Muller on Soll's Free Market: The History of an Idea

history of money history of economic thought book review history of thought history of ideas

January 11, 2023

Soll's Smith is scrutinized and Muller demonstrates a minor replication crisis in the Humanities.

This is the first in a series of writings between Muller and Soll. You can read the following pieces at the below links.

Jacob Soll's “A Literal versus Historical Reading of Adam Smith”

Jerry Z. Muller’s “An Accurate versus Inaccurate Reading of Adam Smith”

Jacob Soll's “Adam Smith’s Misunderstanding of Wealth Creation and His Abhorrence of Greed”

Robert K. Merton, who was, among his many achievements, the inventor of the sociology of science, described the social process of science as “organized skepticism.” That is true of scholarship in general. Ideally, what distinguishes scholarship from polemic or propaganda is that it aims at objectivity, that is, its findings aim to be true regardless of the political, religious or ideological orientation of its producers and consumers. That quest for objectivity, Merton argued, is not just a matter of subjective inclination: it is promoted by institutional norms that guarantee that findings are to be subjected to scrutiny by those who do not share the ideological commitments of the author. That is why, in the natural and behavioral sciences, we expect the scholar to show his method and his evidence. When the evidence turns out to be faulty, or the method fails to replicate, the skill or the veracity of the scientist is called into question.

In the humanities, including the field of history, the closest analogue to the experiment is the footnote. It is in the footnotes that the historian provides the evidence for the assertions made in the text. In principle, the evidence is there for any skeptical scholar to examine for him- or herself. Such is the ideal. It is difficult to realize when the sources cited are to documents in archives or private hands, which may be difficult to access. It is easier when the sources cited are to published books. Even then, few are likely to devote the time and intellectual effort to actually examine the texts cited in the footnotes to ascertain whether they bear out the historian’s claims in the text. For the most part, we rely upon our faith in the skill and veracity of the historian. And that faith is likely to increase in proportion to the institutional prestige of the historian in question.

Jacob Soll is an historian with a good deal of institutional prestige. University Professor of History, Philosophy, and Accounting at the University of Southern California, the author of several well-regarded works on early modern intellectual history and the history of public accounting, the recipient of a MacArthur fellowship and of a “Public Scholars” grant from the National Endowment for the Humanities, and so on. His most recent book, Free Market: The History of an Idea (Basic Books, 2022), which deals with the history of ideas about the market from ancient Rome to the present, is dedicated to Anthony Grafton, the distinguished author of, among other work, The Footnote: A Curious History (1997), which traces the origins and development of that cornerstone of scholarly inquiry.

It sometimes happens that when one reads about a subject one knows a good deal about, one comes across assertions so surprising that one wonders about their veracity, leading one to turn over some of these stones. One’s prior knowledge might turn out to be wrong, of course, in which case the procedure serves to assure one of the veracity of the new information or analysis presented. Or conversely, one’s skepticism may be confirmed, or even heightened by close investigation of the sources cited in the footnotes and their bearing upon the author’s assertions in the text.

Such was my experience when I scrutinized the chapter in Free Market on Adam Smith, a subject I had written a book about almost three decades ago (Adam Smith in His Time and Ours: Designing the Decent Society (Free Press, 1993) and now and again in the intervening years.

The problems with Soll’s characterization of Smith’s ideas can only be demonstrated by a comparison of Smith’s published views with those attributed to him by Soll. The procedure of comparison may seem pedantic, but it allows the reader to judge for himself. To make matters easier to follow, Soll’s words are in italics, and unless otherwise noted, page references are to his book. Quotations from Smith are indented.

Before doing so, however, I must note that all historians make occasional mistakes. We make errors of transcription, cite quotations incorrectly, get page numbers wrong, etc., and the broader our inquiry, the more likely that such minor errors creep into our work. But the errors in Soll’s chapter on Adam Smith go beyond such peccadillos. They include some major mischaracterizations of Smith’s views, based upon a variety of errors, including, remarkably enough, the attribution to Smith of views Smith discusses at length only to refute. Not only that: the relationship of the pages cited in the footnotes to the claims in the text are often casual at best, and at times actually refute the statements they are meant to “prove.”

