he was a moral or an island in the 18th century, who wrote a book on moral philosophy first. and used to get a set of lectures that choo-choo for moral philosophy to economics and eventually wrote a very long book on economics, often for the founding text and inquiry in the nature and causes of the nation. and he's been extremely everson although as a philosopher i wish people would look at it more as a philosopher than just as an economist. >> we will get to that. the proposal russell roberts at george mason university. what has been the impact of the wealth of nations? >> guest: teaching a lot of

economics along the centuries was published in 1776 really saadi holds on for social science. the combination of empirical work, observation, logic, philosophy, all melted together. it's really an extraordinary work that ascendant norm if impact on scholars in the real world. >> host: professor fleischacker, when we talk about moral philosophy, what do we mean by that? >> guest: well, with which went by it was something close to a because social science in part. that is to say everything today recall sociology, economic, political science, all that would be called up moral philosophy as opposed to natural philosophy. now shofar lasciviously mutated good. but it also meant for him as it does for a the study of whites at right and wrong, good and bad, what human beings are aiming for.

and those things are part of his vision of social science i would say. so how groundbreaking was his word? >> guest: it was enormously influential as russell said. almost from the moment it was written, certainly by say the 1790's. it was being red all over. the prime minister of england as of the 1780's, william pitt had read it already in college, the founders of the united states, especially thomas jefferson and james madison were very much influenced by it and were looking to it for guidance as they shaped this country and then by the time of the french revolution was extremely important in france and germany. so in a lot of ways, and it was to go to but if you wanted to figure out what government shld do about the economy, but also what government should do in general. >> host: professor russell roberts, do you use adam smith's

theories in teaching economics at george mason? >> guest: i do actually. his insights into the division of labor and specialization and trade effinger credibly timely. we are the only university i know that george mason is a field in smithian political economy. i hope to teach class and my colleagues. we take smith's quite seriously as a role model for a social science should be conducted here at >> host: what about you, professor fleischacker likes do you use pin in your classes? >> guest: i do but same story of political philosophy. an expected to teach some of the classics of the field, especially the field in the 18th century. so do regularly teach a course on scottish moral philosophy in the 18th century that includes figures like david hume as well as adam smith. and i'd like to suggest two students that smith provides a

quite remarkable model of how philosophy and social science can be run together. and sometimes look at his moral philosophy in connection with the wealth of nations and see how they interact. poster well, good evening and welcome to the special edition of the tv on c-span 2 in primetime. we will be light for the next hour, looking at adam smith, "the wealth of nations" and we want to take your calls, e-mails and tweets. so if you'd like to call in to work to guess, will play a little bit more about them in a second. if you like to call in with her to death and talk about adam smith and the wealth of nations, here's the numbers for you to call. (202)737-0001. (202)737-0002 for those of you in the mountain and pacific time zones. and you can always send us an e-mail at the tv at c-span.org or you can send us a tweak twitter.com/booktv is our twitter address.

now are two or samuel fleischer actor. he is in chicago right now and he is a professor at the university of illinois in chicago and he is also president of the international almond smith society. professor fleischacker, what is that society? >> guest: that was a society founded about that as a society founded about 15 years ago to encourage more scholarly interest in smith. one of our models was the hume society, which did help ratchet up interest especially among philosophers and david hume. smith is of interest to not just philosophers or economists as to intellectual historian to literary theorist, often these days. and we encourage the study of smith from all and no political perspective. but to say we try to stay away from the political uses of smith for ideological purposes and simply encourage scholarly work on what he had to say in all

these various areas. and we have compensated basically at least once a year and also try to encourage scholarly work and various other forms. postcoital mention david hume twice. who is he? >> guest: david hume is one of the most important philosophers most people would say of the postmodern. since about 1600. he was a radical empiricism, that is someone who try to develop a theory of knowledge and of morals and entirely on the basis of experience. that led them in certain ways to be something of a skeptic, raising doubts about the existence of causality, even of ourselves and serious doubts about religion. he was also adam smith's best friend and he preceded adam smith and writing interesting essays on economics and many of his insights and five smith incorporates the system in the inquiry into the wealth of

nations. host our other guest is russell roberts is an economics professor at george mason university you in the washington d.c. area and a research fellow at the hoover institution. he is a weekly podcast called econ talk. what is that? >> guest: an hour-long interview with economist, authors, the guy who sold me my car, an expert on and come anything i think is interesting, that's about the world around us and related economics including a six part series i did with dan klein and the theory of moral sentiments. a little bit intense, but for those deeply interested in more scholarly diversion than we usually do in econ talk. >> host: would you consider yourself a fan of adam smith's theories? >> guest: big-time. >> host: why? >> guest: is startling how something with somebody ago with such charm still educational invaluable. my thesis advisor kerry backer won a nobel prize when asked, who would the economist is simplest him and he said adam smith and alfred mosher.

we go back and read smith. there's so many insights there. any such a role model for how to use observation, facts, evidence and thinking about the world around us. >> host: before we go to calls, there's one phrase that adam smith is very well known for her, the invisible heat. we're going to take that from "the wealth of nations" and read the quote to you where he uses the phrase invisible hand, with a little bit of text before it and after. so it gets a little long hair, but we thought you'd want to see their perspective. and this is from adam smith, "the wealth of nations," book four, chapter two.

