David R. Henderson  

Amartya Sen vs. Dan Klein on Adam Smith

The U.S. Welfare State... Four Principles of Human Actio...

Last week the New York Times blog had a post referencing an article on Adam Smith by Amartya Sen. Those of Sen's thoughts that sounded correct were not news and those that sounded like news were ones that I wasn't sure were correct. So I contacted Smith afficionado Dan Klein of George Mason University. What follows is an edited version of the interview.

Henderson: The New York Times blog on Thursday claimed, drawing on an article by Amartya Sen in The New Statesman, that Adam Smith is a "softee" because he "had a soft spot for government welfare and the little guy." I know he had a soft spot for the little guy. You can't read The Wealth of Nations without reaching that conclusion. The Wealth of Nations was all about how to create wealth for the common man. I'm surprised that the New York Times thought that was new. But did Smith have a soft spot for government welfare?

Klein: Saying that Smith "had a soft spot for government welfare" is highly misleading. Smith expounded a presumption of liberty - as you and I understand that term. Even Jacob Viner, an earlier cataloger of Smith's exceptions to the liberty principle, says so. Though he was in an important sense an egalitarian, and an affirmer of distributive justice understood in a libertarian way, he never favored a policy that he construed as forced "poor relief," and never argued on such grounds. He was silent, even conspicuously silent, in the otherwise quite comprehensive WN, regarding the essential feature of the poor law, tax-financed poor relief. At the opening of WN he says that he shows "what are the necessary expences of the sovereign, or commonwealth ...", and, in the spirit of enumerated powers, we might infer that he did not regard the poor law as "necessary." Indeed, there is a lot of textual evidence indicating that he would not be supportive of the redistributive state.

Henderson: According to the NYT, "Amartya Sen, called 'the Mother Teresa of economics' for his work on poverty and development, says people misunderstand Adam Smith as simply 'an advocate of pure capitalism' extolling the selfishness of 'the butcher, the baker and the brewer.'" My own take is that Smith was not an advocate of pure capitalism and that only people who had never read him thought that. Also, I never thought Smith extolled selfishness but, rather, recognized that people are self-interested and that free markets and private property channel that self interest into paths that are valuable for others. What's your take?

Klein: Lord knows where people come up with that which they pretend to debunk. The Theory of Moral Sentiments (TMS) is about virtue, and Smith develops a rich ethical plexus. At one point, where he treats of his teacher, Francis Hutcheson, he itemizes four sources of moral approval. The fourth source of moral approval looks at "actions as making a part of a system of behaviour which tends to promote the happiness either of the individual or of the society". Later, he morally authorizes the pursuit of honest profit and the policies that give it free play.

[Henderson translation of Klein answer above: Yes, Sen is right that Smith didn't extol selfishness, but who ever said he did?]

Henderson: Sen says, "He defended such public services as free education and poverty relief, while demanding greater freedom for the indigent who receives support than the rather punitive Poor Laws of his day permitted." Did Smith defend "free," by which I assume Sen meant "priced at zero due to government subsidies" education? And how about poverty relief?

Klein: If "poverty relief" means forced redistribution, Sen is wrong to say that Smith defended that. As for schooling, what Sen says is simplistic and highly misleading. Smith's discussion of schooling is lengthy and rhetorically complicated. But read WN's final words on the topic of schooling:

"This expence, however, might perhaps with equal propriety, and even with some advantage, be defrayed altogether by those who receive the immediate benefit of such education and instruction, or by the voluntary contribution of those who think they have occasion for either the one or the other."
It would be wrong of me to suggest that those words--which, by the way, are not Smith's only words suggesting doubts about tax-funding of schooling--fully represent Smith's views on the topic. Sen and many others have been seizing on particular moments in Smith that sound--or can be dressed to sound--more social-democratic.

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CATEGORIES: Economic Philosophy

COMMENTS (14 to date)
Daniel Kuehn writes:

I disagree, David. People denounce Smith all the time for being heartless and cruel to the "common man". That is a common perception of him. If you agree with Sen that that's a misperception of him, why are you criticizing him for correcting that misperception? You should be applauding him. Save your ire for his public welfare arguments, where there seems to be a real disagreement between you two :)

Pardon me, but rather than interviewing an expert, why not go read the book and form your own opinion. It took less than a minute to discover no fewer than 24 mentions of the "poor" in the Wealth of Nations. With due respect to the author of this post and to Prof. Klein, you do no justice to your cause through this mode of argument.

