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Adam Smith’s
Equality and
the Pursuit of
Happiness
JOHN E. HILL
Adam Smith’s Equality and the Pursuit of
Happiness
John E. Hill
Adam Smith’s
Equality and the
Pursuit of Happiness
John E. Hill
Curry College
Milton, Massachusetts, USA
ISBN 978-1-137-59047-3 ISBN 978-1-137-58412-0 (eBook)

DOI 10.1057/978-1-137-58412-0
Library of Congress Control Number: 2016943369
© The Editor(s) (if applicable) and The Author(s) 2016

This work is subject to copyright. All rights are solely and exclusively licensed by the
Publisher, whether the whole or part of the material is concerned, specifically the rights of
translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on
microfilms or in any other physical way, and transmission or information storage and retrieval,
electronic adaptation, computer software, or by similar or dissimilar methodology now
known or hereafter developed.
The use of general descriptive names, registered names, trademarks, service marks, etc. in this
publication does not imply, even in the absence of a specific statement, that such names are
exempt from the relevant protective laws and regulations and therefore free for general use.
The publisher, the authors and the editors are safe to assume that the advice and information
in this book are believed to be true and accurate at the date of publication. Neither the pub-
lisher nor the authors or the editors give a warranty, express or implied, with respect to the
material contained herein or for any errors or omissions that may have been made.
Cover illustration: © Vitalii Myronov / Alamy Stock Vector
Printed on acid-free paper
This Palgrave Macmillan imprint is published by Springer Nature

The registered company is Nature America Inc. New York
For
Jeannette
Foreword
Adam Smith wrote in the eighteenth century. Revolutionary changes have

swept the world in the centuries since he died, but his books still have
much to offer us in the twenty-first century. The political economy of
the USA today is based on a laissez-faire interpretation of his Wealth of
Nations, but according to many scholars, that interpretation grossly dis-
torts Smith’s ideas. Correctly interpreting Smith’s thought would lead to
greater happiness in all capitalist political economic systems.
Smith’s recipe for a wealthy nation was equality, liberty, and justice;
this work is based on the assumption that equality in the pursuit of happi-
ness is impossible without justice and liberty. However, equality does not
produce equal results. Smith, like the founders of this nation, assumed
that equal opportunity would produce different results because individual
capabilities vary so widely.
Several things the reader might expect to find in a book on happiness
were not issues when Smith wrote in the eighteenth century. The follow-
ing paragraphs discuss issues that have important happiness implications,
but because Smith did not write about them, they will not be analyzed in
this book.
While he emphasized the sociability of human beings, he had nothing
to say about major contemporary social relationship problems such as high
divorce rates and teenage pregnancy. These are important for their impact
on happiness, but other than his “do no harm” principle (work as hard
as you can, but do not harm another person) he cannot help us on these
issues.
vii
viii Foreword
Equal rights for women were not an issue in Smith’s time, but, as
Kathryn Sutherland explains, his work negatively affects women’s rights
“through its determining concealment of society’s reliance upon women’s
active contribution to the production of value.” She also states: “In so far
as it refuses or conceals the female contribution to the economy, Smith’s
narrative of proto-industrial society continues to exert a masterly authority
over our understanding of the relation between women and work.”1 Wage
inequality and other discrimination against women undoubtedly affect
happiness, but these are not the focus of this book. However, while one
cannot know what position Smith would take on issues of discrimination
based on gender, sexual preference, race, or religion were he alive today,
his emphasis on equal opportunity should apply to all.
Environmentalism simply was not an issue in the eighteenth century.
While Smith did not directly deal with this complex set of issues, one may
infer that his “do no harm” principle might make him a supporter of envi-
ronmental protection. The importance of the environment is underlined
by Thomas Piketty. While discussing government debt, he argues that:
“The more urgent need is to increase our educational capital and prevent
the degradation of our natural capital. This is a far more serious and dif-
ficult challenge, because climate change cannot be eliminated at the stroke
of a pen.”2
Sustaining the environment is clearly related to happiness. For instance,
while recognizing that not all happiness scholars agree, Derek Bok clearly
connects the ideology of perpetual economic growth with environmental
degradation:
If it should turn out, however, that growth no longer adds significantly to

the happiness of Americans, both policy-makers and the general public may
eventually have to consider whether it is sensible to invest so much time and
effort and put the environment to so much risk in a ceaseless struggle to
expand the output of goods and services.3
Bruno Frey also argues that improving the environment has a positive
effect on happiness.4
This issue affects not only our happiness today but also the happiness of
future generations. Nonetheless, as important as it is, environmental pro-
tection is outside the scope of this work because Smith did not address it.
One other omission should be noted. There is no chapter entitled
“How do we get there?” How do we move from laissez-faire capitalism
Foreword ix
to a more egalitarian capitalism with justice? The issue of gaining support

within our democracy to make such a significant change requires practi-
cal political thinking. While Smith’s principles for a wealthy and happy
nation are discussed, he left no advice on mobilizing a democracy to move
toward his ideal system.
The argument in this book is that laissez-faire has had a negative effect
on happiness. That may sound like an ideological argument; were that
so, this book would be untrue to the legacy of Adam Smith. As Charles
Griswold Jr. writes, it is impossible to see Smith as “either ‘conservative’
or ‘liberal,’ ‘right’ or ‘left,’ in the contemporary American sense of these
terms.”5
While this is now a book, I consider it to be a work in progress. Much
evidence is offered, but I welcome debate on the argument because I
may have missed something important.6 No doubt, many will be critical;
I welcome their arguments about what I have omitted or misunderstood.
However, I hope that many will also be convinced. Perhaps some will be
challenged to develop additional arguments on this topic. So, in the spirit
of Adam Smith, let us suspend our ideological predispositions, either to
accept or reject arguments made herein, and examine what works for a
happier nation.
Notes
1. Kathryn Sutherland, “Adam Smith’s Master Narrative: Women and the
Wealth of Nations,” in Adam Smith’s Wealth of Nations: New Interdisciplinary
Essays, Stephen Copley and Kathryn Sutherland, eds. (Manchester:
Manchester University Press, 1995), pp. 105 and 117.
2. Thomas Piketty, Capital in the Twenty-First Century, Arthur Goldhammer,
trans. (Cambridge: Belknap Press of Harvard University Press, 2014),
p. 568.
3. Derek Bok, The Politics of Happiness (Princeton: Princeton University Press,
2010), pp. 206–207.
4. Bruno S. Frey, Happiness: A Revolution in Economics (Cambridge: The MIT
Press, 2008), p. 158.
5. Charles L. Griswold Jr., Adam Smith and the Virtues of Enlightenment (New
York: Cambridge University Press, 1999), p. 295.
6. This is in the spirit of Sissela Bok’s advice not to come to premature closure
in exploring happiness, in Exploring Happiness: From Aristotle to Brain
Science (New Haven: Yale University Press, 2010), p. 174.
Acknowledgments
A large community contributed to this book. I am deeply grateful to this

community for the thoughtful and constructive comments, criticisms, and
suggestions I have received.
Larry Hartenian, Karen Lischinsky, Les Muray, Becki Paynich, Russ
Pregeant, and Hazel Varella are those who commented on all or most
of the manuscript. Other colleagues, who read individual chapters,
answered questions, and suggested sources include Melissa Anyiwo,
Grant Burrier, David Fedo, Barbara Fournier, Peter Hainer, Susan James,
Robert MacDougall, Maureen Murphy, Kathy O’Donnell, Silas Pearman,
Kenneth Quigley, and Cathy Santos. An anonymous reviewer for Palgrave
Macmillan provided a critical perspective which led to significant clarifi-
cation of the arguments herein. David Bayley, a mentor for many years,
provided critical support.
Catherine Boustani, Nick Butts, Meg Dalton, Matt Hennessey,
Matt Hirsch, Kristen Miller, and students in my Capitalism, Socialism,
Democracy seminar at Curry College read earlier versions; I benefited
immensely from their comments and questions. In addition, Phil Belmont,
Safara Fisher, Chris Menton, and Paul Schwab, alumni, made helpful sug-
gestions and criticisms.
Elizabeth and David Cutting and Samuel Hill, family members, also
read and criticized an earlier version. Last, but most definitely not least,
my wife, colleague, and best reader, Jeannette DeJong helped me clarify
many obscurities and correct grammatical errors, and her love smoothed
the rough spots of a very long road.
xi
xii Acknowledgments
My heartfelt thanks to all these, and any others whom I have inadver-
tently omitted, for their helpful suggestions. Nevertheless, any remaining
errors or obscure passages are the author’s responsibility; they exist in spite
of the assistance of a wonderful community.
Contents
1 Introduction: A Forgotten Revolutionary Ideal 1
2 Justice, Liberty, and Equality: Adam Smith’s

Political Economy 21
3 Smith’s Principles for the Twenty-First Century 61
4 Wealth for All 71
5 Health 121
6 Education 147
7 Crime 161
8 Common Defense 179
xiii
xiv Contents
9 Taxes 193
10 Conclusion 213
Bibliography227
Index243
CHAPTER 1
Introduction: A Forgotten Revolutionary

Ideal
But the philosophers of all the different sects very justly represented virtue;
that is, wise, just, firm, and temperate conduct; not only as the most prob-
able, but as the certain and infallible road to happiness even in this life.1
Happiness was one of the most important parts of Adam Smith’s sys-
tematic analysis of human society. His close friend and first biographer,
Dugald Stewart, makes this clear:
The study of human nature in all its branches, more particularly of the polit-
ical history of mankind, opened a boundless field to his [Adam Smith’s]
curiosity and ambition; and while it afforded scope to all the various powers
of his versatile and comprehensive genius, gratified his ruling passion, of
contributing to the happiness and the improvement of society.2
Smith’s passion for happiness is clearly compatible with the revolutionary

ideals of the USA. Among those ideals in the Declaration of Independence
are the equal and unalienable rights to life, liberty, and the pursuit of
happiness; that Jefferson placed those words in the Declaration was no
accident. The Constitution also listed revolutionary goals important to
happiness, such as establishing justice and promoting the general welfare
which, for the founders, meant the well-being of all—not the current con-
notation of government support programs for the poor.
These documents are so familiar that their revolutionary significance is
not always appreciated. Revolutionary? Many historians argued that the US
war of independence was not a revolution because we simply exchanged
© The Editor(s) (if applicable) and The Author(s) 2016 1
J.E. Hill, Adam Smith’s Equality and the Pursuit of Happiness,
DOI 10.1057/978-1-137-58412-0_1
2 J.E. HILL
British elites for local elites; the working class did not take power. The
Marxian class warfare argument is correct, as far as it goes, but it grossly
minimizes the importance of our astounding ideals. Our founders did not
invent these ideals, but they were radical innovators because they were
the first to apply to everyone ideals that had previously affected only a few
people. Universal application of rights to equality, liberty, and the pursuit
of happiness was revolutionary.
Adam Smith and the American founders shared a concern for the hap-
piness of the entire population. They also shared a desire to improve
society to increase the chances of universal happiness. This book analyzes
Smith’s ideas about happiness and attempts to apply them to contempo-
rary society.
Contrary to what contemporary Americans think, Smith and the found-
ers were not individualistic; they emphasized social relationships. Students
of the new science of happiness are virtually unanimous in affirming the
importance of this point. Ed Diener and Robert Biswas-Diener argue that
“we need others to flourish.”3 Comparing the least happy people with
the happiest people, their research shows the importance of “high-quality
friendships, family support, or romantic relationships; the happiest folks
all had strong social attachments.”4 Martin Seligman’s work shows the
connection between altruism and happiness.5 Richard Layard states that,
“If we really want to be happy, we need some concept of a common good,
towards which we all contribute.”6 Predating the happiness scholars by
several decades, Bertrand Russell clearly stated the importance of social
relationships for happiness.7
Because it ignores the science of happiness and the wisdom of Smith
and the founders, modern individualism impedes our quest for happiness.
Such individualism is also economically costly to societies. We would pro-
mote the general welfare, the good of all, if self-interest were moderated
by the social values of Smith, the founders, and happiness researchers. It
is time to remember the revolutionary ideal of equality in the pursuit of
happiness. But, before going into detail (in Chap. 2) about why we ignore
this ideal, we must try to define happiness.
HAPPINESS
Happiness is neither easily defined nor easily attained; nevertheless, from
ancient philosophers to modern positive psychologists and behavioral
economists, humans have tried both to define it and attain it. Moreover,
INTRODUCTION: A FORGOTTEN REVOLUTIONARY IDEAL 3
Thomas Jefferson made happiness a test of the very legitimacy of a govern-