what does that mean? >> guest: , well, it means different things to different people. what it means to my understanding of smith in the world around us as he was trying out a tradition that was a little preceded good he was the first economist, but adam ferguson was also a scott, talked about things that were the result of human action but not human design. and they take that lineage, ferguson, adam smith, to hayek come in the great 20th century economist. they're all interested in outcomes that are beneficial, sometimes harmful but usually beneficial that no one intended. you often think of the law of unintended consequences is

negative and often is. with smith and hayek and ferguson were talking about was human action that creates an emergent order, not designed from the top down, but from the bottom-up by individuals making decisions based on the knowledge that they have actually have access to that no one else has. understanding that in my view of economics is the single deepest thing economists understand that isn't obvious or just common sense. it's profoundly deep, its new one, it's subtle, good caricature as if everything's going to turn out okay. that's not what smith understood to mean. smith also had a divine access to the invisible hand as the hand of the divine. he uses as a metaphor in this era of moral sentiments and he argues that people through their internal conscience and their worries about what other people think of them are led to do things that make the entire society better off. it's a very deep and subtle idea. it's a beautiful idea. >> host: samuel fleischacker.

>> guest: can i jump in for a second? i agree with most of what russell said. the exact meaning for the idea of the invisible hand is very contentious among smith's colors these days. some say it refers to the divine. smith uses at exactly three times in all his work and in one case it does clearly refer to the divine here in the wealth of nations many people and i would be among them would say there is no reference to the divine. it's just a metaphor that he is found useful elsewhere. whether there's any kind of religious background to his economic theory as i've said is a very controversial. i think russell's main point is the one to focus on here, whether there is or not smith gives us a purely natural secular account of how orders can arise about anybody intending them. and for the most part, how individual action can for the most part pretty something quite good for society as a whole without people intending it.

now one thing that smith has in mind, and this is the one thing i want to add to what russell said, that he's opposed to the idea that what not to think that the society would be better in many cases if there wereeú er of the pottery firm, claiming that he wanted a certain law, which was actually going to benefit his firm for the good of england. and smith says in the letter essentially he'd much rather

have wedgwood admits he's doing it for himself. basically smith doesn't trust merchants when they claim that they're doing something for the good of the public. he thinks it's better if they simply ask for their private interests. and if everyone does that on the whole, i guess russell said it's very important he doesn't think this is true in every case. on the whole win people to pursue their self-interest and a well-organized society they will do the public good. >> guest: i like that point about smith's words of people claiming to be serving the public good. it brings to mind the ceo of goldman sachs who recently was quoted as saying he does god's work as an investment banker making sure capital flows to its highest valued use. it's a lovely idea. unfortunately, the current system which is marconi capitalism than real capitalism usurps goldman sachs and masquerades to be serving the public interest. >> guest: smith wouldn't even think it's so ugly. i think you would say it's quite typical. >> guest: smith understood on

the part of the merchant or the business person to cloak itself in the public interest. and how dangerous it was. >> host: samuel fleischacker, give us a brief bio of adam smith. where was the race, where did he go to school, ephedra. >> guest: okay, i hope your viewers don't fall asleep in the spirit he is one of those boring lives of an important human being. his father died before he was born. he was born in a small town in scotland called kirkcaldy. he'd supposedly was kidnapped by gypsies and he was seven years old in the least a few days or weeks later. that's the most interesting thing in this lifetime. after that he went to the university and glasgow, got a special scholarship to go on to oxford. came back and taught in oxford. he was actually professor which is back, and as some of the major intellectuals of the time. he was never a professor. ferguson was largely not a

professor. and he took over the course of his own major teacher, francis hutcheson. after that he was hired by a rich noble men to tutor his kid and supported for the rest of his life on that money, even though he only tutored the kids for a couple of years. and then he retired to sit at home to write the wealth of nations. and funnily enough, after writing "the wealth of nations" in which he argues against duties of any kind, he became a commissioner of customs for about a decade here it and then he died quietly at home in scotland. her rich from various sources, although apparently he gave most of his money away quietly without telling anyone so he died without much wealth to his name. that's about it. >> host: russell roberts, did he ever visit the united states? >> guest: i don't think so but you can verify that. >> guest: he visited very few places. he went to paris and met a lot

of major intellectuals in france, matt voltaire which got a lot to them. but aside from that one trip to the continent and i think he traveled very much outside the british isles. >> host: list get to our viewer calls. (202)737-0001 for eastern and central time. 202-73-7000 to four pacific and mountain time zones and booktv@c-span.org for e-mail and the tv@booktv is our twitter address. rochester, new york. andrew you are on the samuel fleischacker and russell roberts. >> caller: thank you gentleman for coming out tonight. my question is, what about this mr. smith having something to say about a war tax. i heard there was a war tax in the general washington had a war tax. i was wondering if you talked about what both his desire on debt and things like that.

