Of Course We’re Still Reading Wealth of Nations

• “[W]hatever we may think of Smith and the Wealth of Nations they did become symbolic of the new discipline of economics through the centuries and it hardly befits us to question the judgments of past generations’s assessments of the value of a work they read for themselves for their own purposes. It is a matter of historical fact that the book became a ‘classic’.”

In our times it seems that there are two common responses to the anniversary of a ‘great’ book. The first of these is found in those commentators who seek a revisionist account of the significance of the individual and their work, aiming to de-bunk or de-throne the great book. We find an example of this predictable, yet tired, response in an article in The Economist at the end of 2025¹ that sought to undermine the significance and originality of Smith’s ideas.

One might be forgiven for taking such a click-driven attempt at revising the reputation of a historical figure as a symbol of the decline of seriousness in our culture. But Smith himself would have been well familiar with such reviews in the scurrilous pamphlets and newspapers of his own day, and he would doubtless have treated them with the bemused disdain expected of the Enlightenment literati. In his correspondence we see Smith acknowledge the changes that he made in response to the views of his critics, distinguishing those he saw as substantive and ignoring those he saw as misinterpretations. As he did so he noted that “Authors are not much disposed to alter the opinions they have once published.” (Smith Corr: 250). That he was willing to do this when he thought necessary suggests that he was not doctrinaire in his views and that he was open-minded to persuasion.

Moreover, as Glory Liu demonstrates in her book Adam Smith’s America: How a Scottish Philosopher Became an Icon of American Capitalism,² whatever we may think of Smith and the Wealth of Nations they did become symbolic of the new discipline of economics through the centuries and it hardly befits us to question the judgments of past generations’s assessments of the value of a work they read for themselves for their own purposes. It is a matter of historical fact that the book became a ‘classic’.

The fact that the Wealth of Nations was well-received by his contemporaries and became a must-read for the educated public shows that Smith’s book met with favour and was influential. Though his prose and style of presentation may seem dated to us today, they were well-regarded at the time and demonstrated a system of ideas backed by examples and empirical data. All of this was brought to bear to make a point, a point that was both academic – that commercial society was something new and as a result we had to think anew about its economic structure – and political, that the arguments presented by interested parties in favour of particular economic and political policies were in dire need of reconfiguration. But why should a 250 year old book which Smith himself billed in a letter to his friend Andreas Holt as a “very violent attack” on “the whole commercial system of Great Britain” (Smith Corr: 251) be thought helpful to us today?

This leads us to the second common response to an anniversary, the urge to ask what we can learn from the book. What does the Wealth of Nations say to us, and what would Adam Smith make of the economics of our times? In December 2025 the German newspaper Die Zeit did just that.³ They resurrected Adam Smith through AI and interviewed him about recent events. As anachronistic, and perhaps narcissistic, as it might seem to ask a 250 year old book and its author to speak to our problems, the AI ‘Smith’ acquitted himself well, appearing suitably baffled that trade wars and tariffs remain a part of our own economic life. Smith might have hoped that his book and 250 years of subsequent effort could persuade politicians of the folly of seeking to manipulate economic activity in such a way, but that is to misunderstand Smith’s pragmatic sense of the likelihood of success for his book. He noted “To expect, indeed, that the freedom of trade should ever be entirely restored in Great Britain, is as absurd as to expect that an Oceana or Utopia should ever be established in it. Not only the prejudices of the publick, but what is more unconquerable, the private interest of many individuals, irresistibly oppose it.” (WN IV.i.43: 471).

So, Smith was modest in his expectations for the influence of his book upon those whose self-interest is best served by restricting competition and securing a livelihood through the power of the state. In some areas he obviously succeeded in shaping the course of both the discipline and the public discourse. We no longer think that wealth consists in gold and silver, and we understand that our world is characterised by specialisation and interdependence. But in his attacks on empire and on colonialism we find him much less successful – as the history of the British Empire in the Nineteenth Century attests.

Smith has been more fortunate than his dear friend David Hume in that his opposition to empire and slavery have not seen his reputation suffer among those who consider it a worthwhile use of their time to judge the past by present mores. His understanding that the interests of some would likely prevent the attainment of the system of natural liberty in its full form, suggests that he had a different hope in view for his book. The point was not to create a school of ideologues seeking to impose his system. Instead, it was to influence the public debate by providing so clear a system of ideas that it became much more difficult to advance policies based on false systems and personal enrichment. That free trade became synonymous with nineteenth century British liberalism is largely down to Smith’s success in kick-starting the discipline of political economy while using it to make political points about British economic policy.

