A rereading of Adam Smith and his prevailing interpretations

Abstract

This paper wants to critically analyse key aspects of Smith’s thought in order to show that the common view that he is a conservative author and a dogmatic proposer of laissez-faire policies is not correctly based. As Muller has claimed, many of those who regard Adam Smith as “a patron saint” often fail to think in the way he did because they are quite satisfied with what he thought (1993: 197). To try to comprehend the root of Smith’s ideas has been the main objective of this paper. To understand the former is key when contemporizing his thought. A Smithian analysis of society has to apply Smith’s method of thought to our contemporary world. In section 1, I argue that as markets and institutions have changed since Smith’s time, to apply his recommendations directly to our days is misleading. In fact, if applied nowadays, they will generally lead to different outcomes. By carrying out the study of his method of thought I aim to show that Smith’s legacy cannot be the Utilitarian school and that more appropriate followers of his work are authors such as Amartya Sen, Arthur Pigou or Karl Marx. In section 2, I propose Sen as a more adequate follower of Smith since he uses the concept of sympathy in his economic analysis to show that our functions of welfare are not only influenced by our individual well-being. In section 3, I propose Pigou as an adequate follower of Smith since he uses the concept of justified state intervention –in sectors that benefit the whole of society but that the individuals would not want to privately invest in– to elaborate the concept of externality so as to show that government has to set up taxes to privately internalize the public damage. In section 4, I support that Marx’s concept of alienation was very influenced by Smith. All in all, this paper challenges the common assumption that Smith was a proto-libertarian through an indepth contextualization of Smith’s work.