>> host: professor fleischacker. >> guest: well, there is a long black and complicated and very technical session of the wealth of nations devoted for taxes, very much as mired for politicians of the time. they took to see which taxes might be most useful. and in there he talks about funding of course quite explicitly. he talked about was called the sinking fund which was a kind of data system by which britain financed its worst. he complains about by way of financing for technical reasons and i'm going to leave it to russell as he wishes. and says that he would prefer if wars were funded by a tax paid in every war fought. one reason he says that would be advantageous as that would meet the wars shorter. people would be irritated by paying the tax that would make them call for the war to come to an end. i'll leave it to russell to say anything else on this.

>> guest: my only other comment for smith on taxes is he deeply understood who really paid the tax as opposed to the tax was supposed to be paid by. and he also understood the incentives that politicians and taxpayers dough with. and the sam's example of the pain of war being paid for in the contemporary time is a tremendous example of a smith was always aware of, which was how incentives work and effective of politics. >> host: gentlemen, we have a tweet hear from joe orlando. both men show he goes by and he writes, who cares? why should we care about adam smith? >> guest: well, as i said, i teach a class in microeconomics every year of top for about 30 years and is often assumed as most economists to the days of day as ricardo insights into trader the right ones. diversity is a powerful trade. i've come to understand recently that actually said that perhaps the more important idea, which

is the role that economies of scale on divisional labour have a specialization even when we're all the same. he has a lot to teach us though. it's not always easy reading. the first three of four chapters of "the wealth of nations" can be read by anyone today. >> guest: the first seven chapters. >> guest: okay, you're even more willing -- that's okay. the moral sentiment from his first book starts out slowly, very difficult to read but if you get into it it's all about her self-esteem, our self-worth come the tension between our self-interest and doing the right to. it's tremendously powerful but still very much worth reading and i went out again on trade smith's remarks on trade policy, his subtle and ironic understatement of self-interest of merchants bactine often a claiming to be in the public interest, the wool of the politicians. still worth reading.

>> guest: i would add two quick thoughts to that. one is smith decided of course vary widely by people for political purposes to this day. he decided as a moral source as well as economic source of the free trade and economy of what's called the punta arenas a more classical liberalism and then he is also cited by people more in the last. and in many ways, he has been the origin of ideas that are still very much alive in the political scene. and if one wants to trees how we've come to these ideas, our own heritage, our own history, how these ideas have come to be kicking around the political landscape, one really needs to read smith. the other thing i can say is is a founder social science and this goes back to something russell said in the beginning of the program, he sets a model for how social science might be done. and this is a in which

scientific observation is integrated with moral thought, in a way that isn't always true among bitter social scientist. in the nonsense i think it's very inspiring, with reading, was looking to as the model. >> host: harrisville, pennsylvania, bob. please ask your question about "the wealth of nations." >> caller: hello, good evening man. i'd like either of the professors to comment on the new relationship between adam smith and marx is on. and where would someone from the 20th century such as iron brand, where would she fit in regarding the philosophy is? thanks. >> host: let's start in chicago with samuel fleischacker. >> guest: well, many people who study marks point out that for all he identified smith in large part with this system that

he marx.he should be of a stronger was due to the past. he couldn't get away from admiring smith. he quoted smith as a very honest thinker and in fact incorporated some of the remarkable thing smith says about the suffering and oppression of workers as things that he himself could still hold. and in fact, there is a move now i should say even though i sympathize with assault for left-wing wing yousef smith i'm not a marxist. there is a move among many people who were very interested in marx and have a marxist orientation to the political economy to recover smith. all over the academy especially. there are many people interested in marx who are covering smith yet i don't see any relationship between them. i think there may be others who do. i heard emphasis on self-interest only i think is quite alien to smith. i think it's a very different view of how economies work and how societies work.

>> guest: i want to emphasize that as well. i think part of smith gets caricatured at the defender of creed. he's not a defender of creed. he was someone who understood the power of self-interest, but most of us put ourselves first. that's human nature. he took it as it was. he urged us in his first book to overcome that. he talked about how sometimes we do and sometimes we don't. the other part that i think is a brand in about smith is smith talks about the importance of happiness. and he talks about how it appears to him that the world was created for the happiness of humanity. and that's really an extraordinary idea. i think a lot of people learned from ayn rand that it's okay to fall your happiness for smith was certainly not a hedonist or libertine. he was a huge emphasis on the importance of moral values and conscience and doing the right thing that i think is often absent from ayn rand.

>> host: the first edition of "the wealth of nations" was finished in 1776. didn't play any role in the u.s. revolution? >> guest: well, as sam pointed out earlier the founders read smith. he did revise it and say one of the days. he revised it and i think 1782. quite a bit. "the theory of moral sentiments" came out in the 1750's and i don't know how influential it was. >> guest: jefferson had read "the theory of moral sentiments" by 1771. the president of princeton at the time of the revolution and before with a man named john withers and was a scots and he educated many of the founders. and they read what he as a scot thought was worth reading. witherspoon with the declaration of independence and so forth. he that is "the theory of moral sentiments" was worth reading. i wouldn't say however that the

