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The story we are beginning today is

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a story about one man, but It's

1:49

also a story about the whole world. This

1:52

one man happens to be an eighteenth

1:54

century economist. I hope that

1:56

doesn't kill your interest because this

1:58

is a good story. This

2:01

economist was born in Scotland in seventeen

2:03

twenty three. Next year, we'll mark the

2:05

three hundredth anniversary of his birth.

2:07

but his ideas are still incredibly

2:10

powerful today. Why?

2:12

There's many reasons his thinking was powerful.

2:15

Interestingly, not the reason that most people

2:17

think. He did think

2:19

like an economist. He believes

2:21

in free markets and a free society There's

2:24

no getting around that, but he was

2:26

much more than that. He forces

2:28

you to look at yourself and realize

2:30

what makes you tick, what pushes your buttons,

2:32

rings your bells, tighten your shoelaces.

2:35

Here is a sentence he once wrote, which

2:38

may tighten your shoelaces. Man

2:41

naturally desires not only

2:43

to be loved, but to be lovely.

2:45

He was himself a lovely man.

2:48

He

2:48

always had lots of friends, who's a good

2:50

nature guy, very easy to get along with.

2:53

He did have quirks. absent

2:55

minded, mumbling to himself,

2:57

not really paying attention to what's going on.

3:01

But it was his ideas that

3:03

mattered and his ideas have

3:06

reverberated. It means if you

3:08

work hard, you

3:09

should make a decent living.

3:15

If

3:15

you work hard, you should be able to support

3:17

a family. his

3:18

ideas have been interpreted. In

3:20

the economic market, people

3:22

who intend to serve only their own private

3:25

interests are led by an

3:27

Mohan to serve public interest

3:29

that it was no part of their intention to promote.

3:31

And they've been reinterpreted. He

3:34

certainly influenced missus Sanchez.

3:37

Today, people are quite sure they

3:39

know exactly who he was. There's

3:41

like the father or the father of capitalism

3:44

father or less a fair capitalism. The

3:46

father of economics. I did kind of groom a

3:48

little one people say, oh, finding father of economics.

3:50

I'm like, there's more to him than that. His

3:53

name, by the way, is Adam

3:55

Smith. It's a pretty generic

3:57

name, but the man was quite

3:59

singular. He worried about the ways

4:01

that wealth and an emphasis on

4:03

material goods can corrupt people's moral

4:05

sentiments. The theory of

4:08

moral sentiments. The wealth of

4:10

nations. Those were the books

4:12

Adam Smith left behind. Today

4:14

on Freakonomics Radio, let's take a

4:16

trip to see what else he left

4:18

behind. What we're looking at

4:20

is where Adam Smith's host

4:23

was. Come with us in

4:25

search of the real Adam Smith.

4:27

Like I said, it's a good

4:29

story. and this is the first episode

4:32

in what we think will be a three

4:34

part series. It begins right

4:36

now.

4:49

This is Freakonomics Radio, the

4:51

podcast that explores the hidden side

4:53

of everything, with your host,

4:56

Steven Dubner.

5:02

If you

5:06

know anything at all about Adam Smith,

5:08

it probably comes from his second

5:10

and most famous book The Wealth of

5:12

Nations Full Title an

5:14

inquiry into the nature and causes

5:16

of the wealth of nations. It is

5:18

a big book with annotated

5:20

editions running more than a thousand pages.

5:23

It's not the wealth of individuals, it's the wealth

5:25

of nations. Right? You may have also

5:27

heard Smith's most famous phrase,

5:29

the invisible hand, which his

5:31

disciples used to describe how

5:33

the economy should work. They

5:35

picked out the phrase, the invisible hand, which he

5:37

uses just two or three times

5:39

and made that the central feature of who

5:42

Smith was. And

5:43

maybe you have read some of Smith's

5:45

first book, the theory of moral sentiments,

5:47

but Probably not. I thought, well, I don't

5:49

have to read this because it's

5:51

not economics. It's philosophy or

5:54

psychology. You could call it. and

5:56

I didn't read it forever. Most

5:58

economists don't. That

5:59

first book, the one no one reads.

6:01

It is essentially a call

6:04

for what many modern Liberals say

6:06

they most believe in, sympathy.

6:09

The second book, the famous one,

6:11

is a call for what many modern conservatives

6:14

say they most believe in. A

6:16

free market economy with less

6:18

government involvement. Since

6:20

most political people aren't willing to

6:22

hold two potentially conflicting ideas

6:24

in their mind at the same time or

6:26

even ever, they often simply

6:28

ignore the idea they don't like.

6:31

In the case of Adam Smith, the conservatives

6:34

have done a much better job of late

6:36

promoting his views than have

6:38

the Liberals. Liberals tend to

6:40

disparage free market Smith

6:42

without offering sympathetic Smith

6:45

as balance. Both

6:47

sides have turned him into a caricature.

6:50

Here's something the economic historian

6:52

Robert Heilbrenner once wrote, No

6:54

economists' name is more frequently

6:56

invoked than that of Adam Smith,

6:58

and no economists' works are

7:00

less frequently read. Obviously,

7:02

that's an exaggeration. There are plenty

7:04

of dead economists that no one reads,

7:06

but you get the point. This

7:08

brilliant and sympathetic man has

7:11

been turned into a cardboard cutout.

7:13

Our mission today is to try to

7:15

turn the cardboard cutout back into the

7:18

real Adam Smith. So

7:20

let's begin at the beginning.

7:23

Adam Smith was born in seventeen twenty

7:25

three in Cercaldi, Scotland.

7:28

So you have to pronounce it.

7:32

Sorry. Adam Smith was born in seventeen

7:34

twenty three in Scotland.

7:38

It's a small port city on the

7:40

East Coast in Fife County. It

7:42

lies just across the first of fourth

7:45

from Edinburgh. We

7:47

are now approaching Kalkori. Please

7:49

mind the gap when I'm lighting from this train.

7:51

We were meeting up

7:54

with another Kirkody Native. His name

7:56

is John Yule.

7:57

Steven, pleased to meet you. Very pleased to

7:59

meet you, John.

