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Was Adam Smith Really a Right-Winger? (Update)

May 06, 2026 • 1h 8m

Summary

⏱️ 7 min read

Overview

This Freakonomics Radio episode explores how Adam Smith, the 18th-century Scottish moral philosopher, became the patron saint of free market capitalism despite his writings revealing far more nuance. The episode examines how Chicago School economists, particularly Milton Friedman and George Stigler, cherry-picked Smith's ideas—especially the 'invisible hand'—to champion deregulation and privatization. Scholars debate whether Smith would align with modern conservatism or progressivism, revealing a thinker concerned with both market efficiency and human welfare, who warned against wealth inequality and corporate collusion while advocating for education and worker conditions.

Adam Smith's Two Books and Early American Influence

Adam Smith published The Theory of Moral Sentiments in 1759, emphasizing sympathy and arguing that wealth doesn't indicate moral virtue. His second book, The Wealth of Nations (1776), took 17 years to write and was published alongside American independence. Smith criticized British colonialism as financially draining and influenced America's founders like Hamilton and Madison, who studied his work on political economy, though he wasn't yet treated as an untouchable authority.

  • The Theory of Moral Sentiments (1759) was praised for its beautiful writing and humanity, arguing wealth doesn't equal moral virtue
  • The Wealth of Nations was published in 1776, the same year Britain lost its American colonies
  • Smith's final paragraph criticized the British Empire as existing 'in imagination only,' calling it 'the project of an empire' that drained resources without profit
  • American founders like Madison, Hamilton, and Jefferson read Smith as a technical resource, not a religious text
  • Alexander Hamilton borrowed from Smith in his report on national banks
" This disposition to admire and almost to worship the rich and the powerful, and to despise or at least to neglect persons of poor and mean condition, is at the same time the great and most universal cause of the corruption of our moral sentiments. "
" It has hitherto been not an empire, but the project of an empire, not a gold mine, but the project of a gold mine. A project which has cost, which continues to cost immense expense without being likely to bring any profit. "

The Chicago School's Reinvention of Smith

By the mid-20th century, University of Chicago economists like Friedrich Hayek, George Stigler, and Milton Friedman transformed Smith into a champion of individualistic, market-oriented society. They emphasized concepts like self-interest and the invisible hand while smoothing over complexities in Smith's work. George Stigler particularly loved Smith, even wearing a t-shirt proclaiming himself 'Adam Smith's best friend,' but critics argue they cherry-picked aspects that supported their free-market ideology.

  • Chicago School economists like Viner and Knight built intellectual credibility by teaching Smith as an early theorist of price
  • Later Chicago economists transformed Smith by reworking concepts like individualism, self-interest, and the invisible hand
  • George Stigler saw Smith as 'the Prometheus of economics' and wore a t-shirt saying 'Adam Smith's best friend'
  • The Chicago School picked a few aspects of Smith's thought and made it the whole of his philosophy
  • The phrase 'invisible hand' appears only once in The Wealth of Nations but became central to modern economics
" The Chicago School picked up a few aspects of Smith's thought and made it the whole of Smith's thought. They picked out the phrase the invisible hand, which he uses just two or three times in his writings, and made that the central feature of who Smith was. "

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