Revisiting the 20th Century Wealth of Nations on Adam Smith’s 300th Anniversary

Revisiting the 20th-Century Wealth of Nations on Adam Smith’s 300th Anniversary — The Story of the Reissued The Constitution of Liberty

The tremendous success of The Road to Serfdom, published in 1944, brought Hayek fame as a political thinker, but it also made his path as a professor of economics even more difficult.

After Keynes died suddenly in 1946, his practical theories were systematized and elevated into orthodoxy by his disciples, becoming the mainstream of economics and economic policy around the world.

Hayek, who had openly opposed Keynes’s solutions, found himself ostracized in the British economics establishment dominated by Keynesianism.

In the end, Hayek moved to the United States. At the time, America had experienced years of Roosevelt’s Keynesian economic controls, and there were quite a number of devoted supporters receptive to Hayek’s arguments.

But his new beginning in America was not easy either.

Even the economics department at the University of Chicago, which had published the American edition of The Road to Serfdom, refused to accept him as an economist. In the end, he suffered the humiliation of being appointed professor of social and moral science, and only with difficulty did he manage to establish himself in the United States.

For Hayek, the 1950s he spent in America were a period of decline.

Most faculties, leaning to the left, disliked Hayek, and economists treated him as an outsider.

The book he wrote over nine years while enduring that lonely and difficult period was The Constitution of Liberty.

He completed the manuscript on May 8, 1959, his 60th birthday, and the book was published the following February.

At the time, Hayek hoped this book would become a 20th-century version of The Wealth of Nations.

But its time had not yet come.

The Constitution of Liberty was thoroughly ignored by American society.

The public response was lukewarm, and academic journals paid little attention to it. Reviews were rare, and even those were mostly critical.

Eventually, suffering from depression and physical and mental exhaustion, Hayek returned to Germany in 1962. For Hayek, who had become a British citizen, this was both a retreat and a refuge. After even suffering a myocardial infarction and falling apart mentally and physically, he reached the point of thinking to himself, “Now I am finished.”

In the 1970s, a reversal came.

The disasters produced by Keynesian policies struck countries around the world.

Stagflation and government fiscal crises, which Keynes had never anticipated, led the world to seek out once again Hayek, who had stood against Keynes.

Victorian Britain had been shaped by Adam Smith’s The Wealth of Nations. Prime Minister Thatcher, who called for a restoration of that era’s values, carried Hayek’s The Constitution of Liberty in her handbag, reading and rereading it. And she went on rebuilding Britain into a free society.

The happy ending that followed is widely known.

A few years before his death, Hayek lived to witness even the collapse of socialist states, humanity’s greatest dangerous experiment, and he passed away in peace. After that, he was gradually forgotten once again.

And as the end of the socialist states loosened humanity’s sense of vigilance, Keynesian government policy began to rise again.

And, sure enough, the financial collapse of 2008 occurred.

Democratic governments, whose defining trait is forgetfulness, revived Keynesian stimulus policies, from George Bush to President Obama.

But this time it was different. Among the public, Hayek’s warning was awakened again.

The Tea Party movement emerged in opposition to government stimulus measures, and The Road to Serfdom once again rose to the top of the bestseller lists. Resistance to such government policies that undermine the free system is still ongoing in many parts of the world.

In the preface to The Constitution of Liberty, Hayek says:

“For the truths of the past to keep hold of people’s minds, they must be retold in the language and concepts of the next generation.”

For us, who have come once again to realize the preciousness of the free system through the experiences of the past several years, The Constitution of Liberty has been rewritten in the language of our time.

Let us remember that this 20th-century version of The Wealth of Nations, which Hayek rewrote under the title The Constitution of Liberty, brought an end to socialism, the mercantilism of the 20th century, and restored a prosperous free system. For us, who are only beginning the work of reconstruction, it is a precious asset.

This year marks the 300th anniversary of Adam Smith’s birth.

It is deeply meaningful—and something to be grateful for—that in this significant year, a truth from the past, one that must be reread for the reconstruction of the free system and repeated across generations, has found us once again.

- 2023.6.5 Nam Sangmin

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Original title: 애덤스미스 300주년에 다시 읽는 20세기 국부론

Author: Jayujuui Ipmun Dokseo Toron Moim

Date: 2023-06-02

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=reading01&pn=3&idx=25700