Rehabilitating Self-Help: Why Hayek Was Wrong about Samuel Smiles
By Roger Donway
In 1976, Friedrich Hayek effectively read Samuel Smiles out of the classical-liberal movement. In The Mirage of Social Justice, Hayek said that the work of Samuel Smiles (1812-1904) constitutes a snare and a delusion for pro-capitalists. Smiles’s defense of free enterprise, Hayek lamented, seemed to be “the only defence of it which is understood by the general public.”1 And this prominence of Smiles, Hayek warned, “bodes ill for the market order.” Self-Help, Smiles’s internationally famous 1859 book, had praised capitalism as a system inherently conducive to honest advancement in business. But such a defense, Hayek lectured classical liberals, was merely a pro-capitalist version of the “social justice” illusion.
Thereafter, Smiles appears to have lost favor among classical liberal economists. For example, Smiles is not among the 132 biographical entries in the Cato Institute’s Encyclopedia of Libertarianism, although entries exist for several obscure figures. In fact, Smiles is not mentioned in the 600-plus page text of Cato’s encyclopedia, apart from one sentence in an introduction written by a fellow Scot.2 Nor does Smiles appear in the index of Deirdre McCloskey’s The Bourgeois Virtues: Ethics for an Age of Commerce, although the linkage of bourgeois virtue and commercial success is what Self-Help made famous.3
Enthusiasm for Smiles, post-Hayek, seems to have been centered mostly in the Institute of Economic Affairs in London (IEA). In 1996, IEA brought out a reprint of Self-Help.4 In 2004, IEA’s general director (John Blundell) joined with Mackinac Center president Lawrence Reed to write a tribute to Smiles.5 In 2009, IEA visiting fellow Robert Bradley Jr. honored Smiles as an intellectual pillar of classical liberalism deserving of a separate chapter in his book Capitalism at Work.6 But when in 2011 Reed published another accolade to Smiles and Self-Help, the title was telling: “Dusting Off a Man and His Classic.”7 More important, none of these tributes addressed the issue raised by Hayek.
Who Was Samuel Smiles?
Born outside Edinburgh to the owner of a general store, as the third of eleven children, Smiles studied medicine for six years, first as an apprentice and then formally at the University of Edinburgh, graduating in 1832. In 1833, his father having died of cholera, Smiles returned to his hometown of Haddington to practice as a doctor, working among the rural poor, and meanwhile read voraciously on all subjects. In 1838, Smiles sold his medical practice and became editor of the Leeds Times. The position paid little, but Smiles gained a certain amount of regional fame through his newspaper work (600 editorials) and through his participation in classical-liberal reform societies such as the Anti-Corn Law League. After marrying in 1843, Smiles determined to provide for his growing family (a wife, two sons, three daughters) and so became assistant secretary of the Leeds and Thirsk Railway. In 1854, his railway disappeared through merger, and Smiles joined the South Eastern Railway in London as secretary, a post he held for 12 years.8
In 1840, Smiles met George Stephenson, “the Father of Railways,” and wrote a memoir of him after Stephenson’s death in 1848. Smiles then persuaded Stephenson’s son to let him write a full biography, which was published in 1857 to considerable success. This launched the less-known side of Smiles’s career, although it is a side well-known to historians of technology: Smiles became the first serious biographer of Britain’s industrialization, with several books published between 1861 and 1865. His best-known work, Self-Help, was a by-product of this admiration for the engineers who were revolutionizing the nation. A lecture about them and other self-made men, given in 1845 to a mutual improvement society in Leeds, became Self-Help. Published in 1859, it sold 20,000 copies in the first year and a quarter of a million copies by the time of Smiles’s death. Translated into a dozen languages, Self-Help became a worldwide phenomenon.
