Category: Modern Europe, Winter 2012

Although they had read the exact same text I had, my students in Modern Europe seemed skeptical about my interpretation of Adam Smith’s Wealth of Nations.  Smith’s notion of the “Invisible Hand” of the market may be his most famous contribution to modern economic thought, but he also elaborates a role for the state in providing the necessary conditions for those free markets to emerge.  In order to bring the point to our own time, I related what he said in our excerpt (from our primary source reader Perspectives from the Past) to Elizabeth Warren’s defense of contemporary liberal politics.  I wanted to illustrate how Smith — associated with a particular vein of economic liberal thought and used to justify nonintervention in the industrializing economy — was taken up by people and reinterpreted according to a particular ideological agenda, rather than attention to the actual text.  So, just for the record, here’s what I was thinking of.

Smith:

The expence [sic] of defending the society, and that of supporting the dignity of the chief magistrate, are both laid out for the general benefit of the whole society.  It is reasonable, therefore, that they should be defrayed by the general contribution of the whole society, all the different members contributing, as nearly as possible, in proportion to their respective abilities (425).

Warren:

There is nobody in this country who got rich on his own. Nobody. You built a factory out there – good for you. But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory… Now look. You built a factory and it turned into something terrific or a great idea – God Bless! Keep a Big Hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.