"the wealth of nations" played a role in the revolution. what i it is playable and very clearly so as the debates of the constitution. people were reading it. many of the most important founders were reading it by the mid-1780's. they were looking at smith's of national banks. it was looking at his discussions of militias and standing armies. many aspects of the wealth of nations were very important to the founders and effects that give cited and debates of the constitution in 1787 and 1788. >> host: next call comes from john invalid taxis. his go-ahead. >> caller: yes, i studied "the wealth of nations" and "the theory of moral sentiments" when i was in college back in the 60's. and my professor insisted that she can't understand one without the other and i wonder -- i read both books again in the last two years and i was amazed at how powerful it is, particularly

through moral sentiments, he does a powerful job of explaining and reviewing all of the philosophy, plato, aristotle, and other philosophers. and he emphasizes the importance of the human behavior and then he goes on and "the wealth of nations" he talks a lot about the importance of savings and accumulation of capital and how sñ2ñ,ñ!i úbidipt

sñ2ñ,ñ!i úbidipt and i wanted to pick it up again and i'm naturally interested in philosophy. and i just started rereading aristotle. i picked up "the theory of moral sentiments" again and adam smith is so clear in his explanation and he compares the philosophies and the consequences. >> guest: well, one thing we haven't talked about and "the theory of moral sentiments" which is so important to avoid the character of smith.

he explicitly says the accumulation of wealth doesn't make you happy and he wants against it. and he also talks in a modern way about gadgets and how richmond will sell their pockets with gadgets. and they didn't have blackberries and i found them. they're too thick holders and other things other things that he mocks as a source of happiness and prestige and says they're not real. he says the book is full of important borland section that i think as you point out they have to be right together. i think was smith saw that is so important is the culture, the role of conscious, the role of trust and making it a market system work although his market system is very primitive compared to ours. so the other thing i want to mention, we've talked about how is a role model for social science. a lot of deep insights into the real side of our lives and the economy that are easily forgotten. common fallacy that people subscribe to that smith understood centuries ago were wrong.

his whole attack on mercantilism, his whole attack on the idea that exports create wealth in imports are bad. he understood in 1776 that was a flawed and fallacious idea. he understood money, the pieces of paper in the golden solver want a real wealth. real wealth came from what we produce. he understood the moral sentiments is what gives us happiness and how we produce it and spend our time, not to be spending our time at the office. i mean, he's a profoundly inspiring thinker and both his insights and his moral instruction. >> host: professor fleischacker. >> guest: i think it's wonderful that he studied both "the theory of moral sentiments" and "the wealth of nations" in college. that doesn't happen today and i wish it would happen more often. i agree with pretty much everything that resto said. i would decide this midsize them "the theory of moral sentiments" his conversation with friends. it sociability, if having

friends and hanging out with them basically. he doesn't use that phrase of course but he does talk a lot about conversation and that is the greatest source of happiness and that's one of the reasons why morality is essential to happiness. because much of a certain level of decency won't have any friends. and in that understanding, it's very clear, this is something so interesting, such an interesting irony about economics that material goods are not central to happiness. anyone who seeks material goods at the cost of friendship and morality is making a huge mistake for smith. an msi think he provides something that i think we can easily look back too. here's a man who praises the free market, who is not opposed to the relationship of material goods. the main reason he wants countries to be wealthy and he says is quite explicitly is that he wants poor people to be able to have enough to beat and of clothing on their back. the most important as he often calls on us. he often says her food, clothing and lodging. they are abbreviated by sco in

his notes as often. material goods are important. he sees the role for them. he sees the wall for them especially in helping people rise out of poverty. that they are not the goal, not the ultimate goal. when you read the two books together you really can see that clearly. >> guest: smith says man wants to be loved and to be lovely, meaning we care deeply about how others perceive us and we want to win my respect honestly by being lovely, by doing the things that engender love. and i think what sam points out, which is extremely important, is often people, even economists, forget what the purpose of economic says. it's not about accumulating material well-being. while this important as misunderstood to help people survive, to live long, extremely important. but it's only a part of the story. in economics, people think about the stock market, interest rates. it is about those things but as a student told me once after she

went from her teacher, economics is a study about how to get the most out of life. it's better choices, the fact that we don't have an infinite amount of time in an amount of money and we accuse our time which is so precious. and not merely accumulating material goods. in that sense, economics is to come back to smith and not be as focused on the material. and i think it's useful people understand that's an important role in economics. >> host: here's a quote from "the wealth of nations," book three, chapter three, part 3. >> guest: well, that's a bit misleading. i think it might tend to encourage you to think that making stuff is the road to prosperity. that certainly didn't say that.

what he believed was that our skills should be used as widely and successfully and productively as possible. and the way we do that is through our free choices of buying and selling and specialization and choosing what jobs to do, et cetera. but i think he is referring in that passage and maybe sam knows this better than i do. i think he is referring to it as comparing a semi-modern society fails dinners with her son manufacturing to a more primitive hunter gatherer, even agricultural society. is talking about the natural transition he saw from hunter gatherer to a role where artifice, with the making of stuff became a way for people to use the division of labor. a famous example in the opening of the back of the pen factory, where an individual by cooperating with other people are specializing and not trying to make the pins all by oneself could produce an enormously larger number of pins per person. it's really a deep understanding of productivity and how productivity is enhanced by

exchange. >> guest: if i could just pretend for a second. the quote from book three i agree is misleading and affect radically so in a way. it's actually part of his polemic against the mercantilist theories that manufacturing is better than agriculture. one of the main points of the wealthy nations of the whole is to say manufacturing is in better than agriculture and agriculture is in better than manufacturing. a country should do whatever is best suited for or rather the individuals in the country. if you leave them alone to find her unemployment and this fits with what russell was just saying, will naturally seek the kind of work that is remunerated, which means basically the kind of work that's most needed by the society. so the government doesn't need to promote manufacturing of the cost of commerce -- sorry, manufactured at the cost of agriculture or agriculture of the cost of manufacturing.

