“It was Adam Smith, the father of free-market economics, who once said, ‘They who feed, clothe, and lodge the whole body of the people should have such a share of the produce of their own labor as to be themselves tolerably well fed, clothed, and lodged.’ And for those of you who don’t speak old-English, let me translate. It means if you work hard, you should make a decent living. If you work hard, you should be able to support your family.”

Barack Obama

Glory M. Liu’s new work, Adam Smith’s America: How a Scottish Philosopher Became An Icon of American Capitalism, rekindles a debate that has raged in economics departments in the United States for the past 50-plus years. This debate has largely been centered around the economic history of America, and there are essentially two stories. 

The first is the Marxist or perhaps “democratic socialist.” In this vision of economic history, America begins as an agricultural and mercantile country dependent upon slave and indentured labor. The country becomes increasingly industrialized in the nineteenth century as the fierce monster of capitalism consumes native and immigrant labor to build the cities, railroads, and factories of the United States. In response, American workers band together and push back against capitalism, forming unions. In the twentieth century, government forms of Keynesian or later neo-Keynesian economics take center stage during Franklin D. Roosevelt’s New Deal and Lyndon B. Johnson’s Great Society. Unfortunately, the democratic socialism forged by government and union leaders begins to be dismantled under the Reagan and then Clinton administrations. After the debacle of 2011’s Occupy Wall Street, the left largely abandoned their efforts to tame (or destroy) capitalism, instead focusing on race, gender, and environmental issues. 

In contrast to this is the liberal, libertarian, or what in the United States is called the (neo-)conservative economic history. Here America is seen as the great capitalist nation par excellence, that threw off the shackles of reactionary religious and political restraint and conceived a new nation, becoming the most powerful economic force the world had ever seen. There were injustices within the American system such as slavery and exploitation of workers, but it was primarily the advance of capitalism, not unions or government regulation, that ended these injustices and provided a just and prosperous labor environment. In the twentieth century, a host of leftists and socialists (some with good intentions) attempted to restrain the tremendous power of capitalism through various restrictions, which inevitably produced destructive consequences. Thankfully, a group of economists located at the University of Chicago was able to wage an economic revolution in the 1970s, which eventually led to the Reagan Revolution of the 1980s, in which the New Deal and Great Society restrictions on the economy began to be rolled back. Unfortunately (in this reading), the twenty-first century has seen a resurgence of an anti-capitalist right moving into the vacuum created by the left’s abandonment of economic issues for cultural and racial ones. 

In crafting their narratives, both the left and the right in the United States claim parentage in European economists. For the left, it is the nineteenth-century German–Jewish philosopher Karl Marx, while for the right it is the Scottish Enlightenment thinker Adam Smith. Indeed much of the economic discourse on the right is focused on Smith, as the father of modern economics and an advocate for the power of the free and unregulated (or at least loosely regulated) market by the stifling government. 

In Adam Smith’s America, Harvard University’s Glory Liu attempts to revise the neo-conservative, Chicago School narrative in which Adam Smith is the progenitor of laissez-faire American-style capitalism. Drawing on the recent “revisionist” scholarship of Smith, Liu argues that Smith’s view of economics was not quite as free-market as the economists at the Chicago School have argued. 

Liu notes that, in the popular imagination, Adam Smith is almost exclusively associated with his 1776 An Inquiry into the Nature and Causes of the Wealth of Nations and is widely recognized as the father of “free market” economics. In her prologue, Liu provides a catalog of American organizations, including the Adam Smith Society, American Enterprise Institute, the Adam Smith Foundation, and even Forbes magazine, which perpetuate the notion that Adam Smith’s thought is synonymous with unfettered capitalism. Throughout the book, Liu then attempts to argue that Adam Smith was not always perceived this way in America. Moreover, and perhaps more importantly (and controversially), Liu argues for a new rereading of Adam Smith as a figure more in line with contemporary, post-Trumpian compassionate (and hence regulated) capitalism. 

Although she provides a lengthy and detailed chronicle of Adam Smith’s reception in the United States, Liu’s principal target appears to be the economics department at the University of Chicago. Her treatment of the twentieth-century development of libertarian or laissez-faire economics at Chicago begins with the Great Depression. The tremendous suffering caused by the Depression served, for some with democratic socialist sensibilities, as proof that the market could not function without regulation. As a response, the New Deal arose, as did a general appreciation for the work of John Maynard Keynes in academia. Liu argues that important early Chicago School figures like Frank Knight, Jacob Viner, Friedrich Hayek, George Stiegler, and Milton Friedman retooled Adam Smith to advance the argument that markets did not need regulation. 

Liu does acknowledge that these thinkers approached Smith from many different angles. Knight and Viner held that Smith recognized the importance of state intervention in markets. Friedrich Hayek, Henry Simons, and Aaron Director, however, largely read Smith as the apostle of the free market. The most famous Chicago School reader of Adam Smith was, of course, Milton Friedman, who argued for a Smithian free market economics coupled with “rational choice theory and strident market advocacy.” 

Liu’s tone throughout the book is scholarly and almost entirely avoids polemics. However, one can reasonably read her book as an attempt to appropriate Adam Smith for the new post-Trump American establishment. Adam Smith’s America ends with an epilogue detailing “revisionist” criticism of Adam Smith that argues for Smith as a much less free-market-oriented thinker than the Chicago School took him to be. Liu quotes historian Emma Rothschild who (controversially) has argued that Adam Smith’s notion of the “invisible hand” of the market was a “mildly ironic joke.”

In contrast, Liu and the scholars from which she draws want to present Smith as “both a moral critic and a defender of commercial society.” This passage is one of the most important in the whole book. Liu contends that this common reading is marked by “prejudices” of Smith’s twentieth-century interpreters, who allegedly are guilty of “foreshortening, attenuating, and misreading” Smith. Smith’s works, she believes, are “worth reading, contemplating, defending, and criticizing.” However, she suggests that the political right in America has hindered Smith’s ideas from flourishing in the hands of the millennial left, which, contrary to some conservative critics, is seeking to retool capitalism as opposed to abolishing it.

While many on the right refer to the dominance of Marxism or even communism during the Biden Era, the establishment left, as it did during the Obama and Clinton Eras, sees itself as presenting a kinder, gentler form of capitalism that is welcoming and inclusive toward people who have been identified as marginalized. In order to achieve this goal, certain Western figures have been completely jettisoned as too reactionary for the twenty-first century, while others, in this case, Adam Smith, are being revisited and retooled as cultural capital. 

Although Adam Smith’s America is a book with ultimately left-leaning political implications, Liu provides a rich and thoughtful exploration of the history of Adam Smith and the various ways in which Americans have received and utilized Smith for their own purposes. Certainly Adam Smith—like every great world thinker—is complex and multifaceted, and his work can reasonably give rise to a variety of interpretations. Nonetheless, one of the biggest underlying questions of our time, implicit in Liu’s book, is what form of economics will propel a just and prosperous America into the third decade of the twenty-first century.