decided from the 1970s that the world had moved on.

I am also confident that we would have a very different world without the Leninist challenge, and a world much less to the taste of most living Britons.^[11] We have overthrown the values of generations before the Baby Boomers, but most of this generation evade or deny it.

I am myself a Baby Boomer. And elsewhere I have explained what we got right, and where we failed.^[12]

I found Marx useful on the complex matter of Productive Labour. But he also preferred to accept Smith’s vision as real capitalism, with alternatives certain to be swept aside and was scornful of Imperial China, whereas Smith showed a respect for China that his followers have tended to underplay.

I refuse to distance Marx from the Lenin-Stalin-Mao politics that he inspired. He saw no merit in a parliamentary system, even if the vote should eventually be extended to all adults, or even just all men.^[13] He rewrote early drafts of the Communist Manifesto to avoid the issue – something the ‘thinkers’ of the New Right seem not to have noticed.^[14] But note that the British Isles only gave the vote to a majority of its male inhabitants in the 1880s. That the Westminster government denied real power to the non-white majority in the British Empire before the Soviet Union became a major challenge after World War Two.^[15]

Incidentally, the Russian Parliament that Lenin overthrew was elected by a tiny rich minority. At least 90% of the 1917 Constituent Assembly wanted some sort of socialism.^[16] But the German Social-Democrats in the 1920s Weimar Republic achieved little. They left a mess which was resolved by Hitler becoming the 13^th Chancellor of Weimar – only by stages did he become a real dictator.^[17]

The liberal view that all would have been fine without those bad men Lenin and Stalin is contradicted by history. Likewise the notion that China would have been fine before Mao. Taiwan alone would have been likely to succeed, having been transformed by brutal but effective Japanese rule from 1895.^[18]

Marx had a clear and authoritarian vision. Lenin and Stalin and Mao built on it, with unexpected success.

I find nothing surprising in the lack of positive achievement by the small number of Marxists who reject Lenin. Or the much larger number who denounce Stalin.^[19] ^[20]

When it comes to real-world human freedoms, most demands came from the left. It was Global Communism that was the only serious power-political threat to the West’s now-discarded 1950s values. To limits on racial equality, on sexual choice, and on women’s rights. Fascist regimes always posed as defenders of conventional Christian morality, and were no more hypocritical in practice than liberal regimes.

Global Leninism was solidly for the dismantling of Europe’s’ racially-unequal empires, whereas the USA was often lukewarm. US presidents were the last major defenders of Portugal’s global empire and of Apartheid South Africa. They did also keep the Tsarist Empire intact, but did try to run in on a racially equal basis.

Fear of losing the Cold War was a major force in making the West’s elite decide that they had to match what Leninism offered on personal choice and individual freedoms. And to accept the dismantling of empires.

The 1970s saw something that most Marxists had seen as impossible: the majority of capitalists openly discarding what we’d called bourgeois values and at the same time being much more enthusiastic about capitalist economics. Far too many from a Marxist background failed to properly rethink.

Liberals now like to claim credit for everything good in the new freedoms. So do New Rightists, even though they operate through centre-right parties that were mostly the main opposition to the new freedoms. That sometimes still are, particularly in the USA.

Late Liberalism’s only major success was decriminalising homosexuality, and then by stages normalising it. Engels despised Greek homosexuality, seeing it as a product of women losing status.^[21] Stalin rolled back the limited tolerance of the 1920s Soviet Union. Mao enforced neglected rules against gay people as part of a general campaign that also swept away prostitution and concubinage, which ended extensive sex slavery and exploitation of the under-age and suppressed polyandry in Tibet; something that no Western government has chosen to legalise, even though Gay Marriage is now generally accepted.

Peoples’ China from the 1990s has tolerated gays, so long as they ‘stay in the closet’. Women’s Rights were enforced from the start, but there have been few women at the highest levels of politics in the post-Mao era. But women without privileged family connections are vastly better off in China than they ever were in the parliamentary democracy of the Republic of India.

The Marxist challenge to capitalist ideas has produced modern Western values. Western liberalism has been transformed by it.

In the year 2000, I viewed Adam Smith as mistaken. Viewed the 1980s enthusiasm for him as an aberration. And now in 2023, there should be a lot more people agreeing with me who would find useful things in my book, even if they reject my views on Leninism.

I see Adam Smith as having had false expectations of the free trade and free commerce he argued for. He expected power to stay with what I called the Radical Rich: aristocrats living off land rents. And I see his seldom-mentioned view of history as being sometimes more accurate than what we get from Marx.

Smith’s False Hopes

Adam Smith might have been horrified by what his work was used to justify.

“Smith in The Wealth Of Nations did correctly recognise that the whole society was getting steadily richer. This was not a routine observation at the time he wrote, though Petty had seen it clearly enough in the previous century.

“Smith also makes the comfortable assumption that the new prosperity would be evenly shared:

“‘Since the time of Henry VIII, the wealth and revenue of the country have been continually advancing, and in the course of their progress, their pace seems rather to have been gradually accelerated than retarded. They seem, not only to have been going on, but to have been going on faster and faster. The wages of labour have been continually increasing during the same period, and in the greater part of the different branches of trade and manufacturing the profits of stock have been diminished.’ (The Wealth Of Nations, I. ix. 6)

“Events after 1776 confirmed Smith’s view that an economic takeoff was happening. But it was happening much more dramatically than Smith ever realised. And the new industrialists were under no obligation to share their newfound wealth with their workforce.” (Page 113.)