and then they stomach a technical point, but in the context of the day, where there were many people who thought that the job of the government was to promote the kind of industry that makes country's richest. and some people thought that was manufacturing and somebody was agriculture. smith says no, leave industry alone. let people find the road work and that will be the best way to promote wealth. >> guest: that idea which was popular in smith's time is still very much alive today, where people think we have to pick and choose the right activities. ross perot said it better to make computer chips and potato chips. that's true if you're good at computer chips. if you're not you're going to get even poorer doing something are not good at. >> host: adams this important new compared to john maynard keynes, milton friedman. >> guest: well, they stand at the shoulders without trying it. they are hayek and friedman more than keynes, but i'm sure came

with himself is in the same tradition. >> guest: i mean, one difference between smith and the others is that none of the others that you mentioned fall themselves as a moral philosopher as well as an economist. this sometimes a very interesting things to say about morality and about moral philosophy in certain ways. but smith's views i think it's a great the study of human nature from a philosophical point of view with a study of human nature in a more empirical way, more than the others do. let me just say a word about that if i may. which also pertains to this question of how you read the wealth of nations and "the theory of moral sentiments" together. there's one thing that we haven't mentioned that i think we might want to adhere. and that is in the "the theory of moral sentiments," he makes clear that in order to understand other human beings properly, to sympathize with them as he says, we need to

imagine ourselves into their situations. and we need to do that in great detail. otherwise we will really appreciate what they're experiencing. and he uses that idea throughout "the wealth of nations." in a particularly he imagines himself in the position of poor labor is a great deal, which he consider role number of later economists in bother to do. but i think as part of what i need when i refers to smith is having this model of how you integrate philosophical thinking about human nature with empirical study. and i don't think that is so true for some of these later figures, although they are very important also in their own ways. >> guest: the argument of course that adam smith are living at a poor time to milton friedman or hayek or can't. he was less specialized. and one of the great aspects of economic growth is at school and specialization. into of course those guys were narrower. they were pretty diverse for

economists, all three of him. >> host: j. in hurlburt, florida. thank you for holding on. your run with fleischacker and russell. >> caller: thanks for taking my call this fascinating subject. i am interested in the wealth of nations as an exercise in social science and i've taken sort of a casual interest in adam smith for years, yet i've not read the book. so my question is, who explains smith better than smith? is there one volume a clear and accurate analysis or interpretation of what he was communicating and if so, what is that title? post a all right, we'll start with professor fleischacker. >> guest: i hate to set you on that road because it is worthwhile reading smith. russell said before, just the first through four chapters of "the wealth of nations" i said for seven you could try reading that and maybe just say the first couple chapters of part --

part 4 of "the wealth of nations" which includes the famous invisible hand chapter in the book of five. that would be very useful. i was introduced to smith for his ninth goal by a book on the great economist and i found that a fairly good, clear summary of what smith have to say. i think it's probably out of date by now and somebody will probably take it to be biased. there's a man named dede buffy l., who has a least one book, i think to book entitled adam smith which will give you a pretty good summary, very clearly caused and it's very sure. so i guess that's what i'd recommend. >> guest: i would recommend of the library of economics library you can find the entire "the wealth of nations" and the entire "the theory of moral sentiments" available at no charge searchable and it's a lovely and very inexpensive way to get access to the man and his

ideas. you'll also find an essay there by samuel fleischacker on deep insight of smith and treating people in a very egalitarian way. it's a great essay by sam. he points out that smith unlike most of his colleagues of the day actually thought the poor people knew what was best for them. that he was mentally paternalist. he recognized that every human being had knowledge that other people didn't have. and as a result of the best judge of was best for their own interest. it's a very radical idea surprisingly and to change the world. >> host: who promotes adam smith for these days, republicans or democrats? professor fleischacker. >> guest: that is changed quite a bit over the past 20 years. i confess my interest began just about exactly at the moment of the fall of the berlin wall. it began shortly before i should say. but i think that were a great number of people and mostly rather left-wing academy who

thought marx is dead, what should we read now? and quite a few found smith. in fact, this is also happening to the political world. gordon brown, the prime minister of britain, even when he was chancellor of the check is a very profound reading of smith. i've been told that barack obama is also reading smith coming out of the university of chicago is an be surprised. so i think at this point of falling people on both sides of the aisle quite enthusiastically quoting smith, though sometimes for different purposes, which actually takes us back right to the smith's own time when people on both sides of many issues including some of the same issues we talk about today cited smith heard the >> guest: well, i agree with what sam said but i think republicans may claim to smith unfortunately because the use rhetoric that they think is smithian about markets, competition, they often don't live up to it which i think is a