ment which “exists for the happiness of the governed.”8 Jefferson could
have gotten this idea from Adam Smith, who wrote: “All constitutions of
government, however, are valued only in proportion as they tend to pro-
mote the happiness of those who live under them.”9
The idea that the people’s happiness is the purpose of government was
widely shared by the founders. For instance, John Adams wrote in 1776
that whatever form of government provided “ease, comfort, security, or in
one word, happiness to the greatest number of persons, and in the greatest
degree, is the best.” He also wrote in the same document that happiness
“consists in virtue.”10
Government, on its own, cannot provide happiness; happiness comes
from within. But government, one part of a multifaceted socio-economic
system, helps provide a framework which can facilitate happiness or
impede it. This work will focus on the interaction of government and the
economy. In the USA and in much of the world, economies are based on
market principles that were first clarified by Adam Smith. We will examine
how Smith’s political economic thought might help increase happiness.
Smith wrote that a major part of happiness “arises from the conscious-
ness of being beloved.”11 His understanding of human beings included
his conviction that we all require mutual assistance. “Where the necessary
assistance is reciprocally afforded from love, from gratitude, from friend-
ship, and esteem, the society flourishes and is happy.”12 Or, as a biogra-
pher puts it, “Smith is saying that the happiness of others is necessary to
us….”13 His social orientation is also obvious in his praise for benevolence
“aimed at the happiness of a great community…” rather than benevo-
lence aimed “at the happiness of an individual, such as a son, a brother, a
friend.”14 The importance of sociability is also demonstrated by his com-
ments on the negative implications of antisocial behavior for happiness; he
stated that hatred and anger “are altogether destructive of that composure
and tranquility of mind which is so necessary to happiness, and which is
best promoted by the contrary passions of gratitude and love.”15
Individualistic Americans may be surprised by Smith’s emphasis on the
importance of sociability for happiness. But as noted above, happiness
scholars are virtually unanimous on this point. Supporting it, a modern
economist, Joseph Stiglitz, recounts his parents’ definition:
I remember clearly my parents’ advice when, like all teenagers, I wondered

what I would do when I grew up. They said, “Money is not important. It
4 J.E. HILL
will never bring you happiness. Use the brain God has given you, and be of
service to others. That is what will give you satisfaction.”16
Here, Stiglitz argues against a common individualistic assumption: he

who has the most toys wins. Do possessions bring happiness? Modern
consumer society is based on the assumption that they do. Some econo-
mists have supported and some have criticized this view. John Kenneth
Galbraith notes that, for Bentham, consumption was the supreme source
of “happiness”; but, Galbraith notes: “With Veblen it became in its fullest
development a vacuous thing, a service to puerile personal aggrandize-
ment. Is this what the economic system is really about?”17 Consumption
is a perpetual treadmill; people are never satisfied. Make one significant
purchase, and rising aspirations require another purchase. Material desires
are insatiable.18
One form of consumption is viewing television. Americans watch
an average of 35 hours of TV (in all its forms, including video) per
week. If watching TV makes you happy, you are an exception to what
happiness research has found: people who watch more TV report less
life satisfaction. Bruno Frey’s statistical analysis demonstrates that
watching long hours of TV indicates “imperfect self-control, which
reduces well-being.” He also writes that “people who spend a lot of
time watching television do indeed report lower life satisfaction.”19
Similarly, Derek Bok states that one of the major findings of happiness
research in the last 35 years is that “people are often surprisingly bad
judges of what will make them happy.”20 Sonja Lyubomirsky concurs:
“we assume that positive events, be they promotions at work, clean
bills of health, hot dates, or victories by our preferred presidential
candidates or football teams, will provide more happiness than they
usually do.”21 So, if you think that various forms of consumption pro-
vide happiness, you may be misunderstanding the paradoxical nature
of happiness.
Another common illusion is that money makes you happy. Many stu-
dents attend college because they want to earn a lot of money. But this
could come at some cost to happiness. According to David Halpern,
materialistic college students “tend to end up less happy.”22 In general,
those who emphasize acquisition of wealth report below-average happi-
ness.23 The relationship between money and happiness is complex. On the
one hand, richer people “report higher subjective well-being.”24 But, on
the other hand, beyond a certain point, increased income does not pro-
portionally increase happiness; “there is diminishing marginal utility with
absolute income.”25 In other words, more income may make you a bit
happier, but it takes larger and larger increases in income to obtain each
increment of happiness.
Also, significant economic growth in the USA in the decades after
World War II did not result in a significant increase in happiness. Scholars
of well-being have for many years puzzled over this “Easterlin paradox”:
generally, people in wealthier countries are happier than people in poorer
ones; but, over time, increases in per capita income have produced no sig-
nificant increases in happiness.26 Some scholars believe that rising expecta-
tions explain this paradox. “Once basic needs are met, aspirations rise as
quickly as incomes, and individuals care as much about how they are doing
in comparison with their peers as they do about absolute gains.”27 Some
call this the hedonic treadmill.
Richard Layard argues that, above $20,000 per person, additional
income “is no guarantee of greater happiness.”28 Daniel Gilbert supports
Layard:
Economists and psychologists have spent decades studying the relations

between wealth and happiness; they have generally concluded that wealth
increases human happiness when it lifts people out of abject poverty and
into the middle class but that it does little to increase happiness thereafter.29
Smith made a similar point about our misunderstanding of happiness.

Charles L. Griswold Jr. notes Smith’s presentation of a circular process;
people admire a wealthy or powerful person, thinking him happy, “which
happiness in turn derives in large part from his awareness that spectators
sympathize with him.” So, people try to emulate the wealthy, which leads
to “passionate and unceasing efforts to better our condition.” Griswold
notes that this “problem of vanity” indicates a “deep misorientation about
the true nature of the ends of human life (and especially of happiness).”30
Robert Heilbroner’s interpretation of the myth of King Midas illus-
trates the counterintuitive relationship of wealth and happiness:
If the legend also points the finger of accusation at the wealthy, the moral it
offers is a most peculiar one: it is that the rich will not enjoy their riches—in
fact, that they will be destroyed by them. The tragedy of Midas is lodged in
6 J.E. HILL
the personality of the king himself; Midas is the awful example of what hap-
pens to a man who confuses wealth with life.
Smith made a similar point when he wrote that people “are driven by
moral, intellectual and aesthetic as well as material needs.31 There is much
more to life than money. He even referred to gold and silver plate as
“trifling superfluities.”32 And Russ Roberts notes that, in Theory of Moral
Sentiments, Adam Smith “wrote as eloquently as anyone ever has on the
futility of pursuing money with the hope of finding happiness.”33
None of this should be taken as indicating that money is unimportant.
While people in poor countries report some happiness, richer countries
report higher levels of happiness. However, the hedonic treadmill means
that there is not a direct relationship between more money and more hap-
piness. Indeed, materialism is incompatible with happiness.34
Benjamin Barber has devoted an entire book, Consumed, to this
incompatibility, criticizing the infantilizing effects of modern capitalism.
He points out that Nietzsche analyzed alienation in capitalist society and
Rousseau saw the misery of modern man, whose power to assuage wants
merely multiplied wants.35 According to the Dieners, people who “highly
value love, friendships, and other worthwhile pursuits” are generally more
satisfied with their lives than people who focus on accumulating more
wealth.36 Indeed, Richard Kyte, a contemporary philosopher, writes that
“genuine happiness comes from the capacity for love; every other source
of pleasure is limited and limiting.”37
Students of happiness have long debated whether one can directly pur-
sue happiness or whether it is a by-product of other human endeavors.
This is still an open question. On the one hand, Jonathan Edwards stated
that “Thinking about the happiness of others would guarantee one’s own
happiness, but the reverse was not true.”38 Bruno Frey warns that individ-
uals cannot attain happiness by aspiring to it; it is, instead, “a by-product
of a ‘good life.’”39 Johan Norberg writes that happiness is a “way of travel-
ing, not a destination.”40
On the other hand, Gretchen Rubin quotes John Stuart Mill who
wrote: “‘Ask yourself whether you are happy, and you cease to be so.’” She
obviously disagrees; her entire book details a year-long project to improve
her individual happiness.41 Some support for Rubin’s perspective comes
from Lyubomirsky, who argues that 40 % of our happiness is subject to
change; she discusses strategies to increase happiness emphasizing behav-
ior and social relationships.42
DEFINITIONS
Happiness researchers’ definitions are often multidimensional. Daniel
Nettle lists three types that often appear in happiness studies:
• Pleasure (momentary feelings of joy);

• Life satisfaction (positive balance of pleasure and pain over a long
term);
• The good life (“Eudaimonia is a life in which the person flourishes
or fulfils their full potential”).43
Lyubomirsky similarly defines happiness as “the experience of joy, con-

tentment, or positive well-being, combined with a sense that one’s life
is good, meaningful, and worthwhile.”44 But Matthieu Ricard, a French
PhD in biology who went to the Himalayan region to become a Buddhist
monk, emphasizes only Nettle’s third type: “By happiness, I mean here a
deep sense of flourishing that arises from an exceptionally healthy mind.
This is not a mere pleasurable feeling, a fleeting emotion, or a mood,
but an optimal state of being.”45 Ricard’s definition seems very close to
the early Christian view that there was something higher than happiness:
blessedness.46
Martin Seligman, like Ricard, also emphasizes flourishing, which, for
him, includes five elements: “positive emotion, engagement, meaning,
positive relationships, and accomplishment.”47 A similar definition, which
Charles Murray states is not original, is that happiness “is lasting and justi-
fied satisfaction with one’s life as a whole.” He explains that thinking about
happiness focuses on “aspects of your life that tend to define your life (not
just bits and pieces of it) and you base your assessment of your own happi-
ness on long-range satisfactions with the way things have gone.”48
The good life is also called “the American Dream”—an idea that has
long been a part of the American ethos. In 1931, James Truslow Adams
wrote “of that American Dream of a better, richer, and happier life for
all our citizens of every rank which is the greatest contribution we have
as yet made to the thought and welfare of the world.”49 His inclusion of
“citizens of every rank” makes clear the egalitarian nature of that dream.
He also clearly stated that the dream is not merely materialistic and that it
includes equal opportunity for all men and women “to attain to the fullest
stature of which they are innately capable, and be recognized by others for
8 J.E. HILL
what they are.”50 It is noteworthy that, 80 years ago, he included women

in his conception of the American Dream.
Another perspective on happiness is provided by Diener and Biswas-
Diener, with their concept of psychological wealth.
Psychological wealth is the experience of well-being and a high quality of

life. …Psychological wealth includes life satisfaction, the feeling that life is
full of meaning, a sense of engagement in interesting activities, the pur-
suit of important goals, the experience of positive emotional feelings, and a
sense of spirituality that connects people to things larger than themselves.
Taken together, these fundamental psychological experiences constitute
true wealth.51
Lyubomirsky writes that “People who strive for something personally sig-
nificant, whether it’s learning a new craft, changing careers, or raising
moral children, are far happier than those who don’t have strong dreams
or aspirations. Find a happy person, and you will find a project.”52
In addition, Diener and Biswas-Diener warn that happiness requires
balance: “Hedonism without pursuing meaning leaves most people feeling
empty. However, too much purpose without actually feeling good leaves
something to be desired as well.”53 Layard writes about “absorbing your-
self in some goal outside yourself.”54 He also states that “the happiness of
a society is likely to increase the more people care about other people.”55
The social nature of happiness was emphasized in the definition given
by participants in a seminar on Gross National Happiness (GNH) in
Bhutan in 2004: “Happiness may be understood as a state of physical
and emotional wellbeing and inner contentment, founded on principles of
sociality and of not harming other sentient beings or the environment.”56
Uniting these diverse perspectives is the social nature of happiness.
Scholars recognize the value of individual joy (Nettle’s level one). But it
should also be clear that focusing on individual joy can be deadly; the large
number of drug overdose deaths illustrates this point.57 A higher level of
well-being is attained when one can balance individualistic positive affect
with striving for the good life. This is not to deny that we are all individu-
als; it is to emphasize that we are individuals within communities.
Still, each person must identify what her purpose is. Sissela Bok writes
that, considering the many different forms of human happiness, it is “need-
lessly restrictive” to think that there is only one definition of happiness.58
Or, as Nettle puts it, no other person can decide for you; psychology
can posit that “having a sense of purpose is an important component

of well-being” but it cannot “answer the question of what purpose one
should have….”59 And James Truslow Adams clearly states that each indi-
vidual, each man and woman, must decide what the good life is, what the
American Dream means.60
Given the many definitions of happiness, it is no surprise that there are
many different measures of happiness. But you might be surprised, if you
compare happiness indices, to see that the USA generally does not score
well in happiness rankings. The World Happiness Report 2015 ranked the
USA 15th. Switzerland was first; five Scandinavian countries were in the
top ten, along with Canada, the Netherlands, New Zealand, and Australia.
Israel, Costa Rica, Austria, and Mexico also outranked the USA.61 That
the USA, despite its enormous wealth, ranks so low is good reason to ana-
lyze what might be done to increase the opportunity to pursue happiness.
HAPPINESS, SMITH, AND POLITICAL ECONOMY

