Author and political satirist P.J. O’Rourke recently addressed a John Locke Foundation Headliner event in Charlotte. He also discussed his recent book, On The Wealth Of Nations, with Mitch Kokai for Carolina Journal Radio. (Click here to find a station near you or to learn about the weekly CJ Radio podcast.)
Kokai: If you are a student of history, you have probably heard of The Wealth of Nations, a book written by Adam Smith of Scotland in 1776, the year of the Declaration of Independence. The Wealth of Nations is considered one of the building blocks of economics, but has anyone alive ever read the whole 900-page book? The answer is yes. P.J. O’Rourke wrote a book about the famous book. You could have written about any topic, and you have written about many. Why did you decide it was worthwhile to look at this really long book that is never read and to tell people what it is all about?
O’Rourke: Somebody asked me to after I had had too much to drink. I was out to lunch with this fellow, Toby Mundy, who runs Grove Atlantic, [which] has been my publisher just forever. And Toby Mundy runs our British operation. I was over in London, and Toby and I were out to lunch, and Toby had this idea for this series of commentaries on great books, books you are never ever going to read, daunting books. And so his idea was to get — not experts, really — but enthusiastic lay people to read these great books and explain them to the public. And so we are having lunch, and we are having a little too much to drink at lunch, and he said, “You’ve read Wealth of Nations.” And I had had just enough to drink that I said, “Sure, I have.” And he said, “Well, why don’t you just, you know, whip off something here, just 50,000 words. You know, it won’t take you that long.” And I said, “Sure.” And then I got back home, and I started. I hadn’t read Wealth of Nations. I had read maybe six pages out of 900. And, not only that, you have to read The Theory of Moral Sentiments, this doorstop that Smith wrote before The Wealth of Nations, if you are going to understand, properly understand The Wealth of Nations. So it ended up … Toby was right, it didn’t take me that long. It only took me about five, six months to write the book. It took me a year-and-a-half to do the reading. Whew.
Kokai: Despite that, you say in the book, On The Wealth of Nations, that this is a very important book, even if people don’t read it from cover to cover.
O’Rourke: It is worth reading in. You don’t really have to read the whole thing. A lot of stuff has been overtaken by events, and some of the stuff may not have been interesting, even at the time. But it is a crucial … book about capitalism because it lays the moral foundations for a free market. And Smith is talking about the three necessary things that you have to have for economic progress, and they all have to do with individual freedom. I mean, it is the division of labor, that is to say your right to pick and choose what you want to do for a living, you know, and trade, which is a very fundamental freedom here. And everything he has to say about the — about his fundamental theory of free markets has to do with individual liberty and property rights, starting with our right to ourselves, our right to our own self-possession, our right to be free people.
Kokai: One of the things you write is: “Smith began by asking two very large questions: how was wealth produced, and how was it distributed? Over the course of some 250 pages, he answers: Division of labor, and mind your own business.”
O’Rourke: Yes, exactly. Here is what he comes down to. And there is a lot of stuff. You have to realize the poor guy is inventing a science of economics. There is a lot of stuff. And he has no reliable statistics, so every time he comes up with a number when he is trying to prove a point — he is trying to prove the point, for instance, that gold does not have a set value, that it varies in value like any other commodity. But he doesn’t have 200 years of the records of the price of gold from some reliable source to go on, so he has to go all over Europe and — pricing things in precious metals — give us each of the statistics and vet that statistic and show us how that statistic is comparable to the next statistic he gives us. And so it is a huge job, and it is a huge bore to read, but I mean —but it was a necessary accomplishment because it is the beginning of real quantifiable analysis of economics.
Kokai: If anyone knows anything about Adam Smith and the original 230-year-old book, The Wealth of Nations, it is probably the phrase “the invisible hand,” meaning the unseen force guiding the free-market process. But you mentioned in your book that the invisible hand is not a huge piece of Smith’s book.
O’Rourke: “Invisible hand” is mentioned only three times in all of Smith’s writing, and once in a dismissive way, where he is talking about people’s instinctive understanding of physics, and he said that even the most primitive people don’t believe that the hand of Jupiter is necessary, you know, to make water wet or fire hot and so on. And, really, the most important reference to the invisible hand is in The Theory of Moral Sentiments, where he is really — what he is talking about, by invisible hand, he means unintended consequences. He doesn’t mean that if you just let capitalism do anything it wants that everybody will get rich and everything will be hunky-dory, which is the way the phrase is usually used.
Smith was a rather conservative, proscriptive person about economics. He believed firmly in free markets and in market freedoms, very firmly in those freedoms, but he also believed in rule of law, and he held rule of law to be absolutely the highest good of human governance. He said better, basically, he was saying, to be ruled by mediocre law, you know, than for there to be chaos. Better for the law to be imperfect than to live in a world where, you know, the mighty take what they want.
Kokai: Would Americans be surprised by what Adam Smith thought of the American colonists fighting for their independence back in 1776?
O’Rourke: He didn’t like America. He didn’t have much use for the American colonists. He felt, basically, that we had taken all of the benefit from being British subjects — that is to say, basically, defense against the French in the French and Indian War, for which we had paid nothing — and then now we were upset that Britain wanted to tax us. He felt that Britain had every right to tax us. On the other hand, he also felt that we had every right to a say in Parliament, and that — for a solution to this, which was Franklin’s early position, too — was actually a union, a proper union, between the two countries, abolition of the colonies as colonies, and a union with Britain.
Kokai: Despite what Smith said, Americans have proven much of what he had predicted to be correct.
O’Rourke: Well, yes and no. I mean, actually, America was remarkably isolationist and protectionist in its economic policies. It was only by dint of our development of a huge internal market that we overcame some of the things that Smith thought would ensure our failure. He felt that the American colonies were likely to fail, partly because he had an 18th century skepticism about democracy. Their only model, really, was Athens and a few small principalities and some Swiss cantons and some few small, you know, democracies in Italy and the Swiss cantons — but also because he was afraid that we would recede into this protectionist, anti-free trade [state], and we did. And yet our internal market was able to develop so fast and grew so fast that we became rich in spite of our economic policies.
Kokai: If people see this big tome, The Wealth of Nations, sitting on their shelves and admit they are not going to read it, what at least should they know about this famous book?
O’Rourke: Well, that is basically my book, is to give the individual reader some idea of what he or she might be interested in, in The Wealth of Nations. For instance, there are five books in The Wealth of Nations. One book — and it is the briefest book — is devoted to a kind of economic history of Europe, showing how the middle class essentially defeated feudalism. Even if you aren’t interested in the technicalities of economics, but if you are interested in the history of human freedom, that one book in there is an absolutely fabulous book to read.