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Adam Smith's pragmatic liberalism

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 Adam Smith’s Pragmatic Liberalism*

Professor Lisa Hill

School of History and Politics
University of Adelaide.

*Draft Only: Not to be cited or quoted without the author’s express permission.

In this paper I argue that the popular characterisation of Adam Smith as a champion of

negative liberty is basically correct but with three important qualifications: first, Smith is

no high theorist of liberalism and his account of rights and liberties is sketchy,

incomplete and at times confusing and confused; second, though he sometimes describes

the ‘system of natural liberty’ as a ‘perfect’ mechanism for the delivery of human

flourishing, he also admits to (without explaining) its failures and therefore the necessity

of violating liberty for the sake of human flourishing; third, his delineation and defence

of the system of natural liberty is not borne of any desire to promote such abstract liberal

values as individualism, freedom and autonomy as ends in themselves but is a

pragmatist’s response to problems associated with political corruption, relentless war and

interstate conflict, public debt, sub-optimal productivity levels and economic —and

especially food—insecurity. In other words, he defends such values to the extent that they

serve substantive ends and readily abandons them when the ends demand it.

After establishing Smith’s advertised position on liberty and exploring some of its

ambiguities, I examine cases where he compromises this position. The discussion

concludes with a reflection on Smith’s underlying rationale for occasional— and

sometimes serious— violations of the system of ‘natural liberty’.

Rights and the System of Natural Liberty.

1
 Adam Smith is well known as a defender of personal liberty. He argued that

underlying the complex of seemingly arbitrary social arrangements and conventional

institutional constraints on human behavior there was a system of natural and

spontaneous economic –and indeed social–relations which, when allowed to operate,

would function harmoniously. On Smith’s account there exists a natural equilibrium with

which both legislators and private individuals should, for the most part, avoid interfering;

each person is by nature the best judge of her own interest and should therefore be left

unhindered to pursue it in her own way. In this manner s/he is able to achieve, not only

her own best advantage, but that of society as well. Smith’s belief in the existence of a

natural economic order is reflected in his celebrated statement that in pursuing her own

advantage each individual was ‘led by an invisible hand to promote an end which was no

part of [her] intention’ namely the general welfare and prosperity of the nation. 1 When

all ‘systems either of preference or of restraint’ have been removed “the obvious and

simple system of natural liberty establishes itself of its own accord.’ 2 In such an order,

government can rarely be more effective than when it is restrained.

Corresponding to this natural order (and contrary to the perception of many Smith

scholars that he avoided the language of rights) Smith refers to the ‘natural rights’ of

individuals to denote the liberty each person has to act in a way that is consistent with her

self-regarding inclinations. People have a ‘natural right’ to ‘free commerce’( including

‘the right to freedom in marriage’) 3 and to enjoy their ‘liberty free from infringement’. 4

1
Smith, A. 1979 [1776]. An Inquiry Into the Nature and Causes of the Wealth of Nations, R.H. Campbell,
and A.S. Skinner, (eds.), Oxford: Clarendon Press (hereafter cited as WN) IV.ii.9: 456
2
WN. IV.ix. 51: 687.
3
Smith, A. 1978 Lectures on Jurisprudence, R.L. Meek, D.D. Raphael and L.G. Stein (eds.), Oxford:
Oxford University Press Hereafter cited as LJ)(A). 12-13, p. 8.
4
LJ(B).11: 401; LJ(A). i. 24: 13.

