Both Michaels, Perelman and Yates, are right that Smith was no Milton Friedman/Ayn Rand type. I amaze my students by assigning the first few chapters of THE WEALTH OF NATIONS, which is quite readable. They can see pretty clearly that Smith was more complicated than those who invoke his name all the time and wear ties with his picture on them.
Smith definitely liked the free market, but compared to the Absolutist/Mercantilist state. Just as with the vast majority of government programs nowadays, the state sector -- which includes the repressive apparatus of the police, Brad -- benefited the rich and powerful. He hoped that the plebeian sorts would benefit from the free market.
I think it is chapter 8 which is very pro-labor, advocating a version of the efficiency wage hypothesis. The workers would gain, in his story, because the increasing division of labor would imply cheaper commodities while capitalist accumulation and growth would pull up wages. That's nothing but trickle down theory, missing how capitalist accumulation encourages wider and wider gaps in society (absent counteracting institutions like labor unions and the welfare state). Of course, Smith was no socialist.
Smith wasn't a plagiarist because scholarly standards were very different in 1776 than now. But he definitely borrowed from all previous authors (including the famous pin factory example, which I understand is from the French Encyclopedia). He was a synthesist, so there was some originality in his work.
Of course, Marx was better. But we can learn from Smith. We don't have to agree with the politics of someone to learn from them. After all, I learned some stuff from an article or two I read by Brad de Long.
Jim Devine jdevine at popmail.lmu.edu & http://clawww.lmu.edu/Departments/ECON/jdevine.html