The low happiness ranking for the USA brings us back to Adam Smith.
He wanted to increase everyone’s happiness; his books suggest ways to
do that.
Economics is sometimes called the “dismal science,” so it seems strange
to claim that the entire corpus of writings of Adam Smith, “the father
of capitalism,” was one big happiness project. But that is precisely what
Dugald Stewart, his literary executor, argued when he wrote about Smith’s
“comprehensive genius” applied to the study of “human nature in all its
branches” and “his ruling passion, of contributing to the happiness and
the improvement of society.” (See the quotation at the beginning of the
chapter.)
According to a recent scholar, Dennis Rasmussen, Smith “maintains
that the most important measure of a society is the degree to which it pro-
motes people’s happiness, not the standard of living it provides.”62 Andrew
Skinner notes “that Smith did not conceive of welfare as measurable in real
terms alone. In Smith’s view, happiness is a state of mind and he was well
aware of the social and psychological costs of economic growth.”63
That Smith’s passion was to contribute to the happiness and improve-
ment of society is not surprising because these were themes for intellec-
tuals in the eighteenth century. Darrin McMahon states that, “To many
enlightened souls on both sides of the Atlantic, the need to promote hap-
piness had assumed the status of a self-evident truth.”64 Gary Wills writes
10 J.E. HILL
that “Happiness was not only a constant preoccupation of the eighteenth

century; it was one inextricably linked with the effort to create a science
of man based on numerical gauges for all his activity.”65 Smith’s happiness
project and his attempt to be scientific were part of the mainstream.
The founders of the USA were also part of that mainstream. They were
revolutionary in advocating equal justice, without which pursuing happi-
ness and promoting the general welfare are impossible. Monarchs, nobles,
and a few rich people might pursue happiness, but an equal right for all?
Promote the general welfare? Preposterous! What makes the USA truly
revolutionary is application of these ideals universally, not just to elites;
and it is even more revolutionary because of the immense expanse of the
new nation. Democracy had never been attempted on such a large scale,
both geographically and in terms of population. Europeans expected the
outrageous experiment of this new republic to fail. Even the founders
worried that it would fail; they knew they were taking the new nation into
uncharted territory.
The experiment is still incomplete; in addition to economic inequal-
ity, the promise of American revolutionary ideals has long been denied
to blacks. The Civil Rights Movement demonstrated the power of the
ideals of equal liberty and justice. However, a real opportunity for minori-
ties to pursue happiness requires more than civil rights. Martin Luther
King Jr. understood that economic rights were needed in addition to civil
rights. The pursuit of happiness had been severely limited by segregation,
but eliminating segregation did not result in equal economic opportunity.
King’s assassination also killed his economic rights campaign.
Inequality is a problem for all Americans; economic liberty for a few has
trumped the general welfare (see Chap. 4). Economic inequality reduces
the opportunity to pursue happiness and contradicts the founders’ ideals,
especially their emphasis on justice. John Adams’ religious creed, “Be just
and good,” exemplifies this.66 Almost two centuries after he wrote those
words in a letter to Thomas Jefferson, why is it so difficult to apply them?
A partial answer is that many economists believe that their discipline is
a value-free science; this view is in stark contrast to the heavy emphasis on
values in the thinking of Adam Smith and the founders. They understood
that human actions are often based on perceived self-interest. However,
they also knew that humans are social beings. Smith provides a good
example of this perspective. In a direct criticism of Thomas Hobbes and
Bernard Mandeville, the very first sentence of Smith’s Theory of Moral
Sentiments states: “How selfish soever man may be supposed, there are
evidently some principles in his nature, which interest him in the fortune
of others, and render their happiness necessary to him, though he derives
nothing from it except the pleasure of seeing it.”67 Ryan Hanley empha-
sizes the importance of this critique of obsessive self-interest. Our real
interests include “promoting the well-being of others.”68 This nuanced
view of human nature is also clear in Smith’s more famous book.
Wealth of Nations is the reason that Smith is known around the world as
the “father of capitalism.” Of course, he did not create capitalism, but he
was the first to write a systematic analysis of the capitalism that had existed
for many decades before Wealth was published. That he was honored with
this nickname is fitting tribute to the quality of his work and an indication
of the widespread approval it received. However, fame and high approval
ratings do not mean that his work has been widely understood; too many
scholars and businessmen hold the distorted view that he endorsed value-
free self-interest, or, to be blunt, selfishness and greed.
Such interpretations of Smith are too simplistic; in his books, self-
interest had both community and justice components. In Theory of Moral
Sentiments, Smith clearly stated the connection between values and hap-
piness: “by acting according to the dictates of our moral faculties, we nec-
essarily pursue the most effectual means for promoting the happiness of
mankind, and may therefore be said, in some sense, to co-operate with the
Deity, and to advance as far as in our power the plan of Providence.” The
context of this comment was that the original purpose of the “Author of
nature” was the happiness of mankind.69 This religious aspect, combining
self-interest and values, means that Smith’s recipe for wealth differed sig-
nificantly from the economic practices of recent decades.
Smith’s self-interest, tempered by community values, was not the
heavily individualistic self-interest that worried the founders early in the
American republic. John Adams and Thomas Jefferson both thought that
public spirit, concern for the common good, was being overwhelmed by
the individual quest for commercial gain; they feared that this individ-
ual emphasis could threaten the republic. Neither Smith nor the found-
ers were Lockean individualists.70 A contemporary conservative author,
Murray, argues that Jefferson and his colleagues were right in their under-
standing “that the vitality of communities and the freedom of individuals
are intertwined, not competitive.”71
One might very well wonder why anyone in the twenty-first century
should care that some dead white males believed that human motivations
are based both on self-interest and altruism. Their ideas are important
12 J.E. HILL
because they were astute observers of human relations and comprehensive

analysts of history going back to the Greeks and Romans. In short, they
were not spinning utopian fantasies; they were pragmatic analysts of what
promotes flourishing societies.
CONCLUSION
People can cope with a great deal of adversity and still have a degree of
happiness. However, the greatest potential for happiness exists in societ-
ies that promote equality and justice for all. In this book, concepts from
the work of Adam Smith will be tested against contemporary compara-
tive statistics. For instance, Smith argued that wealth should be spread
widely, even to the lowest ranks of society. Do more economically egali-
tarian societies score higher on happiness scales than less equal societies?
Demonstrating that will be the easy part. Proving that there is a causal
relationship will be more difficult.
That this work discusses justice, equality, and happiness means that it
is not, nor does it claim to be, an economics book (even though Adam
Smith is central to the book’s organization). Galbraith notes that econo-
mists’ faith
removes from them any sense of social or moral obligation. Things may be
less than good, less than fair, even less than tolerable; that is not the business
of the economist as an economist. Because of the claim of economics that
it should be considered a science, it must separate itself from the justice or
injustice, the pain and hardship, of the system. The economist’s task is to
stand apart, analyze, describe and where possible reduce to mathematical
formulae, but not to pass moral judgment or be otherwise involved.72
Wilhelm Roepke, a European conservative, criticizes the mathematical

pretensions of economists, as well as “the disinclination of so many econo-
mists to make contact with sociology, ethics or politics.”73 In A Humane
Economy, he writes that economics “is a moral science and as such has to
do with man as a spiritual and moral being.”74
Herman Daly and John Cobb Jr., while appreciating what econom-
ics can do well, have thoroughly criticized the misplaced concreteness in
economic theories. They argue for “a more empirical and historical atti-
tude, less pretense to be a ‘science.’”75 More recently, Thomas Piketty has
made the same point about “economic science,” criticizing economists
for overemphasizing mathematical precision, ignoring significant societal

issues, and shirking their duties as citizens. Instead, he advocates “politi-
cal economy,” a normative, rational, systematic, and methodical study of
“the ideal role of the state in the economic and social organization of a
country.”76
That important scholars on the left and the right criticize the scientific
pretensions of many economists is not an argument against rigorous, fact-
based reasoning. It is an argument that modern economics has strayed
from the values-based system of Adam Smith. This book is not advocating
sloppy thinking. It is arguing that social-economic policy should be based
on values as well as best practices. Adam Smith’s values-oriented market
economy was derived from his analysis of what was effective in advancing
the wealth and happiness of the entire nation. He saw his work as a scien-
tific system.
Thus, this work is an interdisciplinary examination of political/eco-
nomic connections to the fundamental human desire for happiness,
enriched by insights from positive psychology, behavioral economics,
public policy, and other fields. While some economists question happi-
ness researchers’ methods, Derek Bok argues that their results “seem, if
anything, more reliable than many familiar statistics and other types of
evidence that legislators and administration officials routinely use in mak-
ing policy.”77
ORGANIZATION OF THE BOOK

One major finding of happiness research is that nonmaterial factors of
existence, in particular social relations, are important; human beings are
not purely economic animals.78 This insight is entirely compatible with
what Adam Smith wrote but is contrary to what most people think he
advocated. The next chapter focuses on this gross distortion of Smith’s
system.
Much of this involves laissez-faire, often combined with the invisible
hand, a grossly simplistic view of his political economy; instead, Smith
emphasized the more complex “liberal plan of equality, liberty and jus-
tice.”79 He also insisted that the market competition he favored required
good social relations and that economies functioned best when this com-
munity aspect was recognized. Thus Smith’s thought has egalitarian impli-
cations. This might surprise some people, but equality in the sense of
equal opportunity is an absolutely fundamental part of Smith’s system.
14 J.E. HILL
Several major factors that Smith considered important to a good life (to
happiness) are examined herein. In The Politics of Happiness, Derek Bok
emphasizes six factors:
1. Marriage
2. Social relationships
3. Employment
4. Perceived health
5. Religion, and
6. Quality of government80
Smith had little or nothing to say about the first and fifth factors. Since he
was a bachelor, it is no surprise that he did not discuss marriage.
The fifth factor, religion, was very important in Scotland (his home-
land) during his lifetime. But scholars debate Smith’s religious views.
James Boswell labeled him an infidel81; many believe he was a Stoic, or
perhaps, a deist or an agnostic. It is difficult to know his religious views
because he had to be very careful what he wrote about religion, given the
religious temper of Scotland during his lifetime. Gavin Kennedy makes it
clear that the dominance of religion in eighteenth century Scotland caused
Smith to be circumspect in what he wrote and said on that subject; the
danger of persecution by religious zealots was real.82
Smith did write about Derek Bok’s other four major happiness factors.
2. Social relationships: Chap. 2 presents the argument that human sociability,

not the individualism of laissez-faire, was fundamental to Smith’s thought.
3. Employment: as emphasized in Chap. 4, Smith advocated justice for
workers and spreading wealth to everyone. He supported good pay and
working conditions, both of which are related to happiness.
4. Health: Smith argued that poor working conditions could affect work-
ers’ health, which is an important factor in happiness (see Chap. 5).
6. Quality of government: this pervades Smith’s writing and is inherent in
most of the chapters of this work. Education, crime, the common defense,
and taxes (Chaps. 6–9) are not specifically listed among Bok’s six most
important happiness factors; nonetheless, because of the government role in
each of these and because they can have a significant impact on happiness,
they fit in Bok’s quality of government category.
Smith’s analysis of the role of government in human happiness is con-

sistent with the American founders’ views. Danielle Allen points out that
the sentence in the Declaration of Independence dealing with the self-

evident truths of equal rights to life, liberty, and the pursuit of happiness is
directly connected to the people establishing the “government most likely
to effect their safety and happiness [her emphasis].”83
Another item not on Derek Bok’s list of major happiness factors is
popular entertainment. Smith proposed that government encourage “the
frequency and gaiety of public diversions.” He wrote that government,
by giving entire liberty to all those who for their own interest would attempt,
without scandal or indecency, to amuse and divert the people by painting,
poetry, music, dancing; by all sorts of dramatic representations and exhibi-
tions, would easily dissipate, in the greater part of them, that melancholy
and gloomy humour which is almost always the nurse of popular supersti-
tion and enthusiasm.84
The US government goes beyond what Smith recommended with the