7:59

That's a pleasure. It's wonderful to have

8:02

you here. Kirkody, my hometown. Born

8:04

and raised? Not born and born

8:06

and edra, but raised in Crookedi.

8:08

Yule is in his mid seventies. He's

8:10

an actor and a playwright. One

8:12

of his plays is called the invisible hand.

8:14

It's about the life and times of

8:16

Adam Smith. It is a work of history,

8:19

but also a work of

8:21

John Yule's imagination.

8:23

Well,

8:23

I get thrilled by this. I'm not

8:25

an academic. I'm not an economist. I

8:27

concluded that Smith just been misunderstood.

8:30

Okay. So where are we going first?

8:32

We're going

8:33

to the old Kirk where Adam Smith was

8:35

baptized, a Kirk being

8:37

Scottish for Church. Yeah. Old,

8:39

old stuff. How old is

8:41

Kirky? Oh, it's old.

8:43

It was just one

8:46

long turn from the

8:49

harbor along the stretch just along the

8:51

coast. And the industry back

8:53

then or how did people make a living fishing?

8:56

fishing, salt, mining,

8:58

not mining, places riddled with coal

9:00

mining, and trade.

9:02

Trade was important. to

9:04

Crookedi and it would turn out to be very important

9:06

to Adam Smith. Now we

9:08

are approaching the old church.

9:10

George, I hope

9:11

you haven't been waiting there. George,

9:16

I'm Steven. Good to meet

9:18

you. Josh Prophy. How do you do?

9:20

George

9:20

Proudfoot is chair of the Crookedi

9:23

Civic Society and

9:25

director of the Adam Smith Global

9:27

Foundation. Once we get

9:29

inside the church, we also meet

9:31

Rosemary Potter. I'm the

9:33

cheer of the trust that owns

9:35

the old kirk now. We're

9:37

visiting on a Monday morning, but

9:39

lucky for us, the church organist

9:41

has come in to practice. So

9:44

This is where Adam Smith

9:46

begins. He was

9:48

baptized. The only reason we know

9:51

is tariffs intensity as next

9:53

year is because of the record in

9:55

the church here that he was baptized

9:57

on the fifth of June. We're

9:59

in the

9:59

eighteen o seven part of

10:02

the church. The new part. The new

10:04

part. But the part that Adam Smith would

10:06

have known and would have come through his

10:08

the tower, which is fifteenth century.

10:11

That's

10:13

the pulpit.

10:14

So he would have been baptized in the

10:17

front of the church in there. And you've

10:19

got the graveyard of what you call the

10:21

Kirkyard outside. Are any

10:23

of his relatives? Maybe his father

10:25

buried there? that we do not know because there's

10:27

no records from that date that

10:29

were lost. They were lost in a

10:31

ship. In a ship, why

10:32

were the church records in a ship?

10:35

were taking them were to Edinburgh. So

10:37

we don't know if they were in that or if they

10:39

were just not recorded. We

10:41

we don't know

10:45

Okay.

10:45

So what do we know about Adam

10:48

Smith and his family? His

10:50

father, Adam Smith senior, died

10:52

shortly before Adam was

10:54

born. He had worked at the port in

10:56

Kricati as a customs agent,

10:58

essentially, a tax collector. His

11:00

death did not throw the

11:02

Smiths into poverty as

11:04

Adam's mother came from money.

11:06

She was born Margaret Douglas.

11:08

The douglises were one of the oldest

11:10

and most powerful families in

11:12

Scotland. Adam was Margaret's

11:15

only child. They were

11:17

very close and would remain so

11:19

until her death many years later.

11:21

and Adam never married, by the

11:23

way. As a boy in

11:25

Crookedi, he got an excellent

11:27

education. in

11:28

the various biographies. It

11:31

was well recognized that he got a good

11:33

schooling. That's

11:33

George Proudford. Not every if

11:35

we have had a good school, did I

11:38

see a garment schools have been very, very

11:40

partly, but he was fortunate.

11:42

For example, it was not normal

11:44

to teach Greek, but the schoolmaster

11:47

recognized Smith's intellectual

11:49

talents and in part of some Greek

11:51

And of course, that was very, very useful because when they went

11:53

to Glasgow University when he was fourteen. Some of

11:55

the clashes were indeed taught in Greek. So it

11:58

didn't start out.

12:02

That's right. Smith enrolled at

12:04

Glasgow University at age fourteen and

12:06

he studied under a forward thinking

12:09

philosopher named Francis Hutchison.

12:11

This would start Smith on a

12:13

lifetime of study

12:15

teaching and writing in the fields

12:17

of philosophy, theology,

12:20

astronomy, ethics, jurisprudence,

12:23

and, yes, political economy.

12:25

But why is it his voice,

12:27

one of the few from

12:29

three hundred years ago that still

12:31

echoes in the modern era? Here,

12:34

for instance, is US president

12:36

Ronald Reagan from a nineteen

12:38

eighty eight radio address? The

12:40

freedom to trade is not a new issue for

12:42

America. In seventeen seventy

12:44

six, our founding fathers signed the

12:46

declaration of independence, charging

12:48

the British with a number of offenses

12:51

among them and I quote, cutting

12:53

off our trade with all parts of

12:55

the world end quote. And

12:57

that same year, A Scottish

12:59

economist named Adam Smith launched

13:01

another revolution with a book entitled

13:03

The Wealth of Nations, which

13:05

exposed for All Time. the

13:07

folly of protectionism. And

13:10

here's Barack Obama when he was president

13:12

in twenty thirteen. This

13:13

shouldn't be an ideological question.

13:16

It was

13:16

Adam Smith, the

13:19

father of free market economics,

13:22

who once said, they

13:24

who feed,

13:25

clothe, and lodge the whole body of the

13:28

people,

13:28

should have such a share of the

13:31

produce of their own labor

13:33

as to be themselves tolerably

13:35

well fed, clothes, and lunch.

13:40

Everybody

13:40

loves to quote Adam Smith. Everybody wants

13:42

Adam Smith on their side. And that

13:44

is Glory Lou, a political

13:46

scientist at Harvard. people quote

13:48

from the bible to support

13:51

whatever their views happen to be.

13:53

Right?

