Scottish Enlightenment: what were the influences on Adam Smith’s thought?

Newtonian principles, Stoic philosophy and post-Calvinist religious thinking all shaped the ideas of Adam Smith – and through him, they underpin modern economics.

Ideas rarely come out of nowhere. Prior thinking matters. So too do the surroundings in which the people doing the new thinking live. Even when this influence is subconscious, what people think normally reflects what is happening around them. This applies not just to the physical circumstances governing their everyday lives, but also to the significant historical forces, and even the major attention-arresting events, of their time. Economic thinking is no exception.

Adam Smith laid the foundations for what became modern Western economics in the third quarter of the 18th century. The centrepiece of his thinking was the idea that ordinary individuals, acting merely in their own self-interest, can – and under conditions of well-regulated competitive markets will – take actions that make not only themselves better off, but others too.

Against the background of centuries of concern over the consequences of self-interested behaviour, especially in the economic sphere, the idea was not just novel but startling. And it has been the centrepiece of Western economics ever since. But where did Smith’s thinking come from?

Some of the chief influences are well understood, and widely discussed in scholarly research. Smith and his generation of intellectuals were all educated in Newtonian principles of system and mechanism. Newton’s great Principia Mathematica was first published in 1687, and by the time Smith was an undergraduate at the University of Glasgow, the book was part of the standard curriculum in all Scottish universities, as well as at Cambridge in England.

What made Smith’s contribution in The Wealth of Nations special was that he offered not only the central proposition about self-interested economic behaviour making others better off, but also a systematic explanation for it together with the mechanism – market competition – that made it work. Some of his intellectual predecessors, both British and French, had intuited the proposition, but none had offered a systematic explanation or a believable mechanism.

Several other influences are also familiar. Smith was well educated in Stoic philosophy (his favourites were Epictetus and Marcus Aurelius), with its concept of natural harmony in the universe. He was a highly observant man, and he lived in an increasingly commercial society and spent time in major mercantile centres like Edinburgh, Glasgow, London and Paris. He was also an insightful philosopher, whose penetrating introspections had earlier formed the basis of The Theory of Moral Sentiments.

I believe that there was something else at work too: the new and hotly contended religious thinking in the English-speaking Protestant world at that time, associated with the movement away from Calvinist notions of depravity and predestination. In place of Calvin’s belief that all men are ‘totally depraved’ and ‘unable to do good’, the new thinking emphasised the inherent goodness of all men. In John Locke’s memorable metaphor, all men are given the ‘candle of the Lord’ with which to understand what is right.

The new thinking set out that all men are able to be saved, and that – in the words of John Tillotson, the first Archbishop of Canterbury appointed after the Glorious Revolution of 1688 – each person must ‘cooperate’ with God in achieving their salvation. This stood in contrast to earlier beliefs that who was saved was a matter determined before the world was even created, leaving no room for influence from an individual’s decisions or acts. Further, instead of the Calvinist idea that the sole purpose of human existence is to glorify God, now human happiness was a divinely intended end, perhaps the most important.

The contention over this change in religious thought was a rolling process, developing first in England, then in Scotland and later still in America. Importantly, it was at its height in Scotland just when Smith and his contemporaries were coming to young adulthood and therefore forming what Einstein called their ‘world view’ (Weltbild) and what Joseph Schumpeter called the economist’s ‘preanalytic vision’. Especially in light of the close integration of intellectual life in Edinburgh and Glasgow at the time, it was highly likely to have affected their thinking about the world, even though Smith, and even more so David Hume, were not outwardly religious men.

In effect, Smith and his contemporaries were secularising the religious thought of their day, with its optimistic assessment of human character and expansive sense of the possibilities for human agency. Those principles were essential to the creation of modern Western economics and they have remained so ever since.

Today, economics is still about human choices and their possibilities. Smith’s proposition about the effect of self-interested actions taken under conditions of market competition is still the heart of our analytical apparatus. And the more expansive and optimistic view of human agency held by Smith and Hume remains ours as well.