The Myth of Adam Smith.

• Author: Pack, Spencer J.
• Position: Review

By Salim Rashid. Cheltenham, UK: Edward Elgar, 1998. Pp. X, 227. $80.00.

For every economist who has ever idolized Adam Smith or wished they could be more like him, Salim Rashid's The Myth of Adam Smith is the valuable antidote. Rashid is unusual among economists in that he really does not care much for Smith. In this well-researched book, Rashid presents a strong case against what he regards as Smith's overblown reputation. Rashid's book is not rancourous or nasty. Rather, Rashid asks the reader for pity, as after years of study he has "to struggle to find something nice to say about Smith" (p. vii).

In Rashid's view, "what is true" in The Wealth of Nations "is not original and what is original is not true" (p. 3). According to Rashid, Smith made no advances in microeconomics; indeed, "if we identify economics with the use of the concepts of 'demand and supply' then Adam Smith never did become an economist" (p. 9). From the point of view of neoclassical economics, Smith's price theory was inadequate; it is not clear what determines the natural rate of profit, and Smith is confused on the determinants of rent. Also, Smith was behind the best of his age in macroeconomics and monetary theory.

In Rashid's reading, Smith's emphasis on the division of labor was probably not genuinely perceptive. Moreover, it distracted attention from the role of machinery, science, and inventions and the activity of entrepreneurs and managers. According to Rashid, Smith took his example of pin making from the French encyclopedists and his emphasis on the division of labor from Xenophon's Education of Cyrus without properly acknowledging either.

For Rashid, and contrary to the impression cultivated by Smith, Smith was not a painstaking scholar; his references contain many inaccuracies. Smith was not aware of the Industrial Revolution or of the major growth sectors of the economy. Smith gives the impression of carefully studying his facts. Actually, Smith used historical facts largely to corroborate his own theory and to illustrate his already established convictions. For Rashid, Smith was really an a priori theorist.

Rashid finds that Smith's work in public finance represents no advance over the work of Locke or Sir Matthew Decker. Indeed, issues in public finance had been thoroughly discussed in the economic pamphlet literature in the previous half century before publication of Smith's Wealth of Nations.

Blood is on Smith's hands for his extreme arguments that...