great tragedy. i like to see politicians internalize those lessons rather than just use rhetoric for covering up self-interest. >> host: bill in fort lauderdale, good evening. >> caller: good evening. thank you for taking my question. i was interested in finding out some of the professors, essentially how john maynard keynes might've influenced in specific areas. i know that today consumerism is a result of dr. keynes. and i was wondering if they have any comment on that. >> host: professor roberts. >> guest: keynesian and can't himself was worried about saving too much and not spending. i do think that the mistake although many people would disagree with me. a lot of people think of zimmer is the described it as the foundation of economy. that certainly is not a smithian idea. the part that is smithian is

perhaps keynes interest in animal spirits. emma keynes meant by animal spirits is if you team. he meant the emotional aspect are the worries and fears. smith had a lot to say about that. smith was very interested in how people were often overconfident about their prospects for success are cautious or fearful about the future. and perhaps keynes was influencing. but other than that not so much. >> host: from book four, chapter eight, consumption is the sole end and purpose of all production in the interest of the producer ought to be attended to only so far as it may be necessary for promoting that of the consumer. >> guest: go ahead. >> guest: that's one of the tidbits in one of my pet peeves that gets quoted a lot out of context. as a smith wanted to say, always too consumed as opposed to say and help other people which smith certainly didn't believe. in context, that's again part of

smith's polemic against merchants who want the government to help them. in particular, we want to help them promote certain colonial policies by which for instance the colonies can only buy from british manufacturers. to that, smith is saying, listen, the consumers are working out, not you manufacturers. the government shouldn't be out to help you produce more. the point of production is how for the consumer. in that context he said government should be looking for the consumer needs and not to what the producer claims that he or she needs. >> host: daniel, manhattan, you're on the air. >> caller: our current political discourse in economics, you know, discourse, smith is received upon by antigovernment voices. weren't the governments around at the time -- weren't they monarchies? and what their monopoly monarchies? i do want to offend anybody, but

mafia invasion. >> guest: you're onto something there. other smith did in the liver time of a lot of tierney, but of despotism and a lot of plunder by monarchs and others. and as a result he was very concerned about the power of the state and certainly the democracy that he was living in at the time, parliamentary democracy. he was worried about it there as well. you're right. i think it's important to remember that the context of the time he lived that was part of the reason he was antigovernment. more importantly though the reason he was antigovernment to the extent he was, he certainly was an anarchist by the way, you certainly viable for government and defense, and the court system and sometimes in other areas. but his worry was aware that we should all have at all times, which is the concentration of power in the incentive for politicians to do the right name. that's always a genuine concern. >> host: samuel fleischacker, what did adam smith think about the east india company?

>> guest: he hated the east india company. he thought that was a huge mistake, one of the worst things the packet happened is to have merchants will warblers become merchants basically. he goes merchants have an interest that is quite different from the interest of the citizens. and so we actually wanted to disband it and that's one of his major recommendations in "the wealth of nations" and quite a shame, something of a betrayal of his legacy that even his friends kept the east india company going after he died. let me just say in connection with what russell just said, i agree with all that. i infected even out in the context smith is also worried about the king corrupting the democracy because he was capable of buying out the voters in many places. i would say that here, libertarians who use smith to cry against big government do have a point. i think whether you're on the left or the right, when did you

learn from smith is that government can't solve all our problems and some of the reasons for that don't have to do with the faults of monarchy. one thing smiths has often been one thing that i confess i have come from a more left-wing background have learned from smith is that governments just don't know the right kinds of things to run large economies, to run things in small local situations. you just can't trust anchors of legislatures in a centralized office in the middle of the country to know what's going on all throughout the country better than the people known themselves good as smith says, ordinary people can judge better in the realm local situations than any legislator can do for them. and i think that is a very important kind of message. it doesn't draw the will of government. government can do important things. but one has to ask oneself always comes should government do this, could this be better done by the private sector. that is something smith always does want you to ask.

>> host: bland, massachusetts, good evening. >> caller: i just finished reading transport in a one volume paperbacks there is a technical question for either gentleman. it's 1218 pages and not volume. would "the wealth of nations" suffer at all if the entire disposition on silver were removed? thank you. >> guest: there were a lot of passages in smith that are hard for moderns to read you when i said you should. the first report chapters as a minimum. a lot of smith is difficult to read because he is dealing with economic issues or institutional details that are relevant to us today or were not familiar with. it can be very difficult going. to me what is striking is for a book written in 1776 how much of it is still worth reading. but i think the wise reserve is not a scholar of smith, assam is, and that would include me when going back to the book

would have been worth more juice dishes and profitable. >> guest: i think a good excerpt could be put out. i have a thing when i like because they think they often leave out some of the important things about workers and public schooling and religion in book five. the disposition of the digression on silver i agree with the collar is the first thing i think most people would want to cut out. on the other hand, i gather that it's one of the things that modern economists think is most really be done and actually makes an impressive 20. this guy was pricing silver over 400 years, quite a remarkable feat, even with modern scholarship, but alone with what he had available to them at the time. in order to prove that the price of silver does not inevitably decline as his mercantilist opposition sided and i think it is a pretty good job of it though i can't really judge the technical details. >> guest: i would just that they think it's it's important for any reader or an economist

