Adam Smith — a view from the XXI century

The official history of economic thought is largely based on a cumulative approach to systematizing the works of famous economists. After the mercantilists there were the physiocrats. A. Smith’s “An Inquiry into the Nature and Causes of the Wealth of Nations” initiates the development of the classical school in political economy. “Simultaneous discovery” by W. S. Jevons, L. Walras and K. Menger means “marginalist revolution” and so on. Thus, Smith fits into the line of classics of political economy and liberalism who attached great importance to moral qualities of the new class — the bourgeoisie, which advocated property rights, promoted competition and free trade. The main mistake in his system of views is considered to be the division into productive and unproductive labor, later rejected with the appearance of A. Marshall’s works. Otherwise, given the cumulative progress of economics, Smith remains an iconic figure of the remote past.
Reading Smith's major work casts doubt on the validity of the above assessments by historians of thought. These doubts are presented in the form of the following theses. First, Smith understood contemporary economics better than modern economists understand theirs, with ample evidence of this. The latter appeared already at the end of the 1950s, after the works of R. Solow. This raises the problem — what are the advantages of Smith's method of analysis compared to modern methods of economic analysis? Second, Smith was neutral on slave trade. Besides, he argued that monarchical regimes treated slaves more humanely than democratic republics. This does not allow Smith to be labeled a “libertarian”, which is done by many modern authors. Third, speaking about management practices of the East India Company, Smith, in fact, calls for the liquidation of this company as a monopolist, and at the same time for the violation of shareholders property rights. Fourth, from the perspective of 21st century economy, where rent-seeking behavior of actors is becoming extremely widespread, the question arises as to the correctness of denying the division of types of economic activities into productive and unproductive. M. Mazzucato and M. Hudson believe that the division proposed by Smith, despite some necessary adjustments, generally retains its fundamental significance. All this, taken together, indicates the need to revise the approaches dominating in the modern history of thought to assessing outstanding economists of the past.

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