Of the Inquiry into the Nature and Causes of the Wealth of Nations.

An historical view of the different forms under which human affairs have appeared in different ages and nations, naturally suggests the question, Whether the experience of former times may not now furnish some general principles to enlighten and Edition: current; Page: [xlix] direct the policy of future legislators? The discussion, however, to which this question leads, is of singular difficulty: as it requires an accurate analysis of by far the most complicated class of phenomena that can possibly engage our attention, those which result from the intricate and often imperceptible mechanism of political society;—a subject of observation which seems, at first view, so little commensurate to our faculties, that it has been generally regarded with the same passive emotions of wonder and submission, with which, in the material world, we survey the effects produced by the mysterious and uncontrollable operation of physical causes. It is fortunate that upon this, as upon many other occasions, the difficulties which had long baffled the efforts of solitary genius begin to appear less formidable to the united exertions of the race; and that in proportion as the experience and the reasonings of different individuals are brought to bear upon the same objects, and are combined in such a manner as to illustrate and to limit each other, the science of politics assumes more and more that systematical form which encourages and aids the labours of future inquirers.

In prosecuting the science of politics on this plan, little assistance is to be derived from the speculations of ancient philosophers, the greater part of whom, in their political inquiries, confined their attention to a comparison of the different forms of government, and to an examination of the provisions made for perpetuating their own existence, and for extending the glory of the state. It was reserved for modern times to investigate those universal principles of justice and of expediency, which ought, under every form of government, to regulate the social order; and of which the object is, to make as equitable a distribution as possible, among all the different members of a community, of the advantages arising from the political union.

The invention of printing was perhaps necessary to prepare the way for these researches. In those departments of literature and of science, where genius finds within itself the materials of its labours; in poetry, in pure geometry, and in some branches of moral philosophy; the ancients have not only laid the foundations on which we are to build, but have left great and finished Edition: current; Page: [l] models for our imitation. But in physics, where our progress depends on an immense collection of facts, and on a combination of the accidental lights daily struck out in the innumerable walks of observation and experiment; and in politics, where the materials of our theories are equally scattered, and are collected and arranged with still greater difficulty, the means of communication afforded by the press have, in the course of two centuries, accelerated the progress of the human mind, far beyond what the most sanguine hopes of our predecessors could have imagined.

The progress already made in this science, inconsiderable as it is in comparison of what may be yet expected, has been sufficient to show, that the happiness of mankind depends, not on the share which the people possesses, directly or indirectly, in the enactment of laws, but on the equity and expediency of the laws that are enacted. The share which the people possesses in the government is interesting, chiefly to the small number of men whose object is the attainment of political importance; but the equity and expediency of the laws are interesting to every member of the community; and more especially to those whose personal insignificance leaves them no encouragement but what they derive from the general spirit of the government under which they live.

It is evident, therefore, that the most important branch of political science is that which has for its object to ascertain the philosophical principles of jurisprudence; or (as Mr. Smith expresses it) to ascertain “the general principles which ought to run through and be the foundation of the laws of all nations.” In countries where the prejudices of the people are widely at variance with these principles, the political liberty which the constitution bestows, only furnishes them with the means of accomplishing their own ruin: And if it were possible to suppose these principles completely realized in any system of laws, the people would have little reason to complain that they were not immediately instrumental in their enactment. The only infallible criterion of the excellence of any constitution is to be found in the detail of its municipal code; and the value which wise men set on political freedom, arises chiefly from the facility it is supposed to afford for the introduction of those legislative improvements which the general interests of the community recommend. I cannot help adding, that the capacity of a people to exercise political rights with utility to themselves and to their country, presupposes a diffusion of knowledge and of good morals, which can only result from the previous operation of laws favourable to industry, to order, and to freedom.

