Central Notions of Smithian Liberalism 
By Daniel B. Klein.
CL Press, 2023.
Paperback, 338 pages, $14.

Reviewed by Paul D. Mueller.

Central Notions of Smithian Liberalism collects a series of academic articles and essays written by Daniel Klein and various co-authors. Klein’s organon—the area of study he addresses and how he does so—makes this volume more interesting than your traditional “stapling” together of collected articles. The pieces included here relate to one another in nuanced ways that should interest classical liberal intellectual historians, philosophers, and economists. They examine different facets of the same object, Smithian liberalism, by combining moral, political, and economic thought. Smithian liberalism, in turn, supports liberty, self-governance, and a free market economy.

Klein writes that Central Notions of Smithian Liberalism is the first of three volumes elaborating Adam Smith’s ideas and their relevance for modern audiences. A second volume, Contemplating with Adam Smith, he says will treat “notions central to Smith’s allego-theistic moral approach-the dialectics of virtue, propriety, beneficialness, sentiment, sympathy, and ‘impartial spectator.’” The third volume, Smithian Morals will compile shorter essays and columns from more popular outlets.

The current volume before us, Central Notions, is more contemplative than Smithian Morals but less contemplative than Contemplating with Adam Smith. Scholars of Adam Smith and classical liberalism should find this trilogy very exciting. It is the culmination of a scholar who has thought long and hard (and creatively) about Adam Smith’s ideas and, in the process, created a community of former students and fellow scholars who seek to re-animate the vibrant ideas of Smith and his contemporaries in a time when such ideas are dismissed or ignored with little understanding.

Conceptions of justice are central to Smithian Liberalism. They undergird Smith’s vocal defense of private business and free enterprise as well as his warnings about the dangers of abusive government power. Unlike more radical libertarians such as Murray Rothbard, Smith’s conception of justice extends well beyond an axiom of non-harm or simply protection of life, liberty, and property. These are matters of justice—for Smith and Klein “commutative” justice—but there are other matters of justice; what Smith and Klein call “distributive” justice and what Klein calls “estimative” justice. 

This formulation has many interesting dynamics. Some questions of justice are bound up in the duties of government, but other matters of justice should be outside of the state’s purview. I’ll give a quick sketch of these kinds of justice here but I strongly encourage the interested reader to examine Chapter 1, “Commutative, Distributive, and Estimative Justice in Adam Smith,” and Chapter 2, “The Presumption of Liberty in Adam Smith.” 

The rules of commutative justice, involving respecting others’ persons, property, and promises due, are both essential to public order and relatively clear or “grammatical.” Governments ought to enforce the rules of commutative justice—prosecuting thieves and murderers, upholding contracts, defending people’s property from infringement, etc. 

Distributive justice, however, means making a “becoming use” of what is one’s own. Unlike narrow libertarian notions that morality only consists of not violating the rights of others, Smith claims that people can make bad (unjust) uses of their own property or bodies. The standards for judging matters of “becoming use,” however, are loose, vague, and indeterminant—a complex amalgam of circumstance, intention, and outcome. Although these are matters of justice, they should not be regulated or enforced by the state. Attempts to do so inevitably lead to abuse, corruption, or tyranny. 

Beyond even how we act or use our property, Smith and Klein suggest that we can be just or unjust with our thoughts and estimations. This “estimative” justice involves esteeming objects (and people) properly. The standards for this kind of justice are even looser and more ambiguous than those of distributive justice. This tripartite view of justice—commutative, distributive, and estimative—undergirds restrained and limited government while maintaining the existence and importance of virtue for society.

The political dimensions of commutative justice require us to distinguish between equal-equal legal relationships and superior-inferior legal relationships. While the rules of commutative justice do not change with the legal or jural relationship, how we classify violations does. If another private citizen, an equal, were to take our property without our consent, we would rightly call the act theft. But if a superior, such as a government agency, were to take our property lawfully but without our consent, we call it taxation.

For some libertarians like Rothbard, the jural distinction makes no difference. All taxation is simply theft. But in the jural relationship between citizen and state, we call such government acts that violate commutative justice infringements on liberty rather than theft (see Chapter 8 for more about “Jural Dualism”). In Klein’s view, government violations of commutative justice require a high, but not insurmountable, burden of proof. Infringements on liberty can sometimes be justified once a high burden of proof of social welfare has been met. Distinguishing jural relationships between private citizens and between citizens and their government can help us navigate policy reforms and liberty/justice matters.

Spontaneous, decentralized, unplanned order is another important theme of Smithian Liberalism. Klein addresses the concept in Chapter 4 “Convention without Convening” (with Erik Matson) and in Chapter 14 “Liberalism and Allegory.” The metaphor of the “invisible hand” of the market has been part of the English lexicon since Smith used the phrase in the mid-18th century. But Klein also explores the related conception of convention, especially as discussed by David Hume. Smith and Hume developed sophisticated explanations for how social institutions can evolve without being centrally planned or directed. Adaptation and improvement become the key characteristics of individuals within society. And liberty promotes better and faster adaption.

Indeed, the idea of spontaneous order enables Smith and Hume to unabashedly advocate for free markets and free enterprise. They developed a general faith that political and economic liberalism would lead to good outcomes over time, even when they could not predict the details of those outcomes. But Smithian liberalism does not take an anarcho-capitalist position that the invisible hand or individual adaptation to existing conditions will naturally resolve all problems through voluntary exchange. Political states and institutions still play a role, however limited, in creating conditions where people can enjoy liberty and commutative justice.

A final element of Smithian Liberalism to highlight is the utilization and limitation of knowledge in society. Klein has an interesting chapter riffing on The Master and His Emissary (Ch. 13 “The Divided Brain and Classical Liberalism”). He argues that McGilchrist’s ideas suggest the need for epistemic humility and restraint—something that can be found within a liberal order of limited government.

Smith frequently used elaborate metaphors to describe how markets led people to act as if they were “led by an invisible hand.” Highways in the air, the prudent master of a ship, the pin factory, and the example of the woolen coat all illustrate ways in which rightly ordered societies that protect property and profit, enforce commutative justice, and look kindly upon honest income (see Chapter 10 “Is It Just to Pursue Honest Income?”) lead to prosperity.

Ultimately, the value of this volume and Klein’s scholarship comes from how it deals with the moral, ethical, and epistemological dimensions of commercial society. Smithian liberalism does not stand on adding a percentage point or two (or three or four) to annual GDP growth—though that is important—but on the fact that it is the best system for promoting justice, liberty, and flourishing. Smithian liberalism is not just efficient and productive.

It is also morally good.  

Paul D. Mueller is Senior Research Fellow at the American Institute for Economic Research.

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