The first example in the chapter on Smith of a conflict between Soll’s claims and the sources he cites relates not to Smith himself, but to Friedrich Hayek. At the beginning of the chapter, Soll informs us that “In 1944… Friedrich August von Hayek painted Smith as a thinker opposed to all government intervention who focused on economic efficiency.” (196). The footnote refers us to two citations from Hayek’s The Road to Serfdom. One of them is a direct and famous quotation from Smith’s Wealth of Nations (Road, p.100) about the folly of the statesman who presumes to direct private people as to how to employ their capital. The other citation is to page 88, where Hayek writes:

“To create conditions in which competition will be as effective as possible, to supplement it where it cannot be made effective, to provide services which, in the words of Adam Smith, ‘though they may be in the highest degree advantageous to a great society, are, however, of such a nature, that the profit could never repay the expense to any individual or small number of individuals’ – these tasks provide, indeed, a wide and unquestioned field for state activity. In no system that could be rationally defended would the state just do nothing. An effective competitive system needs an intelligently designed and continuously adjusted legal framework as much as any other. Even the most essential prerequisite of its proper functioning, the prevention of fraud and deception (including exploitation of ignorance), provides a great and by no means yet fully accomplished object of legislative activity.”

Elsewhere in The Road to Serfdom and at greater length in his Constitution of Liberty (1960), Hayek would devote himself to analyzing the proper role and the limits of the state in providing for social welfare. But even the quoted paragraph, to which Soll’s footnote calls our attention, is far from advocating opposition to all government intervention.

Soll is at pains to insist upon the ongoing influence of Cicero, as an advocate of an agrarian elite influenced by Stoic conceptions of virtue. Soll’s main contention in his chapter on Adam Smith is that “Smith believed that trade would flourish in a society where agriculture was dominant, under a landowning, governing elite that could limit the interests of merchants and promote learning and Stoic virtue. As a professor of Roman moral philosophy, Smith was in a good position to help lead this Ciceronian moral regeneration.” (198) A few pages later, we read that “While recognizing that commercial society had bad and greedy tendencies, Smith countered this by arguing that leading citizens had to be landowning, wealthy, law-abiding, educated, rational men of goodwill and ‘compassion.’ Otherwise, Smith suggested, the world would fall to war and ‘despair.’” (202).

Here Soll provides two references to Smith’s Theory of Moral Sentiments, (TMS I,ch. 1,para1; III.ch.2, para 9) as well as one to Smith’s Letter to the Edinburgh Review (1755) (in Wightman and Bryce ed, Essays on Philosophical Subjects.) But the cited pages say nothing about these subjects.

In Soll’s discussion of TMS (first published in 1759), we are told (203) that “Smith felt that the ‘bitter and painful emotions of grief and resentment more strongly require the healing consolation of sympathy.’ Writing in the context of the conflict with France in the late 1750s, he sought a philosophical recipe to escape the grip of war, which he saw as a product of human moral failings.” The accompanying note refers the reader to TMS Part 1, sec 1, ch.2 para 5, from which the quote is taken. But in context, the quoted text has nothing to do with war. Here, as elsewhere, Soll latches on to a phrase in Smith’s text entirely unrelated to the point Soll is asserting.

Soll contends (203) that “Drawing on Epictetus, Smith created a moral philosophy that rejected greed. For society and markets to work well, moral individuals had to control passions such as anger and desire. It was essential never ‘to be angry with those who fall into error.’ Instead, one must be an ‘impartial spectator,’ and show them the error of their ways and ‘how to amend their faults’ If Smith could find a method to channel this personal Stoic ideal of self-control and impartiality and infuse it into his own society, he hoped to make a better world.” The footnote for this claim refers to TMS, pt. 1, ch. 1 para 5. It reads, in its entirety

“Pity and compassion are words appropriated to signify our fellow-felling with the sorrow of others. Sympathy, though its meaning was, perhaps, originally the same, may now, however, without much impropriety, by made use of to denote our fellow-feeling with any passion whatever.”

This paragraph of TMS is purely definitional. And neither of the two quoted phrases appear in it – or anywhere else in TMS for that matter.

