Editor’s Note: What follows is an expanded version of a piece that appears in the June issue of National Review.

Tuscon, Ariz.

Vernon L. Smith has been associated with many institutions, and he has been given many honors. He is the type of person after whom institutions and honors are named. He is one of the leading economists of our time.

He now hangs his hat at Chapman University, in Orange, Calif. But this week, he is at the University of Arizona, where he once taught. I am in town too — as a guest of the university’s Center for the Philosophy of Freedom. That is Smith’s longstanding theme: freedom.

(In the 1950s, John Dos Passos published a collection of journalism under the title “The Theme Is Freedom.” Some 40 years later, M. Stanton Evans gave a book of his own the same title.)

Smith was born on January 1, 1927. That’s kind of a neat birthday: New Year’s Day. Smith tells me that he was born on the 200th anniversary of Isaac Newton’s death. (It depends on which of the various calendars you consult — but yes.) Newton, says Smith, “had a big influence on the Scottish Enlightenment,” as well as the world in general. “The reason he is significant for economics and Adam Smith is that he explained and modeled observable phenomena with invisible forces. Just think about that.”

I do.

He was born in Wichita — and in a hospital. He was the first of his mother’s children to be born in a hospital. Times were changing (as is their tendency).

His mother’s maiden name was “Lomax” — and that’s what the “L” in “Vernon L. Smith” stands for: “Lomax.” She was born Lulu Belle Lomax. She married Grover Bougher, who was a fireman on the Santa Fe railroad. He was killed in an accident. She later married Vernon Chessman Smith, the economist’s dad.

He was a machinist. In 1932, three years into the Depression, he was laid off. What to do? The Smiths had invested in a farm, 45 miles from Wichita. They did this with the insurance money from Grover Bougher’s death. Moving to the farm enabled them to survive, the economist tells me, frankly. “Because, you know — you can eat there.”

The farmhouse had no plumbing or electricity. The senior Smith shot rabbits with a gun from 1890. In those daunting years, the family did indeed survive.

It seems to me that the actions of many, many people in the Depression were heroic. It must not have seemed that way to them. I ask Professor Smith, “Do you think we’re big babies today, complaining about slow Wi-Fi or the difficulty of losing weight?” He shrugs and says, among other things, “We can always find stuff to complain about.”

Young Vernon studied in a one-room schoolhouse. The teacher was one Mr. Hemburger, who had much to recommend him: He spoke English (in this German-American community); he could read and write; and he knew some math. Therefore, he was the teacher.

In 1934, the Smith family moved back to Wichita. There were books in their home: The Harvard Classics, originally known as “Dr. Eliot’s Five-Foot Shelf of Books.” (Eliot was Charles W. Eliot, Harvard’s president.) Vernon wore out Volume 17: “Folk-Lore and Fable, Aesop, Grimm, Andersen.”

There were many entrepreneurs in Wichita. One was Fred C. Koch, the chemical engineer who founded Koch Industries. There were also a slew of aviation entrepreneurs: Walter and Olive Ann Beech, of Beech Aircraft; Clyde Cessna, of Cessna Aircraft; Lloyd Stearman, of Stearman Aircraft. This last eventually merged with Boeing. Vernon Smith went to work for Boeing when he was in high school, age 16.

He had begun working at twelve: delivering prescriptions and whatnot for Mrs. Blackburn, of the West Side Drug Store. Between deliveries, he’d wait on customers and operate the soda fountain (making him a “soda jerk”).

“The most important lesson I learned working for Mrs. Blackburn,” Smith says, “was that her customers were my customers. That’s a neat thing about retail work. In a small establishment, your boss’s customers are your customers. And the way you make Mrs. Blackburn happy is to make her customers happy!”

Vernon’s mother was interested in politics and, in fact, involved in them: She was a Socialist. Indeed, she entertained Norman Thomas, the leader of the Socialist Party of America, in their home. There was much to admire about him, says Professor Smith: “He was a defender of First Amendment rights and of freedom in America.” In 1948, Smith cast his first presidential ballot for Thomas. Of course, their views on economics would diverge greatly in years to come.

