Freakonomics Radio Podcast Explores How economic Theory Affects Us

Most people don't think that economists and their grand theories of how the economy works have any effect on our daily lives. It's just pointy-headed academics with tweed jackets postulating about pie-in-the-sky stuff.

The truth is that economists impact how we navigate through our lives in direct ways. For example, American economist Milton Friedman developed the doctrine as a theory of business ethics that states that “an entity's greatest responsibility lies in the satisfaction of the shareholders.” Therefore, the business should always endeavor to maximize its revenues to increase returns for the shareholders.

That theory has been responsible for all sorts of corporate malfeasance (Wells Fargo, Volkswagen, Enron), a flattening of employee wages, massive layoffs to cut costs and make share price targets, and a general hollowing out of the American middle class.

In a three-episode podcast series just released, Freakonomics Radio searches for the real Adam Smith, the economist whose theories about free markets and the invisible hand get tossed around so loosely in political discourse (and whose other ideas often get overlooked or ignored). 

As host Stephen Dubner says in the intro, “A brilliant and sympathetic man has been turned into a cardboard cutout. Our mission today is to try to turn that cardboard cutout back into the real Adam Smith.”

To do so, Dubner travels to Smith’s hometown of Kirkcaldy, Scotland to investigate Smith’s origins, and continues onto Glasgow, where Smith wrote his books. He also interviews a wide array of economists, political scientists, and Adam Smith scholars around the world. “There's many reasons [his] thinking was powerful,” one says. “Interestingly, not the reason that most people think.” 

In case you're not a listener, each week, Freakonomics Radio tells listeners things they always thought they knew (but didn’t) and things they never thought they wanted to know (but do) — from the economics of sleep to how to become great at just about anything.

As host Stephen Dubner explains in the intro of the first episode, “In Search of the Real Adam Smith,” Smith’s work has long been distorted to fit partisan agendas:

“That first book, the one no one reads [The Theory of Moral Sentiments], is essentially a call for what many modern liberals say they believe in: sympathy. The second book, the famous one [The Wealth of Nations], is a call for what many modern conservatives say they believe in: a free-market economy with less government interference. Since most politically motivated people aren’t willing to hold two potentially conflicting ideas in their mind at the same time (or even ever), they often simply ignore the idea they don’t like. In the case of Adam Smith, conservatives have done a better job promoting his views than the liberals, who tend to disparage the free-market Smith without offering the sympathetic Smith as balance. As a result, both sides have turned him into a caricature.”

Episode one, “In Search of the Real Adam Smith,” just released, looks at Adam Smith’s life and background – who he was, where he grew up, how he came to publish his two master works – as well as how his ideas were interpreted in America, especially by the Chicago School of economics.

Episode two, out the evening of Wednesday, December 14, examines how Smith's ideas have been interpreted by politicians on the right, as well as attempts on the left to reclaim Smith.

Episode three, out the evening of Wednesday, December 21, asks how we can make our current economy more Smithian, looking at the anti-big corporate stance seen in his opposition to the East India Company’s territorial expansion in India.

Listen to “In Search of the Real Adam Smith” at freakonomics.com or wherever you get podcasts.