Sorry -- forgot to include the link.

This one seems particularly inconvenient for your argument:

"The avidity of our great manufacturers, however, has in some cases extended these exemptions a good deal beyond what can justly be considered as the rude materials of their work... That which is carried on for the benefit of the poor and the indigent is too often either neglected or oppressed."

at 419-420

[Definitive, in-context Cannan edition for this paragraph available at par. IV.8.4 in Adam Smith's complete An Inquiry Into the Nature and Causes of the Wealth of Nations at the Library of Economics and Liberty; and also to the 129 references to the poor. See also many other references to the poor and poverty in Smith's other published books, including The Theory of Moral Sentiments.--Econlib Ed.]

D writes:

It's a good thing Mr. Martin has shown us that Adam Smith cared about the poor contra Mr. Henderson's claim that "I know he had a soft spot for the little guy."

Oh wait... er, hmmm...

agnostic writes:

There are no ellipses in the original. So what came just before the "poor and indigent" reference? --

"It is the industry which is carried on for the benefit of the rich and the powerful that is principally encouraged by our mercantile system."

So in fact Smith was making an argument that to help the poor spinners, we should lift duties on foreign linen and end subsidies of domestic linen -- nothing to do with government rescue or support for the poor, just getting rid of the mercantilist rents created from manufacturers controlling the legislature.

It only took you less than one minute to come up with your gotcha quote because you have no idea what you're talking about. Next time follow your own advice and read the book first.


As you say, Smith's argument is that

"to help the poor spinners," mercantilism should be curtailed.

As D suggests, the problem here may not be with reading, but with comprehension.

SydB writes:

I'm not convinced anyone knows what Adam Smith really thought because--so I'm told--his writing style is a bit bloated or prolix. And while those commenters above searching through the text are doing good work, the excerpts--without overall context--makes it difficult to definitively conclude what Adam Smith thought.

Which brings up another issue: Physicist don't spend too much time debating what Newton thought about gravity. Why? Because it doesn't matter. Principia, which I tried to read when I was in college, is impossible to fathom, all his proofs written in geometric form (he didn't want to defend the calculus).

Adam Smith played an important intellectual role in the West. As did Newton. My point: I think Economists should be arguing about economics, not what Milton Friedman or Adam Smith thought. It's almost like the "What Would Jesus Do?" idea, except in economics instead of religion.

And no, I'm not going to say that economics is a religion. That's absurd.

Uni. Of Stockholm writes:

[Comment removed pending confirmation of email address. Email the webmaster@econlib.org to request restoring this comment. A valid email address is required to post comments on EconLog.--Econlib Ed.]

Charlie writes:

These seem to be the quotes that provide at least enough evidence that Smith is at odds with modern libertarians. I've taken out all of Sen's words, except the contextual intro, the quotes are Smith's.

Smith saw the task of political economy as the pursuit of "two distinct objects": "first, to provide a plentiful revenue or subsistence for the people, or more properly to enable them to provide such a revenue or subsistence for themselves; and second, to supply the state or commonwealth with a revenue sufficient for the public services"..."When the regulation, therefore, is in favour of the workmen, it is always just and equitable; but it is sometimes otherwise when in favour of the masters."

The idea that revenue or subsistance could be provided (that this is passive is amplified by the next clause) and that regulation can be just and equitable, seems very problematic for Henderson and Klein. I'd think putting context for these passages would be important for proving their interpretations correct and Sen's wrong.

Charlie writes:

"Political Ĺ“conomy, considered as a branch of the science of a statesman or legislator, proposes two distinct objects: first, to provide a plentiful revenue or subsistence for the people, or more properly to enable them to provide such a revenue or subsistence for themselves; and secondly, to supply the state or commonwealth with a revenue sufficient for the public services. It proposes to enrich both the people and the sovereign."