2
Smith tells us that ‘[t]he property which every man has in his own labour’ is ‘the original

foundation of all other property’ and therefore ‘the most sacred and inviolable’. 5 He also

says that ‘[j]ustice is violated whenever one is deprived of what he had a right to and

could justly demand from others, or rather, when we do him any injury or hurt without a

cause’. 6 A person may be ‘injured in his person’ by either direct injury to his body or else

by some restraint on ‘his liberty’ and he has the general right to ‘do what he has a mind

when it does not prove detrimentall to any other person’. 7 Smith also tells us that ‘a man

who by forcible confinement or other violence done to his liberty, or any threatenings’ is

compelled by another to do something he is injured in ‘his liberty’, therefore, ‘all such

contracts or obligations which are forced from’ him under ‘duresse…are void’ 8 All these

rights, save for property rights, are, Smith says, natural. It is self-evident (that is,

according to the judgements of the impartial spectator 9) that we have a right to life, limb

and reputation but property rights ‘require some more explanation’ due to the fact that

‘[p]roperty and civil government very much depend on one another. The preservation of

property and the inequality of possession first formed it, and the state of property must

always vary with the form of government’. 10 (At this point the discussion becomes

confusing given that Smith has already asserted that property in labour is a natural,

‘sacred and inviolable’ right).

5
WN. I. x. c. 12: 138; WN. IV.v.b.43: 540.
6
LJ(A), i.9, p.7.
7
(LJ(A).i.12, p. 8
8
LJ(A) ii.131, p.120
9
Smith, A. (1976) The Theory of Moral Sentiments, D.D. Raphael and A.L. MacFie, (eds), Oxford:
Clarendon Press, 1976 (hereafter cited as TMS) II.ii.2.3, pp. 84-5; ibid, II.ii.3.4., p. 86.
10
LJ(B) p. 401

3
 In any case, a system of ‘just liberty’ agents should not be hindered in the use of ‘[t]he

property which every man has in his own labor’. 11 Labour for Smith is the primary source

of value 12 and since humans are constitutionally disposed to specialise their economic

effort it is their ‘natural’ right to exchange any resulting vendibles with the products of

the specialised effort of others. It follows, then, that, provided ‘there is no injury to [ones]

neighbours’ 13 there can be no legitimate interference with exchange either by private

persons or public bodies. Smith’s system of spontaneous order, the system of natural

liberty therefore depends upon agents’ enjoyment of a high degree of freedom and

mobility. As people work sub-rationally to secure social order, their capacity to do so

depends upon their access to a minimum level of negative liberty, 14 or as Frederich von

Hayek was later to put it, a large ‘protected domain’.

It should be noted here that the relationship between the natural laws governing human

life and the rights that correspond to them is not explictly laid out by Smith. But, from the

discussion, he seems to take it as given that rights and our entitlement to them are a

correlate —even function — of natural laws. Smith defends liberty partly because people

are self-owners; at the same time, that people are self-owners is reflected in the fact that

the economy works better when people are treated as such, that is to say; the laws of

nature governing human societies, when allowed to work properly, reflect or perhaps

prove the reality of self-ownership. Smith does not, therefore, defend liberty as an end in

itself but because such a defence is consistent with natural laws and has good or adaptive

11
WN. I. x. c. 12: 138; WN. IV.v.b.43: 540.
12
In other words, he is working with a labour theory of value: ‘The real value of all the different
component parts of price, it must be observed, is measured by the quantity of labour which they can, each
of them, purchase or command. Labour measures the value not only of that part of price which resolves
itself into labour, but of that which resolves itself into rent, and of that which resolves itself into profit (WN,
I.vi.9, pp. 67-8).
13
WN. I. x. c. 12: 138
14
WN, I. X. c. 59. p. 157; II. ii. 94. p. 324 and II. iv. Ix. 50, p. 687.

4
effects. Further, it is the only means by which to guarantee the adaptive, flourishing and

progressive society, a fact that, in turn, confirms the naturalness of the right to liberty.

Rights, natural law and justice are thus conflated into ‘the natural system of perfect

liberty and justice’. Smith holds up as his ideal ‘that natural, healthful, and proper

proportion which perfect liberty necessarily establishes, and which perfect liberty can

alone preserve’. 15

Regrettably ‘the natural effort of every individual to better his own condition’ is

frustrated by hundreds of ‘impertinent obstructions with which the folly of human laws

too often incumbers its operations’ the effect of which is ‘always more or less either to

encroach upon its freedom, or to diminish its security’. 16 As a consequence, Smith

expended much energy in criticising those ‘impertinent’ interferences with natural rights

that prevented the system of natural liberty from working properly.

