Category Archives: Adam Smith

As Soon as Government Management Begins It Upsets the Natural Equilibrium of Industrial Relations

Adam Smith? Everett Dean Martin? Apocryphal?

adamsmith03Dear Quote Investigator: Multiple books and websites attribute the following quotation to the influential economic thinker Adam Smith, but I think the ascription is incorrect:

As soon as government management begins it upsets the natural equilibrium of industrial relations, and each interference only requires further bureaucratic control until the end is the tyranny of the totalitarian state.

Usually these words are assigned to the landmark 1775 text “The Wealth of Nations”, but I have carefully searched electronic copies of this work and concluded that the quote is absent. Furthermore, the vocabulary in the passage is chronologically incongruous. The word “totalitarian” first entered the English language only in the 1920s, and that is more than 130 years after the death of Adam Smith in 1790. Could you trace this quote to identify its true origin?

Quote Investigator: Thanks to the questioner for the perceptive analysis accompanying the query. The passage above was not written by Adam Smith. It first appeared in a 1939 essay by Everett Dean Martin who was a Professor of Social Philosophy at Claremont Colleges in California. The statement was Martin’s summary analysis of Adam Smith’s economic philosophy. Martin used his own words, and he did not claim that he was quoting Smith.

Martin’s paper was presented at the Annual Convention of the Investment Banker’s Association of America in 1939 and then was published in the November issue of the journal “Investment Banking” under the title “Social Philosophies at War”. The following passage occurred shortly before the quotation in the essay and indicated the topic: 1

Adam Smith, whose book, “The Wealth of Nations,” was written the same year as our Declaration of Independence, pointed out the moral and economic significance of Locke’s political philosophy. Individual responsibility is the very goal and meaning of free government. There must be no bureaucratic management of affairs which men had best decide for themselves.

The following excerpt from Martin’s paper included the passage being traced:

He held that not only is government incompetent to regulate by decree or by grant the affairs of individuals, but its meddling inevitably results in putting a premium on inefficiency. As soon as government management begins it upsets the natural equilibrium of industrial relations, and each interference only requires further bureaucratic control until the end is the tyranny of the totalitarian state.

The final sentence above was later reassigned directly to Adam Smith. This misattribution has been widely disseminated, and today it is present in several quotation databases.

Here are additional comments and selected citations in chronological order.

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Notes:

  1. 1939 November, Investment Banking, Volume 10, “Social Philosophies at War” by Everett Dean Martin, Start Page 10, Quote Page 12 and 13, Published by Investment Bankers’ Association of America, Chicago, Illinois. (Verified with scans; Great thanks to Dennis Lien and the University of Minnesota library system)