Adam Smith was a champion of the working classes

The forgotten legacy of Adam Smith

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.


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’.


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’.

  SUGGESTED VIEWING The Wealth Paradox With Philip Collins, Guy Standing, Janne Teller, Kristian Niemietz

Having drawn inspiration from Smith to establish labour as the source of all wealth, reformers and socialists set out to define labour. In The Wealth of Nations (1776), Smith wrote: ‘the labour of a manufacturer adds, generally, to the value of the materials he works upon, that of his own maintenance, and of his master’s profit’. Smith’s materialist conception of wealth naturally supported the idea that those that produced material wealth (the manufacturers, for example), were to be considered ‘productive’; whereas those that did not (e.g. ‘churchmen, lawyers, physicians…’ in Smith words) were ‘unproductive’. Ideas about the relative ‘usefulness’ of different groups in society along Smithian lines became a hallmark of early socialist writing. An article in the one-penny Gorgon stated, for example: productive members of society were ‘those who by their labours increase the funds of the community, as husbandman, mechanics, labourers’, while unproductive members ‘waste[d] the produce of the country without giving any thing in return’. Yet despite producing the [material] wealth of the country, the labourer enjoyed but ‘a very small proportion…of the produce of his own toil and industry’.

The working-class press turned to Smith’s writings when discussing the condition of the poor and worker remuneration. There are many instances where Smith is quoted as intellectual validation of the workers’ right to a high wage. One article titled ‘Wages of Labour’ published in The Trades Newspaper and Mechanics’ Weekly Journal in 1825 declared, ‘in accordance with Dr Adam Smith who expressed the same opinion’, that workers should be given ‘as high wages as possible’. The solution to the poverty of the labourer lay in equitable laws for the protection of ‘those whose labour constitutes the wealth of the community’. An 1848 letter to Lloyd's Weekly Newspaper on the poor condition of the working classes stated: ‘Adam Smith likewise informs us that the law aids and abets the monopolists in conspiring to defraud, rob, and grind down the labourer, and that it effectually prevents the latter from going about to do himself justice.’ And on the importance of unionization and political representation, another newspaper said: ‘Adam Smith tells us, the masters and capitalists are always and everywhere in combination against the workmen…this is not surprising, considering who make [sic] the laws – considering that capital, wealth, property, are represented in Parliament, and that labour is not.’ Other publications quoted Smith directly, as in the case of a Gorgon article which stated: ‘No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.’


For Smith, progress involved both the development of markets and social measures to improve the conditions of the working classes.


It is worth noting how the above quote from Smith continues in The Wealth of Nations: ‘It is but equity, besides, that they who feed, clothe, and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, clothed, and lodged.’ Contrary to Smith’s image today as an uncomplicated champion of free market capitalism, during the 19th century, Smith’s work inspired reformers and socialists up and down the country. This is not to say that the more ‘conservative’ elements of Smith went unnoticed. Indeed, Smith’s writings provided intellectual validation for the burgeoning ‘laissez faire’ movement in British politics. Nonetheless today’s facile interpretation of Smith as an unequivocal champion of free markets neglects not only the complexities and inconsistencies in his writings, but the many different ‘Smiths’ that have been invented and reinvented since the publication of the Wealth of Nations in 1776.

  SUGGESTED VIEWING Guesses, errors and economics With Guy Standing, Linda Yueh, Gillian Tett, Richard Werner

For Smith, progress involved both the development of markets and social measures to improve the conditions of the working classes. Markets alone would not achieve the improvements he sought. Yet he understood and even emphasised that social progress was dependent on the accumulation of capital that drives the economy forward. The fact that Smith’s ideas were met with enthusiasm by radical reformers and socialists in the 19th century and by conservatives in the 20th century demonstrates that the intellectual tug of war over Smith’s ideas has a long and complex history, and is likely far from over.

Note: Nineteenth century newspapers can be accessed via the online British newspaper archives:

Latest Releases
Join the conversation