Of the truth of these remarks enlightened politicians seem now to be in general convinced; for the most celebrated works which have been produced in the different countries of Europe, during the last thirty years, by Smith, Quesnai, Turgot, Campomanes, Beccaria, and others, have aimed at the improvement of society,—not by delineating plans of new constitutions, but by enlightening the policy of actual legislators. Such speculations, while they are more essentially and more extensively useful than any others, have no tendency to unhinge established institutions, or to inflame the passions of the multitude. The improvements they recommend are to be effected by means too gradual and slow in their operation, to warm the imaginations of any but the speculative few; and in proportion as they are adopted, they consolidate the political fabric, and enlarge the basis upon which it rests.

To direct the policy of nations with respect to one most important class of its laws, those which form its system of political economy, is the great aim of Mr. Smith’s Inquiry: And he has unquestionably had the merit of presenting to the world, the most comprehensive and perfect work that has yet appeared, on the general principles of any branch of legislation. The example which he has set will be followed, it is to be hoped, in due time, by other writers, for whom the internal policy of states furnishes many other subjects of discussion no less curious and interesting; and many accelerate the progress of that science which Lord Bacon has so well described in the following passage: “Finis et scopus quem leges intueri, atque ad quem jussiones et sanctiones suas dirigere debent, non alius est, quam ut cives feliciter degant; id fiet, si pietate et religione recte instituti; moribus honesti; armis adversus hostes externos tuti; legum auxilio adversus seditiones et privatas injurias muniti; imperio et magistratibus obsequentes; copiis et opibus locupletes et florentes fuerint.——Certe cognitio ista ad viros civiles proprie spectat; qui optime nôrunt, quid ferat societas humana, quid salus populi, quid æquitas naturalis, quid gentium mores, quid rerumpublicarum formæ diversæ: ideoque possint de legibus, ex principiis et præceptis tam æquitatis naturalis, quam politices decernere. Quamobrem id nunc agatur, ut fontes justitiæ et utilitatis publicæ petantur, et in singulis juris partibus character quidam et idea justi exhibeatur, ad quam particularium regnorum et rerumpublicarum leges probare, atque inde emendationem moliri, quisque, cui hoc cordi erit et curæ, possit.”

The enumeration contained in the foregoing passage, of the different objects of law, coincides very nearly with that given by Mr. Smith in the conclusion of his Theory of Moral Sentiments; and the precise aim of the political speculations which he then Edition: current; Page: [lii] announced, and of which he afterwards published so valuable a part in his Wealth of Nations, was to ascertain the general principles of justice and of expediency, which ought to guide the institutions of legislators on these important articles;—in the words of Lord Bacon, to ascertain those leges legum, “ex quibus informatio peti possit, quid in singulis legibus bene aut perperam positum aut constitutum sit.”

The branch of legislation which Mr. Smith has made choice of as the subject of his work, naturally leads me to remark a very striking contrast between the spirit of ancient and of modern policy in respect to the Wealth of Nations. The great object of the former was to counteract the love of money and a taste for luxury, by positive institutions; and to maintain in the great body of the people, habits of frugality, and a severity of manners. The decline of states is uniformly ascribed by the philosophers and historians, both of Greece and Rome, to the influence of riches on national character; and the laws of Lycurgus, which, during a course of ages, banished the precious metals from Sparta, are proposed by many of them as the most perfect model of legislation devised by human wisdom. How opposite to this is the doctrine of modern politicians! Far from considering poverty as an advantage to a state, their great aim is to open new sources of national opulence, and to animate the activity of all classes of the people, by a taste for the comforts and accommodations of life.

One principal cause of this difference between the spirit of ancient and of modern policy, may be found in the difference between the sources of national wealth in ancient and in modern times. In ages when commerce and manufactures were yet in their infancy, and among states constituted like most of the ancient republics, a sudden influx of riches from abroad was justly dreaded as an evil, alarming to the morals, to the industry, and to the freedom of a people. So different, however, is the case at present, that the most wealthy nations are those where the people are the most laborious, and where they enjoy the greatest degree of liberty. Nay, it was the general diffusion of wealth among the lower orders of men, which first gave birth to the spirit of independence in modern Europe, and which has produced under some of its governments, and especially under our own, a more equal diffusion of freedom and of happiness than took place under the most celebrated constitutions of antiquity.

