In her first book, Inventing the Market, Lisa Herzog makes an original and important contribution to contemporary discussions, both academic and otherwise, about the place of markets in modern societies. No ordinary work of comparative philosophy, Herzog masterfully brings the views of two figures seldom considered together, Adam Smith and G.W.F. Hegel, into dialogue with one another in order to explore a number of timely questions. To what extent are our identities constituted by our professions? Are unequal market outcomes deserved? How can societies best combat poverty? To what extent is our autonomy cultivated by our participation in the market, and how can societies best preserve liberty? Herzog accurately observes that these questions are central to many current debates in philosophy, politics, and economics, and persuasively argues that many of their most common competing answers today are, in fact, drawn along the lines originally sketched out by Smith and Hegel.

Among the book’s most impressive achievements are Herzog’s chapter-length expositions of Smith’s and Hegel’s views on the place of the market in modern societies in general, though aside from their extraordinary rigor and lucidity, they are impressive in nearly opposite ways. The former is striking because of what it includes and the latter because of what it excludes. Indeed, in her treatment of Smith’s views on the topic, which find their most explicit and sustained articulation in The Wealth of Nations, Herzog skillfully places them within the context of his larger body of thought, and particularly within the context of The Theory of Moral Sentiments and Lectures on Jurisprudence. Along the way, she provides an elegant solution to the “Adam Smith Problem,” even going so far as to suggest that, if Smith’s Lectures on Jurisprudence had been available to the nineteenth century German scholars who coined the term, the supposed problem might never have arisen in the first place. By contrast, in her treatment of Hegel’s views on the topic, which find their most explicit and sustained articulation in his Philosophy of Right, Herzog carefully extracts them from the context of his larger body of thought, and particularly from the context of his Phenomenology of Spirit and his Science of Logic. Remarkably, she does so without doing hermeneutic violence to Hegel’s broader system. These two chapters, considered alone, are valuable in themselves as excellent summaries of the whole of Smith’s thought on the one hand, and of a part of Hegel’s thought on the other, and will prove enormously useful to those seeking to educate or to refresh themselves on either.

As impressive as Herzog’s expositions of Smith’s and Hegel’s views in general are, the beating heart of her project seems to be the middle chapter of the book, titled “The Self in the Market: Identity and Community.” For the themes she develops therein resonate through all the chapters that follow. In this central chapter, she explores the question: To what extent are our identities constituted by our professions? In doing so, Herzog boldly enters into the ongoing debate between liberals and communitarians over the question of whether the self is best understood as fundamentally “atomistic” or as fundamentally “embedded,” and deftly draws out the consequences of these alternative perspectives for our economic lives. Along the way, she convincingly argues that, in certain respects, Smith understood the self to be rather more embedded and Hegel understood the self to be rather more atomistic than they are usually thought to have done. Specifically, Herzog notes that, for Smith, we become self-conscious—that is, conscious of both how we are and how we should be in the expression of our passions—only in relation to others, and thus are radically dependent upon them for the advent of this most basic element of our subjectivity. And she also notes that, for Hegel, we become members of specific classes and professions within civil society, a space of “particularity,” wherein we freely choose our places in society, largely independent of the needs, desires, and opinions of others.

In noting these things, Herzog in no way obscures the fact that Smith understood the self to be more atomistic and less embedded than Hegel did. For she observes that, in Smith’s view, when we freely choose our professions, we are fundamentally choosing what we do, not who we are. By contrast, in Hegel’s view, when we freely choose our professions, we are fundamentally choosing who we are, because what we do in our professional lives not only habituates us to specific ways of being, but also provides us with concrete identities that can be both recognized and valued by others. This, in turn, enables us to recognize and value ourselves. Herzog argues that the consequences of these alternative perspectives for our economic lives may be quite significant. From Smith’s perspective, if a given profession should disappear from a society, its former members can simply move into another profession, without any deep impact on their sense of who they are. But, from Hegel’s perspective, the impact will be profound—the loss of jobs to nations abroad entails a loss of concrete identities at home, and the process of creative destruction entails a partial destruction of one crucial way in which we come to recognize and value ourselves.

Herzog explores other questions in subsequent chapters, but the above themes resound throughout the rest of her book. For example, in her next chapter, “Justice in the Market,” she explores whether unequal market outcomes are deserved and how societies can best combat poverty. For Smith, the answer to the first of these questions is yes because, in his view, market actors who embody the bourgeois virtues of industry, frugality, honesty, etc., will be rewarded by gaining customers and employees, and those who do not will be punished by losing them. Herzog astutely points out that this answer assumes, first, that these virtues will be both recognized and valued by customers and employees and, second, that market actors are capable of being so rewarded and punished. For Hegel, though, it is precisely this second assumption that may not hold, because employees cannot simply desert vicious employers without risking a loss of their identities. In this way, market actors who do not embody the bourgeois virtues may nevertheless be rewarded, which would, in turn, lead to unequal market outcomes that are undeserved. Along similar lines, individuals cannot simply desert their professions if they should disappear from a society without risking a loss of their identities. Such individuals may find themselves not only out of work, but also trapped in a cycle of poverty, which Hegel never provided any clear way to combat. By contrast, for Smith, since individuals can easily move into and out of different professions, they will all be able to enjoy the benefits of a market society growing in productivity and wealth.

Finally, in her next and penultimate chapter, “Freedom, Freedoms, and the Market,” Herzog explores the extent to which our autonomy is cultivated by our participation in the market and how societies can best preserve liberty. For Smith, the answer to the second of these questions is that societies must be ruled by wise legislators, who will adopt the point of view of the impartial spectator, and thereby will allow only the creation of just laws—laws that do not violate the liberties of citizens. Put differently, societies must be ruled by legislators who will not allow the creation of laws that do unjustly violate these liberties, which are precisely the sort of laws that, in Smith’s day, were constantly being proposed by members of the class of “merchants and manufacturers.” Smith was concerned that the merchant class was ceaselessly attempting to translate its economic power into political power, thereby enabling the creation of laws that would benefit commercial interests at the expense of other citizens. Herzog notes, however, that Smith never provided any clear way to ensure that societies would be ruled by legislators of this kind, and suggests that Hegel may have offered some valuable insights on this score. For, in Hegel’s view, we are provided with concrete identities that allow for self-recognition and self-valuation not only in our professional lives, but also in our political lives—in our lives as citizens possessed of the civic virtues necessary to ensure the creation of just laws—and societies must establish spaces in which such lives are possible and such virtues are cultivated.

In our present historical moment, when economic globalization and inequality as well as the capture of legislative and regulatory functions by powerful vested interests have long been ascendant, we would do well to consider Smith’s and Hegel’s views in our discussions about professional mobility, economic desert and poverty, the preservation of liberal ideals, and other related matters. Inventing the Market empowers us to make considerable progress toward this end. It is an exceptional work that promises more exceptional scholarship to come from Lisa Herzog.