13:53

That more or less happens with

13:55

the wealth

13:55

of nations, like it is very easy

13:58

to quote things

13:59

from the wealth of nations without

14:02

context and to have them support

14:04

their views. Lou just

14:04

published a book called Adam

14:07

Smith's America, how a Scottish

14:09

philosopher became an icon

14:11

of American capitalism.

14:12

I think

14:13

one reason

14:14

that Smith has had such staying

14:16

power is because he wrote

14:18

on some of the most

14:20

important questions about the human condition.

14:22

what are the origins of morality?

14:23

Are we selfish or

14:26

are we benevolent? And then,

14:28

of course, with the wealth of nations, how

14:30

do you understand

14:32

the forces of national wealth. What makes

14:34

a nation

14:35

happy and

14:36

productive? These are

14:38

questions that aren't going away and

14:42

So I think that that is certainly one

14:45

reason why Smith is

14:47

timeless because

14:49

Smith's questions are

14:50

timeless.

14:53

Coming up after the break, timeless

14:56

questions, and it turns out

14:58

timeless answers. You need to pay

15:00

attention to how people

15:02

are producing and where they're

15:04

producing and what they're producing.

15:07

This is Freakonomics Radio. I'm Steven

15:09

Dubner in Scotland in search

15:11

of the real Adam Smith.

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16:55

The

16:58

questions that

16:59

Adam Smith was asking in the mid

17:02

eighteenth century may not strike you as a kind of

17:04

questions an economist. might ask today,

17:06

and there's good reason for that. In

17:08

Smith's day, he was primarily known as

17:10

what's called a moral philosopher,

17:13

as the political scientist Lori Lu tells

17:15

us, moral philosophy came with its

17:17

own set of questions. Where do

17:19

our

17:19

moral judgments come from?

17:21

How do

17:22

we learn what's right and wrong?

17:24

What counts as virtue? And

17:26

these

17:26

are the questions that animate Smith's

17:28

first book, the theory of moral

17:31

sentiments. What

17:31

is it like when we see

17:33

somebody in pain? How do

17:35

we feel when we tell a joke and

17:37

somebody doesn't laugh? That

17:40

is actually an example in the

17:42

book, and he uses all

17:43

of these experiences to

17:47

show how moral rules

17:49

emerge from experience. I

17:51

see the theory of moral sentiments

17:54

as showing this deeply

17:56

humanistic curious

17:58

and imaginative

17:59

person

18:00

interested in what makes humans

18:03

tick

18:03

in all spheres of life. In

18:06

Adam Smith's hometown of Crookedi,

18:08

the people planning his three

18:10

hundredth birthday party suspect it may be

18:12

easier to just call him an economist.

18:15

a lot of people do not know who Adam

18:17

Smith has and to tell them that

18:19

he is a moral philosopher.

18:22

I mean, that just turns people off because they

18:25

have no idea what a moral force if

18:27

it is. George

18:29

Crowdfort walks us from the old

18:31

church down into the town center so we can see

18:33

what Adam Smith used to see. This

18:35

is the high street. The reason why it's

18:37

a wider part of the street is because

18:39

This is where the market was. And

18:42

he

18:42

would see the local trading

18:45

market. He would see local

18:47

art designs selling the goods here.

18:49

What would they have been selling then? Most of it would be

18:51

finished products from agricultural type

18:53

of activities, things like

18:55

liver meat and And was

19:00

the market open every day or were there market

19:02

days? Do you know? Typically market days,

19:04

a double o show. That was very special

19:06

days that there would be markets. Yeah. But

19:08

it would be busy because it

19:10

would attract people from the

19:12

Hunter London category funds.

19:14

Exactly. So so it was a big market -- Oh, yes.

19:16

-- so it was a big market too. Not enough because

19:18

that was very, very important from Adam

19:20

Smith's point of view because he would

19:23

observe that. he would observe the exchange of

19:25

goods, the buying and selling. Kircutte

19:28

wasn't

19:28

just a big market

19:30

town. It was also a royal borough.

19:32

This was a designation from

19:34

the British government, from the Crown,

19:37

essentially, which gave certain advantages to

19:40

local landowners. or burgesses. They

19:42

didn't cost them to sell their goods

19:44

in the town. They had

19:46

special privileges in terms of being

19:48

able to trade That's a big deal. Oh, it's

19:50

a big deal. How many royal boroughs were there

19:53

in this neighborhood? Well, that was

19:55

half a dozen in the Fife area. That

19:57

was very, very important. but also it had

19:59

another side which

19:59

smith recognized as well as it

20:02

almost created a monopolistic situation

20:04

where it was a close shop.

20:06

Right. So if you were a farmer and you had some

20:08

things you wanted to come sell unless you were part

20:10

of the uotope tools to come into

20:12

get caught up, and you also had to pay to have your

20:15

stall here. very often thought the

20:17

richer farmers also were

20:19

budgeted because they had to

20:21

harvest house in the

20:23

town. So they had the best of

20:25

both worlds. What George

20:26

Proudfoot is describing here is

20:28

how the landed gentry families

20:31

like Adam Smith's family, how

20:33

they stayed landed in

20:35

wealthy. They operated as a of cartel

20:37

kicking up taxes and fees

20:39

to the crown, which in turn

20:41

let the burgesses dominate

20:44

local trade. Proudfoot walks us

20:46

further down the high street. Just

20:48

a few hundred yards away is the

20:50

wide mouth port where Adam Smith's

20:52

father worked as a customs

20:54

officer. just

20:55

a basic question. We're

20:57

looking

20:57

at it's called the first of fourth. Is that

20:59

right? Can you explain those words?

21:02

I know of. What's the first and

21:04

what's the fourth? Inlet. First is the inlet. Is

21:06

it This is the last part of the river. So

21:08

it's an estuary because it's going

21:11

both ways. It's the one the issue next to me.

21:13

And then fourth means Oh,

21:15

it's the name of

21:17

the river. We

21:18

press

21:22

on a bit further. What we're looking

21:24

at is where are the Smith's

21:26

host was. And the reason why I say where it

21:28

was is because it was knocked down

21:30

in eighteen thirty four

21:32

and replaced up by the building

21:34

that we see just don't. So as

21:36

most unfortunate, we don't have the

21:39

actual building itself.

