Adam Smith and the Historical Expansion of Economics

Karl Theodor von Inama-Sternegg’s 1876 commemorative university address, Adam Smith und die Bedeutung seines Wealth of Nations für die moderne Nationalökonomie, assesses Smith’s achievement at the centenary of his major work. Its movement is historical and methodological: from Smith’s intellectual formation, through the European reception of his economics, to its standing within an emerging historical social science. The central claim is that Smith founded economics as an autonomous science, while subsequent inquiry must distinguish its enduring discoveries from assumptions specific to his age.

Inama-Sternegg locates Smith between British moral philosophy and economic observation, on the one hand, and French physiocracy on the other. Glasgow’s commercial life supplied practical knowledge; French intellectual exchanges clarified both the possibilities and limitations of existing systems. Smith’s originality consisted less in discovering isolated propositions than in establishing their systematic connection. He separated economic phenomena from the wider field of politics and society sufficiently to disclose their distinctive regularities, without forgetting their connections to that field.

Arbeitsamkeit und Sparsamkeit, das sind die beiden mächtigen Hebel des Volkswohlstandes.

English translation: Industriousness and thrift are the two powerful levers of national prosperity.

This formulation condenses Inama-Sternegg’s account of Smith’s organizing principle. Labour and accumulated resources generate wealth; self-interest, operating through equal competitive freedom, guides their effective employment. But the resulting economics was also a liberal worldview. It supported emancipation from paternal government and inherited restraints, making economic freedom part of a wider movement toward political and civil freedom. Its concentration on material production, exchange, and measurable quantities at the expense of distribution was historically effective even where theoretically one-sided.

The address’s middle section follows the uneven conversion of that intellectual achievement into authority. Early continental reviewers missed the work’s systematic novelty by measuring it against familiar individual propositions. German translation arrived promptly, but sustained assimilation lagged; French reception was interrupted by revolution, while Italy’s established economic literature and particular political circumstances limited Smith’s transformative impact. Britain recognized his authority sooner. Thereafter Ricardo, Malthus, M’Culloch, Say, and Rau helped consolidate a science whose influence extended into administration and legislation. Industrial machinery and expanding transport appeared to vindicate its principles. Inama-Sternegg nevertheless separates Smith’s qualified arguments from the exaggerations of disciples, crediting historical scholarship with recovering the distinction.

The final section explains why this recovery cannot mean doctrinal restoration. Recognition of immaterial goods, productive services, and intellectual labour challenged an economics centred on tangible wealth. Changing moral motivations also required investigation rather than treatment as constants.

Es galt zu untersuchen wie weit angesichts der fortschreitenden sittlichen Vervollkommnung der Menschen das Eigeninteresse als Bewegungsprinzip der Volkswirthschaft bestehen bleiben könne, welchem doch A. Smith eine so dominirende ja ausschließende Rolle im Güterleben eingeräumt hatte; das Gleichbleibende und das Wandelbare in den menschlichen Bestrebungen mußte gesondert — es mußte mit einem Worte historisch das Wirthschaftsleben der Völker untersucht werden.

English translation: It was necessary to investigate how far, in view of humanity’s advancing moral improvement, self-interest could remain the moving principle of the national economy, when A. Smith had assigned it so dominant, indeed exclusive, a role in economic life; the constant and the changeable in human endeavours had to be distinguished—in a word, the economic life of peoples had to be investigated historically.

Historical inquiry thus differentiates universal economic conditions from arrangements expressing particular stages of civilization. Smith’s account of a highly developed economy retains relative truth without becoming a universal description. The more decisive extension concerns inherited institutions: class, occupation, property, law, and state organization shape economic conduct before individuals begin acting.

Die Wirthschaft fängt nicht mit jeder Generation von neuem an; sie beruht wesentlich auf dem ganzen Ergebnisse vorausgegangner Zeiten, und diese Ergebnisse sind nicht blosz öconomische und technische, sie sind sociale und politische Bildungen und Gestaltungen, die nun das neue Geschlecht mit tausend und abertausend Fäden an die Vergangenheit knüpfen und ihm eine feste Ordnung seines Daseins schon in die Wiege legen.

English translation: Economic life does not begin anew with every generation; it rests essentially on the entire outcome of preceding ages, and these outcomes are not merely economic and technical: they are social and political formations and configurations that bind the new generation to the past by thousands upon thousands of threads and place a fixed order of existence in its cradle.

Economics must consequently become part of a broader social science. Yet Inama-Sternegg defends Smith’s isolating method: relatively stable social conditions make analytical separation legitimate, provided its conclusions are not mistaken for the whole truth. The address’s significance lies in this reconciliation of liberal economic science with historical and institutional explanation. Its tribute honours Smith by extending, rather than merely repeating, his achievement.