National Endowment for the Arts and the National Endowment for the
Humanities. Whether the liberty for entertainment that Smith advocated
will be protected in an age of rapid technological advancement remains to
be seen.
Throughout this work, there are many suggestions to increase equality
in the pursuit of happiness. While the importance of the market economy
is recognized, there are also harsh criticisms of the political economy of
the USA for various failings. This is similar to Smith, who understood
the tendency of commercial society to corrupt our moral sentiments but
valued the market system. According to Hanley, he criticized naïve and
impractical reforms of commercial society and he shared “the admiration
of partisans of the system of natural liberty” but found the “complacent
acceptance” of the deficiencies of the commercial system “untenable.”85
Hanley writes that Smith’s ambition was not merely to understand a prob-
lem but to achieve a “practical solution or amelioration of such a problem
to the degree it permits.”86
In addition, Griswold writes that it is “striking that Smith underlines
paradoxes intrinsic to that very ‘system of natural liberty’ … thus rais-
ing the possibility that it too may succumb to the dialectic of history by
depleting its resources for solving the problems it generates.”87 Capitalism
in the USA today may be depleting its resources because it is not the capi-
talism Adam Smith advocated. Our nation would be wealthier, happier,
and more just if we applied Smith’s ideas.
16 J.E. HILL
I am not arguing that Smith intended to write a recipe for greater

national happiness (even though advancing the happiness of society was
his ruling passion); I am arguing that more people in the USA would attain
the good life if more attention were paid to Smith’s ideas for increasing
the wealth of nations.
Smith wrote that love of country involves respect for the constitution
and “an earnest desire to render the condition of our fellow citizens as
safe, respectable, and happy as we can.” To be a good citizen, one must
respect the laws and “wish to promote, by every means in his power, the
welfare of the whole society of his fellow-citizens.”88 This book has been
written with that intention.
What impedes the pursuit of happiness in the USA today? What solu-
tions seem promising? In the spirit of Adam Smith, let us examine prob-
lems and solutions with an open mind and a willingness to learn what is
effective.
THESIS
The founders believed everyone had a right to pursue happiness, the good
life, the American Dream (including a right for each individual to define
his/her own dream). The USA would increase the happiness and wealth
of all the people if Smith’s formula of equality, liberty, and justice were
applied to its political economy.
NOTES
1. Adam Smith, The Theory of Moral Sentiments, 6th ed. (London: A. Strahan
and T. Cadell, 1790), 2:239. Adam Smith described that route to happi-
ness while discussing the various groups of ancient Greek philosophers in
his first book and the book he considered to be his more important work
(originally published in 1759, seventeen years before Wealth of Nations).
2. Dugald Stewart, “Account of the Life and Writings of Adam Smith,
LL.D.,” in Adam Smith: Essays on Philosophical Subjects, W. P. D. Wightman
and J. C. Bryce, eds. (Oxford: Oxford University Press, 1980), p. 271.
3. Ed Diener and Robert Biswas-Diener, Happiness: Unlocking the Mysteries of
Psychological Wealth (Oxford: Blackwell Publishing, 2008), p. 50; see also
pp. 6 and 47–67.
4. Robert Biswas-Diener, Ed Diener, and Maya Tamir, “The Psychology of
Subjective Well-Being,” Dædalus 133, no. 2 (Spring, 2004), p. 22.
5. Martin E. P. Seligman, “Can Happiness Be Taught?” Dædalus 133, no. 2

(Spring, 2004), p. 85.
6. Richard Layard, Happiness: Lessons from a New Science (New York: Penguin
Books, 2005), p. 5; also p. 98. See also Sissela Bok, Exploring Happiness:
From Aristotle to Brain Science (New Haven: Yale University Press, 2010),
p. 103; Sonja Lyubomirsky, The How of Happiness: A Scientific Approach to
Getting the Life You Want (New York: Penguin Press, 2008), pp. 125 and
138–139; Matthieu Ricard, Happiness: A Guide to Developing Life’s Most
Important Skill (Boston: Little, Brown, 2006), p. 203.
7. Bertrand Russell, The Conquest of Happiness (New York: Liveright
Publishing, 1958 [originally published, 1930]), pp. 155, 176, and
248–249.
8. Quoted by Gary Wills, Inventing America: Jefferson’s Declaration of
Independence (New York: Vintage Books, 1978), p. 251.
9. Smith, Theory of Moral Sentiments, 1:468.
10. John Adams, “Thoughts on Government,” April, 1776, in Robert
J. Taylor, ed., Papers of John Adams (Cambridge: Belknap Press of Harvard
University Press, 1979), 4:86.
13. Ian Simpson Ross, The Life of Adam Smith (Oxford: Oxford University
Press, 1995), p. 419.
14. Smith, Theory of Moral Sentiments, 2:291; see also Ryan Patrick Hanley,
Adam Smith and the Character of Virtue (Cambridge: Cambridge
University Press, 2009), p. 183.
16. Joseph E. Stiglitz, Freefall: America, Free Markets, and the Sinking of the
World Economy (New York: W. W. Norton, 2010), p. 276.
17. John Kenneth Galbraith, Economics in Perspective (Boston: Houghton
Mifflin, 1987), p. 176.
18. Bruno S. Frey, Happiness: A Revolution in Economics (Cambridge: The
MIT Press, 2008), p. 40.
19. Frey, Happiness: A Revolution in Economics, p. 105.
20. Derek Bok, The Politics of Happiness (Princeton: Princeton University
Press, 2010), pp. 5–6.
21. Lyubomirsky, The How of Happiness, pp. 16–17.
22. David Halpern, The Hidden Wealth of Nations (Cambridge: Polity Press,
2010), p. 19. See Derek Bok, The Politics of Happiness, p. 166, for some
statistics on the increased materialism of first-year students today, in con-
trast to first-year students in the 1960s.
23. Derek Bok, The Politics of Happiness, p. 15.
18 J.E. HILL

26. Halpern, The Hidden Wealth of Nations, p. 19; Carol Graham, Happiness
Around the World (Oxford: Oxford University Press, 2009), p. 12. Some
scholars debate whether or not the Easterlin Paradox even exists.
27. Graham, Happiness Around the World, p. 25. Mark Anielski, The Economics
of Happiness: Building Genuine Wealth (Gabriola Island, BC: New Society
Publishers, 2007), pp. 217–226, for an extended discussion of scholarship
on the money/happiness relationship.
28. Richard Layard, Happiness: Lessons from a New Science (New York: Penguin
Books, 2005), p. 34.
29. Daniel Gilbert, Stumbling on Happiness (New York: Vintage Books, 2006),
p. 239. See also Martin E. P. Seligman, Flourish: A Visionary New
Understanding of Happiness and Well-Being (New York: Free Press, 2011),
pp. 223–226.
30. Charles L. Griswold Jr., Adam Smith and the Virtues of Enlightenment
(New York: Cambridge University Press, 1999), p. 128.
31. Nicholas Phillipson, Adam Smith, An Enlightened Life (New Haven: Yale
32. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of
Nations, Edwin Cannan, ed. (New York: Modern Library, 1994), p. 273.
33. Russ Roberts, How Adam Smith Can Change Your Life (New York:
Portfolio/Penguin, 2014), p. 5.
34. Diener and Biswas-Diener, Happiness, pp. 97, 102, and 110.
35. Benjamin R. Barber, Consumed: How Markets Corrupt Children, Infantilize
Adults, and Swallow Citizens Whole (New York: W. W. Norton, 2007),
pp. 50–51, and throughout.
36. Diener and Biswas-Diener, Happiness, p. 111.
37. Kyte, Richard, Ideas Unite Issues Divide (LaCrosse, Wisconsin: Piscator
Books, 2013), p. 27.
38. Robert Wuthnow, Poor Richard’s Principle: Recovering the American
Dream Through the Moral Dimension of Work, Business, and Money
(Princeton: Princeton University Press, 1996), p. 69.
39. Frey, Happiness: A Revolution in Economics, p. 5; see also p. 153.
40. Johan Norberg, “The Scientist’s Pursuit of Happiness,” Policy 21, no. 3
(Spring, 2005), p. 13.
41. Gretchen Rubin, The Happiness Project (New York: Harper, 2009), p. 233.
42. Lyubomirsky, The How of Happiness, pp. 22, 128, and 138–139.
43. Daniel Nettle, Happiness: The Science Behind your Smile (Oxford: Oxford
University Press, 2005), pp. 19–20; see also pp. 16–20.
44. Lyubomirsky, The How of Happiness, p. 32.
45. Ricard, Happiness: A Guide to Developing Life’s Most Important Skill, p. 19.
46. Darrin M. McMahon, “From the Happiness of Virtue to the Virtue of
Happiness: 400 B.C.–A.D. 1780,” Dædalus 133, no. 2 (Spring, 2004), p. 9.
47. Seligman, Flourish: A Visionary New Understanding of Happiness and Well-

Being, p. 16.
48. Charles Murray, In Pursuit: Of Happiness and Good Government
(Indianapolis: Liberty Press, 2013), p. 24.
49. James Truslow Adams, The Epic of America (Boston: Little, Brown, 1932),
p. viii. (He dated this preface May 1, 1941).
50. James Truslow Adams, The Epic of America, pp. 404–405.
52. Lyubomirsky, The How of Happiness, p. 205.
54. Layard, Happiness, p. 74.
55. Layard, Happiness, p. 141.
56. Quoted in Anielski, The Economics of Happiness, p. 143.
57. Herman E. Daly and John B. Cobb Jr., For the Common Good: Redirecting
the Economy toward Community, the Environment, and a Sustainable
Future (Boston: Beacon Press, 1989), pp. 94–95, report on the chilling
results of one experiment. Rats starved themselves to death by repeatedly
pressing a lever to stimulate the pleasure center in their brains, ignoring the
food and water that were readily available.
58. Sissela Bok, Exploring Happiness, p. 45; see also p. 58.
59. Daniel Nettle, Happiness: The Science Behind Your Smile (Oxford: Oxford
60. James Truslow Adams, The Epic of America, p. 415.
61. Helliwell, John, Richard Layard, and Jeffrey Sachs, ed., World Happiness
Report 2015, p. 28 http://worldhappiness.report/wp-content/uploads/
sites/2/2015/04/WHR15.pdf, accessed February 1, 2016.
62. Dennis C. Rasmussen, “Does ‘Bettering our Condition’ Really Make Us
Better Off? Adam Smith on Progress and Happiness,” American Political
Science Review 100, no. 3 (August, 2006), p. 309.
63. Andrew Stewart Skinner, A System of Social Science: Papers Relating to
Adam Smith, 2nd ed. (Oxford: Clarendon Press, 1996), p. 120.
64. McMahon, “From the Happiness of Virtue to the Virtue of Happiness,”
p. 5.
65. Wills, Inventing America, pp. 150–151.
66. Lester J. Cappon, ed., The Adams-Jefferson Letters: The Complete
Correspondence between Thomas Jefferson and Abigail and John Adams
(Chapel Hill: University of North Carolina Press, for the Institute of Early
American History and Culture, 1959), 2:499. See also John E. Hill,
Democracy, Equality and Justice: John Adams, Adam Smith, and Political
Economy (Lanham, MD: Lexington Books, 2007), pp. 72–73 and through-
out, on the importance of justice to Adam Smith and John Adams, as well
as the founders in general.
20 J.E. HILL
67. Smith, Theory of Moral Sentiments, 1:1–2.