not just adam smith to be skeptical of the conclusions that are drawn. a lot of times they're not always right. smith was right about everything. he wasn't always -- it doesn't come from out finite, "the wealth of nations." it's not scripture, the profou provocative and intellectually progressive work. you should take many things in there with a grain of salt to learn from it. >> host: the addition we have here in the table is the fifth edition, which is published in 1789. he made revisions throughout the five editions. but this is in the public domain right now, correct? anybody could publish this book? >> guest: about twice a day of extraordinary high-quality version. it's not a knockoff. >> host: anyone can take it and added it in anyway they choose to? gusto i think that's true. >> host: silver spring, maryland. >> caller: hello. i just want to ask a question.

i read it, but what is the most important time of a simple economy? how is he going to -- >> guest: is a comment intrigue of older thinkers that work doesn't apply anymore, it's outdated, smith didn't anticipate derivative, for example, or credit default swaps or worldwide investment banking and that's true he didn't. although we had many things in a statement at some of the flavor. that's why you don't want to read smith for explicit understanding of things. nobody could understand, many, many things he understood for timeless. he understood the ball of human nature. he understood our flaws. he understood our highest aspirations of nature. he understood the role of opportunity cost. he understood that money isn't everything. he understood the pieces of paper are 12 and that what we can really acquired is the true measure of our standard of living with our scarce labor.

he's really got a lot >> guest: let's take three specific rings which i suspect perhaps unusually rough and i may agree on even on specifics. he is a criticism of the balance of trade, the doctrine of the balance of trade which seems to me he was dead on them and is set on now. he understands the importance of education and the importance of education for everyone. and he understands the wastefulness of work. understand the wastefulness of whether could've come out of the decades debate. >> host: samuel fleischacker, this tweet given that i want you to respond to. in your view, what would smith think of the great society, affirmative action, welfare? >> guest: that would take a very long time to answer. >> host: you have 13 seconds. >> guest: i've written two books on it. the short answer is those are

all issues that were not remotely on the table at the moment he died at some of them were on the table within ten years after he died. that was a huge debate about poor law, with the government who should aid the poor which he didn't get to participate in because he died a little too early. my own view is that among the things that our government could do and should do if they could do a while was help the poor reaches condition in which they could participate on the same level as everybody else in the market. in my view would be that he would support something like universal health care today for instance although their many scythians who would disagree with me. >> guest: you're crazy, sam. >> guest: he can be read in both ways i think because he wasn't really addressing those issues. >> host: health care. >> guest: i have no idea what his position on health care policy as you he would be

skeptical of a top-down single-payer tape solution. that's a long debate for another time, sam. i'm shocked by how much we agree on so far. >> host: both of our guests are also authors as well as professors. c. beltran went, one of his book is on adam smith's wealth of nations. and rest roberts most recent book is called the price of everything. you can see it there on your screen. who published it? to >> guest: it is about emergent order. hayek particularly focused on the role of prices. it's a novel by the way. it's written for a general audience and it's very smithian and its flavor. >> host: munro, louisiana, paul. >> caller: good evening, gentlemen. initial collegiate career studying economics at auburn university, the name of adam smith was very rarely spoken

without thomas malthus coming out. and the contrast between the smith's optimism and now fusion pessimism and the different schools of positivism and normative economics. and we see this today where we see central planning being looked to for global warming. and maybe we're better off with individuals deciding what could have been better with adam smith's approach to people looking after their own interests and taking care of things that way. >> guest: well, i'm not going to pretend that adam smith would be interested in a private solution of global warming.

i think you'd be worried as i am about centralization of power in the hands of bureaucrats. i think of something to be concerned about in any solution of any social problem. i think the more general point is that smith wasn't out aware origin have to deal with what modern economists call externalities. and that's a case of pollution, global warming would be an example of that. in private solutions to those although they often made progress, they may struggle and there may be able for government and their incident or hobbes would have recognized, maybe not, he would've been worried as i am about about centralization of power in steering people's lives, not because so much essential if howard fully understand what's on the ground, which was sam's earlier point. but also the power corrupts and smith understood that very earl >> host: samuel fleischacker, did smith have much to say about monetary policy? >> guest: well, that's the one i would throw back a rustle actually. i think he does have some things

to say. but some of us aren't much more technical and better handled by professional economists. if i could just say something about centralization of power going back to the prior question for a second. i think one reason why python i can agree in principle and disagree and specifics about some of these issues is that smith basically has to broadview's about politics and economy. on one hand, the government should do everything that is important to be done in this society and individuals can do for themselves. that's very broad and very vague, but he does say that should happen. he mentioned public schooling, especially for the poor is one thing that might fall into that category. on the other hand, he is definitely worried as russell is an im and as russell says about the centralization of power. and so the question is, how do you balance those things? how do you have government take care of problems that

individuals can't handle on their own, if that the case and global warming might be such a case. health care may be such a case. without, on the other hand, contributing to the dangers of great centralization. one difference between smith and mouse system on these issues is a different capacity with historical events between the time smith wrote in the time office wrote there was a great famine and things look darker than they had an smith's lifetime and there was also the french revolution and the dangers of government and governmental reform. and so that's one reason for a contrast. >> host: were going to get professor roberts very quickly to address craig pardo's tweet. >> host: >> guest: the party want to mention that particularly interesting for a current situation in scotland between a think he was 17 and 1870, for

over a century, scotland had banks issuing the road money. they private currency in circulation. ..

