Before long, many of us will be sitting on Adam Smith. The governor of the Bank of England, Mervyn King, recently announced that the new £20 note, to be released next spring, will bear an image of the Scottish philosopher and inventor of economics.

It isn’t clear whether the Chancellor, Gordon Brown, had anything to do with the decision – he is a Smith enthusiast who is proud to share his birthplace of Kirkcaldy. In any event, it is a remarkable choice, given the way Smith’s ideas are often associated with precisely what is wrong with the global economy today: its relentless, unethical pursuit of the free market, to the detriment of humanity.

Perhaps if the truth were known we wouldn’t be so surprised. After all, Smith argued that the economy could function in the interests of all only if it was held in check, both by the state and by morality. In fact, he insisted that it could not thrive apart from a culture steeped in virtue.

He was also the first serious thinker to suggest that there was a solution to global poverty. It was not charity, philanthropy, state power or any other top-down or paternalist strategy; it was the freedom of the individual to pursue their own economic self-interest. Only this – directed as it was by the ‘invisible hand’ of Providence – had the capacity to unleash the human creativity necessary for economic prosperity.

Smith went further. The very aim of human society, he said, should be ‘universal affluence’ through the creation of wealth. This would put the economy at the service of human beings, rather than vice versa, liberating people from the prison of poverty and scarcity that was the inevitable consequence of the subsistence model that had dominated human history.

It was not the Make Poverty History campaign of 2005, therefore, that first inspired the public to think that something could be done about global poverty. It was Smith’s book The Wealth of Nations, published in 1776 – a time when, even in the West, most people were poor.

Smith’s own hand in economic affairs may now be invisible, but if we are to address contemporary global poverty, the ideas he articulated are worth revisiting. The new £20 in our pockets will be a reminder to do so. In this way, it may exert a greater influence for the good of humankind than through its purchasing power alone.

Peter Heslam

Dr Peter Heslam is associate faculty at LICC and director of Transforming Business at Cambridge University.

additional resources

Adam Smith’s two most important and influential texts are The Theory of Moral Sentiments (1759) and An Inquiry into the Nature and Causes of the Wealth of the Nations (1776). They have been reprinted many times and are still easily available in print. The entire contents of both books is also available online at econlib.org.

Smith’s most famous observation is still frequently cited: ‘It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest’ (The Wealth of Nations, Book 1, chapter 2).

Although he is generally regarded as the originator of capitalism, Smith was fervently opposed to the modern corporation. He was also outspoken against the economic exploitation of the British East India Company – see Nick Robins, The Corporation that Changed the World: How the East India Company Shaped the Modern Multinational (Pluto, 2006). Click here to buy that book on amazon.co.uk. For an interview of Robins by Peter Heslam, go to transformingbusiness.net.

Excellent expositions of Smith’s economic ethics can be found in ‘Adam Smith as Civic Moralist’ in Istvan Hont and Michael Ignatieff’s Wealth and Virtue: The Shaping of Political Economy in the Scottish Enlightenment (CUP, 1983) and Gertrude Himmelfarb’s ‘Adam Smith: Political Economy as Moral Philosophy’ in The Idea of Poverty: England in the Early Industrial Age (Knopf, 1984). Click here and here respectively to buy those books.

The website of the London-based free-market think tank The Adam Smith Institute offers a number of useful resources on Smith. For example, go to adamsmith.org for a recent paper by Richard Morgan titled ‘Adam Smith the Critic of Exploitation’.

Western theologians tend to find it hard to express any appreciation for Smith. More usually they dismiss him as heretical, as in the case of those belonging to the Radical Orthodox school. See, for instance, D Stephen Long’s ‘The Theology of Economics: Adam Smith as “Church” Father’ on theotherjournal.com.

Among the relatively few theological works that make good sense on economics are John R Schneider’s The Good of Affluence: Seeking God in a Culture of Wealth (Eerdmans, 2002) – click here to buy – and Pope John Paul II’s 1991 encyclical Centesimus Annus.