Individuals did not need to be organised by those presuming to enjoy an Archimedian

perspective on economic and social affairs because they are naturally self-regarding, self-

managing, 17 prudent 18 and independent. 19 If allowed, market agents will voluntarily

exhibit all the secondary liberal virtues of: frugality, sobriety, punctuality, faithfulness,

enterprise and industry 20, ‘probity’ 21 and the ‘habits of oeconomy...discretion, attention

and application of thought’. 22 And they will respect the autonomy of other agents and

15
WN IV.vii.c.44, p. 606.
16
WN, IV.v.b.43, p. 540. See also WN, IV.ix.28, p. 674.
17
‘(E)very man is certainly, in every respect, fitter and abler to take care of himself than of any other person’ (TMS.
VI.ii.i.i., p. 219).
18
WN. II. iii. 28, p. 341; .VI. I. 8-16, pp. 214-216..
19
LJA; 118-119, pp. 245-246. WN, I. ii. p. 27.
20
, WN., II.iii. 36. pp. 345-6.
21
LJB, pp.538-9.
22
Smith, TMS, IV.2.8, pp. 189-90..

5
extend reciprocal non-interference (negative liberty). 23 In other words, they will be just

and virtuous in the classical liberal sense.

Smith was averse to ‘system’ and the utopian schemes of the self-important legislator

who ‘fancies himself the only wise and worthy man in the Commonwealth’ in assuming

‘that his fellow citizens should accommodate [themselves] to him and not he to they.’ 24

He deplored regulations such as poor laws, corporation privileges, statutes of

apprenticeship and restrictions on international trade. All these impositions and

restrictions are corruptions of natural social laws, violations of the personal rights of

individuals and extremely ‘hurt[ful to the natural state of commerce’

Smith defended individual rights and the system of natural liberty because any

interference with both is a result of either: a presumptuous claim to knowing the

individual’s good better than she knows her own; a hubristic defiance of the equilibrating

laws of nature; or a conspiracy by interested parties against the public.

Corruption and Liberty.

The eradication of corruption was one of the most pressing problems for political

thinkers of the eighteenth century. Smith shared in his contemporaries’ perception of

English politics as ‘a society shot through with corruption and venality’ 25 and ‘a racket,

run by particular groups within the ruling classes largely for their own benefit’. 26 As I

have argued in detail elsewhere, 27 much of pioneering liberalism could be described,

almost by definition, as an implicit reaction to corruption understood in its modern sense.

23
Smith, TMS, II.ii.2.2. p. 83; See also ibid, III. 6.10, p.175.
24
TMS, VI.ii.2.17: 234.
25
Wilfred Prest, ‘Judicial Corruption in Early Modern England’, Past and Present Vol. 133 (4) 1991, pp.
67-95, p. 68.
26
P. Corrigan. and D. Sayer, ‘From Theatre to Machine: Old Corruption’, in The Great Arch: English State
Formation as Cultural Revolution, Oxford: Basil Blackwell, 1985, p. 89.
27
L. Hill, ‘Adam Smith and the Theme of Corruption’, Review of Politics, 68 (4) Fall, 2006, pp. 636-662.

6
Despite claims that Smith’s observations on modernity constitute a civic humanist lament

on the loss of ‘indispensable’ civic virtue 28 I would suggest that he was an important

driver in the narrowing of the definition of corruption from a classical concern with loss

of civic virtue to a more modern conception as abuse of public trust for private gain. 29 On

this view, Smith’s sustained defence of what are now standard liberal values —

impartiality, universalism, neutrality, liberty, formal equality of opportunity and rule of

law—is an attempt to address the problem of corruption and its attendant maladaptivities;

namely, relentless interstate conflict, public debt, sub-optimal productivity levels,

economic inefficiency and food-insecurity. In a sense then, Smith’s liberalism —his

defence of liberty— was more of a pragmatic than idealistic enterprise.

