Celebrate Today As Adam Smith Day

To me, June 5 is not World Environment Day. It is Adam Smith Day – for this is the day the great man was born. To celebrate the occasion I want to recount how Smith changed the West by spreading the idea of Natural Liberty, and also how he was instrumental in the invention of the steam engine. It is these two great “powers” – the power of ideology combined with the power of steam – that made the nineteenth century so extraordinary. In the twentieth century our world went downhill – thanks to communism, socialism, interventionism, welfarism, economic nationalism, inflationism, mass democracy and world wars; and all these are linked.

The nineteenth century, in sharp contrast, was the age of classical liberalism, and of a “globalism” that meant goods, capital and people could move around the world freely, without passports or visas, and without any “foreign exchange” frictions, as the entire planet was on the Gold Standard.

Adam Smith was a professor of moral philosophy in 1754 when a young James Watt was given space to work at the University of Glasgow after the Hammermen’s Guild refused him permission. Smith was ever opposed to the tyranny of the guilds – and so it was that the University welcomed Watt into its fold. Smith, a much older man, became close to Watt, and the latter was his greatest admirer, as the following extract from John Rae’s Life of Adam Smith shows:

There is nothing in the University minutes to connect Smith in any more special way than the other professors with the University's timely hospitality to James Watt; but as that act was a direct protest on behalf of industrial liberty against the tyrannical spirit of the trade guilds so strongly condemned in the Wealth of Nations, it is at least interesting to remember that Smith had a part in it.

 

Watt, it may be recollected, was then a lad of twenty, who had come back from London to Glasgow to set up as mathematical instrument maker, but though there was no other mathematical instrument maker in the city, the corporation of hammermen refused to permit his settlement because he was not the son or son-in-law of a burgess, and had not served his apprenticeship to the craft within the burgh. But in those days of privilege the universities also had their privileges. The professors of Glasgow enjoyed an absolute and independent authority over the area within college bounds, and they defeated the oppression of Watt by making him mathematical instrument maker to the University, and giving him a room in the College buildings for his workshop and another at the College gates for the sale of his instruments. In these proceedings Smith joined, and joined, we may be sure, with the warmest approval. For we know the strong light in which he regarded the oppressions of the corporation laws.

 

''The property which every man has in his labour," he says, “as it is the original foundation of all other property, so it is the most sacred and inviolable. The patrimony of the poor man lies in the strength and dexterity of his hands, and to hinder him from employing this strength and dexterity in what manner he thinks proper without injury to his neighbour is a plain violation of this most sacred property. It is a manifest encroachment upon the just liberty both of the workman and of those who might be disposed to employ him.”

 

Watt’s workshop was a favourite resort of Smith’s during his residence at Glasgow College, for Watt’s conversation, young though he was, was fresh and original, and had great attractions for the stronger spirits about him. Watt on his side retained always the deepest respect for Smith, and when he was amusing the leisure of his old age in 1809 with his new invention of the sculpture machine, and presenting his works to his friends as “the productions of a young artist just entering his eighty-third year,” one of the first works he executed with the machine was a small head of Adam Smith in ivory.

Watt’s workshop was established in Glasgow University in 1756, and the idea of a “condenser” came to him in 1764 – an idea that changed the world. It was steam (and classical liberalism) that powered the next century with steamships, railways and more. Today it is hard to believe that both these ideas emerged from a small and relatively poor university in the back-of-beyond – as Scotland was then; that too, a place where most people could not speak correct English. This should serve as a strong motivator to those seeking to set up good universities in India.

During his university years, James Watt was member of a cosy club formed by the professors, which included Adam Smith. Watt recalled the discussions at the club in these words: “Besides the usual subjects with young men, the talks turned principally on literary topics, religion, morality, belles-lettres, etc., and to this conversation my mind owed its first bias towards such subjects in which they were all my superiors, I never having attended a college, and being then but a mechanic.”

How did Watt raise the Capital to turn his scientific discovery into technology? Matthew Boulton became his financier and together they set up the firm Boulton & Watt to manufacture and sell steam engines.

Environmentalists today would outlaw the steam engine – because of the smoke. And they would probably have called for the closure of Boulton & Watt. They do not see the magic of capital, how it converts science into technology, and how everything gets more and more efficient as time goes by – because of competition and the profit motive. The engines we use today are many times more efficient and more powerful than those of that era.

To conclude, if you want electricity that works, and good cars, if you want India to progress out of the bullock-cart age, please celebrate today as Adam Smith Day.