Even this brief summary of Smiles’s life shows that he knew what he was talking about, both from his own struggles and from his extensive reading. That was not the case with his imitators, who were often unknown preachers and teachers commissioned by publishers to produce rip-offs of Self-Help. Said one historian of the two men whose Royal Path of Life (1876) outsold even Self-Help: “We should call them compilers rather than authors, for they did little more than put together tags and quotations.”9 The whole field of nineteenth-century “success manuals” thus acquired a well-deserved reputation for fatuousness and pomposity, and those who have not read Self-Help often assume it to be no better. But it is infinitely better. When Self-Help states that prominent painters sometimes rose from obscurity, Smiles does not simply assert the fact or cite one famous example. He rattles off the names of two dozen artists who illustrate his point.10
Hayek’s Argument against Smiles
Why did Hayek slam his pro-capitalist comrade? In 1960, The Constitution of Liberty asserted: “Most people will object not to the bare fact of inequality but to the fact that the differences in reward do not correspond to any recognizable differences in the merit of those who receive them. The answer commonly given to this is that a free society on the whole achieves this kind of justice. This, however, is an indefensible contention if by justice is meant proportionality to moral merit.”11 The merit of an economic activity, Hayek said, is the degree to which it is worthy of moral praise. The value of an economic activity is its value to other people—as judged by them— and that is what the market rewards. The creation of products that consumers want, for whatever reason, “has little relation to anything that we can call moral merit or deserts.”12
In 1976, Hayek published The Mirage of Social Justice, volume 2 of Law, Legislation, and Liberty. In Chapter 9, “‘Social’ or Distributive Justice,” he included a subsection entitled “The alleged necessity of a belief in the justice of rewards,’ and in that subsection he launched his withering attack on Smiles by name. “It is probably a misfortune that, especially in the USA, popular writers like Samuel Smiles and Horatio Alger, and later the sociologist W. G. Sumner, have defended free enterprise on the ground that it regularly rewards the deserving, and it bodes ill for the future of the market order that this seems to have become the only defence of it which is understood by the general public.”13 He concluded the paragraph with an unpleasant attack on businessmen influenced by Smiles who took pride in what they had earned. “That it [Smiles’s defense of free enterprise] has largely become the basis of the self-esteem of the businessman often gives him an air of self-righteousness which does not make him more popular.”14
That is the indictment of Smiles and his businessmen devotees. Before offering a rebuttal, however, one objection must be raised. Hayek’s linking of Smiles and Horatio Alger repeats a nearly universal belief, but it is completely wrong. When it comes to ideas about the means of achieving success, they are polar opposites. As Garry Wills pointed out: “The key chapter in an Alger story is the chance encounter, that allows the hero to manifest his pluck. But the claim of the Market, ever since Adam Smith’s time, has been that it allows merit to arise by system, as the result of basic laws.”15 Smiles is unmistakably on the side of Smith and system. Chapter IV of Self-Help begins thus: “Accident does very little towards the production of any great result in life.”16
Rebutting Hayek, Rehabilitating Self-Help
Hayek’s fundamental error is his belief that Smiles defends capitalism because it exemplifies what Robert Nozick termed a “patterned” distribution of success.17 In effect, according to Hayek, Self-Help is saying: “Observe who has a large income and who has a small income. You will find the former are more worthy of moral praise and the latter less so.” Of course, experience shows than that is not true. “Differences in reward do not correspond to any recognizable differences in the merit of those who receive them.”18 Self-Help is refuted.
But Self-Help makes no such claim. Just to begin with, Smiles is not concerned with everything that may be “worthy of moral praise.” He is concerned specifically with “the bourgeois virtues,” and, in Self-Help (as opposed to its sequels19), he is very specifically concerned with the business virtues. Industriousness and perseverance take pride of place. But also important in Self-Help are: the cultivation of skills and the acquisition of knowledge; self-discipline, regularity, and orderliness; prudence, frugality, and debt avoidance; observation, attentiveness, and alertness to opportunities; integrity, independence, and honesty. Illustrating how these various virtues promote success is much of what keeps Self-Help’s endless “poor boy makes good” vignettes from becoming tedious.
But there is a second and deeper point: Self-Help does not claim that monetary income under capitalism is apportioned according to a person’s exercise of business virtues. Smiles seems to have understood, implicitly, that the variety of occupations in the new industrial-commercial world offers a “proliferation of hierarchies,”20 and each occupational hierarchy offers a different mix of rewards. Being a doctor brought Smiles professional esteem and the chance to help his neighbors, but not much money. Being a railway’s assistant secretary brought him money, but little professional esteem. Before pursuing an occupation via the business virtues, a person must decide which rewards matter to him. Success has its satisfactions, but significant wealth may or may not loom large among them.
