Economics as theology: Adam Smith's Wealth of Nations.

• Author: Waterman, A.M.C.
• Position: Critical Essay

1. Introduction

   Economics is a scientific enterprise. Well-grounded theory is continually refined. Observations of social phenomena are made in light of that theory. Inferences are constructed by means of the best statistical techniques. Putatively falsifiable predictions are made. This is all as it should be.

   Yet what Heyne (1976) calls "the economic way of thinking" is more than just a science. It is a way of looking at society that rests on certain assumptions about the human condition. Those assumptions are neither innocent nor uncontroversial, for they stir up baffling moral and theological questions. Is there a higher good than economic welfare? If economics is about scarcity, and scarcity is an evil (e.g., Walsh 1961), why does God allow scarcity? If individuals actually are as rational and self-interested as we assume, ought they to be?

   Because economists are human beings, our utterances reveal our preconceptions and values. They also function so as to recommend those preconceptions and values. We have all been made aware in recent years of the "rhetoric of economics" (McCloskey 1983, 1985). Every text written by every economist is and must be to some extent an "essay in persuasion." It is a short step from this awareness to recognizing the theology latent or implicit in much economic literature. Many have noted that present-day economics offers a new kind of "modernist faith" with its own "Ten Commandments and Golden Rule," its "nuns, bishops and cathedrals," and its "trinity of fact, definition, and holy value" (McCloskey 1985, pp. 4-9). Policy debates between economists and environmentalists sometimes look like "wars of religion" between "two faith communities" (Sagoff 1997, pp. 968, 972, 980). Modem economics has been plausibly represented as the last gasp of a liberal-protestant "social gospel" that the American Economic Association was founded to promote: a grand if futile gesture explained in Reaching for Heaven on Earth: The Theological Meaning of Economics (Nelson 1991). The author of that work has now given us a more focused analysis in Economics as Religion: From Samuelson to Chicago and Beyond (Nelson 2001).

   It is my purpose in this article to show by means of a classic case that what Nelson calls "economic theology" has been with us for a long time before Samuelson. Not only was Karl Marx "the most successful of all theologians since the Reformation," as Paul Tillich (1967, p. 476) once observed, but Marx's chief exemplar was Adam Smith. If we reread Smith's (1976a) "great book" with proper attention, we may learn from his "interesting mind" a lot more than "its owner wished to teach us." For Wealth of Nations may be read--and conceivably was sometimes read--as a work of "natural theology;" rather as Newton's Principia was read by Cambridge undergraduates as natural theology for most of the 18th century.

   It is important for me to state what I am not trying to do. I am not trying to discover what Adam Smith actually believed in 1776. A person's religious beliefs or unbeliefs are seldom stable or coherent, seldom completely understood by that person or by others, and never reliably signified by documentary evidence alone. I have therefore deliberately ignored the interesting and important work of other scholars who have discussed Smith's theology in a more orthodox, intellectual-historiographic fashion (e.g., Viner 1958; Smith 1976b; Raphael 1985; Teichgraeber 1986; Nicholls 1992; Minowitz 1993; Fitzgibbons 1995; Winch 1996). I have instead attempted to follow the literary-theoretic suggestions of Brown (1994, p. 13) according to which "the richness of a text may be explored independently of the question as to whether the author was aware" of the "textual devices" he employed, such as "style and figurative language," which may now tell us more than he was either willing or able to say in a more straightforward way at the time of writing.

   What follows is in four parts: first, an investigation of the theological work done by Smith's pervasive and ambiguous conception of "nature;"; second, an account of human "interest" and of the ethical and political problems this appears to create, third, Smith's reconciliation of the two in a theodicy of social life that explains in part how a "divine Being" produces "the greatest quantity of happiness;"; and finally, some concluding remarks.