Without this diffusion of wealth among the lower orders, the important effects resulting from the invention of printing would have been extremely limited; for a certain degree of ease and independence Edition: current; Page: [liii] is necessary to inspire men with the desire of knowledge, and to afford them the leisure which is requisite for acquiring it; and it is only by the rewards which such a state of society holds up to industry and ambition, that the selfish passions of the multitude can be interested in the intellectual improvement of their children. The extensive propagation of light and refinement arising from the influence of the press, aided by the spirit of commerce, seems to be the remedy provided by nature, against the fatal effects which would otherwise be produced, by the subdivision of labour accompanying the progress of the mechanical arts: Nor is anything wanting to make the remedy effectual, but wise institutions to facilitate general instruction, and to adapt the education of individuals to the stations they are to occupy. The mind of the artist, which, from the limited sphere of his activity, would sink below the level of the peasant or the savage, might receive in infancy the means of intellectual enjoyment, and the seeds of moral improvement; and even the insipid uniformity of his professional engagements, by presenting no object to awaken his ingenuity or to distract his attention, might leave him at liberty to employ his faculties, on subjects more interesting to himself, and more extensively useful to others.

These effects, notwithstanding a variety of opposing causes which still exist, have already resulted, in a very sensible degree, from the liberal policy of modern times. Mr. Hume, in his Essay on Commerce, after taking notice of the numerous armies raised and maintained by the small republics in the ancient world, ascribes the military power of these states to their want of commerce and luxury. “Few artizans were maintained by the labour of the farmers, and therefore more soldiers might live upon it.” He adds, however, that “the policy of ancient times was violent, and contrary to the natural course of things;”—by which, I presume, he means, that it aimed too much at modifying, by the force of positive institutions, the order of society, according to some preconceived idea of expediency; without trusting sufficiently to those principles of the human constitution, which, wherever they are allowed free scope, not only conduct mankind to happiness, but lay the foundation of a progressive improvement in their condition and in their character. The advantages which modern policy possesses over the ancient, arise principally from its conformity, in some of the most important articles of political economy, to an order of things recommended by nature; and it would not be difficult to show, that, where it remains imperfect, its errors may be traced to the restraints it imposes on the natural course of human affairs. Indeed, in these restraints may be discovered the latent seeds of many of the prejudices and Edition: current; Page: [liv] follies which infect modern manners, and which have so long bid defiance to the reasonings of the philosopher and the ridicule of the satirist.

The foregoing very imperfect hints appear to me to form, not only a proper, but in some measure a necessary introduction to the few remarks I have to offer on Mr. Smith’s Inquiry; as they tend to illustrate a connection between his system of commercial politics, and those speculations of his earlier years, in which he aimed more professedly at the advancement of human improvement and happiness. It is this view of political economy that can alone render it interesting to the moralist, and can dignify calculations of profit and loss in the eye of the philosopher. Mr. Smith has alluded to it in various passages of his work, but he has nowhere explained himself fully on the subject; and the great stress he has laid on the effects of the division of labour in increasing its productive powers, seems, at first sight, to point to a different and very melancholy conclusion;—that the same causes which promote the progress of the arts, tend to degrade the mind of the artist; and, of consequence, that the growth of national wealth implies a sacrifice of the character of the people.

The fundamental doctrines of Mr. Smith’s system are now so generally known, that it would be tedious to offer any recapitulation of them in this place; even if I could hope to do justice to the subject, within the limits which I have prescribed to myself. I shall content myself, therefore, with remarking, in general terms, that the great and leading object of his speculations is, to illustrate the provisions made by nature in the principles of the human mind, and in the circumstances of man’s external situation, for a gradual and progressive augmentation in the means of national wealth; and to demonstrate that the most effectual plan for advancing a people to greatness, is to maintain that order of things which nature has pointed out; by allowing every man, as long as he observes the rules of justice, to pursue his own interest in his own way, and to bring both his industry and his capital into the freest competion with those of his fellow-citizens. Every system of policy which endeavours, either by extraordinary encouragements to draw towards a particular species of industry a greater share of the capital of the society than what would naturally go to it, or, by extraordinary restraints, to force from a particular species of industry some share of the capital which would otherwise be employed in it, is, in reality, subversive of the great purpose which it means to promote.

