Most Americans can recite the opening lines of one of the two great documents published in 1776.
They cannot name the other.
In Philadelphia that summer, Thomas Jefferson and his colleagues declared that all men are created equal, endowed with unalienable rights — among them life, liberty and the pursuit of happiness. The document they produced became the founding scripture of American political life. It is read aloud every July 4th. Schoolchildren memorize it. Presidents invoke it.
Three thousand miles away, on March 9th of that same year, a Scottish moral philosopher named Adam Smith published a book called “An Inquiry into the Nature and Causes of the Wealth of Nations.” It was, in its own way, equally revolutionary.
Where Jefferson articulated the case for political liberty, Smith articulated the case for economic liberty. Where Jefferson argued that governments derive their just powers from the consent of the governed, Smith argued that economies derive their productive power from the choices of free individuals.
Two documents. One year. A common argument about freedom: political and economic.
The coincidence is almost too neat — except that it wasn’t really a coincidence at all. Both men were children of the Enlightenment, breathing the same intellectual air, drawing on the same tradition of natural rights and individual dignity.
There is no record that Jefferson and Smith ever met or corresponded — yet Jefferson would later call the Wealth of Nations “the best book extant” on political economy. Smith’s book appeared in March; Jefferson’s Declaration followed in July. Four months apart, an ocean apart, and yet arriving at the same fundamental conclusion: that the individual, not the state, is the proper author of a free life.
For a time, Americans held both inheritances together. Political freedom and economic freedom were understood as inseparable — two expressions of the same underlying conviction that individuals, not institutions, were the proper authors of their own lives.
Something changed.
Today, Jefferson’s document is celebrated with fireworks and parades. Smith’s is taught in economics departments, argued about in policy journals and increasingly treated as a relic of a simpler age — useful perhaps as a historical artifact, but inadequate to the complex challenges of modern economic life.
The Declaration’s principles are regarded as essentially settled. We do not seriously debate whether individuals possess unalienable rights. We do not propose that government should determine, by decree, what citizens may say or believe or how they may worship.
Smith’s principles, by contrast, are perpetually contested. We regularly propose that government should determine what industries deserve to survive, which technologies deserve investment, which companies deserve protection and which individuals deserve to be shielded from the consequences of their own choices.
We have kept the political liberty. We have been steadily negotiating away the economic liberty.
This is a strange bargain, and we have made it so gradually that most people haven’t noticed.
The argument for economic planning always arrives wearing the costume of necessity. The challenge is too complex, too urgent, too important to leave to the chaos of free markets. Experts are needed. Coordination is required. The invisible hand, we are told, is not fast enough, fair enough, or reliable enough for the problems we now face.
It is worth pausing, on the 250th anniversary of both documents, to ask how that argument has fared.
The twentieth century was the great laboratory of economic planning. The results were instructive, if not always encouraging. Outright central planning — the Soviet model, the command economies — collapsed or stagnated comprehensively. Western industrial policy produced more mixed outcomes, with governments occasionally backing winners but more often protecting incumbents and misallocating capital.
Even the most successful postwar economies thrived largely by preserving enough market freedom to generate the growth that funded everything else. The lesson is not that every intervention fails. It is that the planning instinct consistently underestimates what it displaces.
Meanwhile, the most transformative economic developments of the past half-century emerged not from government blueprints but from the dispersed decisions of free individuals.
The personal computer. The internet economy. Smartphones. Biotechnology. Artificial intelligence. None were centrally planned in their final form, even when publicly funded at early stages. Each was ultimately shaped by countless experiments by entrepreneurs and investors pursuing opportunities that no central authority had foreseen or, in many cases, even recognized.
Smith understood why. His great insight was not simply that markets are efficient — a bloodless technical claim that has always been easy to argue about. His deeper insight was moral.
Free exchange respects the dignity of individuals as the proper judges of their own needs, talents, and ambitions. Planning, however well-intentioned, substitutes someone else’s judgment for your own. It treats citizens as inputs into a system rather than as authors of their own lives.
That is not an economic argument. It is a human one.
Jefferson made the same argument in political terms. Tyranny is wrong not merely because it produces bad outcomes — though it does — but because it denies the fundamental dignity of self-governance. The consent of the governed is not a mechanism for producing efficient policy. It is a recognition that human beings are ends in themselves, not means to someone else’s ends.
The two documents of 1776 are, at their core, the same document. They share a premise: that the individual, not the state, is the basic unit of a free society.
They share a conclusion: that the proper role of government is to protect the conditions under which free people can pursue their own happiness—not to define what that happiness should look like, or to manage the process by which they pursue it.
We celebrate one half of that argument every July 4th. We have spent much of the past century quietly dismantling the other half, always with good intentions, always with expert assurances that this time the planning will work.
It is worth asking, at the 250th anniversary of both, what we have lost in the bargain.
Smith never wrote anything as stirring as “all men are created equal.” He was a philosopher and economist, not a pamphleteer, and his prose rewards patience more than it inspires crowds. But buried in more than 1,000 pages of the Wealth of Nations is a sentence that deserves to stand alongside Jefferson’s finest:
“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.”
It is routinely cited as an endorsement of selfishness—proof that capitalism is merely greed with better marketing. That reading misses everything.
Smith’s point was not that self-interest is admirable. It was that free exchange transforms self-interest into social benefit without requiring anyone to be wise enough, or good enough, or powerful enough to direct the outcome. The butcher does not need to love you to feed you. He needs only to be free to trade. The system works not because people are angels but because freedom allows ordinary human motives to produce extraordinary collective results.
Better institutions, not better people. Ones that protect freedom, enforce contracts, and then get out of the way.
Jefferson understood that government’s highest purpose was to secure the conditions of liberty and then restrain itself. Smith understood the same thing about economic life. In that sense, the two documents of 1776 were always pointing in the same direction—toward a society in which human beings are trusted to govern themselves, to exchange freely, and to pursue happiness by their own lights.
Two hundred and fifty years later, that trust is fraying. Industrial policy is fashionable again on both left and right. Tariffs, mandates, and managed competition are sold as sophisticated modern alternatives to the chaos of free markets—as if the core insight of 1776 were a problem to be solved rather than a principle to be honored.
Not dramatically. Not all at once. But steadily, incrementally, always with the best of intentions—we have been substituting institutional judgment for individual freedom, in politics and in economics alike.
The fireworks on July 4th celebrate a revolution that was never just about taxation or representation. It was about the radical proposition that individuals are capable of ordering their own lives—politically, economically, and morally—without a sovereign to direct them.
Adam Smith published his answer to the same question in the same year.
We would do well, at 250, to read them together.
James Carter served as Associate Director of the National Economic Council at the White House and as Deputy Assistant Secretary for Economic Policy at the U.S. Treasury. He has taught economics and tax policy at Johns Hopkins University and is a principal with Navigators Global.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.
Content created by The Daily Caller News Foundation is available without charge to any eligible news publisher that can provide a large audience. For licensing opportunities of our original content, please contact licensing@dailycallernewsfoundation.org
Agree/Disagree with the author(s)? Let them know in the comments below and be heard by 10’s of thousands of CDN readers each day!
