Contrary to Adam Smith’s image today as an uncomplicated champion of free market capitalism, during the 19th century, Smith’s work inspired socialists and radical political reformers. Writes Alexandra Digby.
Three hundred years after his birth, Adam Smith’s reputation as the poster boy for free market capitalism remains stubbornly deep-seated. Portrayed as an ideologue of the modern political Right, Smith is credited with unlocking an important economic truth: markets work best when left alone. More specifically, Smith supposedly discovered, by way of the ‘invisible hand’, that markets work best for everyone when individuals are free to pursue their own self-interest and when competition is allowed to flourish. Yet this reading would have baffled 19th-century reformers in Britain who looked up to the moral philosopher as ‘that renowned Smith…the great oracle of the discontented’. Indeed, Smith’s writings were a vital source of intellectual ammunition for progressive socioeconomic and political reform movements. In stark contrast to his image today, the working classes viewed Smith as a ‘leading intellect’ who might even ‘change the whole face of things’.
‘Labour is the source of all wealth’ has been a powerful rallying cry among socialists and reformers for over 200 years and remains a popular motto of trade unionism to this day. It has been used in a number of different ways: as a purely rhetorical device in support of workers’ right to vote and as an argument for the redistribution of wealth in favour of workers. The source of this idea is attributed to the economist David Ricardo’s ‘labour theory of value’, an influential theory in political economy stating that the relative value of things is due to the amount of labour (both direct and indirect) used to produce them. Yet there is growing recognition of Smith’s influence (among others) on the development of the idea and, more generally, on early socialist thought. Indeed, socialists appropriated Smith’s theory both as a technical tool to expose the exploitation of the labourer (as in the case of socialist Thomas Hodgskin) and to reinforce the simple message that labour (rather than capital or land) was the source of wealth.
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Over time, Smith argued, capital had been accumulated by capitalists and land had been appropriated by landlords who ‘love to reap where they never sowed’.
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Socialist writers of the 1820s and 30s including John Gray, John Francis Bray, William Hawkes Smith and William King all quoted Smith directly as intellectual validation of the workers’ central role in wealth-creation. In a letter ‘To the Commercial and Working Public’ published in 1839, William King declared:
‘“Labour is the source of wealth”, says Adam Smith. Now if the labourers are the creators of all wealth, how is it they are in general so miserably poor?’
Leading reformers of the Chartist movement (1838–1848) – the first mass mobilization of workers agitating for the vote – also took inspiration from Smith. The Chartist press quoted Smith time and time again, identifying him as the originator of the idea that labour was the source of wealth and using his ideas as intellectual justification for the workers’ right to vote. One working-class newspaper turned to Smith for validation that labour ‘above all things should be protected by law’, pointing out that at one time, according to Smith, ‘the whole produce of labour belonged to the labourer’. Over time, Smith argued, capital had been accumulated by capitalists and land had been appropriated by landlords who ‘love to reap where they never sowed’.
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