What the circumstances are, which, in modern Europe, have contributed to disturb this order of nature, and, in particular, to Edition: current; Page: [lv] encourage the industry of towns, at the expense of that of the country, Mr. Smith has investigated with great ingenuity; and in such a manner, as to throw much new light on the history of that state of society which prevails in this quarter of the globe. His observations on this subject tend to show, that these circumstances were, in their first origin, the natural and the unavoidable result of the peculiar situation of mankind during a certain period; and that they took their rise, not from any general scheme of policy, but from the private interests and prejudices of particular orders of men.

The state of society, however, which at first arose from a singular combination of accidents, has been prolonged much beyond its natural period, by a false system of political economy, propagated by merchants and manufacturers; a class of individuals, whose interest is not always the same with that of the public, and whose professional knowledge gave them many advantages, more particularly in the infancy of this branch of science, in defending those opinions which they wished to encourage. By means of this system a new set of obstacles to the progress of national prosperity has been created. Those which arose from the disorders of the feudal ages, tended directly to disturb the internal arrangements of society, by obstructing the free circulation of labour and of stock, from employment to employment, and from place to place. The false system of political economy, which has been hitherto prevalent, as its professed object has been to regulate the commercial intercourse between different nations, has produced its effect in a way less direct and less manifest, but equally prejudicial to the states that have adopted it.

On this system, as it took its rise from the prejudices or rather from the interested views of mercantile speculators, Mr. Smith bestows the title of the Commercial or Mercantile System; and he has considered at great length its two principal expedients for enriching a nation; restraints upon importation, and encouragements to exportation. Part of these expedients, he observes, have been dictated by the spirit of monopoly, and part by a spirit of jealousy against those countries with which the balance of trade is supposed to be disadvantageous. All of them appear clearly, from his reasonings, to have a tendency unfavourable to the wealth of the nation which imposes them. His remarks with respect to the jealousy of commerce are expressed in a tone of indignation, which he seldom assumes in his political writings.

“In this manner,” says he, “the sneaking arts of underling tradesmen are erected into political maxims for the conduct of a great empire. By such maxims as these, nations have been taught that their interest consisted in beggaring all their neighbours. Each nation has been made to look with an invidious eye upon Edition: current; Page: [lvi] the prosperity of all the nations with which it trades, and to consider their gain as its own loss. Commerce, which ought naturally to be, among nations as among individuals, a bond of union and friendship, has become the most fertile source of discord and animosity. The capricious ambition of kings and ministers has not, during the present and the preceding century, been more fatal to the repose of Europe, than the impertinent jealousy of merchants and manufacturers. The violence and injustice of the rulers of mankind is an ancient evil, for which, perhaps, the nature of human affairs can scarce admit of a remedy. But the mean rapacity, the monopolizing spirit of merchants and manufacturers, who neither are nor ought to be the rulers of mankind, though it cannot perhaps be corrected, may very easily be prevented from disturbing the tranquillity of anybody but themselves.”

Such are the liberal principles which, according to Mr. Smith, ought to direct the commercial policy of nations; and of which it ought to be the great object of legislators to facilitate the establishment. In what manner the execution of the theory should be conducted in particular instances, is a question of a very different nature, and to which the answer must vary in different countries, according to the different circumstances of the case. In a speculative work, such as Mr. Smith’s, the consideration of this question did not fall properly under his general plan; but that he was abundantly aware of the danger to be apprehended from a rash application of political theories, appears not only from the general strain of his writings, but from some incidental observation which he has expressly made upon the subject. “So unfortunate,” says he, in one passage, “are the effects of all the regulations of the mercantile system, that they not only introduce very dangerous disorders into the state of the body politic, but disorders which it is often difficult to remedy, without occasioning, for a time at least, still greater disorders. In what manner, therefore, the natural system of perfect liberty and justice ought gradually to be restored we must leave to the wisdom of future statesmen and legislators to determine.” In the last edition of his Theory of Moral Sentiments, he has introduced some remarks, which have an obvious reference to the same important doctrine. The following passage seems to refer more particularly to those derangements of the social order which derived their origin from the feudal institutions:

The man whose public spirit is prompted altogether by humanity and benevolence, will respect the established powers and privileges even of individuals, and still more of the great orders and societies into which the state is divided. Though he should consider some of them as in some measure abusive, he will content himself with moderating what he often cannot annihilate without Edition: current; Page: [lvii] great violence. When he cannot conquer the rooted prejudices of the people by reason and persuasion, he will not attempt to subdue them by force; but will religiously observe what, by Cicero, is justly called the divine maxim of Plato, never to use violence to his country any more than to his parents. He will accommodate, as well as he can, his public arrangements to the confirmed habits and prejudices of the people; and will remedy, as well as he can, the inconveniences which may flow from the want of those regulations which the people are averse to submit to. When he cannot establish the right, he will not disdain to ameliorate the wrong; but, like Solon, when he cannot establish the best system of laws, he will endeavour to establish the best that the people can bear.

These cautions with respect to the practical application of general principles were peculiarly necessary from the author of “The Wealth of Nations;” as the unlimited freedom of trade, which it is the chief aim of his work to recommend, is extremely apt, by flattering the indolence of the statesman, to suggest to those who are invested with absolute power, the idea of carrying it into immediate execution. “Nothing is more adverse to the tranquillity of a statesman,” says the author of an Eloge on the Administration of Colbert, “than a spirit of moderation; because it condemns him to perpetual observation, shows him every moment the insufficiency of his wisdom, and leaves him the melancholy sense of his own imperfection; while, under the shelter of a few general principles, a systematical politician enjoys a perpetual calm. By the help of one alone, that of a perfect liberty of trade, he would govern the world, and would leave human affairs to arrange themselves at pleasure, under the operation of the prejudices and the self-interests of individuals. If these run counter to each other, he gives himself no anxiety about the consequence; he insists that the result cannot be judged of till after a century or two shall have elapsed. If his contemporaries, in consequence of the disorder into which he has thrown public affairs, are scrupulous about submitting quietly to the experiment, he accuses them of impatience. They alone, and not he, are to blame for what they have suffered; and the principle continues to be inculcated with the same zeal and the same confidence as before.” These are the words of the ingenious and eloquent author of the Eloge on Colbert, which obtained the prize from the French Academy in the year 1763; a performance which, although confined and erroneous in its speculative views, abounds with just and important reflections of a practical nature. How far his remarks apply to that particular class of politicians whom he evidently aimed at in the foregoing passage, I shall not presume to decide.

It is hardly necessary for me to add to these observations, that they do not detract in the least from the value of those political theories which attempt to delineate the principles of a perfect legislation. Such theories (as I have elsewhere observed) ought to be considered merely as descriptions of the ultimate objects at which the statesman ought to aim. The tranquillity of his administration, and the immediate success of his measures, depend on his good sense and his practical skill; and his theoretical principles only enable him to direct his measures steadily and wisely, to promote the improvement and happiness of mankind, and prevent him from being ever led astray from these important ends, by more limited views of temporary expedience. “In all cases,” says Mr. Hume, “it must be advantageous to know what is most perfect in the kind, that we may be able to bring any real constitution or form of government as near it as possible, by such gentle alterations and innovations as may not give too great disturbance to society.”

