The great poet and the great economist

Alexander Pushkin, the great Russian poet was born in 1799, 23 years after the great British economist Adam Smith published his The Wealth of Nations and 9 years after the latter’s death. So, what is there in common between these two great men divided by time, space, and life vocations?

Pushkin turned to the legacy of Adam Smith in one of his most celebrated poems, Eugene Onegin. Describing the educational background of the main protagonist, Eugene Onegin, Pushkin says (translation by Charles Johnston):

He cursed Theocritus and Homer,
in Adam Smith was his diploma;
our deep economist had got
the gift of recognizing what

a nation’s wealth is, what augments it,
and how a country lives and why
it needs no gold if a supply
of simple product supplements it.
His father failed to understand
and took a mortgage on his land.

The stanza contains a direct reference to The Wealth of Nations (“the gift of recognizing what a nation’s wealth is”). There is however a puzzling mentioning of “simple product” or “простой продукт” (italicized by Pushkin himself), a term that is not found anywhere in Smith (or any other economists of the day) but supposedly explaining the lack of need for gold for a wealthy state.

This mysterious reference generated a lively discussion between literary critics, historians and economists who suggested at least three interpretations of the term. One, suggested by Juri Lotman, a prominent Russian literary scholar and historian of Russian culture, is that Pushkin’s term is an inaccurate translation of “produit net”, one of the key concepts of physiocrats. (This view was also shared by Vladimir Nabokov, the author of Lolita.) In the physiocratic system, agriculture was given a dominant place because of its important role in the economic development of a country. The net product is thus the agricultural produce less expenditures for “non-productive activities” (other than agriculture), which constitutes the wealth of a nation.

How plausible is this explanation? On the one hand, the end of the stanza (“His father failed to understand and took a mortgage on his land.”) seems to imply a link between the simple product and land by criticizing the protagonist’s father for having mortgaged land, which is the key factor in agricultural production. On the other hand, it would be in stark contrast to the views of Adam Smith, and there are no reasons to believe that Pushkin was ill-informed or did not sufficiently understand Smith’s views. Pushkin could learn about Smith’s views from lectures on political economy during his Lycée’s years (his professor Kunitsin is known to have used Smith’s book in his lectures), he could read the Russian translation of the book which came out of print in 1802 and he could read it in the original (Pushkin learned English in his later years and even translated Byron).   

As is known, Smith was critical of physiocrats’ views and did not consider land as they main source of a nation’s wealth. For physiocrats, agriculture is the only sector which yields net product or surplus produce. All other economic activities, including manufacturing and artisanry are non-productive or “sterile”. Smith, on the other hand, believed that the wealth of a nation consists of the consumable commodities it annually produces including industrial production. In fact, the first book of The Wealth of Nations opens with a discussion of the division of labor at a pin factory.

Moreover, the immediate link in Pushkin’s text is not to the protagonist’s father’s mortgaging habits but to no need in gold if a nation has “simple product”. This is an almost direct reference to Smith who argued that “the real wealth and revenue of a country consists in the value of the annual produce of its land and labor, as plain reason seems to dictate; not in the quantity of the precious metals which circulate within it, as vulgar prejudices suppose”.  Smith also formulated a proto-theory of the quantity theory of money (QTM) linking a change in the money supply to a change in the supply of goods:  “The quantity of money must in every country naturally increase as the value of the annual produce increases. The value of the consumable goods annually circulated within the society being greater will require a greater quantity of money to circulate them. The part of the increased produce, therefore, will naturally be employed in purchasing, whatever it is to be had, the additional quantity of gold and silver necessary for circulating the rest. The increase of those metals will in this case be the effect, not the cause, of the public prosperity.”

Hence, Pushkin’s brief presentation of the Smith’s theory rings true of the original and there is no reason to believe that he would use a term strongly associated with physiocrats (and opposed by Smith himself) in this context.   

The second interpretation was suggested by none other but Frederick Engels, Marx’s lifelong collaborator and friend. Engels translated the first 11 stanzas of Eugene Onegin into German in prose, making several different variants in a number of cases (perhaps it was this translation that Karl Marx used in his book A Contribution to the Critique of Political Economy). He translated the term “simple product” as “raw product”.

How plausible is this interpretation? Of course, Smith discusses various aspects of raw products (their pricing, for example) but nowhere does he make an exclusive link between raw products (“rude produce”) and national wealth. As discussed above, Smith argued that the national wealth consists of “all the necessaries and conveniences of life which it annually produces”. Moreover, Smith was well aware about the impact of manufacturing on wealth: “As any particular commodity comes to be more manufactured, that part of the price which resolves itself into wages and profit comes to be greater in proportion to that which resolved itself into rent. In the progress of manufacture, not only the number of profits increase, but every subsequent profit is greater than the foregoing…”  

If this is not enough, another passage in the same poem clearly reflects Pushkin’s thinking about raw materials in the context of international trade. Describing the protagonist’s room, Pushkin says that it contained  

Whatever for caprice or spending
ingenious London has been sending
across the Baltic in exchange
for wood and tallow…

It appears that Pushkin was aware and critical of the unfavorable terms of trade resulting from the export of raw commodities and import of manufactured goods and adumbrated Prebisch-Singer theory. Again, given Pushkin’s overall accurate representation of Smith’s theory, there is no reason to think that he would use a term that misrepresents Smith’s views.   

To give Engels credit, he later corrected his translation to “surplus products”. Indeed, surplus produce (i.e. produce above a country’s consumption requirements) plays an important role in Smith’s theory of international trade: “When the produce of any particular branch of industry exceeds what the demand of the country requires, the surplus must be sent abroad, and exchanged for something for which there is a demand at home. Without such exportation, a part of the productive labour of the country must cease, and the value of its annual produce diminish.” Smith thus viewed international trade as an important mechanism of providing new markets for domestic production: “When the capital stock of any country is increased to such a degree that it cannot be all employed in supplying the consumption, and supporting the productive labour of that particular country, the surplus part of it naturally disgorges itself into the carrying trade, and is employed in performing the same offices to other countries.” However, he disagreed with mercantilists about the causal relationship between trade and wealth. For mercantilists, trade was the source of national wealth. Smith objected: “The carrying trade is the natural effect and symptom of great national wealth; but it does not seem to be the natural cause of it. Those statesmen who have been disposed to favour it with particular encouragement, seem to have mistaken the effect and symptom for the cause.”

Where does it leave us? As Sherlock Holmes would say, “When you have eliminated the impossible, whatever remains, however improbable, must be the truth.” If we eliminate “net product” and “raw product” as impossibilities, this leaves us with “surplus product” (not in the Marxist sense, I wouldn’t go that far, much as I respect Adam Smith and like Pushkin).

But how could “surplus product” transform into “simple product”? Here we step into the realm of guesses. We can assume that Pushkin wanted to emphasize the opposition between production (products) and money (gold) as the sources of national wealth. He could then say that virtually (simply) any product is more consequential to national wealth than gold. To put otherwise, if country simply has enough products, it doesn’t need gold because surplus produce will inevitably generate that gold, as Smith argued. Hence, “simple product” = “simply product”. Commodity production rules. However, knowing Pushkin’s attitude to trade exchange based on raw materials, we can also suggested that he was in favour of products using more “ingenuity” and value addition. Still, Pushkin was known for his keen sense of humor, and it is possible that he meant something else.