68. Hanley, Adam Smith and the Character of Virtue, p. 182.
70. Hill, Democracy, Equality and Justice, pp. 34–36, 57 and 83–94.
71. Murray, In Pursuit: Of Happiness and Good Government, p. xiii.
72. Galbraith, Economics in Perspective, p. 124.
73. Wilhelm Roepke, The Moral Foundations of Civil Society (New Brunswick,
NJ: Transaction Publishers, 1996), p. 79; see also pp. 17 and 18.
74. Wilhelm Roepke, A Humane Economy: The Social Framework of the Free
Market (Wilmington, DE: ISI Books, 1960), p. 247.
75. Daly and Cobb, For the Common Good, pp. 8 and 25–43.
76. Thomas Piketty, Capital in the Twenty-First Century, Arthur Goldhammer,
trans. (Cambridge: The Belknap Press of Harvard University Press, 2014),
pp. 573–574; also, p. 16.
77. Derek Bok, The Politics of Happiness, pp. 40 and 204.
79. Smith, Wealth of Nations, p. 719.
80. Derek Bok, The Politics of Happiness, p. 17.
81. Phillipson, Adam Smith, An Enlightened Life, p. 281.
82. Gavin Kennedy, Adam Smith’s Lost Legacy (New York: Palgrave Macmillan,
2005), pp. ix and 40–43.
83. Danielle Allen, Our Declaration: A Reading of the Declaration of
Independence in Defense of Equality (New York: Liveright Publishing
Corporation, W. W. Norton, 2014), p. 281.
84. Smith, Wealth of Nations, p. 855.
87. Griswold, Adam Smith and the Virtues of Enlightenment, p. 353.
CHAPTER 2
Justice, Liberty, and Equality: Adam Smith’s

Political Economy
The establishment of perfect justice, of perfect liberty, and of perfect equal-

ity, is the very simple secret which most effectually secures the highest
degree of prosperity to all the three classes.1
Adam Smith’s capitalism is not practiced in the USA today. In fact,

contemporary laissez-faire capitalism is a gross distortion of the system
proposed by the “father of capitalism.” Many people believe that Smith
advocated laissez-faire but, without doubt, that was not what he meant
by a market economy. Do not allow his use of “perfect” to confuse you;
the context for his usage of “perfect liberty” was a discussion of the ideal
political economic system. He wrote about an ideal system, but he was
well aware of human imperfections. Despite his use of this idealistic term,
he was a realistic analyst of socio-economic systems, intent on promoting
the prosperity of the entire nation, including all economic classes.
People understand correctly that Smith praised market competition
because it produces a dynamic economy. What many do not understand is
that the market is more productive and efficient when it is just, when it is
fair. However, twenty-first century capitalism is not just; in fact, some have
labeled it “savage capitalism”—a term that elicits visions of a dog-eat-dog
world, of a Hobbesian war of all against all.
If “savage capitalism” seems to be too harsh a term to characterize the
current economic system, the reader might consider David Prindle’s com-
ment that the boom of the 1990s “was partly based on fraud. … revela-
© The Editor(s) (if applicable) and The Author(s) 2016 21

J.E. Hill, Adam Smith’s Equality and the Pursuit of Happiness,
DOI 10.1057/978-1-137-58412-0_2
22 J.E. HILL
tions that followed the bankruptcy of the corporate energy giant Enron
in late 2001 made it clear that a significant portion of the apparently ster-
ling profits of American business during the boom had been fictions.”2
One might also want to examine the Great Recession of 2008 and think
about the implications of white-collar crime (discussed in Chap. 7). These
failures of savage capitalism were facilitated by the return of laissez-faire in
the 1970s, replacing the Keynesian policy of the post-World War II period.
The injustice and inequality of contemporary savage, laissez-faire capi-
talism are inconsistent with the economic system advocated by Adam
Smith. He strongly criticized mercantilism for its monopolistic system of
international trade, instead of the free trade he advocated, and for the inor-
dinate political power of businessmen. In Wealth of Nations, the usually
mild-mannered Smith was excoriating in his criticism of businessmen for
controlling Members of Parliament, thereby gaining special privileges such
as international trade monopolies that undermined market competition.
His comments in Wealth of Nations about the power of business interest
groups were among his most severe criticisms. Ironically, while free trade
is dominant today, the power of business and finance in American politics
justifies labeling our system “free-trade mercantilism.”
Free trade dominates the world economy today, so we are not mercan-
tilist in that sense. Today we live in a neomercantilist system, free trade
plus inordinate political power in the hands of businessmen.3 That power
would elicit blistering criticism from Smith were he alive today. In spite
of the high degree of freedom in international commerce, this system is
neither democratic nor a free market. Yet contemporary flawed capital-
ism is very productive. So, paraphrasing Winston Churchill’s witticism
about democracy, capitalism is the worst economic system devised by man,
except for all the others.
Justice in economic relations could establish the capitalism Smith pro-
posed. It could make capitalism the best economic system devised by man.
In short, this chapter is an argument for an egalitarian and just market
economy to replace the laissez-faire capitalism that controls and weakens
the USA today.
Savage capitalism has reduced equality of economic opportunity,
thereby affecting the pursuit of happiness. Economic crises (recessions,
bankruptcies of large financial institutions, such as the Savings and Loan
crisis) clearly affect happiness. Carol Graham states their “terrible” (her
word) impact: “We know that individuals are loss averse and do not like
uncertainty. Crises bring about both significant losses and uncertainty.
Not surprisingly, they bring movements in happiness that are of unusual
JUSTICE, LIBERTY, AND EQUALITY: ADAM SMITH’S POLITICAL ECONOMY 23
magnitude.”4 We need to eliminate “savage capitalism” in order to give

everyone equal opportunity to increase happiness.
If we are ever to see a less vicious capitalism, Adam Smith’s view of
markets must be demythologized. In his famous work, he analyzed how
to increase the wealth of nations. But when he wrote about nations, he
included everyone. In Wealth of Nations, he wrote about “universal opu-
lence,” including even the poorest class.5 (See Chap. 4 for extensive devel-
opment of this point.) In Smith’s system of justice plus liberty and equality,
the productivity gains resulting from the division of labor were supposed
to be widely dispersed among all economic classes. His political–economic
system included both a market and a rather large role for government.
Nevertheless, most people today believe he advocated laissez-faire.
So, what is laissez-faire and why do I argue that Smith did not advocate
it? Paul A. Samuelson, in his classic economics textbook, defined “full”
laissez-faire as “complete government noninterference with business.”6
John Kenneth Galbraith gave this form of laissez-faire an apt label: “Leave
things alone in the widest conceivable area, national defense aside, and
they will work themselves out. This, as it may be called, is theological lais-
sez faire. A higher power assures the best possible result.”7 That higher
power is often called the invisible hand.
Galbraith is not the only scholar connecting laissez-faire and religion.
Thurman Arnold argues that the basic economic beliefs of the USA are
religious in character.8 Thomas Frank writes of the pervasiveness of the
“business-as-God routine.”9 Harvey Cox writes that the market is a god
with a well-developed theology including sacraments and a doctrine of
the “end of history.”10 And at least one businessman seems to share this
belief; the chief of Goldman Sachs, Lloyd Blankfein, when asked if it were
possible to make too much money, responded that he was “doing God’s
work.”11
The USA has never had “full” laissez-faire. Through the years, the
role of the government has ebbed and flowed. But, as noted above, the
government role in the economy has been significantly reduced in recent
decades. This tide has been so strong that it is fair to label our current
political/economy “laissez-faire.”
LAISSEZ-FAIRE MISINTERPRETATIONS OF ADAM SMITH

Widely diverse sources demonstrate the USA fixation with laissez-faire. An
extensive review of books on political ideology, economics, US economic
history, and the history of political thought, plus a non-scientific sampling
24 J.E. HILL
of internet sources,12 confirmed that Adam Smith is often grossly misinter-

preted on laissez-faire. About half of my sources were books, half Internet.
About 70 % of all those sources, both books and internet sources, clearly
connected Smith and laissez-faire. That 70 % included many very intel-
ligent people. Here are a few examples.
One reason laissez-faire has been so dominant is that it has long been
the most basic assumption, the foundation on which American econo-
mists have built their analyses. In 1889, the President of Massachusetts
Institute of Technology (M.I.T.), Francis A. Walker, stated that “belief in
laissez-faire ‘was not made the test of economic orthodoxy, merely. It was
used to decide whether a man were an economist at all.’”13 That attitude
is still dominant among contemporary economists, as the next two items
illustrate.
Elbert and Judith Bowden wrote the following about Wealth of Nations
in their economics textbook:
The philosophy of capitalism is the philosophy of the market process—the

philosophy of Adam Smith’s laissez-faire—of “consumer sovereignty and
the invisible hand.” It’s the philosophy of individual freedom, of private
property, of rewards for productivity.14
The connection of the invisible hand to laissez-faire is common in the

literature; invisible hand is virtually a synonym.
An economic education website from the University of Omaha made
similar statements referring to Wealth of Nations:
In Smith’s view, the ideal economy is a self-regulating market system that

automatically satisfies the economic needs of the populace. He described
the market mechanism as an “invisible hand” that leads all individuals, in
pursuit of their own self-interests, to produce the greatest benefit for society
as a whole. Smith incorporated some of the Physiocrats’ ideas, including
laissez-faire, into his own economic theories, but rejected the idea that only
agriculture was productive.15
Economists were not alone in holding this idea. George H. Sabine’s

work on political thought dominated the textbook market for history of
political thought courses for decades. He wrote: “the so-called classical
economics or the theory of laissez faire—was the work of many hands and
included elements taken from Adam Smith and other English writers and
also elements taken from the Physiocrats and later French writers.”16
Roy C. Macridis, an important political scientist in the twentieth cen-

tury, stated in a political ideology textbook that Adam Smith emphasized
the economic freedom of the individual, with the government keeping “its
hands and agents off.” Macridis also wrote of the “laissez-faire model of
capitalism as it had been portrayed by Adam Smith.”17
Senator Mike Mansfield, Democrat from Montana, an important
twentieth-century political leader, connected Smith and laissez-faire in his
comments to a summit on the US economy in 1974:
The fact is that the laissez faire application of the laws of demand and sup-
ply no longer correct the economic ills of a society already bound in by a
massive complex of intervention built up over decades. The clock cannot be
turned back to Adam Smith’s Eighteenth Century England.18
A contemporary liberal economist, Paul Krugman, connects Smith and

laissez-faire through the invisible hand:
As Adam Smith saw, and many generations of economists have elaborated,

markets often have a way of getting self-interest to serve the common good.
Individuals seeking only gain for themselves are led, ‘as by an invisible
hand,’ to produce goods that other people need, when they need them. It’s
a powerful and true insight. Even liberal economists have a healthy respect
for the effectiveness of markets as a way of organizing economic activity.19
Certainly, Krugman is right to recognize that markets organize econo-

mies effectively. However, critics of savage capitalism, like Krugman, give
an incomplete picture when they fail to present Smith’s advocacy of a
market system which includes equal opportunity and justice. As with so
many authors who refer to the invisible hand, Krugman omits important
components of Smith’s recipe for wealthy and happy nations. Throughout
his long teaching and writing career, Smith consistently argued that self-
interested action should be within the boundaries set by ethics and self-
control; he repeatedly referred to the “impartial spectator,” his term for
self-control based on community standards. In Smith’s view, self-interested
action that violated community standards did not serve the common
good. Smith’s liberty required an egalitarian and just society.
A final example comes from Samuelson’s Economics, the premier eco-
nomics textbook in the last half of the twentieth century. His textbook
was not an argument for laissez-faire; he advocated a mixed economy.
26 J.E. HILL
However, Samuelson clearly connected Smith to laissez-faire. “In short,

