It is no mean compliment to say of this book that it helps its reader think in a more serious way about the market—not only about how it was first theorized as a matter of political economy but also about how long-standing conceptions of the market continue to shape our moral identities and expectations today. Lisa Herzog structures the study as a comparative exercise in the history of political thought. After sketching out the respective visions of “market society” offered by Adam Smith at the end of the eighteenth century and Georg Wilhelm Friedrich Hegel 50 years or so later, Herzog probes a number of telling points of contact in the remaining chapters, finding surprisingly broad agreement but also piquant dissent on specifics related to identity and the self (Chapter 4), social justice and poverty (Chapter 5), freedom (Chapter 6), and progress or history (Chapter 7).

By restricting herself to those parts of Hegel’s system concerned with the realization of freedom in human society (i.e., eschewing discussions of absolute Geist) and, conversely, looking as widely as possible beyond Smith’s most famous discussion in The Wealth of Nations, Herzog is able to plausibly present both figures as part of “a liberal tradition, broadly conceived, for which economic liberties are compatible with other kinds of liberties within a stable social whole” (p. 9). Without too much stretching, the author renders Smith in a Hegelian light and Hegel as something of a Smithian. In this spirit, the chapter on the self follows in the footsteps of much of the Smith literature since David Winch’s Adam Smith’s Politics (1978): It distinguishes his sociologically rich, encumbered notion of the individual from the atomistic individualism found in latter-day economics. Communitarians have long appealed to Hegel for the same insight. A Hegel–Smith comparison here reminds us that “there are not only different degrees, but also different kinds of social embeddedness” (p. 15). Likewise, in the chapter on freedom, Smith is presented as more than a simple negative-liberty thinker; rather, he embraces the market for the sake of freedom-as-autonomy. Hegel’s understanding of freedom as the development of a higher state of consciousness may not be as distant from Smith as it seems at first blush, though his belief that such freedom was realizable only in an authentically political state standing above market society was miles away from the Scottish thinker’s social vision.

Here as elsewhere, Herzog frequently uses the conversation as a springboard into twenty-first-century concerns. All the while, she presents a Smith and a Hegel who, though much more alike than commonly recognized, still “stand at the two ends of a scale of views about how much scope the market should be given” (p. 10). Herzog’s analysis repeatedly demonstrates how this makes them particularly fruitful as subjects of comparison (e.g., as opposed to Smith and Marx). She is similarly persuasive in showing just how indebted we are to Smith and Hegel as the intellectual wellsprings of so many of our received assumptions about life in, and with, the market.

Herzog’s notion of market society is broad enough to encompass contemporary consumer society, the “commercial society” that Smith optimistically endorsed, and the realm of “civil society” that Hegel heralded as the realization of subjective freedom in the modern world, even while stressing—more systematically and unambiguously than Smith had—the market’s need for a redemptive state presence. For Hegel, some elements of the state (i.e., the “external state”) had to be embedded with the market in civil society (an administration of justice, the police, and corporations) to limit and stabilize the market’s “chaotic and Dionysian play of forces” (p. 58). Hegel’s view of the market is pessimistic at heart because, Herzog tells us, he approached it as a “relict of the state of nature” (Philosophy of Right, §200). As such, it was “inherently unstable and unpredictable” (p. 54) in a way that perpetually threatens to turn civil society into “a spectacle of extravagance and misery” (Philosophy of Right, §185). Hegel also had no expectation that the market would reward desert; and on the question of poverty, Herzog informs us that his pessimism shades into outright fatalism. An especially thorny problem for Hegel is “the rabble”—the alienated poor who, unable to establish or maintain a professional identity, are denied the honor and assistance that would come with membership in a corporation. Crucially, for Hegel, members of the rabble are deprived of the opportunity for personal and moral formation, of the “the Bildung that one acquires through work” (p. 108), so that “in the end, Hegel resignedly notes that the best solution might be to let the poor beg for themselves, as all other measures fail” (p. 107).

Contrary to his libertarian caricature, Smith also accepts the necessity of government intervention. His difference with Hegel is, here again, presented by the author as largely a matter of degree. Unlike Hegel, Smith—an optimist—sees the market as a glass half full, expecting many social problems to be solved naturally as progress toward opulence proceeds. For Smith, “the relation between the market and state is a question of knowing what tasks have been taken care of by Nature’s wise contrivances and what tasks need to—and can—be fulfilled through intentional political activity” (p. 37). Not all of nature’s tendencies deserve our assent, but Smith believes that many do and so “should be reinforced, while others should be curbed or channeled” (p. 25). We even have a mechanism of moral reflection—the impartial spectator—to help us make these determinations. Smith, Herzog argues, also believes that markets reward desert and that the problem of poverty could be overcome “if the market is liberated from unjust remnants of feudal times” (p. 106).

Herzog probably overstates Smith’s optimism and, in doing so, may overlook a certain ironic, even tragic, sensibility in his work. She is even less convincing in identifying deism as standing behind his optimism on the basis of his occasional allusions to Providence or a Divine Creator. Perhaps Smith, a keen student of rhetoric, is simply speaking to his audience in terms it would appreciate. He clearly believes that the market justifies itself as an engine of material prosperity that functions according to empirically established regularities of human nature. This is probably enough. That he furthermore believe that markets reward desert and that, for him “it is almost a metaphysical requirement” (p. 88) that they do so seems as unnecessary to argue as it is difficult to establish. Herzog carefully and self-consciously reconstructs the Hegelian notions of Geist and Sittlichkeit so as to rid them of their most controversial metaphysical or mystical underpinnings. Redescribed as expressions of intersubjectivity, they are rendered more plausible and relevant to contemporary approaches. Yet in Smith’s case, the author insists on a reading founded in deism.

In the course of a discussion of Smith and positive liberty, Herzog mentions the case of the “poor man’s son,” from Part IV of his Theory of Moral Sentiments. The story describes a son’s lifetime of toil prompted by his overweening ambition for material riches. For Herzog, the story is taken as a simple acknowledgment by Smith of the problem of inauthentic desires in the market. Undoubtedly we are meant to see the son’s ambition as misplaced or irrational. However, Herzog omits mention of Smith’s ironic verdict on the son’s destructive self-delusion: “It is well that nature imposes upon us in this manner. It is this deception which rouses and keeps in continual motion the industry of mankind” (Theory of Moral Sentiments, IV.I.10–12). This sort of tragic disjunction between the good of the individual and of society may not be fully appreciated if Smith is read as too straightforwardly optimistic.

Those objections aside, Inventing the Market wonderfully demonstrates the value of placing the market more squarely in the foreground of our normative and political investigations. It helps the reader pose the right sort of questions about our moral-economic environment even as it contributes meaningfully to the specific literatures on both Smith and Hegel.