Smith’s political economy is a protracted diatribe against corruption and bad policy

within the British state; He believed that most public institutions contained the potential

for ‘neglicency and corruption’ 30 and disliked any ‘profusion of government.’ 31 In line

with his general view that government profligacy was synonymous with corruption’ 32 he

criticised the English state’s wastefulness and its hypocritical attempts to control the

personal spending ‘of private people’. 33 He was especially concerned with the problem

of rising public debt, noting its tendency to drive up taxes, which in turn led to the flight

of domestic capital and a consequent devaluation of the domestic currency. 34 The long-

term effect of this dynamic was the potential ruination of agriculture, trade and

28
Charles Griswold, The Virtues of the Enlightenment: Cambridge, Cambridge University Press, 1999, p.
293.
29
Lisa Hill, ‘Adam Smith and the Theme of Corruption’, Review of Politics, 68 (4) 2006, pp. 636-662.
30
Adam Smith. Letter 143 to William Cullen, 20 Sept. 1774, The Correspondence of Adam Smith,
Mossner, E.C., and Ross, I.S., eds, ( Oxford: Oxford University Press, 1987), hereafter cited as
Correspondence: 173.
31
WN. II. iii. 36: 345
32
WN. V. ii. k. 64: 898.
33
WN. II.iii. 35-6: 344-6.
34
WN. V.iii.55-56, 60: 927-30.

7
‘manufactures.’ 35 Heavy taxes create unnecessary and maladaptive layers of

administration, encourage smuggling, ‘obstruct the industry of the people’ (thereby

exacerbating unemployment) and subject ‘the people’ to the ‘odious’ and oppressive

scrutiny of the tax-gatherers. 36

The system of natural liberty demands that agents are permitted the free-est possible

use of their bodies, minds and properties. England’s poor laws (and to a lesser degree its

corporation laws) are the most pernicious constraint on such freedoms and were

detrimental to both individual and public welfare. Poor laws are more destructive than

corporation laws because they disproportionately disadvantage the poor. 37 Similarly the

laws of apprenticeship are egregious not only because they are an impediment to the

mobility of labor but also because of their tendency to discourage industry and

commercial effort. 38 Other obstructions are evidenced in the particularistic laws of entail

and primogeniture. 39 In relation to the laws of primogeniture, Smith says that ‘nothing

can be more contrary to the real interest of a numerous family, than a right which, in

order to enrich one, beggars all the rest of the children’ 40 while, the related law of entail

is ‘founded upon the most absurd of all suppositions, the supposition that every

successive generation of men have not an equal right to the earth, and to all that it

35
WN. V. iii. 10: 911.
36
WN. V.ii. b. 6., 826-7.
37
WN. I.x.c.44-5: 152.
38
‘During his apprenticeship the young man perceives [correctly] that there is no connection between his
effort and his reward [as would exist under piecework], and habits of slothfulness and laziness are therefore
encouraged’ (Nathan Rosenberg. “Some Institutional Aspects of the Wealth of Nations”, Journal of
Political Economy, 68 ( February –December 1960): 557-570, 561); WN. I.x.c.14-16: 139-140. The laws of
settlement are a similar and therefore unjust restriction on mobility (WN. I.x.c. 58-9: 156-7).
39
According to the Oxford English Dictionary the laws of entail consist in “[t]he settlement of the
succession of land or other property so that it cannot subsequently be bequeathed or sold but must pass to a
designated class of descendents” the line of succession so prescribed.” The law of primogeniture is: “The
right of the first-born child of a family, especially a son, to succeed or to inherit property or title to the
exclusion of other claimants; the feudal rule by which the whole real estate of an intestate passes to the
eldest son.”
40
WN.III.ii.4, p. 384.

