Amartya Sen compares Adam Smith with Shakespeare “in their reaching over to people across the barriers of time” (Sen 2013). Smith, the father of modern Economics has made pioneering contributions to the emergence of the discipline of Economics. His most influential works, The Theory of Moral  Sentiments (TMS) and The Wealth of Nations (WN) are often at the centre of ideological battles. In this  essay, I discuss the impact Smith had on society from three perspectives – first, the structural changes in  the economy, second, the sociological changes that emerged and finally, the changes in society that  emerged due to the misinterpretation of his work. 

Ideas contained in WN immensely altered the structural dimensions of the economy. Significant impacts of his work include, but are not restricted to, the formation of a capitalist economy, the method of calculating the wealth of a nation by total commercial production and ‘free-trade’ where nations open their trade to one another. This theory of free trade gave rise to Globalization as we know it today. Specialization, Smith’s unique conception where an individual has delegated a specialized job in the production chain instead of the production of the entire good, led to the creation of new jobs and a steep rise in economic productivity and prosperity (Butler, 2011). 

Secondly, unforeseen sociological changes followed increasing employment and wealth. This led to a  social divide between capitalists and labourers due to unequal distribution of wealth and resources as well as social stratification based on income. However, in India, it brought an interesting change. Smith’s idea of ‘natural liberty’ where every individual is ‘left perfectly free to pursue his own interest his own way’  (Berry, 2013) challenged the caste system, which kept Dalits from pursuing interests beyond those dictated by Manu Smriti (Dalits considered ‘untouchables’ are the lowest social group in the caste system according to the ancient Hindu legal text, Manu Smriti.).

 As remarked by Milind Kamble, “Economic reforms unleashed Adam Smith to chase Manu away from this planet”. Though Dalit mainstreaming is far from achieved, entrepreneurial  Dalits believe that Smith has had a great role in this pursuit. 

Further, widespread misrepresentation of Smith’s work gave rise to serious consequences. A prominent example is him being dubbed ‘the Father of Capitalism’, whereas he was not ‘laissez-faire’ or a ‘free-market capitalism apologist’ (Thomas, 2019); Smith never used the expression capitalism (Sen 2013).  Market self-sufficiency is another of his oft-quoted ideas, though in WN he states that markets require the support of external institutions. He highlighted the need for restraint and correction of markets, supplemented by external institutions to prevent instability, inequity, and poverty in society (Sen 2010).  The inadequacy of this institutional support has led to rising inequality today. 

“Economic ideas carry immense power. They have changed the world as much as armies and navies”  (Liu, 2019). Smith’s work did the same, as it dealt with a subject that colossally impacts and ties all components of society together. Smith’s ideas have been adopted by Governments and influenced academia and markets. However, they have been “unduly neglected in the world of knowledge and understanding, particularly in moral, political and legal philosophy” (Sen, 2013). Therefore, if we look at his work holistically his insights can help shape a more egalitarian society.

Bibliography 

Adam Smith’s Moral and Political Philosophy, Stanford Encyclopedia of Philosophy,(Feb 2013) plato.stanford.edu/entries/smith-moral-political/ 

A. Sen. The Contemporary Relevance of Adam Smith, The Oxford Handbook of Adam Smith, (May 2013) 

A. Sen. Adam Smith and the Contemporary World, Erasmus Journal for Philosophy and Economics, (Spring 2010)  

A. Thomas. “Why Adam Smith favoured public education,” The Hindu, January 10, 2019, thehindu.com/opinion/op-ed/why-adam-smith-favoured-public 

education/article25952878.ece Last accessed: July 28, 2020 

A. Ucak. Adam Smith: The Inspirer of Modern Growth Theories, Procedia - Social and Behavioral  Sciences, Volume 195, (2015), Pages 663-672, doi.org/10.1016/j.sbspro.2015.06.258,  sciencedirect.com/science/article/pii/S1877042815037374  

C. Clark. Adam Smith and Society as an Evolutionary Process, Journal of Economic Issues., (Sep 1990) 

C. Pagliari, E. Bucciarelli, M. Alessi, “From Adam Smith to Amartya Sen: Global market as a possible  instrument to promote socio-economic development”, Investigacion Economica (06, 2011) researchgate.net/publication/228286950_From_Adam_Smith_to_Amartya_Sen_Global_Mar ket_as_a_Possible_Instrument_to_Promote_Socio-Economic_Development 

D.C. Rasmussen. “The Problem with Inequality According to Adam Smith”, The Atlantic (Jun 2016) theatlantic.com/business/archive/2016/06/the-problem-with-inequality-according-to-adam smith/486071/ Last accessed: July 26, 2020

E. Butler. The Condensed Wealth of Nations, Adam Smith Research Trust 2011 static1.squarespace.com/static/56eddde762cd9413e151ac92/t/56fbaba840261dc6fac3ceb6/145933 4065124/Condensed_Wealth_of_Nations_ASI.pdf. www.adamsmith.org 

G.Liu. “How Adam Smith became the patron saint of capitalism”, Aeon Jun, 10, 2019 aeon.co/ideas/how-adam-smith-became-a-surprising-hero-to-conservative-economists Last  accessed: July 22, 2020 

J.Norman. “How Adam Smith would fix capitalism”, The Financial Times, June, 21, 2018 ft.com/content/6795a1a0-7476-11e8-b6ad-3823e4384287 last accessed: July 21st 2020 

J.Berry. “Introduction: Adam Smith: An Outline of Life, Times, and Legacy”, The Oxford Handbook of  Adam Smith (May 2013) 

M. Ali. “Entrepreneurship and Ambedkar’s economic justice”, Forward Press, Oct, 20, 2017 forwardpress.in/2017/10/dalit-capitalists-today-and-ambedkars-economic-justice/ Last  accessed: July 21, 2020 

P. Sagar. “The real Adam Smith” aeon newsletter Jan, 16, 2018 aeon.co/essays/we-should-look closely-at-what-adam-smith-actually-believed Last accessed: July 24 2020 

SA Aiyar. “Adam Smith VS Manu: look who’s winning”, Times Of India Aug, 24, 2014 timesofindia.indiatimes.com/blogs/Swaminomics/adam-smith-vs-manu-look-whos-winning/ Last  accessed: July 22, 2020 

The Real Adam Smith: Ideas That Changed the World- Full Video, free to choose network youtube.com/watch?v=8ruiUOQERnw&t=1702s 

The Real Adam Smith: Morality And Markets- Full Video, Free To Choose Network youtube.com/watch?v=V6S6pMsKzlI&feature=youtu.be

The Theory of Moral Sentiment, Adam Smith Institute adamsmith.org/the-theory-of-moral sentiments

Copyright Image: https://www.simplycharly.com/facts/10-things-you-might-not-know-about-adam-smith