The Wealth of Nations Revisited
November 16, 2002

Anyone with even a remote interest in politics, society, and business knows Adam Smith, the author of The Wealth of Nations. The 18th century economist linked the workings of a pin factory to the division of labor and the pursuit of self-interest to the general welfare, and he made the case for the mutual benefits of free trade among nations. Over the past two centuries, hundreds of thousands of economists have mined the Wealth of Nations for insight into why some economies grow and others stagnate.

Of course, not many people dive into his classic anymore. Yet even few economists have paid much attention to his other major work, The Theory of Moral Sentiments. Too bad, for the two works were intimately connected. The philosopher Smith studied the civic institutions that nurtured the moral sentiments under-girding a market economy. In modern parlance, he investigated society's "social capital." That's the web of family, community, school, religion, and voluntary associations that inform everyday life, human behavior, and commerce in villages, cities, regions, and nations.

It's Adam Smith's commercial humanism that Peter Dougherty is determined to revive in his new book, Who's Afraid of Adam Smith: How the Market Got Its Soul!

This is a labor of love, a "personal report" from a close observer of economists. Dougherty is a long-time economics book editor. For the past two decades, Peter has been a fixture at the annual meeting of the American Economics Association conference, a gathering of some 7,000 to 9,000 card-carrying members of the dismal science. I’ve attended about 10 of those meetings, and a highlight every time is wandering through the booths of the book publishers and coming upon Peter. He's always eager to talk about economists and their work, pointing out new books that say something of significance.

So, it's hardly surprising that he's written an enjoyable journey through the intellectual history of economics for the layman. Here you can learn about the towering achievements of Adam Smith's best-known followers, like John Maynard Keynes and Milton Friedman. You also get a picture of what a younger generation of economists is up to.

The book bubbles with ideas. So much so that it's sometimes reminiscent of a charming, wide-ranging, somewhat chaotic conversation in a coffee shop with a knowledgeable enthusiast. He just can't resist the intriguing insight, the scholarly nuance that advances our understanding of how a market works, even if it takes him away from his thesis.

But he doesn't stray for long. He always comes back to the underlying concern of Adam Smith: that by understanding the link between social capital and the economy, a nation could not only end joblessness and alleviate poverty, but make life vibrant and culture dazzling for everyone. This is a hopeful book that celebrates an economic tradition that emphasizes not only the Wealth of Nations but also The Theory of Moral Sentiments.

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