Smith had written on a false basis:

“Bernard Mandeville … told the truth about commerce in his Fable Of The Bees, and was abused as Man-Devil etc. by those who were shocked by the realities that he revealed. (Page 114.)

Mandeville said that luxuries of the elite boosted the economy. A marked contrast with Smith, who treated non-commercial spending as a burden, and called it unproductive. Mandeville would probably have agreed with Keynes that rather than leave workers unemployed, it would be better to pay them to dig holes and fill them in again than to. He might well have approved of the New Deal system of the government hiring them to do useful work,

Smith had borrowed a lot from Mandeville:

“The same belief in the virtues of selfishness is present in The Wealth Of Nations. But here they are made much more acceptable to the middle classes, decently garbed in an appearance of science and worthy middle-class morality. Smith said in dry academic language what Mandeville had said much more blatantly.

“Money talks. It also craps.

“Most people throughout history have had a cautious attitude towards money, viewing it as unpleasant but unavoidable, like dung, but also as something powerful and dangerous, like fire. Useful if applied carefully in just the right places, utterly destructive if allowed to run free.

“Wild money was seen as dangerous, just as an unchecked fire is dangerous. Just as water is essential to life, and also one of the greatest killers and destroyers.

“Britain in Adam Smith’s day was experiencing a brief stability. The system of 1688 faced its last serious challenge in the Jacobite rebellion of 1745. This happened while Smith was completing his student days at Oxford. His Whig friends suffered a brief fright, but won decisively, and it was the last time that a rebel army on British soil looked likely to defeat the existing British government.” (Ibid.)

A Nation Not Ruled by Shopkeepers

I found in Smith a famous phrase that is mostly credited to Napoleon. And found that he had understood much better the real politics of the matter:

“There are major contradictions in Smith’s position. In Book Four, he says:

“‘To found a great empire for the sole purpose of raising up a people of customers may at first sight appear a project fit only for a nation of shopkeepers. It is, however, a project altogether unfit for a nation of shopkeepers; but extremely fit for a nation whose government is influenced by shopkeepers.’ (Ibid., IV. vii. c).

“Smith’s preference was for a world governed by free trade. But without the power of the British state, there would have been no chance whatsoever of such a world coming into existence. He says later (Ibid. IV. vii. c) that Britain might actually benefit from losing its colonial possessions. Yet, in so far as he had any influence on the matter, he was a supporter of George the Third against George Washington.

“It is also interesting to find Smith using the phrase ‘a nation of shopkeepers’ at a time when Napoleon Bonaparte was still a small child. Smith also shows a better understanding of the actual class setup. Shopkeepers and other petty-bourgeois are best looked after by a clever enlightened aristocracy that can think in ways the shopkeepers would never manage.

“When people with the mentality of shopkeepers did finally exercise supreme power in the person and government of Mrs Thatcher, they greatly accelerated the break-up of the traditions that they very much wanted to preserve.

“The Thatcherites claim credit for the break-up of European Leninism, which had in fact been happening from 1968 and the suppression of popular efforts to reform. Czechoslovakia offered a social-market model well to the left of anything now on offer.

“Thatcherites look back to Churchill. But shopkeepers cannot be truly Churchillian, any more than Churchill could have been a successful shopkeeper. (Having nothing to offer except blood, sweat and tears would not attract many customers.)

The cultural context was the key matter:

“The enthusiastic Georgian age was a time of ‘cultural revolution’ as well as industrial revolution. Western Europe as a whole was aware of the rest of the world in a way it had not been before – the first translation into European languages of the Arabian Nights, for instance.

“Habits like washing and tea-drinking were borrowed from abroad, first by the gentry and then by the other classes in European society. There was a willingness to learn and innovate that had seldom been seen before, anywhere in the world. There was a widespread belief in ‘improvement’ as a thing in itself, with hopes for profit as merely a secondary factor.

“The Victorian era saw a re-growth of the gloomy Puritan values that Smith had rejected, and the taming of the civilised-pagan aristocracy that he had admired. It also brought an immense narrowing of cultural vision, with the world outside of Europe seen as crude, uncivilised and best used as raw materials for some inferior brown-skinned version of Victorian values.”

Because of the errors of the post-Stalin Soviet Union, the ‘gloomy Puritan values’ got a new round of power under Thatcher and Reagan.

But most people now agree that they failed. So my book remains very relevant. You can get it from Athol Books.^[22] Or a more expensive copy of the same book via Amazon. Our archive site has many articles on economics.^[23]

^[1] My book, page 13.

^[2] My book, page 97.

^[3] Correspondence of Adam Smith, Appendix B, Glasgow Edition. Also my book, page 3.

^[4] Correspondence, Letter 159. Also my book, page 29.

^[5] My book, pages 132-4.

^[6] https://labouraffairsmagazine.com/#_Toc23413149

^[7] https://labouraffairsmagazine.com/problems-magazine-past-issues/in-a-hole-in-a-hole-dwelt-a-nothingness/

^[8] https://en.wikipedia.org/wiki/Alexander_Wedderburn,_1st_Earl_of_Rosslyn#Political_career

^[9] https://randomscottishhistory.com/2019/01/02/2nd-of-january/

^[10] https://www.madamegilflurt.com/2013/10/notable-birthdays-william-beckford.html

^[11] https://labouraffairsmagazine.com/m-articles-by-topic/m99-topic-menus-from-long-revolution-website/998-from-labour-affairs/the-french-revolution-and-its-unstable-politics/against-globalisation/the-left-redefined-the-normal/

^[12] https://gwydionwilliams.com/about/777-backup-for-gwydion/030-human-dynamics/baby-boomers-to-blame/