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Liberální institut
Liberální institut

The work of Adam Smith is more important now than ever


Introductory remarks by Jiří Nohejl, Chief Economist of the Liberální Institut, at the celebration of Adam Smith’s 300th anniversary.

Ladies and Gentlemen, Dear Friends,

I am absolutely delighted and humbled to welcome you here at the celebration of Adam Smith’s 300th birthday. I am always enthusiastic about events of the Liberální Institut, but this one is even more extraordinary to me. Adam Smith and his work has a very special place in my personal journey towards classical liberalism and were instrumental in my finding the Liberální Institut in early 2000s and later joining the institute in 2018. I would like to share few personal remarks together with my views on how Adam Smith’s work relates to the development of the Czech Republic’s market and political institutions.

I first encountered Adam Smith on the shelf of my grandfather’s library. It was before the first appearance of the Liberální Institut edition in 2001. The book I held in my hands back then in the late 1990s was the first full Czech translation of The Wealth of Nations from 1958. This book was quite understandably accompanied by the vividly written preface explaining why it is important to publish The Wealth of Nations in a country striving to reach the ideal of a communist society. To this day I consider the preface to be illustrative of the history of the economic thought in the Czech Republic. [If you have the stomach for it, I am happy to share all eighteen pages with you.]

One of the striking parts of the preface is an acknowledgment of the importance of Smith’s arguments in the later development of Marxian “exploitation theory” together with bashing of the work of prominent Czech liberal economist Karel Engliš. In contrast, it is enlightening to open Engliš’s textbook from the 1940s where he, in the recommended literature section, references The Wealth of Nations as a resource written by one of the very few listed foreign authors.

Reading Adam Smith was a revelation to me as his ideas could describe the puzzles I have encountered as a child observing a transition from the greys of a unified totalitarian society to the colorful diversity of the free society. I remember that I asked my grandfather about Adam Smith, because his work was mentioned by the leading politician of the era – Václav Klaus. Klaus emphasized The Wealth of Nations as an inspiration leading to the Czech pathway in economic transition as well as the voucher privatization.

The first publication of Czech translation of The Theory of Moral Sentiments in 2005 somehow missed me and my first engagement happened when I studied it with our distinguished speaker and the recipient of this year’s Annual Award Professor Daniel Klein almost a decade later. Reading The Theory of Moral Sentiments had a profound impact on my thinking. Besides other things, it explained the puzzles of my experience growing up in a transitioning country in more depth and detail.

I got to appreciate how Smith in both of his instrumental books develops a coherent theory of social interaction where self-interest and sympathy play complementary, not substitutive roles. In the market, the order is derived from willingness to pay a price and in the realm of culture, the morals are the result of an approval (and disapproval) of our fellow citizens. In both, coherence is found in decentralized discovery and coordination.

Smith famously argued that we desire not only to be loved, but also to be lovely. This statement might evoke a pause for a modern economist, however, it provides an important insight. It forces us to contemplate if it is not, indeed, the case that human characteristics of individual economizing agents are those which allow for the smoothness of the market process.

These thoughts bring me to another important figure of the Czech transition – Václav Havel. Havel was the leading proponent of an argument that decentralized civil society creates balance to the centralized political power. The well-known Havel–Klaus debate to certain extent formed our current institutions and created an apparent tension not dissimilar to the widely discussed Das Adam Smith Problem. This then encourages a question, are the TMS and WN viewpoints in contradiction?

I do not believe they are.

The thoughtful reading and implementation of Smithian ideas as an intertwined system of markets and morals can bring us to a better perception of social issues through the perspective of, to use Vernon Smith’s phrase, humanomics.

Years have passed and we have experienced an ever-widening gap between arguments for profits and markets and arguments for morals and civil society instead of a classical liberal synthesis of the two. Recent political discourse is driven by a struggle between simple populism on the one hand and sophisticated technocratic governance on the other.

I perceive the work of Adam Smith more important now than ever. With new editions of The Wealth of Nations and The Theory of Moral Sentiments, we are encouraging Czech readers to contemplate Smith’s work as a true synthesis of interconnected networks of interested and disinterested commerce where sympathy and self-interest are the two sides of the same coin. Emphasizing Smith’s warning which penetrates through both of his celebrated works that power would nowhere be so dangerous as in the hands of a man of a system who has folly and presumption enough to fancy himself fit to exercise it.

I am delighted to introduce the Annual Lecture by Professor Daniel Klein, one of the world’s most esteemed Smithian scholars, and I invite you to a wonderful journey of Adam Smith’s brilliant synthesis of a system of societal cooperation among neighbors and nations.


O Autorovi


Jiří Nohejl je hlavním ekonomem Liberálního institutu, vystudoval studijní program Finance na Fakultě financí a účetnictví VŠE a Aplikovaná Informatika na Fakultě informatiky a statistiky VŠE. Na VŠE vedl semináře oboru Ekonomie a právo a v roce 2014 působil jako visiting scholar na katedře ekonomie George Mason University.

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