8
possesses.’ 41 Though they might have made sense in previous stages of history ‘in the

present state of Europe’ laws of entail are ‘contrary to nature, to reason, and to justice.’ 42

The system of ‘engrossing’ land in perpetuity is inefficient due to its tendency to hinder

agriculture and development; after all, ‘it seldom happens’ that ‘a great proprieter is a

great improver’. 43 In fact, the comparatively rapid development of parts of America is

largely attributable to the absence of such restrictive laws; 44 As he concluded ‘[p]lenty of

good land, and liberty to manage their own affairs their own way, seem to be the two

great causes of the prosperity of all new colonies’. 45

Imperialism.

Perhaps the most significant and far-reaching obstruction to the system of natural liberty

was the British imperialistic project: Smith violently attacked as destructive the two great

systems of monopoly governing the ‘global connections of the mid-eighteenth century’,

namely, the colonial system whereby empires monopolised the markets of their colonies

and the system of exclusive companies like the East India Company. 46 The ‘invidious

and malignant’ 47 monopoly of colonial trade evinced many maladaptive evils: it caused a

‘malallocation of resources’; discouraged investment; induced ‘profligacy and prodigality

among the favoured merchants’ and provoked wars 48 and therefore unconscionable levels

of public debt. The cost of maintaining the colonies could not be justified. It wasn’t just

the day-to-day administration of these colonies that bothered Smith. In fact, ‘[t]his

41
WN. III.ii. 6, p. 384.
42
WN. III.ii. 6, p. 384; LJ(B), 168-9, p. 469.
43
WN. III.ii.7, p. 385; See also ibid. III. iv. 19, p. 423.
44
WN. IV.vii.b.19, p. 572-3.
45
WN, IV. Vii.16, p. 572.
46
Rothschild, E. 2004. ‘Global Commerce and the Question of Sovereignty in the Eighteenth-Century
Provinces’, Modern Intellectual History, 1: 3-25, p.4.
47
WN., IV.vii.c.18: 595
48
Kittrell, Edward R. 1965. ‘The Development of the Theory of Colonisation in English Classical Political
Thought’, Southern Economic Journal, Vol. 31 (3): 189-206, 190.

9
constant expence in time of peace, though very great, is insignificant in comparison with

what the defence of the colonies has cost us in time of war’. 49 This, in turn, led to an

increasingly large public debt and, with it, rising taxes and an exacerbation of the system

of patronage, 50 all of which contributed to the corruption of the British state. 51

The colonial system is egregious because it is a violation of the natural laws of motion

governing interactions between economic agents. Monopolies are corruptions of natural

social laws and violations of the personal rights of individuals. They are not only

‘hurt[ful’ to commerce but are usually obtained via corrupt (i.e. non-free market) means,

namely through patronage, electoral and related forms of bribery. 52 For example

‘stockholders of the competing Old and New East India companies’ bid ‘for the votes of

small and corrupt boroughs in order to secure the controlling interest in Parliament’

thereby enabling them to eliminate any rivals for the lucrative East Indies trade. 53

The monopoly of trade of the ‘mother country’ that went hand in hand with

British imperialism, acted as a ‘clog’ that ‘cramp[ed]’ and depressed the ‘the enjoyments

and industry of all…nations’, imposing a ‘dead weight upon the action of one of the great

springs which puts into motion a great part of the business of mankind’. Whereas under

the system of natural liberty ‘the private interests and passions of individuals naturally

dispose them to turn their stock towards the employments which…are most

49
WN, V.iii.92, 946
50
Much of the national debt was offset by public credit that was seen to increase the crown’s patronage
powers (Pocock, J.G.A. 1972. ‘Virtue and Commerce in the Eighteenth Century’, Journal of
Interdisciplinary History 3 (1):119-20. For further discussion of the problems of patronage in the
seventeenth century see: Peck, L.L. 1979. Court Patronage and Corruption in Early Stuart England.
Boston: Unwin Hyman.
51
Eckhart Hellmuth, ‘Why Does Corruption Matter? Reforms and Reform Movements in Britain and
Germany in the Second Half of the Eighteenth Century’, in T.C.W. Blanning and Peter Wende eds. Reform
in Great Britain and Germany 1750-1850, (Oxford: Oxford University Press, pp. 19-21.
52
LJ (B), 306-7, p. 529.
53
Laura Curtis, ed. The Versatile Defoe. London: George Prior, 1979, p. 244.

