The Capitalist Manifesto

ON THE WEALTH OF NATIONS

By P.J. O'Rourke

Atlantic Monthly. 242 pp. $21.95

Back in 1776, a subject of the British Empire published a remarkably durable statement about the desires and striving of mankind and the deep human yearning for freedom. This document, whose verities echo and resonate throughout the generations, is regarded with something close to adoration.

Oh, and the Declaration of Independence was published that year, too.

An Inquiry Into the Nature and Causes of the Wealth of Nations, the lengthy tome penned by Adam Smith, then a 53-year-old Scottish logician and economist, has had nearly as great an impact on mankind as the much shorter document inked by Thomas Jefferson. A staple of Great Books courses, The Wealth of Nations is a sort of Bible for free-market devotees. Like the Bible, however, it is more cited than read -- and frequently least read by those who cite it most. And so having a well-known, highly accessible writer introduce Smith's great work to contemporary audiences is a great idea. The guide for the perplexed is P.J. O'Rourke -- satirist, libertarian, author, wit.

It's an incongruous pairing. Smith embarked on a systematic, lengthy, earnest examination of the economic world. "My job is to make quips, jests, and waggish comments," O'Rourke states. But like chocolate and salt, this unlikely combination works well together. In this book, O'Rourke is a charming, highly literate blogger -- one who thinks before actually writing -- elucidating Smith's arguments and making insightful comments along the way. It's a safe bet the words "Talmud" and "P.J. O'Rourke" have never been used in the same sentence. Yet there is something slightly Talmudic to the approach.

O'Rourke nicely lays out Smith's chief contributions to our understanding of economic relationships and of the ways in which government policies can help or hinder trade. "Adam Smith cannot be said to have constructed the capitalist system," explains O'Rourke. "What he did was provide the logic of a level ground of economic rights upon which free enterprise could be built more easily." To a large degree, Smith was light years ahead of his time -- in arguing aggressively for free trade, in proclaiming the dignity of labor at a time when much labor was unfree, and in making the now obvious connections between the pursuit of sustenance and riches and the pursuit of life, liberty and happiness. "Smith saw the moral potential in both our interest in others and our self-interest," O'Rourke writes.

O'Rourke neatly highlights the inconsistencies and occasional contradictions inherent in Smith's view of capitalism. For instance, "the arguments for freedom in The Wealth of Nations are almost uncomfortably pragmatic." The Smith who comes through here is more aware of the limitations of free markets than many of the Financial Times-reading, regulation-loathing acolytes who swear by Smith today. Smith warned against greed. He favored progressive taxation. He was suspicious. ("People of the same trade seldom meet together . . . but the conversation ends in a conspiracy against the public.") At times, he sounds more like Eliot Spitzer than Milton Friedman.

While the Smith that emerges in these pages is frequently timeless, the same can't always be said for O'Rourke. Many of the targets of his quips are so obvious, the punch lines can be seen from across the Firth of Forth. There are entirely predictable smacks at Bill Moyers, PBS, Paris Hilton, Berkeley, conservationists, the United Nations, teachers' unions, liberal Democrats and the poor. On occasion, one wishes the Invisible Hand would smack O'Rourke upside the head, as when he argues that Smith wouldn't have proposed "rebuilding slums below sea level so college kids have a place to get drunk during Mardi Gras." Occasionally, this wag's a dog.

But O'Rourke does manage to tease out an interesting contradiction in Smith's work. Today, free market devotees tend to regard the free market and the attendant competition it spawns as a great leveler, as a guarantee that advantages earned in one generation don't automatically get passed on to successive ones. But such views are perhaps better associated with the 20th-century economist Joseph Schumpeter, who coined the term "creative destruction." O'Rourke points out that, forward-looking as Smith was, he was still a man of the 18th century. He was concerned with order, respectful of tradition and rank (he worked as a tutor for a duke for several years) and not particularly hostile to class. "The peace and order of society is more important than even the relief of the miserable," he wrote. Unlike the French philosophes across the channel who were seeking to reinvent the world, Smith sought merely to improve it.

Smith was clearly comfortable with some of the contradictions in his life and work. In 1778, he was named commissioner of customs for Scotland, following in the path of his father and other relatives in holding public positions charged with maintaining one of the great barriers to free trade -- taxes on imports. "Between book sales and the commissionership, Smith was making money with efforts to eliminate customs duties and with efforts to collect them," O'Rourke notes. "He wouldn't have thought it was as funny as we do. It was the family business." ·

Daniel Gross writes the "Moneybox" column for Slate. His book "Pop! Why Bubbles Are Great for the Economy" will be published in May.