There follows an instance of a statement that might be defensible, but with a textual citation that bears no relationship to the text cited in the footnote. “Smith’s ideal of a benevolent, cooperative, self-regulating society would not materialize on its own; it required leaders and legislators, and for Smith these could only be educated, rich aristocratic landowners… Evoking Aristotle and Cicero, he described the ideal legislator as finely educated, polite, and benevolent, partial only to the law itself. Only such men could practice the necessary self-restraint and ‘science’ of the civil law.” (203). A look at the texts cited (TMS II, ch.3, para I; or V. ch. 2, paras. 10-13; and VII. Ch.4, paras. 36-37) show no reference to Aristotle or Cicero, nor to rich, aristocratic landowners.

Yet these discrepancies pale in comparison to the problem with Soll’s main contention, namely that Smith believed that land and agriculture were the only source of a nation’s wealth. This claim is not only central to his chapter devoted to Smith, but is adumbrated in earlier chapters (14, 29), and repeated in later ones (220, 238). That of course was the position of the Physiocrats, a sect of thinkers Smith had encountered during his visit in Paris, and whose work he continued to read thereafter. Soll writes that “Quesnay, du Pont de Nemours, and Mirabeau introduced Smith to their main argument: that land was the only source of a nation’s wealth. With the physiocrats, Smith felt he had found kindred intellectual spirits.” (205) The accompanying note refers to a secondary source: the 2010 biography of Smith by Nicholas Phillipson, an authority on the Scottish Enlightenment, which is to say, a reliable source. But when one actually turns to Phillipson’s account one finds a discussion of how much Smith disagreed with the Physiocrats’ analysis, despite his respect for their attempt to think systematically about the economy.

Soll, by contrast, takes Smith to have embraced the premises of Physiocratic doctrine.

“In The Wealth of Nations, Smith developed his own version of physiocratic economics, beginning with the old refrain that wealth comes from agriculture. Smith agreed with Quesnay that farm labor was the source of all wealth and that the surplus of agricultural goods was the basis of industrial wealth production. Industry did not produce wealth; it only spread the value of surplus farm products. For Smith, Quesnay’s Economic Table was ‘the great discovery of our age,’ because it showed how agricultural products fed commerce, leading to economic growth and ‘opulence.’ Like Hume, Smith believed that agriculture should not be taxed, in order to protect its productive capacity. Nor did he believe in investing in industry. In a healthy, natural system, even nonagricultural commercial and industrial profits should be directed back into farming, for ‘no equal capital puts into motion a greater quantity of productive labor than that of the farmer.” Smith studied flow and how economies achieved mythic equilibrium, but he did not understand that capital invested in technology and industry, not agriculture, was the only way to create exponential wealth.”

When one examines the pages of The Wealth of Nations cited in the footnote, one finds that (with one exception, to which we will return) they all stem from Book IV, ch.ix, a chapter entitled “Of the agricultural Systems, or of those Systems of political Oeconomy, which represent the Produce of Land as either the sole or the principal Source of the Revenue and Wealth of every Country.” That is a system, Smith writes, which “at present exists only in the speculations of a few men of great learning and ingenuity in France.” (WN IV, ix. Para 2). The passages Soll cites convey not Smith’s own views, but his extensive summary of Physiocratic doctrine, a doctrine which Smith then goes on to refute. “The capital error of this system,” Smith writes, “seems to lie in its representing the class of artificers, manufacturers and merchants, as altogether barren and unproductive.” (IV, ix, para 29). Soll, that is to say, takes as Smith’s position the very views that Smith himself rejected.

The exception is the quote “no equal capital puts into motion a greater quantity of productive labor than that of the farmer,” cited from Vol. 1, book II, ch. 5, para 12. Here Smith is indeed speaking in his own voice, asserting that in farming the natural fertility of the land augments the productivity of those who work it. But this is an obiter dictum, a thought unconnected to Smith’s larger argument. By contrast, elsewhere in WN, Smith argues that because the division of labor is more limited in agriculture than in manufacturing, the latter is likely to be more productive.( I.i.4, p.16). As Smith put it:

The improvement in the productive powers of useful labour depend, first, upon the improvement in the ability of the workman; and, second, upon that of the machinery with which he works. But the labour of artificers and manufacturers, as it is capable of being more subdivided, and the labour of each workman reduced to a greater simplicity of operation, than that of farmers and country labourers, so it is likewise capable of both of these sorts of improvement in a much higher degree. (IV. Ix. Para 35).