10
advantageous’ and ‘agreeable to the interest of the whole society’, mercantilism, whose

‘sole engine’ is monopoly, ‘necessarily derange[s] more or less this natural and most

advantageous distribution of stock’. 54 Restrictions on the right to choose how best to

employ one’s resources and labour are ‘a manifest violation of the most sacred rights of

mankind’ 55 and are borne by the colonies as ‘impertinent badges’ of their ‘slavery’. 56

Unlike the system of ‘natural liberty’, monopoly retards other countries’ progress and yet,

according to Smith, it does not even enhance that of the ‘mother country’. The colonies

therefore yielded few benefits and great costs. ‘Under the present system of

management’, Smith wrote, ‘Great Britain derives nothing but loss from the dominion

which she assumes over her colonies’. 57

Furthermore, the colonial monopoly was both a military and economic security risk.

Commerce, when conducted under mercantile and imperial conditions, exacerbates war

and inter-state conflict, triggering animosities, retaliatory restrictions and outright

hostilities.58 It is also an economic security threat due to its failure to spread risk.

Whereas natural forces would have led Britain to accommodate its industry ‘to a great

number of small markets’, monopoly trade has caused it to put all its eggs in one basket;

to accommodate itself ‘to one great market.’ Trade between the colonies and the mother

country is likened to a major artery any ‘rupture’ of which would certainly occasion

‘convulsions, apoplexy, or death’. 59 In order to reduce exploitation within international

economic relations 60 and ensure enduring productivity, progress, and plenty for all, there

54
WN.,IV.vii.c.88-89, p. 630
55
WN., I. x. c. 12, p. 138; IV.v.b.43, p. 540; IV; IV.vii.b, 44, p. 582
56
WN.,IV. IV.vii.b, 44, p. 582
57
WN, IV.vii.c. 65, p. 616
58
WN, IV. iii.c.9: 493: IV.ii.38, p. 467; V. ii.g.2, p. 852.
59
WN., IV.vii.c. 43, pp. 604-6
60
WN., IV.vii.c.16, pp. 594-5

11
should be no limitations on the nature and extent of the market because this limits the

natural growth of the division of labour.

Arguably the most serious consequence of this dynamic was its effect on food security.

Smith lamented that the exclusive East India Company was powerful enough to impose

such ‘improper regulations’ and ‘injudicious restraints’ as to induce a ‘famine’. Smith’s

preoccupation with food security has not always been well appreciated as the primary

inspiration for his dislike of monopoly and concomitant advocacy of free trade. 61 It

should be borne in mind that the major economic sector of his time was still agriculture

and food was the major expenditure item for the vast bulk of the population. Yet this

most vital sector was unavoidably subject to fluctuations in both output and price,

therefore during the eighteenth century ‘the achievement of a low and stable price for

grain’ was perhaps the most urgent political problem facing European governments.

Smith thought that the best way to encourage domestic production while ensuring ready

access to ‘an international market in foodstuffs’ – especially corn – was via free trade. 62

Smith indicates that the whole point of political economy is to find ways of improving

the per capita consumption of the labouring classes. Mercantilism is wrong in its

perception of non-consumables like gold as the source of wealth. 63 Real wealth consists

in consumables, especially foodstuffs and any policy that prevented a free trade in food

was intolerable: ‘[t]he unlimited, unrestrained freedom of the corn trade, as it is the only

effectual preventative of the miseries of a famine, so it is the best palliative of the

61
WN, IV.v.b.6, p. 527
62
‘Freedom of trade in grains moderated domestic prices and maximised production since producers with
access to extensive markets would be confident of sales at reasonable prices’ (Keith Tribe, ‘Natural Liberty
and lassiez-faire: How Adam Smith Became a Free Trade Ideologue’ in Adam Smith’s Wealth of Nations:
New Interdisciplinary Essays, eds Stephen Copley and Kathryn Sutherland. Manchester, Manchester
University Press, 1995,pp. 23-44, pp.25-6).
63
LJ(A), 161-2, pp.390-91 (Smith’s emphasis). See also LJ(B),262, p. 511.