I tracked down the first quote, and it does appear to have been taken out of context by Sen. It feels more like Smith is using or exploring someone else's definition than giving his own.

It's 'considered a science,' it 'proposes' a couple times, it isn't necessarily doing or able to do what it is proposing


Hans Eicholz writes:

A great deal of confusion has been generated by a lack of historical context, and here that context is essential. The texts of the past require translation into terms that are understandable to us in the present. What that requires, however, is a sensitivity to the fact that certain political terms that we commonly use, are simply not applicable.

Mr. Martin has suggested that mercantilism applies to anything commercial. In one sense that is correct, but in Smith's day, mercantilism was the designation of certain ideas and policies enacted by Parliament and the Board of Trade to regulate commercial relations. Thus to curtail mercantilism is to curtail government control over the economy.

Charlie quotes Smith to make the point that anything that grants government a revenue is contra Henderson and Klein. But that is only the case if we assume that Smith is a libertarian, and an anarchist sort of libertarian at that. Neither term really applies to Smith's day, and to the extent that this debate is carried on in these terms by both sides, we are bound to be confused.

Smith was a Whig, and a moderate one at that. See his views on the appropriateness of raising revenues from America for defraying the expenses of imperial defense.

That said, Charlie's quote reveals that Smith wanted to encourage independence on the part of the workmen. His desire that "regulations" be such that working men can provide "a revenue or subsistence for themselves," is very Whiggish--i.e. he would eliminate restrictions that have constrained their opportunities, and by doing so, encourage personal self-government or the independence of workers.

This ties into the last sentence quoted and with Mr. Martin's quote too. Mercantilism is that set of regulations which generally favored specific merchants and trades. Remove those, and you will get a more equitable system of regulation that favors the workmen, who will now be able to retain more of the bread which they have earned.

"Regulation," at this time could mean all sorts of orderly operations, government imposed as well as self-regulation. It doesn't always mean, as we mean it now, a positive enactment by government.

Charlie writes:


The contentious part of the quote is, "to provide a plentiful revenue or subsistence for the people." Like I said, in context, I don't think it supports Sen, but it is the context not the language that is problematic.

I agree that the second quote could mean lots of different things, as context will be important as well. Someone else will have to look it up though, cause I got bored. The books are free on the site affiliated with this blog.

I think the point Michael and I were making is that, the best way to answer someone's interpretation is with the text directly, not with what your buddy said (especially one who's identity revolves around a certain interpretation of Smith). He said, she said isn't very convincing.


Hans Eicholz writes:


The words of a text are always to be related to the context if we want to be sure of their meaning, of course. I took Dan and David to be initiating a discussion about just that.

But surely you and Michael are correct that people should read the text for themselves. Often, I find, when a passionate defender of a particular point of view presents his/her case, a goodly number of people, from many points of view, are inspired to do just that--but that's a matter of taste I suppose.


Tracy W writes:

SydB - physicists don't spend much time arguing about what Newton actually wrote. But biologists, at least those biologists who actively involve themselves in the fight against creationism, do spend some time arguing about what Darwin actually wrote and believed - because some creationist arguments rely on misrepresenting Darwin's arguments (eg quoting Darwin about the difficulty of how the eye could have evolved, while ignoring that Darwin raised that question in order to answer it by supplying a possible way the eye could have evolved).

Similarly, there is a strand of left-wing thought that keeps going back to what Adam Smith wrote and digging up quotes that appear to support their position. Which triggers responses from those who are opposed to the left-wing policy analysis.

I think that the point of all this to-and-fro on what Darwin really wrote or what Adam Smith really wrote is to attempt to convince open-minded listeners to the debate, not the participants, who always, regardless of their position on the main debate, have the option of concluding that Darwin or Adam Smith were wrong (as all economists I know think about Adam Smith's exploration of the labour theory of value). And the Wealth of Nations is, like The Origin of the Species, a much easier read than Principia, so arguing about what the author *really* meant has much lower barriers to entry.

Incidentally, I recommend reading The Wealth of Nations, as I found it fascinating to see how Adam Smith did his best to base his theories on empirical data in the absence of anything like today's statistical datasets.

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