Sunday, July 22, 2007

Why Smith Became a Commissioner of Customs

All quiet on the Adam Smith front today for Blogging. A couple of uninteresting asides using Smith’s name were not worth commenting upon. So I haven’t.

Maybe because I have been working steadily through my manuscript and these items seem to be rather unimportant. Certainly, they didn’t require me to think through what Smith actually said and meant, instead of the nonsense spouted about him, which would hardly help us understand he legacy.

Instead, I was writing a short note to a chapter detailing the issues involved in Adam Smith choosing to apply for the vacant post as a Scottish Commissioner of Customs and the Salt Duties in 1777, a year after he had guided his first edition of Wealth Of Nations through the press. I have never been happy with the apparent silence among his biographers about this episode and decided to develop some ideas I included in my earlier book, Adam Smith’s Lost Legacy (Palgrave Macmillan 2005) about this strange decision of Smith’s.

I decided to go through the entire episode in detail from the source materials, the biographical accounts (Stewart, 1793; Rae, 1895; Scott, 1937; and Ross, 1995) and what authors of articles had written about it (not much in the latter case).

It seems clear to me that Smith’s actions were deliberate, calculated and well executed. He also called upon a very strong alliance of powerful interest (in the 18th century meaning of this word; basically people well placed to use their influence on the decision-makers, in this case, including the Prime Minister, Lord North).

Basically, the coincidence of the colonial rebellion (1776-83) with publication of Wealth Of Nations posed serious problems to Adam Smith. He was actively seeking to influence decision-makers and influential members of the British political establishment to dismantle the mercantile economy of Britain through Wealth Of Nations, which included a sharp polemic against the American colonial trade under mercantile monopoly laws, which, added to his critique of the Chartered Trading Companies, and the high cost of unproductive European Wars, and his taking sides on the American rebellion, they began to have a cost on his influence. Friends, including David Hume, warned him to desist.

Reflecting on this, he realised the dangers of being identified too publicly with those that most of parliament regarded as ‘traitors’, no matter how right he believed his stance to be, was likely to undo the work he had put into his inquiry into the British economy. Hence, he chose to make himself ‘too busy’ by applying for the Commissioner’s post and absenting himself from new scholarly work.

Thus, despite promises, first published in Moral Sentiments in 1759, and repeated as late as 1759, he did not progress his manuscript on Jurisprudence for 31 years, and in a final act, he ordered all papers to be burned just before he died in Edinburgh in 1790. That’s the gist of my work today, writing up my final version of this episode for my new book.

A small issue, I know, but in the details we learn a lot more about Smith than some of the bland, anecdotal, and lazy acceptance of conventional accounts of his life. At least that’s my considered opinion.


Blogger Kuthula said...


Dating back to the days of Adam Smith, economists used to incorporate ethics, literature and philosophy into their analysis. But these days, Smith’s intellectual offspring have the idea that economics is a physical rather than a social science that has nothing to learn from other disciplines. They cling to the notion that their models are not tainted by the subjectivity that confuses other social sciences. Chicago School affiliate George Stigler once scornfully remarked that “without mathematics, we’d be reduced to the caviling of sociologists and the like.” The 1969 introduction of the Nobel prize in economics – which Stigler won in 1982 – seems to have fueled these delusions of grandeur.

Critics of neoclassical economics chuckle at the the idea that its precepts can withstand the rigor of the scientific process. They argue that Homo economicus – the theoretical self-interested ‘everyman’ that economists base their analyses on – is a misrepresentation of human nature. The model does not account for structural factors and altruism, and assumes rather ambitiously that peoples’ choices are guided by perfect rationality.

The reliability of this and other neoclassical economic models would be irrelevant to the wider world if the prescriptions of Stigler and his ilk were confined to the halls of academia. But the Chicago School had an enormous influence on governments and helped set the tone for the era of fervent free-enterprise boosterism, market liberalization and privatization that swept the globe during the 1980s and 1990s. Their thinking has also helped shape the International Monetary Fund and World Bank directives that have only managed to widen the gap between the rich and poor.

The physical environment has also suffered under neoclassical economic orthodoxy. Since economists treat land like any other form of capital, they often see it as expendable and easily substitutable. When land and resources were plentiful, the environmental implications of this view were not immediately evident. But with the economy so much bigger than it was in Smith’s day, the failure to measure the impact of economic activity on the environment is devastating. Meanwhile, economists show their disregard for nature with comments like those of Nobel laureate Robert Solow who stated, “if it is very easy to substitute other factors for natural resources, then there is in principle no ‘problem.’ The world can, in effect, get along without natural resources, so exhaustion is just an event, not a catastrophe.”

Solow’s outlook epitomizes old-school neoclassical thinking, but the ivory tower he and his cohort sit in is ripe for demolition. A new paradigm is waiting in the wings, one that values nature flows and money flows equally. One that addresses the social and environmental costs of the current model. One that calls for limits to growth and more comprehensive ways of measuring progress. A global economic collapse might be needed to facilitate this paradigm shift, but economics students shouldn’t underestimate their ability to force the change themselves. University campuses have an enormous capacity for agitation. The time for revolution is now.

1:06 am  
Blogger Gavin Kennedy said...


I have only just noticed this post by your good self and apologise for not responding.

I do not have time to comment just now, but this reads far more well thought out than our exchanges on the cause of the price inflation in Zimbabwe.

It says quite a lot I can agree with on neoclassical economics. I am not so sure that events on campus, other than serious study of politcal economy, would produce a challenge to neoclassical orthodoxy.

Smith challenge to the mercanitile politcal economy of his day - the dominant orthodoxy explaining gvernment policies - was based on a robust analysis of the history of society (all subjects), a sound theory of growth ('the progress towards affluence'), of how markets worked, and micro-details of the propensities to exchange and the division of labour.

That's a lot of fudnamentalwork for you to undertake or be competent in.

Best wishes


10:35 am  
Blogger Mason Hackett said...

The Commissioner of Accounts note was very useful to this political scientist. He has noticed the absence of explanation of this and thanks you. (1) He was in London and went back to Scotland to take the job? Did he need going back and did he need any income it may have produced? (2) Did he actually have duties to perform and is there a record on that?

Mason Hackett

4:20 am  

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