Adam Smith … had no right to assert that an Invisible Hand channels
individuals selfishly seeking their own interest into promoting the ‘public
interest’ … Smith has proved nothing of this kind, nor has any econo-
mist or philosopher since his time.”20 According to Murray Milgate and
Shannon Stimson, the “invisible hand” was barely noticed during the
nineteenth century. But Samuelson’s Economics had a large role in elevat-
ing it to prominence in the middle of the twentieth century.21
Mansfield, Krugman, and Samuelson, all come from the liberal end of
the political spectrum; none of them advocated laissez-faire. That each
connected Adam Smith and laissez-faire demonstrates the pervasiveness of
the myth. “Mythical” is the label Warren Samuels gives to “the belief that
the invisible hand enables, even requires laissez-faire.”22 He emphasizes
that laissez-faire is a fiction.23 Gavin Kennedy is equally clear that laissez
faire cannot be attributed to Smith:
Only flaky attribution associates laissez faire with Smith. He declined to use
the expression, partly because of his deliberate preference for more accurate
phrases in English to convey what he meant, but also, I suggest because he
did not believe that a general policy of laissez faire was practical or advisable,
and … he wrote intentionally and with forethought in breach of laissez faire
prescriptions.24
Examples of the laissez-faire misinterpretation are legion. Yet, Smith never

used laissez-faire explicitly, nor did he argue for it implicitly.
WHAT ADAM SMITH DID ADVOCATE

Adam Smith often wrote about perfect liberty and natural liberty; but his
use of these terms was not an implicit argument for laissez-faire. As indi-
cated at the beginning of this chapter, he also included justice and equality
as elements in his “simple secret” of prosperity for all. Adding those two
ideals requires massive revision of the long prevailing, grossly simplistic
distortion of the entire thought of Adam Smith.
Of course, he emphasized liberty. Obviously, he wrote that a mar-
ket economic system (including free trade) was crucial for the wealth of
nations. Market economies have indeed prospered by adopting his wise
insight that individual action often makes enormous contributions to
national wealth.25 But those same market economies have also suffered
enormously when the other two elements in his three-part equation (jus-
tice, liberty, and equality) have been ignored. The Great Recession is but
one example of the harm that results when individual liberty dominates
the economy. Moreover, many books could be written with examples of
corporate and individual greed, such as the Ford Pinto gas tanks that so
often exploded in rear-end collisions, Volkswagen’s skirting of pollution
rules, and the financial scams of the Boeskys and Madoffs.
Adam Smith’s recipe for wealthy nations emphasized justice; most
commentators miss this, even though it was a crucial aspect of his thought.
Some admit that justice, fair play, is part of Smith’s Theory of Moral
Sentiments, but argue that his ideas changed when he wrote Wealth of
Nations. This is the “Adam Smith Problem.” But those who supposed
that Adam Smith changed his views from his first book to his second are
wrong. Theory of Moral Sentiments and Wealth of Nations were two parts
of the interrelated system he was building.
Jerry Evensky argues that Smith was consistent and coherent through-
out the evolution of his logic.26 Smith did not contradict his own system.
Justice is obviously an important element in Theory of Moral Sentiments;
as demonstrated below, it is also important in Wealth of Nations.27 Louis
Schneider agrees with Evensky: “It is simply not to be expected that the
moral philosopher would cease to be at work in Smith when he turned to
economic matters.”28 Smith assumed that businessmen would be ethically
grounded; ethical grounding would prevent market injustice. There is no
“Adam Smith Problem.”29
His ethics included clear connections of virtues and happiness. “Concern
for our own happiness recommends to us the virtue of prudence: concern
for that of other people, the virtues of justice and beneficence; of which,
the one restrains us from hurting, the other prompts us to promote that
happiness.”30 For Smith, a man of virtue was a man who paid attention to
the sentiments of others.
He was subtle about this; if one wants to prosper, one should work
hard, but in that process, one should do no harm to others. Smith empha-
sized individual competition in Wealth of Nations, but with an important
qualification: no violation of the rights of others. This was so important
to Smith that it is fair to label it his “do not harm” principle. Once you
write about the rights of others, you are bringing to economics a social
dimension that is diametrically opposed to the individualism that laissez-
faire theorists assume.
28 J.E. HILL
Human beings are constantly in economic community. This social

aspect of Smith’s thought is clear in both Theory of Moral Sentiments and
Wealth of Nations. He always considered Theory to be his more impor-
tant work—yes, more important than Wealth of Nations—so let us start
with that work. As noted in Chap. 1, the first sentence in Theory of Moral
Sentiments emphasized human sociability. Smith knew that individual
actions are often based on self-interest, but this self-interest was tempered
by sociability. As an individual, valuing peer approval, one will “humble
the arrogance of his self-love, and bring it down to something which other
men can go along with.”31 This statement is in the same paragraph as a
discussion of our own happiness in relation to that of others. “There can
be no proper motive” for disturbing our neighbor’s “happiness merely
because it stands in the way of our own, to take from him what is of real
use to him merely because it may be of equal or of more use to us….”32
A recent biographer, Nicholas Phillipson, notes that Smith believed
“that the human personality could best be understood in developmental
terms as the story of how individuals learned to live sociably….”33 And
Phillipson states explicitly that Smith’s emphasis on sociability comes
directly from the Scottish enlightenment.34 Charles L. Griswold Jr. agrees
and connects sociability with sympathy and happiness.
“Sympathy” resonates with love of humankind, goodwill, willingness to ease

the suffering of others. …Smith’s focus on “sympathy” is both at home in
and formative of what one might broadly call the moral framework of the
Enlightenment. He aims to vindicate the standpoint and virtues of ordinary
life and to alleviate our common human constitution or estate both ethically
and materially, thereby promoting peace, happiness and the betterment of
our condition.35
Mark R.M. Towsey documents that such ideas percolated through the
ranks of Scottish society, reaching many provincial readers who “seem to
have digested the relevance of the enlightened concepts of fellow-feeling,
sympathy, sociability, humanity, moderation and politeness to their every-
day lives.”36 The individualism of laissez-faire is logically incompatible
with Smith’s emphasis on sociability and his understanding of happiness.
In fact, purely individualistic economics does not work; markets require
significant cooperation. This is how Smith put it in Wealth of Nations:
if we examine, I say, all these things, and consider what a variety of labour
is employed about each of them, we shall be sensible that without the
assistance and co-operation of many thousands, the very meanest person

in a civilized country could not be provided, even according to, what we
very falsely imagine, the easy and simple manner in which he is commonly
accommodated.37
The “meanest person” in this context is a person at the bottom of the

socio-economic ladder. Given that such an extensive social network
is needed to supply very poor people who can afford to purchase only
the bare necessities, how much larger are the networks for middle- and
upper-class consumers? This “variety of labour” is often called division
of labor, inherently a social concept because it requires many people to
work together for a common purpose. According to Milgate and Stimson,
this social aspect remained part of economic analysis until the neoclassical
economists of the latter part of the nineteenth century. “Pioneering neo-
classical economists … divested their economic theories from direct con-
tact with any socially specific material conditions (other than the existence
of well-defined and enforceable property rights) whatsoever.”38
Smith’s quotation comes shortly before his famous comments about
self-interested butchers and bakers. “It is not from the benevolence of the
butcher, the brewer, or the baker, that we expect our dinner, but from their
regard to their own interest.”39 This comment is misleading when taken
out of context, resulting in gross oversimplification of Smith’s system. The
context is the combination of sociability and self-love. Evensky argues that
Smith’s point is that “self-love is the spring for human action and it can
serve us. What is not on this page of the WN [Wealth of Nations] is the
context. In Smith’s moral philosophy, the benefits of self-love are pre-
mised on the presence of the ‘well-governed society.’”40 Yes, one expects
the butcher and the baker to act in their self-interest, but that gets them
nowhere without a connection to others’ self-interest. One has to cooper-
ate with one’s customers to have a thriving business, even to sell food and
clothing and other necessities of life.41 The quotation is dangerous when
anyone takes it as a license to divorce self-interest from sociability. That
results in atomistic individuals advancing their own interests with little, if
any, concern about harm done to others.
Recent research demonstrates that we would all be better off if we
practiced Smith’s liberty with equality and justice. Gary M. Woller, an
admirer of the benefits of a market economy, nonetheless strongly criti-
cizes the business ethos for its “simplistic and inaccurate conception of
the individual and society,” which he traces to distortions of the ideas of
30 J.E. HILL
Adam Smith, as well as “misrepresentation of American history and char-

acter.” He notes Smith’s belief that self-interest is necessary for markets
and also that Smith emphasized “the role of society, social relations, and
shared social norms in regulating not only economic transactions but also
the whole of human behavior.” According to Woller, individuals are not
atomistic beings but are influenced by society in forming their values. He
reports research that “individuals do in fact possess a highly articulate civic
consciousness. Contrary to the tenets of liberal [market] theory, numer-
ous empirical studies find, among other things, that people do not always
engage in free riding-behavior.”42 People today are aware that they exist
in a social context.
There is some evidence that sociability has benefits for not only hap-
piness but also the economy. David Halpern contends that more sociable
nations are more resilient in economically difficult times; this idea is fur-
ther developed in Chap. 4. He also argues that our relationships to both
family and strangers are important for both psychological and physical
well-being; trustworthy citizens, prepared to help one another, give a
nation hidden wealth.43 Halpern is not alone in emphasizing the value
of trust. Richard Layard argues that trust leads to cooperation, which “is
a win-win activity.” He is aware that trust is often absent but insists that
“in much of life cooperation is the order of the day, and people do ignore
their private short-term interest in pursuit of a common goal from which
all parties gain.”44
Carol Graham notes the extensive literature on social capital and argues
that higher levels of social capital are “positive for quality of life and eco-
nomic progress.”45 Derek Bok reports that both introverts and extroverts
are happier when they are with others; and he writes that a variety of social
acts (like volunteering) make us happier.46 Bruno Frey presents research
on how volunteering benefits life satisfaction. He argues that there is a
causal relationship; “volunteering makes people happy.”47
Moreover, what Smith understood in 1776 has been confirmed by con-
temporary scholars who see socio-political benefits, in addition to the eco-
nomic and happiness benefits already discussed. Kenneth J. Arrow argues
that, for society to operate successfully, “we must have an ethical code,
that is, some sense of justice. Conduct of an economy of even the most
self-interested type requires a degree of recognition of others, or it will
not function….”48
Political independence is distorted when liberty becomes anomic indi-
vidualism, when the responsibilities of citizenship are forgotten. Smith’s
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so that many quickly recovered. But by this time Hawkins had lost half his
people by sickness, and therefore he burnt one of his ships.
A month later he sailed away with a good bill of health, saving for six
who were not yet well. A few days later they gave chase to a Portuguese
ship and overhauled her. An old gentleman was on board who was going
out to be Governor of Angola, with his wife and daughter and fifty soldiers.
The poor old Don moved Hawkins' compassion by his sad story, for all
his fortune lay in that vessel; so, after taking out of their prize some meal
and chests of sugar, they disarmed them and let them go.
Hawkins' men were delighted with the unlooked-for supply, the