21:41

But this is incredibly central

21:43

to every Or that's very central I think.

21:45

And that's the thing that's going to be understood

21:47

that he would see everything which

21:49

was central to how Cavalli us

21:53

are town operated. He's an

21:55

observer. He's taking everything and

21:57

and it will have been asking questions

21:59

of people as a child.

22:01

when trying to understand literally

22:03

trying to understand how,

22:06

let's say, trading worked. I don't mean to

22:08

be rude, but how do we know that? I mean, we could

22:10

assume that he was curious and observant -- Oh, yes. --

22:12

and asking people as a child, but we don't really

22:14

know. Do we? Obviously,

22:16

Reagan suggested he was seventy he

22:18

was looking at things. and the early part

22:20

of their wealth and agency talks about

22:22

then manufacture. That was the intercolitho.

22:25

That was in the next village

22:27

to here.

22:31

If you

22:31

have read even a little bit of the

22:33

wealth of nations, you may recall

22:36

the passage the George Proudfoot is talking

22:38

about here, the pin factory.

22:39

When modern readers see the

22:41

word pin, we think of

22:44

like the pins you removed from the packaging of a new shirt.

22:46

In eighteenth century Scotland,

22:49

pins were hefty fasteners

22:51

made of iron and used in all

22:53

sorts of industrial settings.

22:54

It would be for timber constructions.

22:57

It would be for shipping.

22:59

Anything attached

23:01

together. In the book,

23:01

Smith describes how each of the

23:04

workers at the Penn factory had a

23:06

specialized task. One

23:08

would draw out the iron, another

23:10

would straighten it, another would cut it

23:12

and so on. By dividing up the

23:14

process like this, a group of factory workers

23:16

could produce hundreds of pins

23:18

a day. What if each worker

23:21

had to make a pin from start to

23:23

finish? Here is how Smith put

23:25

it in the wealth of nations, as

23:27

read by John Yule. If

23:29

they had all wrought separately

23:31

and independently and without any

23:33

of them having been educated to this

23:35

peculiar business, They certainly could

23:37

not, each of them have made twenty,

23:39

perhaps not one pin in a

23:41

day. By telling a small story

23:44

about the pin factory, Smith

23:46

was making a larger argument about

23:48

some of the ingredients required

23:50

for a thriving economy.

23:53

Specialization in labor and

23:55

the division of labor. Smith was

23:57

not afraid of large

23:59

arguments. What is Smith trying to

24:01

explain in the wealth of nations?

24:03

Glory Lou again. If you

24:05

go at it with the

24:06

mindset that this is a

24:08

book of economics, the way that

24:10

we understand the field of economics today,

24:14

you're gonna narrow your field of

24:16

vision. The structure of the wealth of

24:18

nations is not just looking

24:21

at what happens at the level of individual motivations.

24:24

By the time you get to book three,

24:26

Smith is looking at institutional history

24:28

from like the fall of Rome

24:30

to the beginning of modern Europe. What was

24:32

Smith's primary purpose of

24:34

publishing that book? Or what did he hope

24:36

would come of it?

24:38

I think

24:39

that Smith is hoping that

24:41

educated

24:42

readers

24:44

will understand that national

24:47

wealth is not measured in terms

24:49

of gold and silver coin,

24:51

and that actually you need to pay attention

24:54

to output, you need to pay

24:56

attention to how people are

24:58

producing and where they're producing and

25:00

what they're producing. The

25:02

dominant economic ideology of Smith's

25:05

Day was called mercantilism.

25:08

Mercantilists believed that economic value was

25:10

based on how much gold a

25:12

country had to buy the goods it

25:14

needed. This could look

25:16

something like a zero sum game. gold

25:18

or coin exchanged

25:20

for wool or leather or

25:23

flower wool or leather or flower

25:25

exchanged for gold or coin how

25:27

these goods were produced, not only

25:29

the physical inputs, but the human

25:32

motivation, this hadn't been thought of as

25:34

particularly relevant. Adam

25:36

Smith changed that. Here is

25:38

a famous passage from the first

25:40

of five books that make up

25:42

the wealth of nations. It is

25:43

not from the benevolence of the

25:46

butcher, the brewer, or the baker that

25:48

we expect our dinner, but

25:50

from their regard to their

25:52

own interest. We

25:53

address ourselves, not to their humanity,

25:55

but to their self love.

25:57

Yes. The butcher baker brewer.

25:59

Right? We

25:59

don't get our meals out of

26:02

benevolence, but out of self interest, mutual exchange, and mutual

26:05

benefit.

26:05

Smith in book one

26:07

is really just

26:08

outlining some of the principles and

26:11

observations he's making about

26:13

economic life. Right? Like, how do we get

26:15

our needs? We don't get our needs from

26:17

benevolence alone. We get our

26:19

needs because we also care

26:21

about our own interests, and it turns

26:23

out everybody else does too.

26:25

This

26:25

argument that self interest is a sort

26:27

of all purpose economic lubricant.

26:30

It may seem obvious today,

26:32

but in the age of mercantilism, it was not

26:34

at all obvious. This is

26:37

why Adam Smith is called the

26:39

founder of modern economic thought.

26:42

Yes.

26:42

The state of the field was

26:44

not like I'm writing

26:46

a new economics textbook

26:48

for millions of college students in the

26:50

United States to get their college degree, the

26:52

state of the field was, are

26:55

we going to beggar other nations

26:57

and send more gunboats out so that

26:59

we can hoard more gold

27:01

and coin Or should we

27:04

actually care about whether

27:07

we have

27:08

regulations that prevent people from working

27:10

in job that would actually give them

27:12

a meaningful way of

27:15

life.

