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Adam Smith, Storyteller

Adam Smith’s skill was as a storyteller of the first order. It takes one a while to realize where his appeal lies. As many have noted, his Wealth of Nations is rambling, polemical, and rather cavalier with evidence. All this sits rather strangely with the popularity of his writing, both then and now. How to understand that appeal? We suggest it may be found not in any skill at constructing careful and detailed argument, but in his ability to tell stories.

The desire of being believed, or the desire of persuading, of leading and directing other people, seems to be one of the strongest of all our natural desires.[1]

Adam Smith’s skill was as a storyteller of the first order. It takes one a while to realize where his appeal lies. As many have noted, his Wealth of Nations is rambling, polemical, and rather cavalier with evidence.[2] All this sits rather strangely with the popularity of his writing, both then and now.[3] How to understand that appeal? We suggest it may be found not in any skill at constructing careful and detailed argument, but in his ability to tell stories. With that in mind, let us offer some samples of the various fables, sayings, moral tales, vignettes, and parables that overcrowd Wealth of Nations.


Perhaps the most significant fable is the one that follows Smith’s observation that has since become a slogan of the ideologues of capitalism: there exists, he writes, a “certain propensity in human nature,” which is “the propensity to truck, barter, and exchange one thing for another.”[4] Aware that this may be a contested suggestion, he offers not detailed argument to back it up but a cute fable concerning dogs. They stand in for all animals, whose nature is said to be different from that of human beings. Do animals too exchange with one another? Two greyhounds may appear to act together in chasing a hare, turning to each other from time to time. But that is mere coincidence, brought about by their common passion. After all, “Nobody ever saw a dog make a fair and deliberate exchange of one bone for another with another dog.” Indeed, “Nobody ever saw one animal by its gestures and natural cries signify to another, this is mine, that yours; I am willing to give this for that.”[5] The only way a dog can obtain something it wants is to fawn over its master. Exchange or barter simply does not enter into the equation. Obviously a fable such as this is no replacement for argument. But it is readable, entertaining perhaps, designed to appeal at another and more persuasive level.

Sayings and Moral Tales

As for his sayings, a couple of morsels: one concerning a water pond, and the other a shaky inn:

The project of replenishing their coffers in this manner may be compared to that of a man who had a water-pond from which a stream was continually running out, and into which no stream was continually running, but who proposed to keep it always equally full by employing a number of people to go continually with buckets to a well at some miles distance in order to bring water to replenish it.[6]

The house is crazy, says a weary traveller to himself, and will not stand very long; but it is a chance if it falls to-night, and I will venture, therefore, to sleep in it tonight.[7]

Both have a rather earnest moral tone. Indeed, the crazy house appears in the midst of a moral tale concerning the practice of dubious bills of exchange, which one moves perpetually about in order to delay repayment.[8]  Others moral tales include – to name but a few – the folly of the Ayr Bank of Scotland, which opened in 1769 and folded soon afterwards in 1772; the dangers of lotteries, the riskiness of searching for new mines; and the juggling trick of reducing precious metals in coinage.[9] In order to gain a sense of these syrupy tales, we quote one concerning the merchant and the country gentleman:

Merchants are commonly ambitious of becoming country gentlemen, and when they do, they are generally the best of all improvers. A merchant is accustomed to employ his money chiefly in profitable projects; whereas a mere country gentleman is accustomed to employ it chiefly in expence. The one often sees his money go from him and return to him again with a profit: the other, when once he parts with it, very seldom expects to see any more of it. Those different habits naturally affect their temper and disposition in every sort of business. A merchant is commonly a bold; a country gentleman, a timid undertaker … Whoever has had the fortune to live in a mercantile town situated in an unimproved country, must have frequently observed how much more spirited the operations of merchants were in this way, than those of mere country gentlemen. The habits, besides, of order, economy and attention, to which mercantile business naturally forms a merchant, render him much fitter to execute, with profit and success, any project of improvement.[10]

The moral coding of Smith’s work emerges here in all its glory, a coding reinforced time and again through stories such as this. The industrious merchant is of course the virtuous one, full of spirited energy, order, economy, and boldness. He is able to generate profit and thereby improve the condition of the land itself. By contrast, the country gentleman simply has not a clue, for he is timid and lacking in the discipline needed for real improvement.


The moral tale we have just quoted leaks into the dominant form of the parable, although the demarcations between various types are never firm. Parables there are aplenty, especially when Smith wishes to persuade readers concerning an initial assertion. Instead of any extended analysis of empirical data, of tables and calculations, or factory reports, when he needs to make a point, a parable is far more useful. We cannot deal with them all, so we select a few of the better examples.[11]

The first needs only a brief mention, for it is nothing less than a comprehensive gloss of the parable of the Prodigal Son from Luke 15:11-32. Smith sets up an initial opposition between the prodigal and prudent or frugal man, and develops a tale of the growth of capitalism in England in light of the opposition.[12] However, the whole account reconfigures the relationship between the two, for the prodigal becomes the reprehensible figure in the story while the frugal one is to be praised. When the prodigal – a king or government or landlord – dominates, economic growth is threatened, but when the frugal and sober son comes to the fore, the story begins to sound more cheerful.

