Who Owns What a Machine Creates? Adam Smith on AI and Copyright

What would Adam Smith think if told that, centuries after his passing, machines would write poems, draw portraits, compose sonatas, and even mimic the voice of their human authors? Would he cheer at the marvels of technological innovation or shiver at the monopoly claims laid upon these new mechanical “minds”? Let us imagine Smith, the careful moral philosopher and political economist, seated today before a screen displaying the latest outputs of Generative Artificial Intelligence (AI). He sees words composed, styles imitated, and artworks signed by no person at all. What questions would he ask? Likely not: “Can the machine create?” but rather, “To whom are we granting the fruits of creation, and why?”

Smith, who wrote of bakers, brewers, and butchers (and definitely not of bots), had no exposure to neural networks and personal computers. But he did understand something even more foundational: how incentives shape behavior, how monopolies distort progress, and how justice must be felt before it is codified. Copyright, in Smith’s time, was still nascent. He knew it as a limited legal privilege, sometimes granted to authors but often to booksellers. It was not a natural right, but a product of policy, and one Smith might have treated with cautious skepticism.

Why? Because he was deeply wary of state-conferred monopolies, especially when they hindered competition and favored entrenched interests over public benefit. In An Inquiry into the Nature and Causes of the Wealth of Nations, Smith criticizes the exclusive privileges granted to guilds and trading companies (particularly the East India Company) not for being successful, but for distorting markets and suppressing innovation. One wonders, then, what he might have said about modern copyright regimes that extend protection decades after the death of an author, or worse, that now consider whether a non-human entity, like an AI system, can own a copyright at all. Would Smith have endorsed such monopolies for machines? Unlikely. His fundamental test would have been: Do these protections serve the public interest? Do they encourage real innovation and creativity? Or do they merely secure rents for those who control the tools?

In The Theory of Moral Sentiments, Smith grounds his moral philosophy not in cold reason, but in our ability to sympathize: to imagine ourselves in another’s shoes. That imaginative leap, guided by the “impartial spectator,” allows us to judge right from wrong and to build a just society. Let us take a hypothetical example: a human writer spends years crafting stories, essays, or even blog posts such as this one. An AI model, trained on that published work without the author’s consent, begins to generate new content in their voice. The company behind the AI sells it as “original,” while the human author receives no attribution, no compensation, no recognition.

Surely, some degree of resentment would be natural, and just. In Smith’s view, justice is not only about the enforcement of rules but about the preservation of what is due. If this hypothetical author feels that their work has been appropriated without recompense, and if others sympathize with that feeling, then Smith would argue there’s a genuine moral concern. One that law should not ignore. But just as Smith resisted sentimentalism, he also distrusted moral panics. He would likely ask: What are the long-term consequences of assigning copyright to machines, or to those who wield them? Does it encourage laziness among creators or spark new forms of human expression? Does it preserve the conditions of justice or erode them?

Smith believed that good laws emerge from experience. Justice, in his work, is not a system imposed from above but something discovered through trial, error, and the common feelings of ordinary people. He might have found resonance in the writings of Bruno Leoni and F.A. Hayek, who saw the law not as legislation but as a spontaneous order, a dynamic process shaped by custom, dispute resolution, and social evolution. In this view, law is clearly not invented but discovered.

So, what does this mean for copyright in the age of AI? It suggests we should be cautious before inventing new categories, such as granting authorship to machines, unless and until the practice emerges organically from society. Smith would caution against allowing tech firms or legislators to rush ahead with sweeping rules before society has had a chance to feel its way toward justice. And he would certainly warn against the temptation to treat every new invention as deserving of monopoly protection. After all, Smith believed that true innovation thrives under competition, not under the shadow of legal exclusivity.

In The Theory of Moral Sentiments, Smith observes that humans desire not only to be loved, but to be lovely —to be worthy of love. This distinction is central to his ethics. We do not simply seek praise; we seek to deserve it. Certainly, AI can impress us. It can simulate human expression with uncanny precision. It can even produce works that move us, surprise us, or amuse us. But can it be praised in a meaningful sense? Can it feel the burden of virtue or the shame of vice?

Smith might argue that moral praise belongs only to agents capable of virtue. Machines can act as tools, but not as moral beings. To treat their outputs as “authored” in the same sense as human works is not just misleading, it risks undermining the very notion of authorship as an act of moral and creative responsibility. In this sense, granting copyright to AI may be not only a bad policy but a category mistake.

Adam Smith lived long before the age of algorithms, but his legacy remains remarkably alive in today’s debates about authorship, fairness, and innovation. He would urge us to ask not just what we can do with AI, but what we ought to do. And above all, he would remind us that the goal of a good society is not to grant privileges to the powerful, but to protect the conditions under which ordinary people can flourish.

In this moment of technological upheaval, we would do well to remember the man from Kirkcaldy, who saw sympathy as the foundation of morality, competition as a process of discovery, and justice as a feeling before it was ever a rule. The machines may write the words. But the meaning, and the moral, are still ours to discover.

Want to discover more?
(don't worry, this list was NOT generated by an algorithm)
Find more from Garret Edwards here.
Essays on Adam Smith and Jurisprudence.
Katherine Mangu-Ward on AI: Reality, Concerns, and Optimism, A Great Antidote podcast
Mark Andreessen on Why AI Will Save the World, an EconTalk podcast.
Tyler Cowen on the Risks and Impact of Artificial Intelligence, an EconTalk podcast.
Vocation: A Cure for Burnout by Brent Orrell and David Veldran at AdamSmithWorks