Portuguese Governor and his people were astonished at the generosity of
the English captain, and they were all happy and praising God for His
bounty and grace.
But when the Dainty and her consort were off La Plata, a storm came on
from the south which lasted forty-eight hours. By sundown Hawkins saw
with amazement that Tharlton, the master of the pinnace, was bearing off
before the wind, without making any sign of distress. The Dainty followed,
and as darkness fell carried a light, but no answering light was put up by the
pinnace.
Thus Tharlton kept his course for England, and shamelessly deserted his
commander.
ANGLING FOR ALBATROSS
When Hawkins' ship, the Dainty, was in the South Seas making her way to the Straits
of Magellan, the crew saw certain big fowl as large as swans, and secured several by
baiting fishing-lines with pilchard. They were not, however, captured without great
difficulty, for they buffeted the men with their powerful wings until they were black and
blue.
"I was worthy to be deceived," wrote Hawkins, "in that I trusted my

ship in the hands of a hypocrite, and a man which had left his general
before on the like occasion, and in the self-same place." For Tharlton had
deserted Cavendish in the night-time and sailed home; and Hawkins
laments that such offenders were seldom brought to trial, because their
superiors were often not able to wade through with the burden of the suit,
which in Spain is prosecuted by the King's attorney. They had noticed
during the gale certain great fowls as big as swans, and throwing out a
fishing-line baited with pilchard caught enough to feed the crew for that
day. These must have been the albatross, for Hawkins relates how when
they had hooked one of these creatures and pulled him to the stern of the
ship, two mariners went down by the ladders of the poop and seized on his
neck and wings; but such were the blows he gave them with his pinions,
that both left their hold of him, being beaten black and blue.
The Dainty was now all alone, and on the 19th of February 1594
entered the Straits of Magellan. At the Penguin Islands they stored the ship
with these birds, salted like beef in casks. The hunting of them proved a
great source of amusement to the crew; as each, armed with a cudgel,
advanced and drove the silly things into a ring. Whenever one chanced to
break out, divers of the men would run and try to head it round; but the
ground was so undermined with their burrows that ofttimes it failed
unawares, and as they ran you could see first one man and then another fall
and sink up to his armpits in the earth; while another, leaping to avoid one
hole, would disappear into another amidst the uproarious laughter of the
rest. Indeed, so funny an appearance did they make, that many could run no
more, but stopped to hold their sides for laughter. And Sir Richard
concludes thus: "After the first slaughter, on seeing us on the shore, the
penguins shunned us and tried to recover the sea; yea, many times, seeing
themselves persecuted, they would tumble down from such high rocks as it
seemed impossible to escape with life. Yet as soon as they came to the
beach, presently we should see them run into the sea, as though they had no
hurt; but in getting them once within the ring close together few escaped—
and ordinarily there was no drove which yielded us not a thousand or
more."
In another part of the island was a colony of ducks, which had made
their nests of earth and water fetched in their beaks. These were so closely
set that "the greatest mathematician could not devise to place one more than
there was, leaving only one pathway for a fowl to pass betwixt ... and all the
nests and passages were so smooth and clean, as if they had been newly
swept and washed."
Before Hawkins left the western end of the Straits, finding the boards
beginning to open from the great heat of the line, he calked the ship within
board and without above the decks, from post to stern: the manner of
sheathing the hull which his father, Sir John, had invented, preserved the
keel from the attack of worms. One accident caused some anxiety, when the
Dainty struck on a rock amidships and hung there, having deep water both
ahead and astern. Not till the flood came could they warp her off, somewhat
strained and damaged.
Of five anchors brought from England, Hawkins had now lost two, and
two others were disabled, and as bitter weather came on, with sleet and
snow, the men craved to return to Brazil and winter there; but Hawkins,
having Fenton's fortune in mind and that of Cavendish, resolved to go on
and rather lose his life than listen to their counsel.
But he amused his men ashore with sports and games, one day with the
west country sport of hurling, in which the bachelors played against the
married; another day with wrestling or shooting, or stalking ursine seals as
they lay sleeping on the shore in the sun; for their skins were useful as
clothes, their moustaches as toothpicks, and their fat as oil. But these seals,
like the baboons of South Africa, had the habit of posting sentinels, who
wakened the herd with cries of alarm; and when the sailors ran to get
between the seals and the sea, thinking to head them off, the plucky
creatures made straight for them, and not a man that withstood them
escaped being overthrown. Then, after the seals had gained the water, "they
did, as it were, scorn us, defy us, and dance before us."
On the 28th of March the Dainty entered the South Pacific, though the
men murmured and grumbled and prophesied dire consequences.
On Easter Eve they anchored under the island of Mocha, where Drake
had suffered from the treachery of the Indians; so, great precautions were
taken while exchanging goods with them. The Indians, however, had to be
chastised for stealing, and would not sell any hens or llamas of their own
breeding.
Hawkins wished not to discover himself upon the coast till he should
have passed Lima; but his men, greedy of spoil, urged him to enter the port
of Valparaiso, where they took four vessels in which were only stores of no
value, which the owners were allowed to ransom for a small price.
Afterwards a fifth ship came in and was taken. In this they found some
gold, which put the crew in a good humour. New anchors also were
procured, and "a shift of cotton sails, far better in that sea where they have
little rain and few storms, than any of our double sails; yet with the wet they
grow so stiff that they cannot be handled."
Hawkins generously restored all apparel and goods belonging to the

captain who had negotiated the ransom, and his generosity was rewarded
later on.
He remained eight days in port, during which time he and the master of
the Dainty, Hugh Cornish, took little rest, for they had only seventy-five
men to guard five ships, and the Governor of Chili was lying in ambush
near the shore with three hundred horse and foot. But, worse than the
enemy, Hawkins feared the wine for his sailors, which overthrew many of
his men—"a foul fault too common among seamen, and deserving rigorous
punishment"; and he declares that if he had thousands of men, he would not
carry with him a man known to put his felicity in that vice.
As they neared the coast of Peru his men demanded their third of the
gold that had been taken. To this Hawkins replied—
"It will not be easy, men, to divide the bars fairly, and if divided they
may easily be stolen. Many of you, besides, will play away your portions
and return home as beggarly as ye came out."
The men consented to have the gold and silver deposited in chests with
three keys to each, of which the general was to have one, the master
another, and the third was to be given to a man nominated by themselves.
The suspicions of the men were founded on their experience with bad
commanders who often defrauded the men, kept back their pay upon
pretended cavils, or forced them to sell their shares at low prices—"usage
which is accursed by the just God who forbiddeth wages to be withheld."
The commander's humanity in sparing enemy's ships, instead of burning

them, as Drake had done, led to his overthrow; for the news of his coming
was sent by sea and land to the Viceroy of Peru, who at once rose from his
sick-bed and gave orders to man three ships in order to chase "the English
pirate." In eight days three galleons were ready for sea, mounted with
twenty brass guns; but as Hawkins was reported off Arica with three ships,
two of them being prizes, the guards on shore were strengthened and the
squadron of pursuit was reinforced by three more vessels.
When, in the middle of May, they found Hawkins, he had only a

pinnace with the Dainty, having burnt the other prize. As the sun rose, the
wind freshened from the west and caused a chopping sea, by which the
admiral of the Spaniards snapt his mainmast asunder, while the vice-admiral
split his mainsail, and the rear-admiral cracked his mainyard asunder, being
ahead of the Dainty. These accidents were lucky for Hawkins, as the
Spanish ships had been gaining before and getting to windward. Thus he
managed to sail right between the admiral and the vice-admiral, and in a
few hours was clear of all his enemies, who shortly put back to Callao.
They arrived in port after the storm in a sorry state, but the people of
Callao and Lima, whose expectation of seeing the English brought back
prisoners was high, burst out into a frenzy of scornful anger at their
unfortunate countrymen; the women especially reviled them for cowards
when they landed, and some of the lower class stuck daggers and pistols in
their bosoms and strutted about, taunting the "poltroons," and demanding to
be allowed to embark themselves against the English pirate.
This treatment so hurt the sailors and soldiers that they vowed they
would follow Hawkins even to England rather than return again
dishonoured.
So hasty preparations were made, and many boats were staved in on the
stony beach in their hurry to pass to and fro and refit the galleons; for the
Viceroy himself went into the water to set an example to his men.
Meanwhile Hawkins had held on his course and captured a ship fifty
leagues north of Lima; this he burnt, after taking out what provisions he
needed, put the crew ashore, except a pilot and a Greek, who begged to be
taken on board because they had broken the law.
After this they gave chase to a tall ship which outsailed them. Two other
vessels got away in the same fashion, which made the English sailors swear
at the Dainty for being a slow sailer, "a very bad quality for such a ship."
On the 10th of June Hawkins put into the bay of Atacames, about 260
leagues from Lima, and supposing the ship free from any more pursuit, he
stopped to take in wood and water and to repair the pinnace.
Eight days elapsed and they were about to sail, when a ship was seen in
the offing. Instantly the love of plunder broke out, and Hawkins had to
allow the pinnace to give chase, appointing Cape San Francisco as the place
of rendezvous. However, two days went by and no pinnace came, so
Hawkins returned to the bay and met her turning in without a mainmast.
Two days more were lost in repairing the damage, and when the Dainty and
her pinnace at last began to weigh anchor, a man from the masthead said he
could descry two large ships and a small barque steering in towards them.
"The fleet bound for Panama, laden with treasure! Cut sail and meet
them." So shouted the sailors, and ran about in an excited manner.
"No, no," replied Hawkins; "no shipping will stir on this coast as long as
we are known to be here. Besides, my men, if they be merchantmen, let us
wait here for them—they are standing in directly towards us; here we have
the weather-gage of them. But if they are sent to fight us, we can prepare
our ship for the attack better by remaining where we are."
It was done as John Davis would have done it, by gentle appeal to the
reason of the men: very different would have been the treatment of Drake,
whose men feared him too much to argue with him.
On the Dainty the crew were almost insolent in their waywardness;

breaking out into reproaches at their commander's want of spirit, some
vaunting and bragging what they would do, or wishing they had never left
their own country, if they were to refuse such a fight as this.
"To mend the matter," says Hawkins, "the gunner assured me that with
the first tire of shot he would lay one of them in the suds, and the pinnace
should take the other to task. One promised that he would cut down their
mainyard, another that he would take their flag. To some I turned the deaf
ear; with others I dissembled, soothing and animating them to do that which
they promised.... In all these divisions and opinions, our master, Hugh
Cornish (who was a most sufficient man for government and valour, and
well saw the errors of the multitude), used his office as became him, and so
did all those of the best understanding."
Yet, in spite of this, Hawkins let the captain go with the pinnace to
discover what they were, but on no account to engage with the ships. So the
pinnace went, and the mad sailors leaned over the bulwarks, and gaped
foolishly when they saw her suddenly go about; but the Spaniards began to
chase her, "gunning at her all the way."
The Dainty then stood out of the bay to meet them that there might be
sea-room to fight, but the wind fell, and the Dainty was forced to leeward;
then the Spanish admiral came down upon her, as she hailed the foe, first
with noise of trumpets, then with waytes, and after with artillery.
The Spaniards were much stronger both in guns and men, but this might
have been of no avail against English seamanship, had not the chief gunner
shamefully neglected his duty.
For "they came shoving aboard of us upon our lee-quarter, contrary to
our expectation and the custom of men-of-war; and doubtless, had our
gunner been the man he was reputed to be, she had received great hurt by
that manner of boarding; but, contrary to all expectation, our stern pieces
were unprimed, and so were all those which were to leeward. Hereby all
men are to take warning by me, not to trust any man in such extremities
when he himself may see it done: this was my oversight, this my
overthrow."
Poor Richard! very dearly did he suffer for this want of attention to
details. We are reminded of the great Nelson, who, when he was being
carried to the cock-pit, mortally wounded, noticed that one of the tiller
ropes was frayed, and ordered a new one to be put in at once.
Hawkins trusted too much to his gunner; while he with the rest of his
officers was busy clearing the decks, lacing the nettings, fastening the
bulwarks, arming the tops, tallowing the pikes, slinging the yards, placing
and ordering the men,—half his guns were useless from sheer neglect!
"Plenty of cartridges ready, master-gunner?"
"Aye, aye, sir; there be over 500 in readiness."
Yet within an hour the cartridges fell short, and three men had to be
employed in making and filling more.
"Master-gunner, I gave you out 500 ells of canvas and cloth to make
cartridges, but we can't find a single yard of it."
"Got stowed away somewhere, I suspect, sir; we must make shift to

