A slow-cooked review of a new book on Adam Smith and his “canonization” in America’s capitalism, by Jonathan Levy:
On Smith’s “reception” in the US:
[E]arly U.S. colleges used The Wealth of Nations as a textbook in their first courses in political economy. Then, over the nineteenth century, Smith commonly cropped up in public debates about the merits of U.S. industrial trade protection. Free traders cited Smith as their ally… Those who leveraged Smith’s argument on behalf of free trade held it out as a universal truth—hard-won by a science of “political economy,” whose firm foundations Smith had set. Their antagonists did not dismiss The Wealth of Nations. Instead, they asserted that Smith, great though he was, was a thinker of his own times who must be read in historical context.
From the turn of 20th century and up until the Great Depression and the New Deal, the (“largely academic”, as Levy puts it) reception of Smith rested on both readings of his work, with the “historicist” side incorporating the well-known moral musings of the scholar and finding supporters in progressive economists, like Richard Ely.
“The Chicago school’s appropriation of Smith is the pivotal episode in his American reception”, notes Levy, though the story has its nuances:
In the postwar decades, only Stigler fixated on Smith in his scholarship. One of the oddities of this history is that Smith was not the fountainhead of Chicago economics. Viner and Knight’s price theory was faithful to the “partial equilibrium” economics of the late nineteenth-century Cambridge giant Alfred Marshall (Keynes’s mentor, and the target of his intellectual parricide). Behind Friedman’s monetarism stood the Yale economist Irving Fisher’s quantity theory of money—and behind him, not Smith, but Smith’s great mentor, friend, and fellow Scotsman David Hume.
and
The fact that Smith became a public icon of American capitalism during the 1970s and 1980s is a testament to the Chicago school’s success in the shifting the terms of U.S. political economic debate from the merits of concrete policies to abstract generalities about the market and the state.
Ely, mentioned in passim, was a founder of American Economic Association and tilted radical:
Economists of the World, Unite! (Democracy Journal, 2016)
Indeed, the AEA was founded both to conduct scientific research and to agitate for reform, both inside academia and in the public sphere. At its start, the two missions were inextricably linked. The old economics claimed to have discovered immutable laws governing the distribution of wealth, derived from a theoretical construction of an abstract, idealized economy. The founders of the AEA, on the other hand, looked first to study economic outcomes as they found them.
A bit to the left side, but still a good read.