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June 06, 2007

National Lampoon's Wealth of Nations: What will you learn about the Wealth of Nations by reading P. J. O'Rourke? You will learn more about Adam Smith the man than about his work, argues economist William Coleman

Posted by William Coleman

On the Wealth of Nations
by P. J. O'Rourke
New York: Atlantic Monthly Press, 2006
Hardback, 10

Having first came to public attention thirty years ago with his pieces for National Lampoon, now P. J. O'Rourke offers from his pen On the Wealth of Nations.

The Smithian might tremble as he opens its pages. What he finds, however, is no bizarrerie but a more mundane compound of merit and demerit.

This mixed aspect reflects its mixed subject: the portentously entitled volume is as much about Adam Smith the human being, as it is about Wealth of Nations. And this is fortunate. For O'Rourke is ill equipped to analyse the Wealth of Nations, but proves himself equal to casting some light on its author.

His portrait of Smith is approving, and, unsurprisingly, without reverence. At various points he ventures that Smith had "no idea what he was talking about"; was "muddled"; and spoke "nonsense". But this does not doom Smith: character is not condemned on the basis of intellectual errors solely. We will allow and forgive at least a dram of nonsense from someone we admire for other reasons.

What will O'Rourke not forgive? The answer to that is found in the fact that P.J. O'Rourke is a satirist, a humourist, a wag; someone, he says, whose "job is to make quips, jests and waggish comments". And the raw material for quips is the less grave faults of mankind; above all, its pretension, pride, poe-facedness, panicyness, and poppycock.

Fortunately for Smith, the Scottish philosopher provides the wag very few of these less grave faults. O'Rourke approvingly suggests that Smith was an "idealist" but not a "visionary"; that he accepted "religion" but not "religiosity"; and that, whenever he exposed a delinquency in policy:

Smith didn't proceed with the rant that we now expect from people who feel themselves, a little to obviously, to be in the right.
Smith must have been a likeable man, ...[but not] however, one of those dreadful individuals of whom it was said "he was beloved by all".

Being a satirist, O'Rourke is also a moralist, and it is telling that his attention seems most excited, not by the Wealth of Nations, but by Smith's Theory of Moral Sentiments. Having fallen under the silent spell of the Theory, O'Rourke is required to address the question that beckons all students of these two brother works: what is their relation to one another? O'Rourke's position is common, if (in my view) fallacious: that the Theory of Moral Sentiments is about loving our neighbour, while Wealth of Nations is about loving ourselves.

Less commonplace and more insightful is O'Rourke's suggestion that both books share the same underlying principle: work. In the Wealth of Nations work is called "Labour". In the Theory work is called "Imagination". For Smith, as O'Rourke emphasises, imagination is no species of reverie, but a form of work: it is an action of the reasoning power.

This suggestion of an equivalence in the forces underlying the two books underlines the interpretation of Smith as a "puritan utilitarian", of the likes of John Locke. God, said Locke, had intended us to work, and therefore had designed us so as to take pleasure in those things that required work. The upshot of this "puritan utilitarianism" is that all good things come from work, of one form or another. Wealth comes from work. So does Propriety.

But while O'Rourke's instincts as satirist has made him alive to some moral issues, it seems to deaden him to others. The satirist, recall, is offended by the less grave faults of human existence. He falls silent in the face of its grimmer ones. We do not satirise famine. We do not satirise killing. The error of the satirist in the face of these bleak evils, is not to keep silent, but to go on plying their trade by fastening upon the lighter faults of those persons properly revolted by these evils. Thus in the face of famine and war in recent years, what has O'Rourke produced? All the Trouble in the World: the Lighter Side of Famine, Pestilence, Destruction and Death (1994). Or Peace Kills: America's New Fun Imperialism (2004).

Being a satirist besets O'Rourke with one other handicap in the project at hand. The satirist is captivated by the follies of human beings. But the economy is a human system, not a human being. And human systems are not human beings in the large; human systems do things, many things, systematically and predictably, without any human willing any part of those things. O'Rourke is oblivious to human system, and has no sense of the operation of the economic machine, something Smith was keenly alive to.

A remarkable manifestation of O'Rourke's blindness to the Smithian vision of the economic system is his belittling of the "the invisible hand": how the economic system produces the public interest in spite of all actors being only concerned with their private interest. The invisible hand is almost invisible in O'Rourke's On the Wealth of Nations.

O'Rourke dismisses the concept of the invisible hand on account of the fact that the phrase "the invisible hand" appears only once in Wealth. Even worse, says O'Rourke, that lonely usage makes its appearance in Smith's anomalous excursion on the supposed benefits of employing capital "in support of domestick industry" [in "On the Different Employment of Capitals" (Chapter 5, Book 2)], where Smith for five pages (out of a book of 900) adopts a protectionist stance. So how can the "invisible hand" be true to the Smith we celebrate?

[Smith's position in the protectionist "On the Different Employment of Capitals" is that to buy from a foreigner, in place of a home producer, is to give a profit to a foreigner, instead of a home producer, and so stimulate foreign activity over home activity. The defect of this argument is that to buy from a foreigner, in place of a home producer, is - given a balance of trade - to increase exports. Thus to buy from a foreigner, in place of a home producer, is merely to transfer profit from a home producer producing for the home market, to a home producer producing for the foreign market. Total home profits are the same.]

As it happens, O'Rourke is dead wrong in his particulars. The "invisible hand" passage does not appear in "On the Different Employment of Capitals". It appears in "Of Restraints upon the Importation from Foreign Countries of Such Goods as Can be Produced at Home" (Chapter 2, Book 4). That chapter is as classical a free-trade tract - as "Smithian" a condemnation of interference in the market - as any Adam Smith Club member could hope for. It is there that "the invisible hand" phrase appears, to bring out the merits of the free market.

What makes this error of O'Rourke especially puzzling is that his book On the Wealth of Nations is obviously born of his enduring attachment to its 712,000 words. Given the extensively miscellaneous quotation that stud it pages, I can easily believe that his Modern Library edition that he has owned "for almost 40 years" is "dog eared", "underlined" and "read to pieces". One proof is his "An Adam Smith Philosophical Dictionary", that he adds as an appendix. In this "Dictionary" chunks of Smith's wisdom are supplied beneath certain headings composed by O'Rourke. One sample is probably the best way to indicate the curious and rewarding double act that O'Rourke and Smith provide.

Tourists, the Kind Who Come Home Raving about the Excellence of Mass Transportation in Other Countries

In China the high roads, it is pretended, exceed very much everything of the same kind which is known in Europe. The accounts of those works, however, which have been transmitted to Europe, have generally been drawn up by weak and wondering travellers;.Though it should be true that in some parts of Asia this department of the public police is very properly managed by the executive power, there is not the least probability that, during the present state of things, it could be tolerably managed by that power in any part of Europe.

Dr William Coleman is Reader in Economics at the Australian National University and the author of Economics and its Enemies: Two Centuries of Anti-Economics, (Palgrave Macmillan, 2002). To read his essays for the Social Affairs Unit on Anti-Economics, see: Anti-Economics.

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