Adam Smith
Jan Van Vliet
Phillipsburg, NJ: P&R Publishing Company, 2024 (160 pages)

Professor Jan van Vliet’s book on Adam Smith is an entry in P&R (Presbyterian and Reformed) Publishing’s Great Thinkers series. It will be of interest to Christians, particularly those adhering to Reformed theology.

Professor van Vliet successfully checks all three of the book series’s goals: to be academically informed, to maintain a high standard of biblical and theological faithfulness, and to be written in an accessible style. Van Vliet’s knowledge of all things Smith is quite extensive. He has consulted a wide range of the best contemporary scholarship on the topic, and has clearly read the totality of Smith’s published works. The book is a remarkable achievement of clear, concise, and accessible writing.

As a Reformed Christian, I welcomed van Vliet’s approach. It is the sort of reading that could be used in a course on Christian teaching on the economy, which we teach at Gordon College and which we require economics majors to take.

The book consists of five chapters: an introduction; a biographical chapter; two long chapters on The Theory of Moral Sentiments (TMS) and An Inquiry into the Nature and Causes of the Wealth of Nations (WN), respectively; and a concluding chapter. The overarching theme is Smith’s desire to promote a society based on liberty and virtue. The account of TMS, especially of the sympathy mechanism, is well done. The same might be said of the author’s more selective treatment of WN, with the exception of how he handles the value theory material. Van Vliet attributes to Smith a labor theory of value, but he conflates the two concepts “labor embodied” and “labor commanded,” treating them both as causal factors in determining the natural price.

I would respectfully like to take issue with the negative judgment van Vliet renders when he critiques TMS from a Christian perspective. A summary of his views is the following:

While there is much of value in Smith’s phenomenological account of moral theory, it is fundamentally wrongheaded because it introduces a high degree of relativism to his social project of forging a virtuous society … while ignoring altogether the incapacity resulting from sin. (58)

Smith is charged with ignoring sin while upholding relativism in morals: “Smith’s social theory is time-and-place variable,” says van Vliet (56). This is a possible reading of TMS, indeed it is a well-respected one. However, I believe there is another interpretation which renders TMS if not explicitly Christian, then very much compatible with Christian/biblical morality. In other words, reasonable Smith interpreters can and do disagree on the relativism of the system of moral philosophy Smith develops in TMS.

The problem is that the theory begins contextually and proceeds inductively as agents learn by experience. However, by the time we get to TMS Part III, “Of Duty,” we encounter the ideal impartial spectator, i.e., our moral conscience. From here Smith pushes the model to the point where we develop general rules of conduct, and our sense of duty, then, applies to our attitude toward these rules. In chapter V of Part III Smith essentially asks the question: How do these general rules, which have evolved spontaneously in a social context, relate to the moral laws that God has established? Smith’s chapter reads as if it is reasonable to “regard” the laws of morality as if they were the laws of a superior being, God, the Deity, or Nature. However, the chapter title reveals Smith’s hand in this by saying up front that this is a “just,” i.e., correct regard. The general rules which emerge by common consent are the laws of God.

The larger picture here I would claim is something like this. Natural philosophy (physics, geology, chemistry, et al.) investigates the laws by which God governs the natural world, and moral philosophy (moral science, e.g., natural jurisprudence, politics, political economy, history, et al.) investigates the laws by which God intends to govern human beings. The agents (matter and energy) in the natural world behave according to the laws of nature because they have no wills, and, therefore, no choice whether to obey the laws or not. Humans have wills; obedience to the moral law is always a choice, a moral choice, and, hence, the moral sciences create systems of moral philosophy which not only explain the virtues, but also recommend them as a way of life to choose. A system of moral philosophy underpins the other moral sciences. Thus, if we assume there is a moral law, i.e., universal “oughts” or “shalt nots,” then TMS, using the same empiricist epistemology Smith (and Hume, of course) developed for the human mind, is a theory of how humans in the absence of special revelation discover the moral laws, particularly of justice. However, given the frailty of human nature (“coarse clay” at TMS III.5.1, 162), systems of jurisprudence are only an “attempt” at setting out the natural laws of justice (TMS VII.iv.36, 340).

The extent to which we succeed, I suggest, can be explained theologically by common grace, which, I believe, is the theological basis of Smith’s “strong faith in the soundness of judgments made by regular human beings” (54). Van Vliet criticizes Smith, however, for ignoring “our sin problem.” But this problem does not extend to all human action. Man is totally depraved, but not utterly depraved. While there is no part of our nature that is untouched by sin, our actual behavior is not as sinful as it could be. We are capable of making good choices, even though we necessarily make some bad ones. If TMS is a theory based on common grace, the opening sentence might then be rewritten as something like this: “No matter how sinful man may be supposed, there are evidently some principles in his nature which render him capable of making correct moral judgements and acting virtuously.” And it is this positive feature of human nature upon which Smith builds his system.

Turing now to economics, I wish to set the record straight on some value theory issues raised by the following:

That value—the “natural” price—is fundamentally determined by the labor absorbed in its production…. The value of a commodity produced by employing the entire suite of input categories—land, labor, and capital—is likewise determined by calculating their embedded labor equivalencies…. Some ambiguity exists in Smith’s postulation that exchange value depends on both the value of labor embedded in its production and also by the labor that a good commands on the market. The two are not the same. (80)

The first sentence here is simply false, as most have known since the marginal revolution, but it is also false to claim that Smith adhered to the now-discredited labor theory. Moreover, labor commanded has to do with converting nominal values into real values. It has nothing to do with explaining why the real value of a beaver in the early state is equal to the real value of two deer. This is the role of the labor embodied principle, and the fact that Smith treats these in a separate chapter indicates that he was not confused about the role of the two concepts in answering the questions he promised to answer in his value theory chapters. Labor commanded is a simple concept: Divide the money price of a commodity by the money wage, and you get time price—the number of units of time it takes to earn the money via the wage to buy the commodity. Smith called this time price “labor commanded,” and the ambiguity comes into the picture when he claims that labor is always of equal value to the laborer, so that time measured in hours, minutes, seconds, et al., becomes an excellent yardstick to measure real values (i.e., to correct for inflation or deflation). Thus, if it takes half the time to earn the money to acquire a bushel of corn today compared to some point in the past, we can conclude that the worker’s real wage has doubled, or precisely the corn wage has doubled.

The locus classicus of Smith’s labor theory as a theory of relative price is the opening paragraph of WN Book I, chapter VII on beaver and deer hunting in the woods of North America. Relevant to this, I have argued in my past work that Smith is referring to the emergence of social rules or conventions; he is not referring to the natural price and how the market price adjusts to, or is always moving toward, the natural price. He is referring to gift giving among companions who have already found an advantage in arrow making, beaver hunting, or deer hunting. He is referring to rules of gratitude, and the implicit model is not the supply and demand model of the impersonal market, but the sympathy model of TMS. Take away this paragraph from the labor theory interpretation and you essentially refute the entire idea that Smith held to the theory that labor embodied in a commodity determined the natural price, or value, of that commodity.

Having made these friendly objections to some of the positions van Vliet has taken in interpreting Smith, let me end on a positive note. This book is a remarkable, largely faithful, and accessible exposition and critical evaluation of Smith’s two great books. It says very much in a few pages with clarity and economy of expression. Its novelty lies in its explicitly theological (Reformed) point of view, and in its treatment of these two books by Smith as complementary parts of the same program for human flourishing: liberty among virtuous citizens.

Jeffrey T. Young
School of Business, Gordon College & St. Lawrence University