2. Nature

   "Nature" and its cognates ("natural," "naturally," "unnatural") is one of the most frequently used such families of words in Wealth of Nations (Smith [1776] 1976a; hereinafter identified as W) (Table 1). Moreover, it is often used as either synonymous with, or as thematically connected with, "necessity" and its cognates. The frequency of "nature" and "necessity" combined is 1529, which exceeds that of the otherwise most important significant term, "price." "Nature" is sometimes used innocently, to denote the characteristic properties of some entity, as in the title of Smith's Inquiry itself and in such phrases as "the nature of its laws and institutions," "the nature of its soil and climate," and so on (W, pp. 89, 111). But it is also used to denote that which exists, or at any rate the whole created, material universe in which man is located: "the call of nature," "the order of nature," "the nature of things," the "great phenomena of nature" (W, pp. 100, 145, 515, 766, 767). And in some cases there is slippa ge between this sense and a hypostasis of the term that seems to refer to or imply a putative creator of "nature": "talents with which nature has distinguished its fellows," "nature labours along with man," "the work of nature," the "difference which nature has established between corn and almost every other sort of goods," "the nature of things has stamped upon corn...," "nature does herself the greater part of the work," "Nature does nothing for him" (W, pp. 30, 363, 364, 515, 515, 694, 695). The most striking and suggestive example of such usage--an important clue to the theodicy I will suggest in section 4--is to be found in Smith (1976a, Book IV, chap. ix, para. 28; hereinafter referred to as IV.ix.28), in a context that criticizes Quesnay. In the "political body," Smith maintained against the Physiocrats, "the wisdom of nature has fortunately made ample provision for remedying many of the bad effects of the folly and injustice of man" (W, pp. 674; my italics). In each of these cases and especially the l ast, "nature" is nearly synonymous with the God referred to in W (pp. 770, 772) as "the Deity."

   The substantive use of "nature," however, is less frequent than either the adjectival or the adverbial. For whereas "nature" occurs 149 times in W, "natural" occurs 232 times and "naturally" 272 times (Glahe 1993, pp. 345-6). And it is in these that Smith's ambiguous, not to say equivocal, treatment of "nature"--sometimes teleological and/or normative, sometimes merely positive and/or naturalistic, sometimes dubiously either or both--is most evident.

   "Natural" is occasionally used adjectivally of {"nature" = the created universe} as in "natural philosophy" {W, p. 766) and in these cases is neither teleological nor normative. The beginning of some trace of the normative is to be seen in such uses as "the natural aristocracy of every country" and "the natural and respectable distinctions of birth and fortune" (W, pp. 622, 944). These social arrangements may, indeed must, exist in consequence of "the nature of things," but they do seem to be regarded with approval, and they do not seem to be quite inevitable. "Natural liberty and justice," (W, pp. 157, 470, 530, 606), being a state of affairs that ought to exist but that may not, is more obviously both teleological (it is an end, or part of the purpose of "nature") and normative (we must try to see that it is maintained).

   The most interesting uses of "natural" occur within an explicit economic-theoretic context. A key example is found at the beginning of Book III, "Of the Natural Progress of Opulence." "According to the natural course of things. . . capital of every growing society is, first, directed to agriculture... . This order of things is so very natural" (W, p. 380). The redundant phrase "so very" is a giveaway. In a strictly positive sense, something is either "natural" or it is not. Smith was here using "natural" to mean "good" or "desirable." For "in all the modem states of Europe," this "natural order of things" has been "entirely inverted" to become an "unnatural and retrograde order" (W, pp. 380, 422). The "natural progress of improvement" (W, p. 708), the "natural proportion which would.. . establish itself between judicious industry and profit" (W, p. 758), a "natural distribution of stock" the "derangement" of which is "necessarily hurtful" (W, p. 632), and Smith's rhetorical, fourfold incantation of the sonoro us phrase "natural and free state" (W, p. 608) are all equally normative, with more than a hint of the teleological. The "natural price" (W, p. 77 etc.) and "natural rate" of wages (W, p. 79 etc.) are ambiguous. They may be conceived positively as long-run equilibrium outcomes, but there is always some suggestion of the normative in their use. The corresponding value of the "profits of stock" is actually referred to at one point as "their proper level" (W, p. 132).

   Why is it "natural" for human societies to grow and "improve?" What does it mean to say that equilibrium market outcomes are "natural"? And why, notwithstanding, may "natural" outcomes be delayed or altogether frustrated? Some light is thrown on these matters by Smith's use of the adverb "naturally."

   In chapter VII of Book I, "Of the Natural and Market Price of Commodities," the average frequency of "naturally" rises to 0.70 per page as against 0.29 for W as a whole. The purpose of that chapter is to show how "the quantity of every commodity brought to market naturally suits itself to the effectual demand" (W, p. 74; my italics). An important part of the...