charge and discharge with the ladle—rayther a dangerous job in a hot
fight."
"There were brass balls of artificial fire—not one of them will go off."
"Why, no, sir; I guess the salt-water has spoiled them all."
The commander's heart misgave him: was the man false, or incapable?
At length he and the master of the ship were forced to play the gunner. They
found that few of the pieces were clear when they came to use them, and
others had the shot first put in, and after the powder! No wonder that many
believed the master-gunner to be a vile traitor.
When the action began Hawkins had only seventy-five men in all, and
the Spaniards had 1300, many of them "the choice of Peru."
Twice in the course of the day the enemy were beaten off, and in the
evening two Spanish ships were laid upon the Dainty at once; but the
English, what with their muskets, what with their fireworks, cleared their
decks very soon. If Hawkins had had more sound men, he says, he could
have boarded their vice-admiral and taken it. However, the Spaniards had
had enough of close quarters, and now set to and, placing themselves within
a musket-shot of the Dainty, played upon her with their artillery without
intermission. "In all these boardings and skirmishings," says Hawkins,
"divers of our men were slaine, and many hurt, and myself amongst them
received six wounds—one of them in the neck, very perilous; another
through the arm, perishing the bone, the rest not so dangerous. The master
of our ship had one of his eyes, his nose, and half his face shott away.
Master Henry Courton was slaine. On these two I principally relied for the
prosecution of our voyage, if God, by sickness or otherwise, should take me
away."
At times the Spaniards parleyed and invited Hawkins to surrender,

promising the usages of good war. Once the captain of the Dainty came to
stir his leader to accept the terms offered, saying that scarcely any men were
left to traverse the guns or oppose any defence, if the enemy should board
again. Poor Hawkins was suffering agony, and believed himself to be at the
point to die, but he roused himself and begged them not to trust to promises
from a Spaniard, for they would assuredly be put to death as pirates or
delivered to the cruel mercies of the Inquisition.
The captain and his company agreed to fight on and sell their lives
dearly, so with tears and embracings—for they loved their General—they
took their leave; so the action was continued through the night, and an hour
before daybreak the enemy edged off in order to remedy some defects, for
the English shot made larger holes than the Spanish, and a few more men
would have turned the scale and given the victory to the Dainty.
This breathing time the English employed in repairing sails and

tackling, stopping leaks, mending pumps, and splicing yards; for they had
many shot under water, and the pumps were battered to pieces.
When the action was renewed the vice-admiral came upon their quarter,
and a shot from one of the Dainty's stern-pieces carried away his mainmast
close to the deck. Hawkins lay below, and knew nothing of what had
occurred; then was the time to press the Spaniard home, but the Dainty was
steered away, and the Spaniards had time to repair their damage.
They soon overtook the Dainty, and the fight went on through the
second night, and they ceased firing again before the dawn; but there had
been no interval for rest or refreshment, except to snatch a little bread and
wine as they could. Indeed, some of the English crew had drunk heavily
before the fight began; some ignorant seamen even mixed powder with their
wine, thinking it would give them strength and courage. The result of their
drinking was, of course, order, and foolish hardihood without reason, or
vainglorious exposure to danger. And though Hawkins had prepared light
armour for all, not a man would use it; yet it would have saved many from
such wounds as splintered wood creates if they would have imitated their
foe and worn armour.
By the afternoon of the third day the enemy had the weather-gage of
them, and their guns were telling with terrible effect.
The Dainty had now fourteen gaping wounds under water, eight foot of
water in her hold, her sails torn to tatters, her masts bowing and bent, and
her pumps useless—hardly a man was now unwounded.
Again the master with others approached their commander:
"Sir, the Spaniards still offer good war, life and liberty and an
embarkation to England. If we wait any longer, sir, the ship will sink; unless
a miracle be wrought in our behalf by God's almighty power, we may
expect no deliverance or life."
Hawkins was too ill to resist further; he murmured sadly:
"Haul down the ensign, then, and hoist a flag of truce."
So they bade the rest cease firing, and a Spanish prisoner was sent from
the hold to tell Beltran de Castro that if he would give his word of honour
the ship should be surrendered.
Seeing the flag of truce, the Spaniard shouted:
"Hoist out your boat, Englishman."
"We cannot do so; it be all shot to pieces."
"So is ours. Amain your sails, then; strike sail, can't you?"
"No, we can't; there be not enough men left to handle them."
Meanwhile the vice-admiral, not seeing the flag of truce, had come
upon the Dainty's quarter, and firing two of his chase-pieces, wounded the
captain sorely in the thigh and maimed one of the master's mates.
Then the Spanish admiral came alongside, and the prisoner jumped into
the warship, and was received with all courtesy.
Don Beltran affirmed that he received the commander and his people à
buena guerra, to the laws of fair war and quarter. He swore by his habit of
Alcantara, and the green cross of the order which he wore upon his breast,
that he would give them their lives with good treatment, and send them as
speedily as he could to their own country.
"The Spanish admiral wants a pledge? Here is my glove; take it to him."
Don Beltran also sent one of his captains to help to bring the English
commander aboard the "admiral," which he did with great humanity and
courtesy.
"The General received me," says Hawkins, "with courtesy and

compassion, even with tears in his eyes and words of kind consolation, and
commanded me to be accommodated in his own cabin, where he sought to
cure and comfort me the best he could: the like he did with all our hurt
men."
There were only forty Englishmen left, all wounded; but all recovered,
in spite of the fact that no instruments, doctors, or salves were to be had. We
remember that in the other case where an English ship had to surrender to
the Spaniards, the Revenge disdained to swim in dishonour, and sank
sullenly in a terrible storm.
The Dainty lived to fight for Spain under the name of La Visitation,
being so named because she was captured on the day of that festival.
As soon as Hawkins was removed the Spaniards began to ransack their

prize; but the water increased so fast in the hold that she nearly sank, and it
needed a strong body of workers to save her.
She was finally navigated to the port of Panama, and anchored there
some two leagues from the town, about three weeks after the fight.
When the good folk on shore saw the prize and heard the glad news,
they lit bonfires on the hills and candles in every window; the churches and
halls were illuminated, as on a holy day. As the city faced the sea, it
appeared to those in the ships as though the whole place was in flames.
Don Beltran reassured Hawkins that his officers and men should be well
treated, and gave him his word that if the King left him to his disposal, his
ransom should be only a couple of greyhounds for himself and a couple for
his brother. It sounded almost too good to be true.
Then the Englishman had the mortification of seeing his dear Dainty
being rebaptized with all solemnity in the harbour, where she was shored
up. Perhaps a sardonic smile curled his lip when, in the very midst of the
ceremony, the props on one side gave way with a loud crash, and the
reluctant ship heeled over, "entreating many of them that were in her very
badly."
Here ends Sir Richard's account of his unfortunate voyage in his
"Observations"; he had intended to write a second part, but deferred it too
long.
Don Beltran was not allowed by his King to observe the terms he had
offered; the crew were sent to serve in the galleys at Cartagena, Hawkins
and twenty others Don Beltran took with him to Lima.
Our hero had shown courage and generosity and kindness to natives and
prisoners, but as a complete seaman his own words show him to have been
deficient. He trusted his subordinates too much, and he kept rather loose
discipline; but he was a man of the highest honour, and won the respect of
the best Spaniards.
At Lima the Inquisition claimed the prisoners, but the Viceroy refused
to give them up until he had heard from King Philip.
In 1597 Hawkins was sent to Spain and imprisoned at Seville; in

September 1598 he escaped, but was retaken and thrust into a dungeon.
In 1599 he was taken to Madrid, although Don Beltran had indignantly

protested against the violation of his solemn promise.
In 1602 he was released and sent home, as by this time Count Miranda,
President of the Council, had come to the conclusion that formal pledges
given by the King's officers must be kept, or else no other English would
surrender.
In July 1603 Hawkins was knighted, became M.P. for Plymouth and
Vice-Admiral of Devon, and had to scour the sea for pirates.
In 1620 he sailed under Sir Robert Mansell to put down Algerine

corsairs in the Mediterranean, and returned home, after a failure, sick and
weak in body. In 1622 he was carried off by a fit while attending the Privy
Council on business bearing on his late command.
By his wife Judith he left two sons and four daughters.

His book, "Observations in his Voyage into the South Sea, A.D. 1593,"
was not written until nearly thirty years after the events, and consequently
bears traces of inaccuracy in details and dates; but it surpasses all other
books of travel of those times in describing the details of nautical life, in
scientific interest concerning the fauna and flora of the countries he visited,
and in transparent candour and freedom from prejudice. He was no boastful
discoverer, but a God-fearing, conscientious servant of the Queen, who, like
so many others, tried to do his duty, and sometimes failed to reach the
highest success.
But for all that, he was not the least among England's heroes; he was a
worthy son of Sir John, and a man whom Devon may claim as one of her
noblest and most generous sons.
Printed by BALLANTYNE, HANSON & Co.

Edinburgh & London
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Adam Smith’s Equality and the Pursuit

of Happiness 1st Edition John E. Hill

The Greek Life of Adam and Eve 1st Edition John R.

Pursuit of Honor Lexy Timms & Autumn Gaze

The Insentient Adam Hill

The Handbag of Happiness: And other misunderstandings,

Gender Equality in Changing Times: Multidisciplinary

Cherry Hill 2-Finding Happiness Dixie Lynn Dwyer

The Pursuit of Europe - A History 1st Edition Anthony

John Trevisa's Information Age: Knowledge and the

ISBN 978-1-137-59047-3 ISBN 978-1-137-58412-0 (eBook)

Library of Congress Control Number: 2016943369

© The Editor(s) (if applicable) and The Author(s) 2016

Cover illustration: © Vitalii Myronov / Alamy Stock Vector

Printed on acid-free paper

This Palgrave Macmillan imprint is published by Springer Nature

Adam Smith wrote in the eighteenth century. Revolutionary changes have

If it should turn out, however, that growth no longer adds significantly to

to a more egalitarian capitalism with justice? The issue of gaining support

A large community contributed to this book. I am deeply grateful to this

1 Introduction: A Forgotten Revolutionary Ideal 1

2 Justice, Liberty, and Equality: Adam Smith’s

3 Smith’s Principles for the Twenty-First Century 61

4 Wealth for All 71

Introduction: A Forgotten Revolutionary

Smith’s passion for happiness is clearly compatible with the revolutionary

Thomas Jefferson made happiness a test of the very legitimacy of a govern-

I remember clearly my parents’ advice when, like all teenagers, I wondered

Here, Stiglitz argues against a common individualistic assumption: he

Economists and psychologists have spent decades studying the relations

Smith made a similar point about our misunderstanding of happiness.

• Pleasure (momentary feelings of joy);

Lyubomirsky similarly defines happiness as “the experience of joy, con-

what they are.”50 It is noteworthy that, 80 years ago, he included women

Psychological wealth is the experience of well-being and a high quality of

can posit that “having a sense of purpose is an important component

HAPPINESS, SMITH, AND POLITICAL ECONOMY

that “Happiness was not only a constant preoccupation of the eighteenth

because they were astute observers of human relations and comprehensive

Wilhelm Roepke, a European conservative, criticizes the mathematical

for overemphasizing mathematical precision, ignoring significant societal

ORGANIZATION OF THE BOOK

2. Social relationships: Chap. 2 presents the argument that human sociability,

Smith’s analysis of the role of government in human happiness is con-

the sentence in the Declaration of Independence dealing with the self-

The US government goes beyond what Smith recommended with the

I am not arguing that Smith intended to write a recipe for greater

5. Martin E. P. Seligman, “Can Happiness Be Taught?” Dædalus 133, no. 2

25. Frey, Happiness: A Revolution in Economics, p. 29.

47. Seligman, Flourish: A Visionary New Understanding of Happiness and Well-

67. Smith, Theory of Moral Sentiments, 1:1–2.

Justice, Liberty, and Equality: Adam Smith’s

The establishment of perfect justice, of perfect liberty, and of perfect equal-

Adam Smith’s capitalism is not practiced in the USA today. In fact,

© The Editor(s) (if applicable) and The Author(s) 2016 21

magnitude.”4 We need to eliminate “savage capitalism” in order to give

LAISSEZ-FAIRE MISINTERPRETATIONS OF ADAM SMITH

of internet sources,12 confirmed that Adam Smith is often grossly misinter-

The philosophy of capitalism is the philosophy of the market process—the

The connection of the invisible hand to laissez-faire is common in the

In Smith’s view, the ideal economy is a self-regulating market system that

Economists were not alone in holding this idea. George H. Sabine’s

Roy C. Macridis, an important political scientist in the twentieth cen-

1 Introduction: A Forgotten Revolutionary Ideal 1

2 Justice, Liberty, and Equality: Adam Smith’s

3 Smith’s Principles for the Twenty-First Century 61

4 Wealth for All 71