However, the second parable is more typical of Smith’s storytelling. It concerns the borrowed parable of the pin:

To take an example, therefore, from a very trifling manufacture; but one in which the division of labour has been very often taken notice of, the trade of the pinmaker; a workman not educated to this business (which the division of labour has rendered a distinct trade), nor acquainted with the use of the machinery employed in it (to the invention of which the same division of labour has probably given occasion), could scarce, perhaps, with his utmost industry, make one pin in a day, and certainly could not make twenty. But in the way in which this business is now carried on, not only the whole work is a peculiar trade, but it is divided into a number of branches, of which the greater part are likewise peculiar trades. One man draws out the wire, another straights it, a third cuts it, a fourth points it, a fifth grinds it at the top for receiving the head; to make the head requires two or three distinct operations; to put it on, is a peculiar business, to whiten the pins is another; it is even a trade by itself to put them into the paper; and the important business of making a pin is, in this manner, divided into about eighteen distinct operations, which, in some manufactories, are all performed by distinct hands, though in others the same man will sometimes perform two or three of them. I have seen a small manufactory of this kind where ten men only were employed, and where some of them consequently performed two or three distinct operations. But though they were very poor, and therefore but indifferently accommodated with the necessary machinery, they could, when they exerted themselves, make among them about twelve pounds of pins in a day. There are in a pound upwards of four thousand pins of a middling size. Those ten persons, therefore, could make among them upwards of forty-eight thousand pins in a day. Each person, therefore, making a tenth part of forty-eight thousand pins, might be considered as making four thousand eight hundred pins in a day. But if they had all wrought separately and independently, and without any of them having been educated to this peculiar business, they certainly could not each of them have made twenty, perhaps not one pin in a day; that is, certainly, not the two hundred and fortieth, perhaps not the four thousand eight hundredth part of what they are at present capable of performing, in consequence of a proper division and combination of their different operations.[13]

The point that the parable seeks to drive home is of course the crucial role of the division of labor, with which Smith opens Wealth of Nations. Not content with one parable, he soon offers another concerning “The Course Coat,” although the point is largely the same.[14] Smith was evidently rather fond of the parable of the pin, for it also appears in his Lectures on Jurisprudence.[15] He was also quite possessive, accusing Adam Ferguson, a former friend, of plagiarizing the parable in the latter’s Principles of Moral and Political Science.[16] Perhaps it takes one to know one: Smith seems to have drawn the parable from the entry under “Epingles” in the French Encyclopaedie of 1755. Here too do 18 steps in the process of pin-making appear, even though the English pin-makers used 25. Even so, the apparently wondrous process of the division of labor was by no means new to Smith, for it recalls Locke’s account of the making of bread in his Two Treatises of Government.[17]

One further example, entitled “Daedalian Wings.” Smith begins by noting the operations of a judicious bank, which uses paper money as a substitute for a significant portion of its gold and silver, thereby making available productive stock.

The gold and silver money which circulates in any country may very properly be compared to a highway, which, while it circulates and carries to market all the grass and corn of the country, produces itself not a single pile of either. The judicious operations of banking, by providing, if I may be allowed so violent a metaphor, a sort of waggon-way through the air; enable the country to convert, as it were, a great part of its highways into good pastures and corn fields, and thereby to increase very considerably the annual produce of its land and labour. The commerce and industry of the country, however, it must be acknowledged, though they may be somewhat augmented, cannot be altogether so secure, when they are thus, as it were, suspended upon the Daedalian wings of paper money, as when they travel about upon the solid ground of gold and silver.[18]

Suspicions of paper money emerge here, suspicions that Smith would voice on more than one occasion. Compared to the solid ground of gold and silver, one may travel on a wagon-way through the air, or perhaps fly like Daedalus high into the heavens. Daedalus, of course, flew a little too close to the sun, melting the wax that held the feathers to his arms. One must therefore be careful with such an unreliable thing as paper money, for with its enabling possibilities come the risks of crashing to the ground. However, what intrigues us here is the deployment of metaphors typical of myths.[19] Roadways through the sky and the paper wigs of money evoke not merely the Greek myths Smith – given his elite education – knew rather well, but also the myths he sought to rewrite.

Why did Smith populate his vast work with so many tall tales? Perhaps we will never know the answer to that question. But we can answer another: what is the effect of those stories? We suggest that they are able to draw in readers of all types. The stories in their bewildering variety make accessible various ideas concerning the ideology of capitalism at the time, offering not so much a carefully argued synthesis but a vast story book that captured the imagination. Indeed, the key slogans of Smiths thought – freedom of the market, the propensity for human beings to barter and exchange, self-interest, and the invisible “hand” – find their true home in those stories.[20] In that way, they were far more persuasive, entering into the folklore of capitalism.