27:17

Right next to the of Smith's house

27:19

in Crookedi, there is a

27:22

plaque. It's splattered with bird

27:24

poop, but George Proudfoot can still

27:26

make it out. The sign says

27:28

Adam Smith seventeen twenty three to

27:30

seventeen ninety boarding at

27:32

Colli. And so also says

27:34

on the sites to the

27:36

home office mother in which

27:38

he left from seventeen sixty

27:40

seven to seventeen seventy six

27:43

and completed the wealth of

27:45

nations. his grave as in the calling gate, the churchyard

27:47

in Edinburgh, and the site

27:49

at Sofia was erected in nineteen fifty

27:52

three. you see the reference is

27:54

the wealth of nations. It

27:56

doesn't

27:56

say the the the moral sentiments, but

27:58

the the the moral sentiments

28:01

tells you so much more

28:04

about Smith than what the wealthy

28:06

nations does. So this was erected

28:08

fifty three who put the sign up. they

28:10

could call the antiquarian society.

28:12

And why do you think they didn't acknowledge

28:14

the theory of moral sentiments? I think

28:16

one understanding of Smith has moved

28:19

on. that would have been the

28:21

book, which people were

28:23

recognized. But for

28:25

Smith's scholars, of course, there's no question

28:27

about it. The theater model sent them

28:29

in six to really important book.

28:31

You see the humanity and understanding

28:33

of people from material

28:35

moral sentiments, even more so.

28:37

than the vaccinations.

28:41

Coming up, we hear from one Smith's

28:43

scholar who agrees the theory

28:45

of moral sentiments is the

28:47

more interesting, the richer. It made me the more

28:49

innovative of the two books. And

28:51

why was all this innovation

28:53

happening in Scotland?

28:55

I'm Steven Dubner. This is Freakonomics

28:58

Radio. We'll be right back.

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31:18

So

31:20

Adam Smith

31:21

left his hometown of Kricati when

31:24

he was fourteen years old in the

31:26

1730s to attend

31:28

the University of Glasgow roughly sixty

31:31

miles away. And what was the state

31:33

of Scotland in the seventeen

31:35

hundreds? They start the

31:37

century. It's a poor backward outpost

31:39

on the fringe of Europe. That is Dennis

31:41

Rasmussen, a political theorist

31:43

at Syracuse University. By the middle

31:45

of this century

31:45

is really one of the cultural leaders

31:48

of pole continent to the point

31:50

that even Volterra admitted, I think a

31:52

bit ruefully, that now is to

31:54

Scotland of all places that we look for our idea

31:56

of civilization. So

31:57

what happened? How did Adam Smith's

31:59

Scotland go from backward to

32:02

forward so quickly?

32:03

I'd say that Scotland was undergoing an

32:06

economic boom at this time, thanks in large

32:08

part to the union with England that created

32:10

Great Britain in seventeen o seven. fraught

32:12

with it, you know, greater access to the

32:14

markets of England and The

32:16

colonies. And this economic boom

32:18

evidenced by the

32:20

pin factories and the abundant

32:22

ship traffic that young Adam Smith

32:24

had watched back in Crookedi.

32:26

This helped produce what came to be called the

32:28

Scottish Enlightenment, which was

32:30

in full flower by the time Smith

32:33

enrolled at the University of

32:35

Glasgow. Yes.

32:35

Francis Hutchison, who is Smith's teacher,

32:37

the common sense philosopher, Thomas

32:39

Reid, Adam Ferguson, the founder

32:41

of Modern Geology. He was a guy named

32:44

James Hutton. famous chemist named

32:46

Joseph Black. There was James

32:48

Watt of steam engine fame,

32:50

important artist, the painter Alan

32:52

Ramsay, architect Robert Adams. So it really

32:54

spanned a whole variety of fields.

32:56

I

32:56

wanna know why this

32:59

all happened in Scotland. My

33:01

naive reasoning

33:01

has always been, well, there are a lot of well

33:03

educated people, strong literacy

33:05

and university tradition, and

33:09

it was cold and dark for much of a year. So

33:11

might as well stay inside and ponder

33:13

the nature of the human condition, but I

33:15

have no idea if that's right. Tell me.

33:17

Yeah. Maybe that's not far off. So it

33:19

was probably the most literate society in the

33:21

world at that time, thanks to this innovative

33:24

series of Paris schools excellent

33:26

universities, lots of clubs, debating

33:28

societies, a really thriving publishing

33:30

industry. So there's a lot of

33:32

cultural ferment economic boom

33:34

going on at this time. It's a really

33:37

unbelievable renaissance. Adam

33:38

Smith thrived at the University

33:40

of Glasgow studying moral

33:43

philosophy under Francis

33:45

Hutchison. Upon graduation, he won a

33:47

scholarship to Balial College at

33:49

Oxford University in England, Lori

33:52

Lou again. And the

33:54

conditions of the scholarship are that you enter into

33:56

the Episcopalian Ministry afterward.

33:58

To be fair, a lot of university

33:59

education at this point was pointed

34:02

in that direction. Yeah. Exactly.

34:04

So that

34:05

doesn't necessarily indicate that he was

34:07

a committed, a Piscopalian

34:10

This

34:10

was just a convenient way for him

34:12

to attend Oxford. But Smith disliked almost everything

34:15

about Oxford, especially the professors

34:17

whom he found both

34:20

hardy and lazy. Years later in

34:22

the wealth of nations, he would blame

34:24

the incentives explaining that professors

34:27

were well whether they taught well or

34:30

not. In the University of Oxford,

34:32

he wrote, the greater part of

34:34

the public professors had for these many

34:36

years given up all to the

34:38

pretense of teaching.

34:40

Smith also disliked Oxford

34:42

because he was made

34:44

to feel like a country bumpkin.

34:47

He apparently kept to himself almost

34:50

entirely. This solitude

34:52

turned out to be productive. When

34:54

he's at Oxford, he starts reading

34:57

David humes touches on human nature and

34:59

gets in trouble for it because hue

35:01

is seen as like

35:03

this blasphemous atheist. also

35:06

the single most important intellectual influence

35:08

on Smith's life. Hume is

35:11

widely seen today as maybe

35:13

the greatest philosopher ever to write in the English

35:16

language. He was famous during his

35:18

time, sometimes it might be better

35:20

to say notorious because of his

35:22

irreligious or anti religious

35:24

writings. He was twelve

35:26

years older than Smith, and he had

35:28

finished writing almost all of his

35:30

philosophical works before Smith even began to write

35:32

his. As philosophers go,

35:34

David Hume was an

35:36

empiricist. Meaning that he

35:37

thought that all knowledge comes

35:39

through experience, through the senses

35:41

rather than through some kind of

35:43

abstract reason.