As someone who initiated a discipline we cannot hope for him to be an all-seeing sage and expect the truth to lie somewhere in the Wealth of Nations if we only look hard enough. Karl Marx had the misfortune to encourage such a cult-like status among the followers who scratched over his writings to seek meaning that they might apply in their own lives. Adam Smith, ‘founding father’ that he may be, was fortunate not to inspire that level of devotion.

In expecting Adam Smith to speak directly to our current economic situation, we also face the danger of a lack of charity if we point out the things that we now know that he got wrong and which have been ‘corrected’ by the work of subsequent thinkers. Plainly no easy balance sheet can be constructed if we take a 250 year old book that established a discipline and try to apply it today. We might, however, take a moment to think about what Smith got wrong, and where he may not be a reliable guide.

One big example pointed to in writings that explore Smith’s place in the history of economic thought is his attempt to create an objective theory of value from labour. This attempt flows naturally enough from the guiding ideas of trade and the division of labour that Smith places at the heart of his analysis. Viewed from a contemporary setting on the other side of the ‘marginal revolution’ this looks like a major misstep. This, in addition to being uncharitable, is also a mistake. It is a mistake because Smith saw that the theoretical search for a measure of value in labour was doomed to fail in practice and instead suggested that we rely on prices derived from market exchanges as a more practicable guide (WN I.v). A century of economic thinkers followed him in trying and failing to solve the puzzle of the basis of a labour theory, but this in itself would not been seen as a waste by Smith. As we see in his essay on the History of Astronomy, he well knew knowledge advances slowly and systems of ideas are eventually replaced by better systems that more accurately explain the matter. We have to go up a dead end to discover that it is such.

But more than that, he understood that economic interaction was more complex than the simplified exchange examples he uses to illustrate his theory. Smith understood the value of generalising from evidence to create models of types of situations that might then illustrate the point under discussion, but here again we see some of those thinkers who were influenced by him taking up his ideas in a less than helpful fashion. Smith’s identification of types of society characterised by the dominant mode of subsistence, the ‘four stage’ theory of hunter, shepherd, farmer, and commercial societies, encouraged thinkers like Hegel and Marx to develop scientific theories of historical development of a sort absent from Smith’s work and in direct contradiction to the spirit of his inquiry. Smith has no notion of historical inevitability, and so he would not have dreamt that his writings could foresee what our own societies have become. Indeed Smith more often than not describes the ‘natural’ track of economic development only to then explain that human institutions have redirected that course. The analysis of the rise and fall of feudalism in Europe that we find in Book III of the Wealth of Nations is a masterpiece of such analysis that demonstrated the difference between how we can explain economic change on a theoretical level and yet realise that the reality of historical change is quite different for those living through it.

Perhaps, then, that is the lesson that we ought to take in reflecting on what Adam Smith can say to us today. When Smith defended what he called “the obvious and simple system of natural liberty” where “The sovereign is completely discharged from a duty, in the attempting to perform which he must always be exposed to innumerable delusions, and for the proper performance of which no human wisdom or knowledge could ever be sufficient: the duty of superintending the industry of private people, and of directing it towards the employments most suitable to the interest of the society.” (WN IV.ix.51: 687). He was not making a doctrinaire point about self-interest or claiming that there was no role for the government; the whole of Book V is about what that role ought best to be. Instead he was drawing a conclusion from the evidence as he saw it. His aim was to puncture the pretensions of those, whether merchants or “pretended doctors” (WN IV.iii.c.14: 496) advancing false systems of understanding the economy, who sought to direct opinion on economic matters. In doing so he understood that he was unlikely to be completely successful, but he could at least make advancing such views as difficult and intellectually embarrassing as possible for those whose ideas he opposed.

That the Wealth of Nations is a classic, that it has had a profound impact on the discipline of economics and the way that the educated public think about political economy is undeniable. We’re still talking about it after 250 years. That its author had a more modest sense of the likely impact of his system given the nature of human life, the prejudices of the public, and their tendency to make interested arguments where wealth is to be made, perhaps explain why we do not live in the system of natural liberty. If someone were to check in again on the 500th anniversary of the Wealth of Nations, in all probability Adam Smith would expect the same mixed report card. Even a text as great as the Wealth of Nations can’t fully inoculate against human folly, but perhaps we can still learn a few lessons from Smith’s faith in clear argument and empirical evidence in countering the more damaging economic follies of our own times.

This article has been cross-posted from Liberty Matters, part of the Liberty Fund network. It is part of the series “Compounding Interest: Revisiting the Wealth of Nations at 250“.