(Incidentally, William F. Buckley Jr.’s first guest on Firing Line, his television show, was Norman Thomas. That was in 1966.)

Vernon Smith, the great scholar-to-be, was a middling high-school student, with a C average. “Why?” I ask. “Girls?” Bingo. “Boys discover girls,” he says, “and it’s hard to get ’em to study.”

But his parents expected him to go to college, and he expected to go too. His parents had an eighth-grade education, only. Nobody knew anything about how to choose a college. So, Vernon went to the Wichita City Library and found a book on the subject. The book said, right up front, that the best college in the United States was Caltech. So, Vernon didn’t read any more of the book. He figured he should go to Caltech.

Yet, with his academic record, such as it was, he didn’t even qualify to sit for the entrance exam. So he studied at Friends University, in Wichita, for 15 months. Nine months in, he sat for Caltech’s exam: and was admitted.

On the faculty were math-and-science giants of the age: Theodore von Kármán, Eric Temple Bell, J. Robert Oppenheimer, Linus Pauling. “We loved him,” says Smith of Pauling. “He was just so personable. His lectures were just exciting.” Pauling would win the Nobel Prize in Chemistry in 1954 — and the Nobel Peace Prize in 1962.

Looking back, Smith calls Caltech “the meatgrinder.” Even so, “it was a great experience,” he says. “And fortunately, I wasn’t so smart that I didn’t have to work. I feel sorry for people — and there are such people — to whom it comes easy. It’s good to learn to work.”

He majored in electrical engineering. But something odd happened in his senior year: He took an introductory course on economics. And was smitten. He had never imagined that a social science could include so much rigor.

Caltech degree in hand, he went back to his home state — to the University of Kansas, in Lawrence — to see whether this econ thing was really for him. He studied with Richard S. Howey, a man of exceptional erudition, steeped in economic history — which is to say, the history of economic thought. Smith earned a master’s. Then he went to Harvard, for his Ph.D.

“Wassily Leontief was my major professor,” says Smith, “and he supervised my dissertation.” Leontief taught theory. He would win the Nobel Memorial Prize in 1973. “We learned macroeconomics from Alvin Hansen,” Smith says. “He was the foremost American Keynesian and he was short. He was our Milton Friedman — except he was a Keynesian.”

(Friedman, please note, was about 5 feet.)

Having earned his doctorate, Smith embarked on his long teaching career: Purdue, Stanford, Brown, UMass, etc. He has been a prodigious researcher, but he enjoys teaching, too. “I like small classes,” he says, “in which we read a common text and discuss it. I learn so much from the students. They tend to relate what they are reading to their own experience and their own knowledge. And their knowledge can be very valuable to you.”

Smith is known for behavioral economics and experimental economics. Although he can talk theory with the best of them, he is a man of practicality and pragmatism (typically Midwestern, you could say).

The late Friedman has been variously described as “liberal,” “libertarian,” and “conservative.” What does Smith call himself, if he must choose a label? “I’m a classical liberal,” he answers. “It was the Scotch philosophers in that period who were really articulating the basis of a free society. Adam Smith did it first, not in economics, but in his book The Theory of Moral Sentiments” (1759).

A free society features “capitalism,” as we say. (In my opinion, this is an ugly word, and potentially misleading, but my peeve need not detain us now.) Capitalism is often depicted as greed-based and selfish. In truth, it is marvelously, almost miraculously, cooperative and mutually beneficial. Vernon Smith talks about this with patience. He has a lifetime of study and observation behind him.

In 2002, the Nobel committee called: Smith was sharing the prize with Daniel Kahneman, an Israeli-American scholar. Smith won, in particular, for “having established laboratory experiments as a tool in empirical economic analysis, especially in the study of alternative market mechanisms.” (I have quoted the committee’s citation.) After giving him the news, the committee’s chairman asked, “How do you feel?” Smith said, “Relieved, because my friends have been predicting this for years, and I’ve kept thinking I was letting them down.”

He recounts this, as he does many things, with mirthfulness — a mirthfulness in which you want to share.