35:44

Was he a

35:45

fun guy? Yes. Hume was maybe the best

35:47

natured philosopher whoever lived. He was

35:50

a big Jovial guy

35:52

who, like, to, you know,

35:54

drink and eat with his friends and play

35:56

cards and have fun. He was almost

35:58

universally known during his time in France as

36:00

Lebon David, the

36:02

David. So he was very well liked by those who are close to

36:04

him, including very religious

36:06

people, the ministers among the

36:08

Scottish literate

36:10

So it's an interesting contrast. He was very widely hated

36:12

for his blatant iraligiosity, but

36:14

also very well loved by people who

36:17

knew him well. the fact that he was

36:19

called there a mild David as well?

36:22

I I don't know

36:24

of one. He was just universally known as

36:28

being a good apple guy.

36:29

So what was David

36:30

Hume, the Bondi Veed,

36:32

the famous irreligious philosopher? What

36:34

was he to Adam

36:38

Smith? Smith began as a fan

36:40

reading Hume in his room at

36:42

Oxford. Ultimately, they

36:44

became friends. Correct.

36:45

So they're both from Scotland, Humus from just

36:48

south of Edinburgh, Smith is from

36:50

just north of Edinburgh. Much of

36:52

their time they actually didn't

36:54

live together or in the same city. So

36:56

they actually spent much less time

36:58

together than you might expect given that they

37:00

were best friends, which they were.

37:01

Yes. Yeah.

37:02

Adam Smith and David Hume are best friends.

37:04

It's very cute.

37:06

In their letters to one

37:07

another, they call each other my dearest friend, which they

37:09

don't say to anyone else. is

37:11

very clear that they regard each other as their

37:13

closest friend. They both asked the other to be

37:15

their literary executor when they were

37:18

dying or feared they might be dying.

37:19

Dennis Rasmussen

37:20

has published a book called the Infidel

37:22

and the professor. The subtitle

37:24

is David Hume, Adam Smith,

37:26

and the friendship that shaped modern

37:30

thought. I asked him if that

37:32

claim isn't a bit bold. It

37:34

is

37:34

a bold claim. My defense

37:36

of it, the reason I went with it

37:38

was that very clearly Hume shaped every element

37:40

of Smith's thought that there is.

37:42

And Smith himself shaped modern

37:44

thought in the modern world in

37:47

a deep way, which is why you're doing this podcast series

37:49

on him. Indeed, scholars like

37:52

Rasmussen see David Hume's

37:54

fingerprints all over

37:56

Adam Smith. You can trace Hume's influence on

37:58

virtually everything that Smith ever

37:59

wrote. For instance, even though

38:01

Smith

38:02

would become known as a champion

38:06

of free trade and of a commercial society in

38:08

general, his view was

38:10

remarkably nuanced. He weighed

38:12

not just the benefits, but the costs.

38:15

especially the human costs.

38:17

He

38:17

recognized the real potential

38:19

drawbacks and dangers of commercial society.

38:21

The ways that commerce can produce

38:23

great inner qualities The way is

38:25

that the division of labor can exact an immense cost in human dignity

38:27

by making people feeble and ignorant

38:30

the idea

38:32

being you know, you spend the whole life making the part of a

38:34

pin. You don't have any opportunity to exercise

38:36

your body or your mind. He worried

38:38

about the ways that wealth

38:41

and an emphasis on material goods can

38:43

corrupt people's moral sentiments.

38:45

This

38:45

wrestling that Smith did with

38:47

how individual humans fit into

38:49

rapidly industrialized economy. All

38:52

that was to come years

38:54

later. Let's get back to his

38:56

bruising experience

38:58

at Oxford. From Oxford,

39:00

he retreated to Crookedi where he

39:02

spent the next two years living with

39:04

his mother, an eighteenth century version

39:07

of failure to launch. Almost nothing is known

39:09

about that time in Smith's life. Although

39:12

John Eul, our playwright friend,

39:14

suspects that Smith was in

39:16

a deep funk. In

39:18

his play, here's what Yule has

39:20

Smith's mother saying to

39:22

him. You need help. You

39:23

spend hours talking

39:25

to yourself conversing with some imaginary companion.

39:27

You're distracted, absent

39:29

minded. Large one

39:32

morning you

39:32

walked several miles along the seafront

39:34

in your night shirt. You don't

39:36

look at me when I talk to

39:38

you. You've

39:39

simply withdrawn from me. I cannot

39:41

and I will not tolerated. However, true

39:43

or untrue

39:44

that depiction may be, Smith

39:46

did ultimately break his isolation.

39:50

He was hired to give freelance

39:52

lectures in Edinburgh on rhetoric and jurisprudence. And in

39:54

seventeen fifty one, he was offered a faculty

39:57

position at the University

40:00

of Glasgow his alma mater. He soon became

40:02

chair of moral philosophy, and it was

40:04

the lectures he gave in

40:06

that capacity

40:07

which would become his first book, the theory of

40:10

moral sentiments. Glasgow suited

40:12

him well. Enbrel

40:13

was the political and ecclesiastical capital

40:15

of the country. This is where a lot of

40:18

the decision making was made, but it was

40:20

also a

40:22

very cramped squad head,

40:24

fill feasts, and key place.

40:26

Whereas Glasgow is the

40:28

opposite. It was open and

40:30

airy and well designed. It was

40:32

dominated by it's First

40:34

Great University that Smith was part of

40:37

Well, if

40:39

Smith

40:39

was part of it,

40:41

we wanted

40:41

to be part of it too. So we got

40:44

back on the train. We'll soon

40:46

arrive

40:46

at Glasgow Queen Street

40:48

high level, which is the last station

40:50

on this fruit. And we found the most appropriate

40:53

gentleman to be found. My

40:55

name's Craig Smith. I

40:57

am the Adam Smith senior lecturer in the

40:59

Scottish enlightenment. I assume the answer

41:01

is no, but I would be remiss if

41:03

I didn't ask. Adam Smith, Craig Smith. No

41:05

relation. I Sadly not. No relation.