The limits of this Memoir make it impossible for me to examine particularly the merit of Mr. Smith’s work in point of originality. That his doctrine concerning the freedom of trade and of industry coincides remarkably with that which we find in the writings of the French Economists, appears from the slight view of their system which he himself has given. But it surely cannot be pretended by the warmest admirers of that system, that any one of its numerous expositors has approached to Mr. Smith in the precision and perspicuity with which he has stated it, or in the scientific and luminous manner in which he has deduced it from elementary principles. The awkardness of their technical language, and the paradoxical form in which they have chosen to present some of their opinions, are acknowledged even by those who are most willing to do justice to their merits: whereas it may be doubted, with respect to Mr. Smith’s Inquiry, if there exists any book beyond the circle of the mathematical and physical sciences, which is at once so agreeable in its arrangement to the rules of a sound logic, and so accessible to the examination of ordinary readers. Abstracting entirely from the author’s peculiar and original speculations, I do not know that, upon any subject whatever, a work has been produced in our times, containing so methodical, so comprehensive, and so judicious a digest of all the most profound and enlightened philosophy of the age.

In justice also to Mr. Smith, it must be observed, that although some of the economical writers had the start of him in publishing their doctrines to the world, these doctrines appear, with respect to him, to have been altogether original, and the result of his own Edition: current; Page: [lix] reflections. Of this, I think, every person must be convinced, who reads the Inquiry with due attention, and is at pains to examine the gradual and beautiful progress of the author’s ideas: But in case any doubt should remain on this head, it may be proper to mention, that Mr. Smith’s political lectures, comprehending the fundamental principles of his Inquiry, were delivered at Glasgow as early as the year 1752 or 1753; at a period, surely, when there existed no French performance on the subject, that could be of much use to him in guiding his researches. In the year 1756, indeed, M. Turgot (who is said to have imbibed his first notions concerning the unlimited freedom of commerce from an old merchant, M. Gournay) published in the Encyclopédie, an article which sufficiently shows how completely his mind was emancipated from the old predjudices in favour of commercial regulations: but that even then, these opinions were confined to a few speculative men in France, appears from a passage in the Mémoires sur la Vie et les Ouvrages de M. Turgot; in which, after a short quotation from the article just mentioned, the author adds: “These ideas were then considered as paradoxical; they are since become common, and they will one day be adopted universally.”

The Political Discourses of Mr. Hume were evidently of greater use to Mr. Smith, than any other book that had appeared prior to his lectures. Even Mr. Hume’s theories, however, though always plausible and ingenious, and in most instances profound and just, involve some fundamental mistakes; and, when compared with Mr. Smith’s, afford a striking proof, that, in considering a subject so extensive and so complicated, the most penetrating sagacity, if directed only to particular questions, is apt to be led astray by first appearances; and that nothing can guard us effectually against error, but a comprehensive survey of the whole field of discussion, assisted by an accurate and patient analysis of the ideas about which our reasonings are employed. It may be worth while to add, that Mr. Hume’s Essay “on the Jealousy of Trade,” with some other of his Political Discourses, received a very flattering proof of M. Turgot’s approbation, by his undertaking the task of translating them into the French language.

It does not belong to my present undertaking (even if I were qualified for such a task) to attempt a separation of the solid and important doctrines of Mr. Smith’s book from those which appear exceptionable or doubtful. I acknowledge that there are some of his conclusions to which I would not be understood to subscribe implicitly; more particularly in that chapter, where he treats of the principles of taxation;—a subject which he has certainly examined in a manner more loose and unsatisfactory than most of the others which have fallen under his review.

It would be improper for me to conclude this section without Edition: current; Page: [lxi] taking notice of the manly and dignified freedom with which the author uniformly delivers his opinions, and of the superiority which he discovers throughout, to all the little passions connected with the factions of the times in which he wrote. Whoever takes the trouble to compare the general tone of his composition with the period of its first publication, cannot fail to feel and acknowledge the force of this remark. It is not often that a disinterested zeal for truth has so soon met with its just reward. Philosophers (to use an expression of Lord Bacon’s) are “the servants of posterity;” and most of those who have devoted their talents to the best interests of mankind, have been obliged, like Bacon, to “bequeath their fame” to a race yet unborn, and to console themselves with the idea of sowing what another generation was to reap:

Mr. Smith was more fortunate; or rather, in this respect, his fortune was singular. He survived the publication of his work only fifteen years; and yet, during that short period, he had not only the satisfaction of seeing the opposition it at first excited, gradually subside, but witnessing the practical influence of his writings on the commercial policy of his country.