[1] Adam Smith, The Theory of Moral Sentiments  (Oxford: Oxford University Press, 1976 [1759]), VII.iv.25.

[2] Murray N. Rothbard, An Austrian Perspective on the History of Economic Thought I: Economic Thought Before Adam Smith  (Auburn: Ludwig von Mises Institute, 2010 [1995]), 435-74; David Ricardo, On the Principles of Political Economy and Taxation, ed. Piero Sraffa, vol. 1, The Works and Correspondence of David Ricardo (Indianapolis: Liberty Fund, 2004 [1817]), 329. Even the sympathetic Viner notes the “absence of complete co-ordination and unity” in his philosophy. Viner, Essays on the Intellectual History of Economics (Princeton: Princeton University Press, 1991), 101.

[3] For an indication of the immediate impact and popularity of his work among the ruling class, see the brief survey in Roy Harold Campbell and Andrew Skinner, “General Introduction,” to Wealth of Nations, , 41-43.

[4] Smith, Wealth of Nations, I.ii.1. Elsewhere he speaks of the “the natural inclinations of man,” assuming this initial slogan (III.i.3; see also II.i.2).

[5] Smith, Wealth of Nations, I.ii.2.

[6] Smith, Wealth of Nations, II.ii.76.

[7] Smith, Wealth of Nations, II.ii.67.

[8] Smith, Wealth of Nations, II.ii.67-72.

[9] Smith, Wealth of Nations, I.x.b.27; II.ii.73-78; IV.vii.a.18-19; V.iii.60.

[10] Smith, Wealth of Nations, III.iv.3. It is worth noting here the tension between this moral tale and the parable of the industrious farmer. “Not only the art of the farmer, the general direction of the operations of husbandry, but many inferior branches of country labour require much more skill and experience than the greater part of mechanick trades. The man who works upon brass and iron, works with instruments and upon materials of which the temper is always the same, or very nearly the same. But the man who ploughs the ground with a team of horses or oxen, works with instruments of which the health, strength, and temper are very different upon different occasions. The condition of the materials which he works upon too is as variable as that of the instruments which he works with, and both require to be managed with much judgment and discretion. The common ploughman, though generally regarded as the pattern of stupidity and ignorance, is seldom defective in this judgment and discretion.” Smith, Wealth of Nations, I.x.c.24.

[11] Others include “The Coarse Coat,” “Linen Manufacture,” “The Cotter,” “The Coarse Coat,” “The Delightful Vegetable Garden,” “The Potato,” “The Vineyard,” “Eqippage,” “Types of Metals,” Stone and Silver Mines,” “Dwellings, Clothes, and Rents,” The Talents,” The Guinea,” “One Million Pounds,” “The Labor of Nature,” “The Tailor and the Shoemaker,” “Scottish Wine,” “The Army,” “The Ale-House,” “The Witch and the Corn Merchant,” and “The Lace-Maker.” Smith, Wealth of Nations, I.i.11; I.ix.24; I.x.b.49; I.xi.b.25; I.xi.b.27; I.xi.b.39-42; I.xi.c.7; I.xi.c.31; I.xi.d.2; II.i.12; II.i.17; II.ii.18-19; II.ii.30; II.iii.39; II.v.12; IV.ii.11; IV.ii.15; IV.ii.33; IV.iii.c.8; IV.v.b.26; IV.ix.12.

[12] Smith, Wealth of Nations, II.iii.

[13] Smith, Wealth of Nations, I.i.4.

[14] Smith, Wealth of Nations, I.i.11.

[15] Smith, Lectures on Jurisprudence (Indianapolis: Liberty Fund, 1982 [1976]), LJ(A) vi.29-30, 51; LJ(B) 213-14, 329.

[16] Adam Ferguson, Principles of Moral and Political Science  (London: G. Olms, 1975 [1792]).

[17] Locke, Two Treatises of Government and A Letter Concerning Toleration (edited by Ian Shapiro New Haven: Yale University Press, 2003 [1691]), 2.43.

[18] Smith, Wealth of Nations, II.ii.86.

[19] Other mythical language appears from time to time in his writing, such as money being the “the great wheel of circulation” or a bank the “great engine of state.” Smith, Wealth of Nations, II.ii.23, 39; II.ii.85.

[20] Needless to say, critics simply miss the mythic nature of Smith’s work. For instance, Aspromourgos does not see that the comprehensive “framework” produced by Smith is a result of his mythic production within which neoclassical and neoliberal economists remain in thrall. Aspromourgos, The Science of Wealth: Adam Smith and the Framing of Political Economy (London: Routledge, 2009).

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