Friday, May 09, 2008

Adam Smith Was Not a Precursor of Karl Marx

It’s always pleasing to read letters in the Scottish press from residents debating some of the ideas of Adam Smith from people who appear to have read his works.

Two recent correspondents are Ellis Thorpe (Inverurie, Aberdeenshire) (‘I prefer Adam Smith's idea – tax on what I spend, so what I do pay is "little by little" and how much I pay is my own responsibility', Evening News, 28 April), and Alan Murphy (Edinburgh) (‘Adam Smith's classic Wealth of Nations certainly has something to teach us about taxation (Letters, 29 April). But he did not advocate taxes on spending. He saw them as unfair for the same reasons Ellis Thorpe approves of them: consumption does not always match income; the parsimonious can avoid paying. Worse still, those who live in another country to their source of revenue escape completely.’).

The background, briefly, is that in Scotland there is a debate over the Scottish National Party’s election proposal, which it is trying to implement now that it forms the newly elected Scottish Government in the Edinburgh Parliament, to abolish the local ‘Council Tax’ and replace it with a new local income tax.

The minutia of the political controversy, now in the muted rage stage, would take us beyond the remit of Lost Legacy (and probably beyond the attention spans of our readers), but I would like to comment on one of the statements made by one of the disputants now exchanging carefully aimed (and uniquely brief) arguments they are mustering in the Scottish press.

Alan Murphy writes:

The pioneer of modern economics is often regarded as the patron saint of capitalism. Read him carefully and you may find a precursor of Karl Marx.”

Not knowing either gentleman – though I confess to having exchanged letters in The Scotsman from time to time with Ellis Thorpe on his views on Adam Smith, but not recently – it is not clear how solid is Alan Murphy’s knowledge of Adam Smith to make his assertion though he advises Ellis Thorpe to ‘read him carefully’.

Without knowing for sure, I would have thought it likely that Ellis Thorpe would be inclined to have a view on the assertion because he stood as a Labour Party candidate for the Scottish Parliament in 2003.

But Alan Murphy’s assertion can be taken several ways, either as a ‘tease’ to a Labour Party member (whom I agree has expressed not entirely ‘warm’ views about Adam Smith in correspondence with me, suggesting that Smith was a ‘bosses’ man’), or as a serious observation about Adam Smith as a ‘precursor’ (a ‘forerunner, herald or harbinger’) of Karl Marx.

The latter view, as a ‘precursor’ could be consequential or trivial: Adam Smith as ‘John the Baptist’ to Karl Marx (a monstrous libel), or Adam Smith among several other early economists that Karl Marx read, summarised, sifted through, and selected from, to draw up his unique blend of economics, political fantasy and future prospects.

I am writing a paper at present, to be presented to the History of Economic Thought conference this coming September in Edinburgh, entitled: ‘Adam Smith and the Labour Theory of Value’, which disposes of the common view among modern economists (few of whom read his works) that Adam Smith had a labour theory of value.

This decidedly breaks the widely proclaimed link between Adam Smith and Ricardo (who did have a labour theory of value) and Karl Marx, who turned it into a religion.

Adam Smith’s views on the ‘liberal reward of high wages’ and its role in ‘spreading opulence’ among the labouring poor and their families was based on ‘equity’ (what is only fair) and the ability of a growing commercial economy to pay higher wages as the demand for labour increased from the growth of an economy.

An opulent economy was characterised by low profit rates (but larger total profits from a larger total annual output of the ‘necessaries, conveniences, and amusements of life’, or GDP) and higher wages above basic subsistence (from the increased demand for labour in a growing economy).

This prospect contrasts with Karl Marx and his expectations of growing immiseration of labour, both those employed and in the unemployed reserve army of labour, all beset by the increased frequency of depressions.

Having read Adam Smith carefully, I do not concur with Alan Murphy’s assertion that he was a precursor of Karl Marx.



Blogger Alex said...


This is interesting because in the recent Political Economy course i did, i read about Smith Theory of value- labour commandable as opposed to Marx's labour embodied. [The reading from from Meek, if i remember correctly]

1:43 pm  
Blogger Gavin Kennedy said...

Hi Alex

Ronald Meek was a distinguished academic economist with a fine sense of the history of economic thought; he was also a marxist, with an interest in linking Marx to his predecesors.

Because Adam Smith is not clearly an advocat of a Labour Theory of Value (LTV), the labour commandable distinction is made instead.

I have prepared a paper for the Annual Conference of the History of Economics Theory in Edinburgh in September: 'Adam Smith and the Labour Theory of Value', showing that he did not have have such a theory and did not state one for society after the division of labour and the emergence of property, and later, the emergence of land owners and capital-stock owners.

This has largely been ignored by writers on the LTV, including lecturers and course texts.

Thanks for commenting

Prof Kennedy

1:16 pm  
Blogger Alex said...


It would be great if you could send me your paper/put it on the net after you present it.

2:10 pm  
Blogger Gavin Kennedy said...

I shall circulate to all interested my paper(s) at the start of the various conferences where I am presenting them this summer and autumn(Fall):

1 'Adam Smith's Theory of Bargaining' for the History of Economics Society, Toronto, June 27-30;

2 'Adam Smith and the Labour Theory of Value', for the History of Economic Theory, Edinburgh, 6-8 September

3 'The Pre-History of Bargaining', European Association for Evolutionary Political Economy
(EAEPE) 2008 Conference
6-8 November, Rome, Italy

Courtesy to the organisers of these academic conferences precludes prior publication, but as soon as the papers are circulated by the conferences I shall send them out to interested readers.

In this respect, please note that my paper ('Adam Smith and the Myth of the Ibvisible Hand') presented to the History of Economics Society conference at GMU Fairfax, Virginia, last June is available to those interested from:


10:12 am  
Blogger GRITSFED said...

"Gritsfed" again:

Now you have a fascinating blog!

I am looking forward to reading more of your material.


5:28 pm  

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