Adam Smith vs Ha-Joon Chang: The Founder of Market Economics and One of Its Historical Critics
Comparing Adam Smith's Wealth of Nations and Theory of Moral Sentiments with Ha-Joon Chang's history-based critique in Kicking Away the Ladder: what Smith actually argued, what Chang adds, and where they differ. General education.
Adam Smith is the founder of modern economics and the most cited authority for free markets. Ha-Joon Chang is a development economist who has used economic history to challenge the policy advice often drawn from that tradition. People compare them to see what Smith actually argued, and what a historical critic adds.
What is the core difference?
Smith explains how markets, specialization, and competition can raise living standards, and argues against rules that protect favored producers. His key mechanisms are the division of labor, the extent of the market, and the incentives of self-interest operating within rules of justice.
Chang examines how countries have actually developed. His method is historical: he looks at the policies of Britain, the United States, Germany, Japan, South Korea, and others when they were catching up, and argues that these often included protection, subsidies, and state direction.
One analyzes the workings of a market economy. The other asks what policies countries actually used to grow.
What did Smith write?
Adam Smith, a Scottish moral philosopher, held a chair at the University of Glasgow and later worked as a tutor and customs commissioner. The Theory of Moral Sentiments (1759) analyzes how sympathy shapes moral judgment. An Inquiry into the Nature and Causes of the Wealth of Nations (1776) explains the division of labor, the role of markets, and criticisms of mercantilism and of monopolies.
He died in 1790. Scholars debate the relationship between his two books and the weight he gave to institutions and ethics. The image of Smith as a champion of unrestrained markets is a later simplification.
What does Chang argue?
Ha-Joon Chang, a South Korean economist at Cambridge and later SOAS, wrote Kicking Away the Ladder (2002), Bad Samaritans (2007), 23 Things They Don't Tell You About Capitalism (2010), and Economics: The User's Guide (2014). His work focuses on development, industrial policy, and the history of institutions.
He argues that the current emphasis on good institutions as a cause of development confuses cause and effect, since rich countries built many institutions after getting rich. His views are controversial, and critics argue that successful interventions are overstated and failures understated.
How do they compare?
| Dimension | Smith | Chang |
|---|---|---|
| Era | Eighteenth-century Scotland | Late twentieth and twenty-first century |
| Focus | How markets and specialization create wealth | How countries have developed and what policies they used |
| Method | Moral philosophy and observation of commerce | Economic history and comparative policy analysis |
| Key works | The Wealth of Nations (1776); Theory of Moral Sentiments (1759) | Kicking Away the Ladder (2002); Bad Samaritans (2007) |
| View of government | Limited but real roles: defense, justice, public works | Active industrial policy often needed for development |
| Target of critique | Mercantilism and monopolies | Free-market orthodoxy and advice to developing countries |
| Main caveat | Popular image simplifies his views | Critics say the record of intervention is mixed |
When does each one fit?
Smith's work fits when you want to understand the logic of exchange, specialization, and competition, and the case against privilege and monopoly. It also fits for understanding the moral theory behind his economics.
Chang's fits when you want to examine how policy advice relates to history, particularly in questions about trade, industrial policy, and the role of the state in development. It gives a critical view of standard prescriptions.
Both can mislead if used to support a conclusion in advance. The record is complex, and it contains both successes and failures of intervention and of liberalization.
What does this look like in practice?
A government considers protecting a young industry. A Smith-style analysis would ask whether the protection benefits consumers and the nation as a whole or only the producers, whether it will lead to monopoly, and whether competition would serve better. It is wary of special interests. Smith himself allowed exceptions for national defense.
A Chang-style analysis would look at the history of countries that built industries: how long protection lasted, what conditions were attached, whether firms were pushed to export and improve, and how the policy ended. It asks whether the protection is time-limited and disciplined. A careful answer uses both questions.
"A proposal says to protect [industry] with tariffs or subsidies. First, in Smith's manner, ask who benefits and who pays, whether it creates monopoly or privilege, and what competition would do. Then, in Chang's manner, ask what historical cases of success and failure suggest, what conditions were attached, and how protection was ended. Present the strongest argument and objection on each side. This is for study, not policy advice."
Why it works: asking both the market question and the historical question avoids a conclusion drawn from only one.
Can you use both together?
Yes. Many economists combine respect for market incentives with attention to institutions and history. Reading Smith closely shows that he was not a simple partisan of laissez-faire, and reading Chang shows what a historical test of policy advice looks like.
Be cautious about both. Each is used in political argument, and each is more complex than the slogans.
"Take a claim commonly attributed to Adam Smith: [claim]. Tell me where it appears in The Wealth of Nations or The Theory of Moral Sentiments, what the surrounding passage says, and whether the popular use is accurate. Then tell me how Ha-Joon Chang would use or challenge the claim."
Why it works: checking the actual text corrects many popular myths about Smith.
Where to go next
Adam Smith and Ha-Joon Chang both sit in the Economist category. For the originals, read The Wealth of Nations and The Theory of Moral Sentiments by Smith and Kicking Away the Ladder by Chang. This guide is general education and not policy advice. To work through a major decision in a structured way, Decision Brief is a $79 tool built for it.
Frequently asked questions
Is this policy advice?
No. This guide compares two economists' documented arguments for general education. It recommends no economic policy, and economists disagree about the questions raised here. Readers interested in policy should read the primary works and the range of scholars who have assessed them, and consider the evidence for their particular country or case. Whatever one's view, the primary texts are worth reading in full, because summaries often mislead.
What did Adam Smith actually argue?
In The Wealth of Nations (1776), Smith argued that the division of labor and the pursuit of gain in competitive markets increase national wealth, and that mercantilist restrictions are harmful. He also supported certain government roles, including defense, justice, and some public works, and defended the Navigation Acts for reasons of national security. His earlier Theory of Moral Sentiments (1759) emphasizes sympathy as a basis for morality.
What is the invisible hand?
It is a metaphor Smith uses, sparingly, in The Wealth of Nations and once in The Theory of Moral Sentiments, to describe how individuals pursuing their own interests may unintentionally promote the wider good. The phrase appears only a few times in his work, and its meaning is debated. Popular accounts often make it a larger claim than Smith did. Some scholars note that Smith used the metaphor modestly and that later economists elevated it.
What is Chang's main argument in Kicking Away the Ladder?
In the 2002 book, Chang argues that today's rich countries, including Britain and the United States, used tariffs, subsidies, and other protectionist and interventionist policies during their own development, and later urged poorer countries to adopt free trade and other policies that they themselves had not followed. His claim is that this amounts to kicking away the ladder they climbed. Chang also points to Germany, Japan, South Korea, and Taiwan as examples of countries that used industrial policy.
Does Chang disagree with Smith?
Chang's critique is aimed less at Smith than at later free-market orthodoxy and at the policy advice given to developing countries. He draws on economic history to argue that active industrial policy has often been central to development. Smith is a source for many of the arguments he challenges, and a more nuanced figure than the caricature. Many economists respond that other factors, such as geography and institutions, also matter, and that protection often failed.
Can AI help me study the debate?
It can compare passages, summarize historical examples, and list criticisms. It may repeat simplified versions of both authors. Check claims against the primary works and against economic history, and keep in mind that contexts differ. Treat any single quotation from either author with caution and look at the context. Please also read the books in full where you can. Keep track of the sources it cites.
Written by Gareth Hoyle. Last updated 8 October 2026. Part of the authority.md guides library.
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