Thursday, September 07, 2006

Wealth of Nations is Not a Textbook on Economics

The notion persists that Adam Smith wrote a textbook on economics. He most certainly did not. He wrote a report on his inquiry into the nature and causes of the wealth of nations, as it says in the title of his 2-volume publication in 1776.

Textbooks are an intentional post-Smithian phenomenon that appeared in the 19th century, usually under titles like ‘Principles in Political Economy’ (Ricardo, Mills, Nicholson) and, after dropping ‘Political Economy’, ‘Principles on Economics’ (Marshall), until, mid-20th century, they became just plain ‘Economics’ (Samuelson). The author's intentions, content and approach of their textbooks bear no relation to Smith’s ‘Wealth of Nations’.

Jeremy N. Smith in ‘Great Moments in World Trade: the Adam Smith of Supply Chain Management’ (World Trade Magazine, 6 September) illustrates the misleading notion about Wealth of Nations being a textbook by quoting an professor who asserts the notion without comment:

“In January of 1915, Harvard University Press first published a 119-page business book covered in modest maroon cloth. Its thirty-eight-year-old author, Arch Wilkinson Shaw, was a former office supply company owner and ardent student of “scientific” business management. Three years earlier, the Dean of the Harvard Faculty of Commerce had hired Shaw to help teach business policy, reorganize curriculum, and start the school’s Bureau of Business Research. The result, Some Problems in Market Distribution, would prove the world’s first supply chain management textbook.

Enacting that replacement took almost half a century, at least in the case of “figuring out how to get it there.” Bud La Londe’s 1961 doctorate in Business Administration from Michigan State made him among the country’s first ten degree holders in the new discipline of “physical distribution.” Whatever the field’s name, Some Problems in Market Distribution, reprinted in 1920, 1951, and 1976, long-remained its central text at home and abroad. “There is an unquestionable superstar in marketing theory, whose work did in fact gave rise to all of the latter theories,” Isao Hashimoto, Professor of Economics, Kyoto University, wrote in the mid-seventies. “The man is Arch W. Shaw, ‘the father of marketing’ and ‘Adam Smith of Marketing Theory.’”

Apart from the fact that many authors before and after Adam Smith advanced ideas about political economy along the lines of Smith and could be said to have adopted an intentional textbook approach to the presentation of their ideas (e.g., Cantillon, 1734; Turgot, 1766; and perhaps, Steuart, 1767). Wealth of Nations is an account of how 18th century Britain, and to some extent Europe, had emerged from the long millennia of the post-Roman collapse to become the cradle of the re-emergence of a wealth creating commercial economy. It was about the history of the social-evolution of Western Europe.

That is why so many academics today do not read it, why they rely on quotations (Smith was a most quotable writer) and why those who attempt to read it as a textbook give up in frustration because Smith undertakes what they dismiss as diversions – they tend to comment disparagingly about the wide range of subjects listed in the index, a sure sign they skimmed it and misunderstood its purposes. The so-called ‘diversions’ are integral to Smith’s method of inquiry and to his utilisation of historical and current data as evidence in his report.

Arch Wilkinson Shaw wrote textbook; a guide to supply chain management for managers and students; a testable set of concepts and propositions suited for examination to establish a level of general competence in the subject. You cannot teach similarly from Wealth of Nations; sure, you can teach what Smith said and the context in which he said it. But as economics, no work in which the author was oblivious to everything that happened after 1790 could possibly teach much sufficient to be competent in economics has it has developed since.

The economy has so dramatically altered, and the roles of the ‘great orders’ within it, including the role of the state, that to conceive of Wealth as Nations as a textbook now, or even in 1776, and subsequent editions, would be widely at variance from anything remotely useful. Nor would it correspond to what Smith considered his labours to be about.


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