A Nobelist receives a gold medal. I wonder where Smith’s is. “It’s in a safe in the bowels of the library at Chapman University,” he says. “I gave it to Chapman.” A Nobelist also receives a healthy wad of cash. In 2002, Smith and Kahneman split a million dollars. Smith’s wife, Candace, tells me what he did with his half (though he protests when she starts to do it). He donated the money to a foundation he had set up: the International Foundation for Research in Experimental Economics.

“What would your parents think of your status as a Nobel laureate?” I ask him. He answers, in so many words, that they would be pleased and not all that surprised. They knew that their kid was a whiz.

“There have been two really lucky things in my life,” Smith says: “I was born in a free country, and I had great parents.”

They both died in the 1950s, when they were in their 60s. Their son today is 97. I don’t wish to make too much of age. I think of Herbert Blomstedt, the Swedish conductor, who is still working at 96. (He was born about six months after Vernon Smith.) I have interviewed him a couple of times in recent years. He said once — with annoyance — “Critics always mention my age.” Yet no allowance need be made for Maestro Blomstedt.

Let me say of Professor Smith: He is not merely “a good 97”; he’s just plain good.

In a leisurely, wide-ranging conversation, I ask him about some basic issues. “Is there anything new to be discovered in economics?” I say. “Is everything there is to know, known?” Reflecting on this, Smith says, “Economies are kind of moving institutions. They involve people and experiences. Particularly when there’s freedom, you have a lot of innovation, and products, and services.” You can always learn things. At the same time, it’s amazing, says Smith, how much the Scotsmen knew, back in the 18th century. “I’m impressed by how relevant the things they talked about are for us today.”

Another question: Are there certain fundamental mistakes that people make, generation after generation? I am thinking of protectionism in particular. Smith says that people often fail to think about the consumer. “The reason you’re producing something,” he says, “is that someone wants to consume it, and if there’s no consumption, there’s no production.” In political debates — especially where demagoguery prevails — the consumer tends to be forgotten.

All right, how about this: Will Americans ever get serious about the national debt and the federal budget deficit? The route to seriousness, Smith answers, may be inflation: “the monster,” as Joseph Schumpeter called it. (In his English, the words came out “ze monster.”) The great Austro-German economist taught at Harvard from 1932 until his death in 1950. Smith did not arrive until a bit later — but he heard the phrase “ze monster” from people who had known and worked with Schumpeter. Like others in Europe, Schumpeter had seen the devastating effects of inflation. He regarded the phenomenon with horror. Says Smith, “It is a great temptation to a government to pay its bills by printing money.”

One of the most infamous notes of recent times is Zimbabwe’s $100 trillion bill.

What about reform of our “entitlements”? Smith received his Social Security card in 1940, when he was 13. His mother made sure of it. She, and others, did not realize that Social Security was “just a tax,” he says — and “unvested.” There are much, much better ways to arrange for retirement.

President Reagan used to speak of a “social safety net of programs,” strung by the federal government. He pledged that it would always be there, sturdy. As we are talking about this, Smith says, “I think we’re going to have a universal basic income,” particularly as “more and more goods are produced by automation.” He adds, “Of course, technology has been displacing workers for hundreds of years. It’s not exactly new. And the thing that has always rescued us is that demand has expanded.”

Smith has concerns about “UBI” (as “universal basic income” is known). One of them is: Will people have enough incentive to work? Work has often provided meaning and purpose to lives. What will replace it, if it is to be replaced?

“If you want to help the poor,” says Smith, “raise the value of their work” — through better education, training, and so on. “If you want to do something about the poor, do something to make them more valuable to other people. We’re all of value because of what we provide to other people — through markets. The thing about markets is, each person has to give in order to receive. And there are huge gains in that. That’s why markets have so improved our material well-being for the last two or three hundred years.”

Think of North Korea and South Korea, Smith says: the same people on the same peninsula, with the same history, language, and culture — divided between a dictatorship and a free society. “The North Koreans can barely feed themselves. And the South is burying us in automobiles, cameras, and electronic gadgets.”

There are great lessons in this, says the professor, if only people will bother to ponder and learn them.

Altogether, an encounter with Vernon L. Smith — who rose from the Kansas plains to leave a mark on the world — is an encounter with intellect, practicality, and humane values. That earlier Smith, from Scotland, would smile.