That contention is in keeping with one of the central themes of WN, namely the ways in which the greater division of labor (made possible by the extension of the market) leads to greater productivity, making possible that “universal opulence” the spread of which is the book’s main purpose.

“The role of government was to free nature and hinder the destructive, monopolistic tendencies of merchants by allowing the moral market to pull them back to the farm, the source of all wealth,” Soll asserts (210), citing the historian Emma Rothschild’s study of 2001, Economic Sentiments: Adam Smith, Condorcet, and the Enlightenment. Yet when one examines Rothschild’s argument, one finds that there is no such statement about agriculture and pulling labor back to the farm. (Rothschild, 127) Both Rothschild and Soll argue that Smith was concerned to diminish the political influence of merchants. But that of course is a plain, explicit, and emphatic message of WN, so much of which is focused on Smith’s critique of “the mercantile system,” a system, he thought, that reflected the interests, the mentality, and the importuning of merchants.

Soll portrays this physiocratic Smith as the exponent of an updated Ciceronian program. “In the end,” he writes, “Smith’s central project was a reworking of ancient morality for a new commercial age. Once landowners were liberated from poorly designed taxes and other economic ‘prohibitions,’ free agricultural trade would continue to bring Britain opulence, order, and benevolence.” (214). Yet Smith’s actual argument involved increasing production in manufacturing, which is why WN famously begins with a study of the pin factory, intended by Smith to encapsulate the way in which the increased division of labor made possible by the spread of the market could lead to greater productivity.

Among other dubious, unsupported and unsupportable assertions about Smith in Soll’s chapter is the following: “Because Smith believed in stages of societal progress and in the British agrarian Lockean compact society, he enthusiastically supported both colonial conquest and slavery.” (210) Smith did make use of a stage theory – of hunters and fishers, nomadic herdsmen, settled agriculture, and finally commercial society. But he used this as a kind of ideal type through which to explore the interrelationship between means of subsistence, structures of authority, law, and forms of property in various societies at various points in history. He did not treat them as necessary, successive stages of progress. Nor did Smith enthusiastically support slavery. On the contrary: in TMS, he described contemporary slave traders and slave owners as

“the refuse of the jails of Europe, … wretches who possess the virtues neither of the countries which they come from, nor of those which they go to, and whose levity, brutality, and baseness, so justly expose them to the contempt of the vanquished.” (TMS V.2.9, pp.206-07.)

In WN, Smith wrote of “the unfortunate law of slavery” (Vol. 2, bk IV, ch. viiib, para 54) which he nevertheless explored, with an eye to minimizing the harms of that practice. It is in that context that Smith came to discuss contemporary slavery. He argued that slaves are worse off when their masters also form the government (as in the American and Caribbean British colonies), since the masters have unlimited control of their slaves. He thought that paradoxically, where there was more “arbitrary government,” -- that is greater control by an appointee of the crown -- slaves may acquire a bit more protection. Here he cites historical precedents going back to ancient Rome, as well as the situation of contemporary French sugar colonies. Soll chastises him for underrating the brutality of these colonies. But Soll misses Smith’s point, which was not to offer a positive portrait of slavery in the French colonies, but to speculate about the circumstances under which slavery was likely to be more and less oppressive. Smith’s treatment of slavery was anything but an enthusiastic embrace.

Soll’s misleading treatment of other figures has been noted in reviews of the book published in the New York Times, the Wall Street Journal, and “Mises Wire”. A good deal more might be said about Soll’s interpretation of Smith and many other figures discussed in his book. My purpose here has been not a thorough or overall evaluation, but rather to place under a microscope, as it were, a few of Soll’s claims, and the textual evidence claimed for them. On the basis of that experiment, more than a little skepticism seems in order. To adapt a phrase from the film “Cool Hand Luke”: What we have here is a failure to replicate.

Jerry Z. Muller is Professor Emeritus of History at the Catholic University of America. Among his many books are Adam Smith in His Times and Ours (1993), The Mind and the Market: Capitalism in Modern European Thought (2002), and Capitalism and the Jews (2011).