41:08

Although I do say to people you can at least say you

41:10

meet a Scotsman called Smith and

41:12

talk to nations

41:14

in Glass School. Craig Smith walks

41:16

us over to what is now called the Adam

41:18

Smith Business School. These are not the

41:20

same buildings where Adam taught

41:22

in the eighteenth century. This campus was built

41:24

in the nineteenth century as the university

41:26

expanded. In the entry hall

41:28

of the business school at a

41:31

foot of a grand wooden staircase, there stands

41:33

a marble statue of the man

41:36

himself. So he's standing with his

41:38

hand on a book on the volumes piled up

41:40

around about him.

41:41

And we're told that

41:42

he was a little bit sometimes a

41:44

little bit careless of his appearance. So if you look

41:47

if you see the the bottom, his undying in

41:49

the middle of his waistcoat, So that's

41:51

supposed to been Smith, the academic,

41:53

essentially, this one. And he was also known

41:55

to be a bit forgetful

41:58

words. Yes. Maybe not forgetful, but involved

42:00

with his own mind. Let's say, yeah. He looks

42:02

the Smith looks like someone I'd want

42:04

as my professor. He does. And

42:07

he's a good luck symbol to the students, so

42:09

there's a little tape to keep the

42:11

students from touching him. Oh.

42:13

Because the hollow steers is used

42:15

for exams, and there was a habit of touching

42:18

him for good luck as you go

42:19

up the stairs. From

42:22

the Adam Smith business school, we

42:24

head to the Adam Smith Building, which

42:26

houses the Social Sciences. This is

42:28

where Craig Smith keeps his office.

42:31

There are students rushing through the hallways,

42:34

and we grab one. His name is

42:36

Alvaro. He's from Spain, and he says

42:38

he will be writing his rotation on

42:40

the Scottish enlightenment. I asked

42:42

Alvaro what he knew about Adam

42:44

Smith before coming to

42:46

Glasgow. Nothing,

42:48

you know. have only heard of him, like mainstream

42:50

media. There's this concept that

42:52

he's an ultra capitalist and

42:53

he's willing

42:56

to override the rights of everyone, etcetera. And this course has

42:58

opened my mind in the sense

43:00

that it's not that simple, and

43:02

Anush Smith does recognize the flaws

43:04

of capitalism.

43:06

We

43:06

duck into Craig Smith's office. It's quiet

43:09

and orderly. His shelves

43:10

are stuffed

43:11

with philosophy

43:14

books, biographies, and a vast

43:16

array of smithiania.

43:18

I've always tried to introduce

43:20

students to the other elements of

43:22

his thought. to show that he's a richer thinker and

43:25

a more complex thinker. I mean, I happen to

43:27

think that of the two boots, the theory of moral

43:29

sentiments is the more interesting, the

43:32

richer many ways, the more innovative of the two books. I'm really

43:34

curious to know why you say that. I mean,

43:36

I recognize that theory of

43:38

moral

43:38

sentiments is a very

43:40

moving

43:41

book on the human condition really, but wealth

43:43

nations really took a step back and

43:45

tried to describe how

43:48

the global economy worked, and this was a long time ago. So why

43:50

would you give the more innovative label to

43:52

moral sentiments? To be fair to Smith,

43:54

I think what he does

43:57

in the wealth of nations is radical, but he's not

43:59

the first

43:59

person to try to do that.

44:02

He's not the first person to try and write a moral

44:04

philosophy, but he is the first

44:06

person, I think, to try and

44:08

understand the reality of what it is

44:10

to make a moral judgment. So

44:12

Smith's moral philosophy is not about

44:14

telling you Here's how you should love

44:16

your life. Here's our program. It's

44:18

predominantly about explaining

44:20

to you what happens when you make

44:22

a moral decision. And the way in which he

44:24

does that, I think, is really, really

44:26

quite striking. He's able to point

44:28

to things that readers today

44:31

recognize in their own

44:33

lives. as reactions that they

44:35

have to scenarios and is able to

44:37

build that and make an account,

44:39

a coherent account all of the different

44:41

that come to make moral lives. I think that's a

44:44

very radical thing to do

44:46

in moral

44:48

philosophy. It

44:49

almost sounds as though you're saying that Smith described our,

44:52

you know, daily

44:52

behavior and our moral

44:54

behavior.

44:57

in

44:57

a similar way as he

44:59

describes economic transactions, which are

45:01

their costs and benefits to everything. And

45:03

sometimes the things that we think may be beneficial

45:05

to us, like being selfish, Yeah. In

45:07

fact, have costs in the long run that make

45:09

us worse off. Yeah. No. I think that's

45:12

right. And I think he also points out there that

45:14

there's a whole set of other considerations that

45:16

people have. So cost benefit analysis. They're

45:18

part of human life, and it explores that brilliantly

45:20

in a world of nations. But it's also true

45:22

that there are other concerns that people have

45:25

about reputation, about sympathetic engagement with other

45:27

people about trying to do the right thing.

45:30

And those are equally a part of human

45:32

experience. You

45:34

can't have our rounded vision of

45:36

what it's like to live a human life without both

45:38

of those elements being present? If

45:40

Smith were alive and thinking and

45:43

writing and teaching today, let's say here, at Glasgow,

45:45

which department would he be in? Oh, that's a good

45:48

question.

45:48

Yeah. Well,

45:50

he was such a polymath. So

45:52

moral philosophy, as he taught encompasses a range

45:55

of different academic disciplines now, so he

45:57

had a bit of economics,

45:59

a bit of ethics, a bit

46:02

of political science, a bit of Jewish Britain, a

46:04

bit of philosophy of science, a bit of

46:06

literary studies. How would you describe

46:08

his teaching style

46:10

or his persona. Yeah. This is interesting. So

46:11

we have notes from a

46:14

student who says that Wentworth

46:16

started lecturing. He

46:18

tried to adopt

46:19

the style of his teacher,

46:21

Francis Hutcheson, to be a

46:24

kind of contemporary preacher,

46:26

you know, to to stand and relate the work to

46:28

the students. But then he discovered he wasn't very comfortable

46:30

doing that. So the description we have is

46:32

of him standing with his notes and working

46:35

very close to his notes. and encouraging the

46:37

students not to take their own notes, but to listen attentively to

46:39

what he was saying. At one point, he's

46:41

supposed to have said I hate scribbles because they

46:43

put him off when was

46:46

giving his leg counts of other people scrambling again.

