Review: How Adam Smith Can Change Your Life
From the archives and originally published by the Financial Times.
As any FT reader worthy of the title knows, Adam Smith was the original Gordon Gekko - insisting greed is good. This, however, is not true. In “How Adam Smith Can Change Your Life”, author Russ Roberts seeks to redress this enduring misconception by showing how the grandfather of the dismal science can in fact make you a better, happier and more fulfilled person.
Mr Roberts does so by whisking the reader through Smith's other "hidden gem" - The Theory of Moral Sentiments. This treatise on moral philosophy was the work for which Smith cared most. Beautifully written and spanning his entire working life, it was first published in 1759 and he continued to revise it until just before his death in 1790.
The Theory of Moral Sentiments puts his famous invisible candlestick-makers and unbenevolent bakers to one side and instead shows Smith to have been the pioneer of what is now fashionably called behavioural economics, or more prosaically, what it means to be human. As Roberts skillfully shows through the words of Smith "economics is about something more important than money".
This work of Smith’s contains two important discussions: how to follow a moral path and how to find true happiness. Despite his image, Smith was keenly aware that we are not entirely selfish - we are deeply moral animals:
"How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him." We don't constantly steal, we don't kidnap our bosses and - God knows - we queue. Smith pondered why.
His "great insight", says Roberts, was to state that "our behavior is driven by an imaginary interaction with an impartial spectator". We do not judge ourselves by our principles but by what this finger-wagging companion would think of our actions. Deviations from our moral code are noted. More or less this keeps us in line - literally, for the British. There are limits, of course. Smith compared the deaths of thousands of never-met Chinamen to having one's finger cut off. The latter being "worse, much worse".
Smith thought deeply about what makes us (truly) happy. In the 1700s the longing to be rich and famous was as ubiquitous as today. Gadgets too were demanded to raise our status and temporarily distract. (The iPhone 6 of 1759 was a an ear-picker.)
Yet, as Roberts notes, "Smith wrote as eloquently as anyone ever has on the futility of pursuing money with the hope of finding happiness." The message has yet to penetrate.
Such "seductions will never satisfy". What matters, says Smith, is "the consciousness of being beloved.” The meaning of which has weathered through the ages but it approximates "authenticity" - wisdom and virtue.
The problem in reaching this idyll is ourselves. We are brilliant at thinking we are brilliant. But we are not, of course. We are all deeply flawed, vain and selfish. And while persuading others of our greatness might at least be understandable, more worrying - says Smith - is that we are trying to convince ourselves. Smith counselled that "it’s our own praise that’s hardest to reject" and we can all relate to the fact that "flattery and falsehood too often prevail over merit and abilities."
How, then, to reject the praise we do not deserve? Smith invoked the impartial spectator. For "if we saw ourselves in the light in which others see us, or in which they would see us if they knew all, a reformation would generally be unavoidable."
Roberts is right that only by recognising our flaws can we begin to find wisdom. And it’s a life of reduced popularity Smith warns - you will be noticed only by the “most studious and careful observer” but you will not miss the attention.
The earlier chapters in Robert’s book - part political history, part self-help - hang together better than the rest. But there is a little repetition and on the whole this is a neat and concise attempt to keep Smith's timeless ideas alive and to consider their relevance in an age of Facebook and Purchase Protection Plans. Roberts skillfully blends modern examples with Smith’s original text in a way that leaves you wanting to tackle the original masterpiece.
Adam Smith is rightly redeemed from those wishing to claim he somehow justifies mercenariness. If only Mrs Thatcher had put Smith’s more important contribution in her handbag, things might have turned out a little differently.