The first three chapters and the plan of the book provided the whole kernel of what today we would call a theory of growth. Much stress has been laid over the years on the significance of the description of the pin factory. In fact Smith never visited one. Apparently he based his account on an article in an encyclopedia. Never mind that Smith was widely traveled and sharply observant everywhere he went. His failure to expend much shoe-leather in this case has occasionally been cited to discredit him. Such cavils entirely miss the point.What was the basis of Warsh's error? Warsh writes,
I am pretty certain that, when I wrote that passage, I was thinking in a general way of my old and dear friend Charles P. Kindleberger, from whom I first learned much of what I know about various controversies of historical economics. Specifically, I was remembering an essay that he wrote for Thomas Wilson and Andrew Skinner to commemorate the bicentennial of the publication of the appearance of Smith’s great work in 1776.Warsh then goes on to state,
As usual, Charlie set out his thesis concisely and joyfully in the first paragraph of "The Historical Background Adam Smith and the Industrial Revolution:"So there we have it. Does it matter? As Warsh says,An early version of this paper focused on the dispute, if one may call it that, between historians of economic thought who sometimes seek to demonstrate that Adam Smith was fully aware of the industrial revolution taking place around him as he wrote The Wealth of Nations, and economic historians who think he was not. It is true, as Samuel Johnson put it, that “in lapidary inscriptions, a man is not upon oath,” and piety demands that the guest of honour be given the benefit of the doubt. Nonetheless, I propose to dismiss this question quickly, with an open-and-shut verdict for the economic historians.I am, however, pretty certain that it was the recollection of this zinger a few pages farther on that caused my fingers to slip. CPK was nothing if not memorable:It may well be true, as Viner says, that “Smith was a keen observer of his surroundings and used skillfully what he saw to illustrate his general argument”…. But it is surely going too far to say with Max Lerner in his introduction to the Modern Library Edition: “Smith kept his eyes and ears open… Here was something that gave order and meaning to the newly-emerged world of commerce and the newly-emerging world of industry… Smith took ten more years. He could not be hurried in his task. He had to read and observe further. He poked his nose into old books and new factories.”
That last sentence is half right.
Whether my error is serious or trivial depends on the business you are in. It is, I suppose, a calumny on Smith to say that he never saw to a pin factory, even if in the same breath I gave him credit for getting out and around. Certainly I deeply regret the error. It is still the case that Kindleberger was correct in the essay that made such an impression on me: Smith failed to report a lot of stuff that was going on right under his nose. The great figures of the early Industrial Revolution – Wedgewood, Arkwright, Boulton and Watt – are mostly missing from The Wealth of Nations. But does that demonstrate that Smith was ignorant of the industrial revolution that was going on around him? I don’t think so.Update: The Undercover Economist (Tim Harford) has this to say on the matter.
Update 2: Gavin Kennedy's response to Warsh is here.
Update 3: Tim Worstall makes an interesting point about this debate, namely how quickly it was over. Worstall writes,
Aside from all of this trivia, there's one other thing I think interesting. The speed with which all of this was worked out. The original contention, that Smith didn't, was published last Wednesday, as was the assertion that he did (we're still in panto season, aren't we?)See A Tiny Technology Story for Worstall's article.
We're now only at Monday and we've got the whole thing sorted, down to the footnotes of which earlier writers he did reference, as well as who was at fault for the implication that he hadn't also visited such a manufactury himself.
Update 4: Tim Harford offers Adam Smith: an apology