The dynamism of liberalism: An esoteric interpretation of Adam Smith

Several scholars have noted that entrepreneurship, innovation, and market dynamism more generally —“creative destruction’— are largely absent from Smith's characterization of what his “liberal plan” tends to bring about. Indeed, in reading Smith's body of work, one gets the impression that Smith's opinion of innovation ranged from oblivious to skeptical. I argue, however, that the scant attention to innovation and market dynamism is not an oversight on Smith's part; nor did Smith believe that innovation was typically undesirable. Instead, I argue that we must read Smith esoterically. Smith recognizes that prejudices against commercial activity are ancient and deep—even natural. Market dynamism generates moral and social tumult. Innovation breaks from, and sometimes disrupts, traditional ways of living. A liberal order tends toward greater cultural detachment and moral fragmentation. Smith downplayed the tumultuous effects of market dynamism, and, on the surface, he did sometimes disparage the effects of innovation. Beneath the surface, however, Smith recognizes that innovation is an inherent component of the liberal package—a mixed blessing but, at any rate, an integral part of the liberal plan. In his work the careful reader can find guidance on how people can adjust to, and make the best of, a liberal order. The economic growth promised by liberalism hinges on innovation; the virtues of tolerance and reserve must be learned. To make the liberal plan palatable, Smith recognizes that he must adopt a pedagogy that leaves some of his teachings indirect or nonobvious.