Lastly, and perhaps most important, Self-Help does not even claim that the mix of rewards characteristic of a specific occupation will be found among the occupation’s members in proportion to the degree that they practice the business virtues. That would indeed be a patterned distribution of rewards. But Self-Help never promises it. Quite the contrary. The book’s repeated insistence on the importance of perseverance stresses the absence of any such correlation. The business virtues are techniques, not magic. They take time, often a great deal of time, often a lifetime, to bring about their results. To emphasize this point, Smiles modified the subtitle of Self-Help in the final edition with which he was involved, the edition of 1866. “Illustrations of Character and Conduct” became “Illustrations of Character, Conduct, and Perseverance.”
All Self-Help claims is that the business virtues—practiced assiduously over a lifetime—are very likely to bring a man into the higher ranks of his occupation and to garner for him the types of rewards that his occupation bestows on its higher ranks. The corollary that stirred Self-Help’s readers was that even a man who starts out with nothing but ordinary ability can reach the higher ranks of his profession by persevering in the business virtues. In the new industrial-commercial world, Self-Help said, occupational and economic mobility are possible by dint of unremitting effort. That, and that only, is the book’s eternally inspiring claim. Smiles adds a caveat for the fine arts, in which (he believed) one needs a degree of innate talent to reach the top ranks for which business virtues alone cannot substitute.21 Smiles also admitted that to reach a world-historical rank in any profession requires sheer genius. “No amount of labor, however well applied, would have produced a Shakespeare, a Newton, a Beethoven, or a Michael Angelo.”22 But with those qualifications made, Self-Help tells the reader that he can, however lowly his initial station, rise to the higher ranks of his chosen field. Better still, during his long years of struggle, he can live with the knowledge that he will rise—and that, in the end, he will have earned it.
Would Hayek allow that Smiles is right in these more limited claims? Apparently not. In “The Principles of a Liberal Social Order” he said “the concrete results of the catallaxy [the system of market exchange] for particular people are, however, essentially unpredictable.”23 Smiles disagreed. A person entering an occupation learns what goods and services it provides and why they are rationally desirable. By practicing business virtues over a lifetime, he learns to provide those products at a high level. By being alert to what makes current products rationally desirable, he has a good chance of predicting which products consumers of the future will find still more rationally desirable. (Many of Smiles’s heroes are innovative entrepreneurs). In these ways, a man who assiduously practices the business virtues can fairly anticipate that he will tend to rise in his chosen occupation, and even that he will reach its higher ranks, garnering its rewards. Achievement of that sort is not “essentially unpredictable.”
One might assume that the Smiles-Hayek debate can never be settled. Are the business virtues reliably efficacious or not? How can we know? In 1970, Irving Kristol (the “godfather” of neoconservatism) wrote a defense of Smiles, insisting against Hayek that (empirically) the bourgeois virtues were indeed exemplified by virtually all economically successful businessmen, at any rate by self-made businessmen emerging from “the working class, lower-middle class, and even middle class.”24 If true, that would at least indicate that the business virtues are one necessary ingredient of bourgeois economic success. Robert Bradley Jr., in Book 3 of his Enron tetralogy, made the same point by showing how the abandonment of the bourgeois virtues had led to that company’s destruction.25
But is there any way to test the powers and efficacy of the business virtues and discover if they do indeed have a strong tendency to bring about commercial success? We cannot run experiments on society at large. But what if a corporation created internal structures and practices that imitated the workings of the free market and made employees “earn” their raises and promotions through market-like behavior?26 Then we could observe the efficacy of the business virtues in controlled circumstances. After years of experimentation, Charles Koch developed just such a framework for Koch Industries. He calls it Market-Based-Management,27 and the outstanding success of his company (the second largest privately held company in the United States) strongly suggests that his system works magnificently. Somewhere out there, Samuel Smiles—smiles.
 Friedrich A. Hayek, Law, Legislation and Liberty, vol. 2, The Mirage of Social Justice (Chicago, IL: The University of Chicago Press, 1976), p. 74.
 Stephen Davies, “General Introduction” to The Encyclopedia of Libertarianism, ed. Ronald Hamowy (Thousand Oaks, CA: Sage Publications, 2008), p. xxxi.
 Deirdre N. McCloskey, The Bourgeois Virtues: Ethics for an Age of Commerce (Chicago, IL: The University of Chicago Press, 2006), pp. 589-616.