12
inconveniencies of a dearth’. 64 But the greed of merchants and corrupt unwisdom of

sovereigns blocked the path to this solution, thereby occasioning hardship and even death

for many.

Smith strongly advocated, in the short term, tighter parliamentary control over the main

vehicle of mercantilism, namely, monopolistic entities like the East India Company, and

in the long term, not only the dismantling of mercantilism but the complete emancipation

of the colonies in order to deliver Great Britain ‘from the great…expence’ of

‘maintaining her authority in the colonies…defending them in time of war’ and the

crippling burden ‘of the naval establishment necessary for defending her monopoly of

their trade. 65 Henceforth‘Brittain should by all means be made a free port… and liberty

of exchange should be allowed with all nations and for all things’. 66 Trade barriers

between all nations and especially the ‘exclusive trade to the colonies’ should be

abolished until the market was effectively free. 67

Smuggling, Dirty Degrees and Liberty.

In Smith’s delineation of the best regime for the enjoyment of liberty, it is noteworthy

that he was prepared to go so far as to defend illegal and even seemingly immoral

practices like smuggling and the selling of ‘dirty degrees’ in the name of liberty. This

permissive attitude may have been related to the fact that he had direct experience of the

effects and causes of both practices. He was a University Professor for much of his career

and he was also involved in the effort to manage smuggling. For example, in 1783 a

House of Commons Committee set up to deal with the smuggling problem invited Smith

64
WN., IV.v.b.6, p. 527; IV, v.b.39, p. 538-9
65
‘Letter 143 to William Cullen, 20 Sept. 1774’ Correspondence,, p. 382
66
LJ(B), 262-9: 511-14. My emphasis.
67
WN IV.vii.c.44, p. 606.

13
to share his views on subject (there is some evidence that Pitt’s Commutation Act of

1784’ took heed of Smith’s principles). 68 Smith also had the opportunity of experiencing

the problem first hand when in 1777 he was appointed a Customs Commissioner for

Scotland. 69

Smith was a well known critic of high importation duties, not only because they drove

up the prices of commodities but also because they gave rise to smuggling. This in turn

caused the ‘ruin’ of those who had attempted ‘unsuccessfully to evade the tax’’ which, in

turn, ‘put an end to the benefit which the community might have received from the

employment of their capitals.’ High duties were perverse: the ‘law, contrary to all the

ordinary principles of justice, first creates the temptation, and then punishes those who

yield to it’. 70 He argued that ‘that if it were possible to defray the expences of

government by any other method, all duties, customs, and excise should be abolished’. 71

Though Smith conceded that the smuggler is, in one respect, ‘highly blameable’ for

‘violating the laws of his country’, nevertheless such a person has in no way violated the

more sacred laws ‘of natural justice’ and is probably an otherwise ‘excellent citizen, had

not the laws of his country made that a crime which nature never meant to be so.’ In

‘corrupted’ governments where heavy taxes, debt, profligacy and waste are the norm it is

not surprising that ‘the laws which guard it are little respected.’ 72

68
Ross, Life of Smith, p. 324.
69
Ian Simpson-Ross poses the rhetorical question: ‘whether Smith the Customs Commissioner is at odds
with the author of WN?’ He answers that despite his clear preference for government restraint in the econoy
he demonstrated ‘exemplary conscientiousness as an official regulating enforcing’ the ‘commercial, or
mercantile system’ he decried (Life of Smith, pp. 318-19; WN, IV.i.1-45, pp.329-451).
70
WN., V.ii.b.6, pp. 826-7.
71
LJ (B) 269, p. 514. my emphasis.
72
WN. V. ii. K. 64: 898. The context for Smith’s opinions here is doubtless the following: ‘In defiance of
the terms of the Treaty of Union, Parliament proposed in 1712 to levy the Malt Tax on Scotland. Also,
Scotland was brought within the system of English excise and customs regulations, which burdened normal
trade links with the Continent. Instead of producing higher tax returns this change pushed more people into

14
 Smith’s attitude to the ‘dirty practice’ of degree-selling also bears notice here. Rather

than condemning it outright, as might be expected, he simply notes that the poorer

universities understandably engage in the practice in order to ‘turn the penny’ in a market

unjustly — and therefore unnaturally — oligopolised by the richer institutions (i.e.