46:48

He was very well full of, though,

46:50

the students admired him. His classes

46:53

were particularly large. He attracted students from around the world to come to go

46:55

high school to one rate my professor. He had a good

46:58

rating. Yes. Yet, well, you could buy a bus

47:00

off Smith. from a Sharpen

47:02

Glasgow, so he was obviously well regarded well

47:04

late phase

47:06

students.

47:11

How

47:11

many philosophy professors do

47:13

you know who attract students from around

47:15

the world who have a

47:18

bust in the

47:20

campus bookstore? Adam Smith was plainly an

47:22

extraordinary thinker and writer.

47:24

There are Smith scholars who wish

47:26

he'd written much more than he did

47:29

or at least published more than he did.

47:31

There were just the two books, the theory

47:33

of moral sentiments, and the wealth

47:35

of nations, multiple editions

47:38

of each. since he was an inveterate reviser. He

47:40

also published a few essays

47:42

on the history of astronomy,

47:44

for instance, but all

47:46

his unpublished writings were

47:48

burned upon his death. That was a

47:50

common practice at

47:52

the time. There was one other published

47:54

work. It's a letter he wrote

47:56

following the death of his

47:58

best friend David

47:59

Hume. Here again is Dennis

48:02

Rasmussen. This letter ended up

48:03

being maybe the most controversial thing

48:05

that Smith ever wrote. It came

48:07

in this very highly charged atmosphere because of

48:09

Hume's iralidiosity. Few people in eighteenth

48:12

century Britain

48:14

were as forthright in their lack of religious faith as he was.

48:16

And as a result, as he neared his end,

48:18

everybody wanted to know

48:20

how he would

48:22

face death. which he showed remorse would he maybe even

48:24

recant his skepticism. And so

48:26

Smith wanted to tell this story for people. He

48:28

wrote what was effectively the

48:30

authorized version of

48:32

the story of Hume's death. Smith doesn't explicitly call

48:34

attention to Hume's impiety in the letter, but

48:36

he does make very clear that Hume

48:38

died with remarkable good humor

48:41

and without religion. He chronicles, maybe even

48:43

flaunts, humes, cheerfulness, and

48:46

equanimity during his

48:48

final days. he depicts

48:50

him telling jokes and playing cards

48:52

and conversing tearfully with his

48:54

friends. He also

48:56

emphasizes the goodness of Hume's character. He concludes the letter

48:58

in one of the most faithful sentences that

49:00

Smith ever wrote. He says that Hume,

49:02

his unbelieving friend,

49:04

he approached as nearly to

49:06

the idea of a perfectly wise and

49:08

virtuous man as perhaps the nature

49:10

of human frailty will permit.

49:12

And so this letter I mean, this isn't

49:14

nearly as well known of course as his two books

49:16

today, but this caused an

49:18

absolute uproar in Smith's

49:20

time. Smith later, very

49:22

famously said, that this letter brought on me ten times more abuse than

49:24

the very violent attack I'd made on the entire

49:26

commercial system of Great Britain, meaning,

49:28

of course, the wealth

49:30

of nations.

49:32

Wait a minute. The wealth

49:33

of nations is an attack

49:36

on the entire commercial system of

49:38

Great Britain. That

49:40

is not how the wealth of nations

49:42

is read today. It is read as a

49:44

tribute to free

49:46

market economics. and an

49:48

attack on, if anything,

49:50

government interference. So

49:52

next week on the show, how did

49:54

that happen? And where did that happen?

49:56

The Chicago School picked up a few aspects of

49:59

Smith's thought and made it the

50:01

whole of Smith's thought. how

50:03

the invisible hand was made very

50:06

visible and was used to slap around

50:08

anyone who disagreed.

50:10

Oh, absolutely. We worked with missus

50:12

Satcher on privatization, for example, and

50:14

contracting out

50:16

local services.

50:20

Part

50:22

two of

50:26

our search for the

50:28

real Adam Smith. That's next time on the

50:30

show. Until then, take care of

50:32

yourself. And if you can,

50:34

someone else too. Because as

50:36

Smith says, We naturally

50:38

desire not only to be loved,

50:40

but to be lovely.

50:44

Freakonomics radio produced by Stitcher and Red Bud Radio, you can find entire

50:46

archive on any podcast app or

50:48

at freakonomix dot com, where we

50:50

also publish transcripts and show notes.

50:54

you can reach us directly at

50:56

radiol freakonomix dot com. This episode was

50:59

produced by Zack Lopinski We

51:01

had help in Scotland from Josh

51:04

Nixon and upload studios. Thanks

51:06

also to John Yule for reading

51:08

Adam Smith. and Claire

51:10

Darvishire for reading Margaret

51:12

Smith. Our staff also includes Neil

51:14

Carruth, Gabriel Roth, Greg Ripon,

51:16

Ryan Kelly, Rebecca Lee Douglas, Julie

51:18

Canfor, Morgan Levy, Catherine Mancur, Jasmine Klinger, Eleanor Osborn,

51:20

Jeremy Johnston, Darius Klener, Ematorel,

51:24

Leark Boudic, Alina Coleman, and Elsa Hernandez. Our

51:26

theme song is mister Fortune by the

51:28

hitchhikers. You also heard a bit of I'm

51:31

in love with Margaret Thatcher. by

51:33

not Sensibles from nineteen seventy nine,

51:35

special thanks to them. Our regular music

51:37

is composed by Louis Guerra.

51:40

As always, thanks for

51:42

listening. What

51:46

do you

51:47

think of

51:47

John's play?

51:49

Oh,

51:49

fantastic. Wish plea we're talking about.

51:52

No. No.

51:54

Thanks

51:56

George. The

51:59

Freakonomics Radio Network, the hidden

52:01

side of everything. Stitcher.