 Samuel Smiles, Self-Help, with a Foreword by Lord Harris of High Cross (London: IEA Health and Welfare Unit, 1996). Also available online: Self-Help, Library of Economics and Liberty.
 Lawrence W. Reed and John Blundell, “Remembering a Classic, and the Man Who Wrote It,” Mackinac Center for Public Policy, April 5, 2004.
 Robert L. Bradley Jr., Capitalism at Work: Business, Government, and Energy (Salem, MA: M & M Scrivener Press, 2009), pp. 37-57. This is the ideology-focused Book 1 of Bradley’s Enron tetralogy, for which the present author serves as a researcher and editor.
 Lawrence W. Reed, “Dusting Off a Man and His Classic,” The Freeman 61, no. 8 (October 2011), pp. 4-5.
 For the details of Smiles’s life, see The Autobiography of Samuel Smiles, ed. Thomas MacKay (New York: E. P. Dutton, 1905 [thus posthumous]); Peter W. Sinnema, introduction to Self-Help, by Samuel Smiles (New York: Oxford University Press, 2002), pp. vii-xxviii; H. C. G. Matthew, “Smiles, Samuel,” Oxford Dictionary of National Biography. Unfortunately, even these three excellent sources are not always accurate.
 Frank Luther Mott, Golden Multitudes: The Story of Best-Sellers in the United States (New York: Macmillan, 1947). Quoted in Judy Hilkey, Character Is Capital: Success Manuals and Manhood in Gilded Age America (Chapel Hill: University of North Carolina, 1997), p. 56.
 Smiles, Self-Help, p. 136.
 Friedrich A. Hayek, The Constitution of Liberty (Chicago, IL: The University of Chicago Press, 1960), p. 93.
 Hayek, Constitution of Liberty, p. 94.
 Sadly, this pronouncement by Hayek is currently the conclusion of Wikipedia’s article on Samuel Smiles. “Samuel Smiles,” accessed July 18, 2019.
 Hayek, The Mirage of Social Justice, p. 74.
 Garry Wills, Nixon Agonistes: The Crisis of the Self-Made Man (New York: Houghton Mifflin, 1969), p. 236. Deidre McCloskey also noted this difference when attacking Horatio Alger: Bourgeois Equality (Chicago, IL: The University of Chicago Press, 2016), pp. 313-14. The case of William Graham Sumner, Hayek’s other villain, must be left for another day.
 Smiles, Self-Help, p. 96.
 Robert Nozick, Anarchy, State, and Utopia (New York: Basic Books, 1974), pp. 156-57.
 Hayek, Constitution of Liberty, p. 93.
 Character (1871); Thrift (1875), Duty (1880).
 Libertarian journalist Megan McArdle has discussed this idea in “Consumer culture” published in The Atlantic, October 2007, but it is not clear who coined the term. Some trace the general insight back to a January 2006 blog post by Will Wilkinson, “The Strange Myth of Finite Status,” January 2, 2006.
 Smiles, Self-Help, p. 135.
 Smiles, Self-Help, p. 69.
 F. A. Hayek, “The Principles of a Liberal Social Order,” Il Politico 31, no. 4 (December 1966), p. 607.
 Irving Kristol, “‘When Virtue Loses All Its Loveliness’—Some Reflections on Capitalism and ‘The Free Society,'” The Public Interest (Fall 1970), p. 3-15; reprinted in Kristol, Two Cheers for Capitalism (New York: Basic Books, 1978; Signet Classics, 1979), p. 247.
 Robert L. Bradley Jr., Enron Ascending: The Forgotten Years, 1984-1994 (Beverly, MA: Scrivener Publishing; Hoboken, NJ: John Wiley & Sons, 2018), pp. 3-9, 671-75.
 Hayek seems to have assumed that a corporation’s compensation system could not work this way and that is must embody “distributive justice.” “It is most important [in a corporation] that remuneration be generally regarded as just, that it conform to known and intelligible rules, and that a human agency be responsible for every man’s receiving what his fellows regard as being due him.” Constitution of Liberty, p. 122.
 Charles Koch, Good Profit: How Creating Value for Others Built One of the World’s Most Successful Companies (New York: Crown Publishing Group, 2015) See especially, chapter 9: “Decision Rights: Property Rights Inside the Organization,” pp. 171-92.
*Roger Donway is a research assistant at the Institute for Energy Research and freelance editor and writer.