Adam Smith, the £20 note and the

The new Adam Smith £20 note has been issued today. He is the first Scotsman to appear on a Bank of England note (our colleague Stefan would argue that this honour should have gone to Bill Shankly) and the first economist. Pictures of the new note can be found here. Whilst he was undoubtedly a free-market economist, a lot of the press coverage of the launch of the new £20 note has overemphasised this element of his work, and indeed right-wing politicians have often selectively quoted from The Wealth of Nations (1776) in order to justify the dismantling of all government activity. The "invisible hand" does indeed lead humans to create the greatest wealth for society by us acting in our self-interests, and in his most famous quote Smith stated that:

It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest.

However, not only did Smith see an explicit role for the state to intervene in areas of the common good – for example, education, defence, sewerage – but elsewhere he explicitly denies that a selfish "laissez-faire" economy is desirable. The "invisible hand" doesn’t work in an absence of human "sympathy" and society. In addition he advocated progressive taxation ("it is not unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion") – again, an unpopular policy for the right-wing think tanks that have adopted Smith as their poster-boy. So an interesting and welcome choice for a banknote (we economists aren’t celebrated often enough!), but not one as straightforward as the free-marketeers would have you believe.


The value of investments will fluctuate, which will cause prices to fall as well as rise and you may not get back the original amount you invested. Past performance is not a guide to future performance.

Jim Leaviss

Job Title: CIO Public Fixed Income

Specialist Subjects: Macro economics and fixed interest asset allocation

Likes: Cycling, factory records, dim sum

Heroes: Brian Clough, Morrissey, Neil Armstrong

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