Adam Smith’s Wealth of Nations (1776) is often regarded as the “Bible” of capitalism. It is usually remembered for slogans that have become second nature to neoliberal advocates and governments around the world.
These include the importance of self-interest (a recoded greed) for social wellbeing, freedom of the market, the propensity for human beings to barter and exchange, and the invisible “hand” that guides the market.
But a careful study of Wealth of Nations reveals that its influence lies not in Smith’s ability to construct an argument but in his skill as a storyteller.
Indeed, many have noted that this two-volume work is rambling, polemical, and rather cavalier with evidence. It is not a work of science in any conventional sense. Instead, this “Bible” of capitalism is full to overflowing with fables, sayings, moral tales, vignettes, parables and myths. Let me give a few of the more significant examples.
Perhaps the most significant fable is the one that follows the well-known saying: there exists, Smith writes, a “certain propensity in human nature,” which is “the propensity to truck, barter, and exchange one thing for another”.
Aware that this is a highly contested suggestion, he offers not detailed argument to back it up – but a cute fable concerning dogs. They stand in for all animals, whose nature is said to be different from that of human beings.
Do animals too exchange with one another? Of course not. “Nobody ever saw a dog make a fair and deliberate exchange of one bone for another with another dog.”
Indeed, “Nobody ever saw one animal by its gestures and natural cries signify to another, this is mine, that yours; I am willing to give this for that”.
The only way a dog can obtain something it wants is to fawn over its master. Exchange or barter simply does not enter into the equation. Obviously a fable such as this is no replacement for argument. But it is readable, entertaining perhaps, designed to appeal at another and more persuasive level.
As for his moral tales, my sample is the syrupy tale of the merchant and the country gentleman:
A merchant is accustomed to employ his money chiefly in profitable projects; whereas a mere country gentleman is accustomed to employ it chiefly in expence … Those different habits naturally affect their temper and disposition in every sort of business. A merchant is commonly a bold; a country gentleman, a timid undertaker […] The habits, besides, of order, economy and attention, to which mercantile business naturally forms a merchant, render him much fitter to execute, with profit and success, any project of improvement.
The moral coding of Smith’s work emerges here in all its glory, a coding reinforced time and again through stories such as this.
The industrious merchant is the virtuous one, full of spirited energy, order, economy, and boldness. By contrast, the country gentleman simply has not a clue, for he is timid and lacking in the discipline needed for real improvement.
Of parables there are many. Instead of any extended analysis of empirical data, of tables and calculations, or factory reports, when Smith needs to make a point, a parable is far more useful.
To give one example: “Daedalian Wings.” Smith begins by noting the operations of a judicious bank, which uses paper money as a substitute for a significant portion of its gold and silver, thereby making available productive stock.
The judicious operations of banking, by providing, if I may be allowed so violent a metaphor, a sort of waggon-way through the air; enable the country … to increase very considerably the annual produce of its land and labour. The commerce and industry of the country, however, it must be acknowledged, though they may be somewhat augmented, cannot be altogether so secure, when they are thus, as it were, suspended upon the Daedalian wings of paper money, as when they travel about upon the solid ground of gold and silver.
Curiously, Smith reveals a suspicion of paper money. Compared to the solid ground of gold and silver, money enables one to travel on a wagon-way through the air, or perhaps fly like Icarus high into the heavens, on wings made by his father Daedalus. Icarus, of course, flew a little too close to the sun, melting the wax that held the feathers to his arms. One must therefore be careful with unreliable paper money, for with its enabling possibilities come the risks of crashing to the ground.
But what intrigues me here is the deployment of metaphors typical of myths – a common feature of Smith’s writing. Roadways through the sky and the paper wings of money evoke not merely the Greek myths Smith – given his elite education – knew rather well, but also the myths he sought to write for his own purposes.
The purpose of tall tales
Why did Smith populate his work with so many tall tales?
Perhaps we will never know. But we can answer another: what is the effect of these stories? I suggest that they are able to draw in readers of all types. The stories make accessible various ideas concerning the ideology of capitalism at the time, offering not a carefully argued synthesis but a vast story book that captured the imagination.
The key slogans of Smith’s thought find their true home in these stories. In this way, they were far more persuasive, entering into the folklore of capitalism.
This is the first of a series of three articles by Roland Boer on Adam Smith.