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Adam Smith’s work was driven by his deep concern for the poor
If you have read BFN you will know that I am motivated to reform India not because I care much for India’s so-called “greatness” (which is a good thing to have, no doubt) but because I care a lot for the poor of India (and of the world).
I don’t want to have to experience the sight of any child standing inside a mound of rubbish to salvage something to sell – or worse: something to eat. If socialism merely meant deep concern for the poor then both Adam Smith and I are socialists.
The great difference between me and Nehru is that I demonstrate care for the poor not by stealing money from your pocket or stopping you from becoming rich, but by asking you to help bring about the conditions by which these poor can be empowered to bootstrap themselves into prosperity. These conditions go by the common term (often mistakenly used), CAPITALISM.
People forget that Adam Smith was primarily a philosopher, not economist. Economics is all fine as a tool, but we must be clear about our moral philosophy, first.
Smith's concern for the poor came out in many ways. For instance, his view on taxation was basically progressive. The first such expression, perhaps (well before Marx):
“it is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion” [Wealth of Nations]
The poor must therefore not be asked to shoulder the bulk of the costs of running the state (during his time all taxes were regressive: it was only Milton Friedman who first brought about the progressive income tax in the West). (See also: http://sabhlokcity.com/2011/05/discovery-of-similarities-between-adam-smiths-views-on-taxation-and-mine/)
Smith objected to sheer (reckless, arrogant) greed: “All for ourselves, and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind…”
It is but equity, besides, that they who feed, cloathe and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, cloathed and lodged. [WN, 79]
Note that (as is the case with the arguments I make): “However, only the direst poverty was of concern to Smith, who thought that, thanks to the 'invisible hand,' it was a rare phenomenon” [Source].
And no natural right accrues to our charity: “A beggar is an object of our charity and may be said to have a right to demand it; but when we use the word right in this way it is not in a proper but in a metaphorical sense”. Unlike Marx who thought that violent theft from the rich was acceptable, Smith was totally opposed to violent means. Adam Smith's is therefore DEFINITELY not a concept of positive liberty (which leads to socialism and to the destruction of wealth and freedom).
And so Sandy Baum concludes:
While he never explicitly stated that the government should intervene in favor of the oppressed to facilitate the workings of unbiased market forces, such a conclusion is consistent with Smith's writings [Source].
This understanding is important, particularly in relation to a distorted version of “laissez faire” that was apparently taught to British civil servants of India – which allegedly led them to ignore mass deaths in the many famines that afflicted British India.
I'll briefly comment on these famines presently.
Read more at Sanjeev Sabhlok’s Occasional Blog-Economics
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