the ways in which government can help society and the need for government in administering justice they agree on a lot of economic issues and some small ones. it's very hard to tease them apart. one difference for the purpose of this discussion is smith put all his thoughts about economics and government into one large systematic discussion and that's not something that he did. >> host: ed, baltimore. good evening. >> caller: yes i have a question concerning spending and

saving. what do you say about the government's spending today? what would happen by economists could address? how much of total gdp is all government spending and if we cut out most of the spending except the necessaries of let's say the war, annie war or we will call it a defense what would employment be liked with large amounts of government spending on national or state and the local levels i mean how what capital keep enough employment going? because at this moment business is and spending, individuals are barely spending and if the government doesn't spend where does the spending come from?

>> guest: i think he would reject as many economists to but not all the i.t. we have to keep spending up, the economy afloat. that is a common keynesian view and it is a mean streak view among economics but there's a lot of people who think that is the wrong approach to take. he wasn't an economist in that sense. the part smith would have a lot to say about today would be the example for example bailing out general motors aig or the money that flowed into investment banks that made alladi lousy decisions. he would realize that is money will spend not for the good of society at large. it's good for the people who get it and he would be skeptical about its value. that's the most important lesson also the size of government is a concern in terms of the power of the state. the question is what are they spending? sam print of smith was an advocate for the government doing things people couldn't do for themselves. people are not going to buy lousy cars for themselves. the government has to do that

for them and that is an enormous mistake. >> guest: we have about five minutes left with our guest. in chicago a philosophy professor of the university of illinois at chicago and russell roberts an economics professor at george mason university, a discussion about adam smith and the wealth of nations. kansas city missouri. >> caller: thank you for taking my call. i love watching booktv. i watch all weekend. i tried to read adam smith at do times. i was on a will, i don't want to see comprehend but it appears some of the undermining in this book is the consumer it's almost consumer driven market as it should be, the merchant should tailor their products so the consumer can buy and which would help the economy as far as the government to bailing out the banks and did not being consumer

driven. i curious how the underlying doctrines and adam smith's book would actually see the results of that. >> guest: smith talks about the natural tendency of producers, people in business to gather together to try to exploit consumers and he's all competition as a great way of preventing that and he also saw the world of commerce as a way of enhancing the virtues that by as you said earlier cough making sure you provided for people like you have to put yourself in the shoes of consumer and figure out what the consumer wanted and that force is extremely important in smith and missing from some of the public policy of the last two or three years. i think we've made disastrous mistakes and in particular the consequences of those mistakes whether you thought they were good or bad or whether there wasn't a better choice and some people argue i disagree but if you felt there was a good choice we certainly now have to deal with incentives that has for the future and that is something smith had a lot to say about.

>> host: i want to start with you, professor speed for you to answer quickly if you could, but would smith say about the american economic system if he were alive now? has government intervention replaced the invisible hand? >> guest: well, again, we live in very different circumstances, and this is an issue -- it's a very difficult question to answer, and i think resisting answering that question is important. jumping in and saying one knows what smith would say today is i think quite dangerous i do have a section at the end of my book called learning from smith today in which i suggest that there are ways to use for both right and left-wing approach to contemporary policy. i don't think the government in the united states is activist enough in some areas as i indicated before the would include health care for me on the other and again, russell i

am surprised how much we agree. i entirely would agree we shouldn't be allowed the banks and i would agree that is something smith would say. it's very important businesses failed when they make bad decisions. that is something smith says and that is a kind of government intervention that he opposes. coming in to prop up industries because you think that particular industry is necessary for the economy. i think smith would have been worried by our very large defense establishment. as i said before, he worries about the government expenditure on war that there can be too much of that. i don't think he would have been as worried as spending on the welfare policy. i do think it's quite clear he would have opposed government intervention to prop up specific industries. >> before you answer, professor, we want to get more data and we are almost out of time. go ahead in lansing michigan.

>> yes, this is to make profit from summer to afford and i do not believe that it is as complicating as it sounds. i think it is a matter of physics is the way we are looking at the situation of the consumer and the business >> host: professor roberts, you get the last word. >> guest: this is proper capitalist society which is businesses that want to thrive in a profit lost system have to make customers happy but as smith would remind is milton friedman often reminded it's a profit in the loss system so businesses that don't do well serving the consumer or make bad investments have to take losses. if we don't put businesses take losses we don't get capitalism we get crony capitalism and that is the road to a very unhealthy world. >> host: that will have to be the last word. we are out of time. russell roberts of george mason university, one of his many

websites is econtalk if you would like to communicate directly. samuel fleischacker, also the president of the international adam smith society