Oxford and Cambridge). 73 Although Smith seems sincere in admitting that it is a ‘most

disgraceful trade’, he nevertheless denies that it is in any way ‘hurtful to the public’

because the ‘intolerable nuisance’ of exclusive privilege is even more hurtful due to its

unerring tendency to raise the costs of services to consumers. 74 From a moral point of

view Smith undoubtedly felt justified in taking this position on the belief that the laws of

natural liberty automatically trump those of frail and imperfectly-informed mortals. 75

Despite Smith’s insistence that interference with the system of natural liberty is often a

symptom of corruption and invariably a violation of natural rights and laws that would

otherwise deliver prosperity, peace and human progress, he is prepared to explicitly

recommend such violations when utility required it. Personal rights become defeasible

and natural laws violable when the exigencies of governing and security demand it.

Violations and Exceptions

1. Defence, Justice, Infrastructure.

smuggling activities which proved highly profitable throughout the eighteenth century, until the younger
Pitt took Smith’s advice about lowering duties to the point at which the dangers and outlays of smuggling
were clearly greater than the yields’ (Ian Simpson Ross. ‘Political Themes in the Correspondence of Adam
Smith’, The Scottish Tradition 5 (1975):5-22, 7).
73
Letter 143 to William Cullen, 20 Sept. 1774, Correspondence: 174-8. Ian Ross reports that ‘St Andrews
University put itself in this position by conferring an MD on ‘one Green, who happened to be a stage-
doctor’, that is, a quack who practiced medicine on a platform’ (Ian Simpson Ross, The Life of Adam Smith,
Oxford: Clarendon Press, 1995, p. 260).
74
Letter 143 to William Cullen, 20 Sept. 1774, Correspondence , pp. 174-8.
75
See, for example, ‘History of Ancient Physics’, Adam Smith, Essays on Philosophical Subjects, I.S.
Ross, (ed.), Oxford: Clarendon Press, 1980, p.113. For further discussion of this claim see Lisa Hill, ‘The
Hidden Theology of Adam Smith’, European Journal of the History of Economic Thought, Vol. 8 (1),
Spring 2001, pp.1-29, passim.

15
 To begin with, there are Smith’s three well known exceptions to his insistence on

government restraint in the market. Due to market failure and the existence of a number

of collective action problems Smith allows ‘three proper duties of government’, which,

though of ‘great importance’ ‘are plain and intelligible to common understanding’.

These are, firstly, to protect society from the invasion of other societies (apart from the

provision of standing defences forces he also recommended the imposition of bounties

upon the exportation of British sail-cloth and gun-powder 76 and approved of the

controversial Navigation Acts that controlled trade yet served defense interests 77);

secondly, to establish and administer a system of justice; and finally, to provide essential

public works. 78 Beyond these, the system of ‘natural liberty’ should be left to operate. 79

All these recommendations are designed to either directly or indirectly faciliate

commerce though Smith never explains why the natural laws of spontaneous order leave

such large and inconvenient gaps in an otherwise self-ordering universe.

It could be argued that Smith’s security and justice exceptions to the system of natural

liberty are less a betrayal of liberty than an realist’s indirect defence of it. Smith

repeatedly acknowledged that without security liberty could not be enjoyed and the

pursuit of national wealth would be pointless, even impossible. Only when ‘[t]he natural

effort of every individual to better his own condition’ is unleashed under conditions of

‘freedom and security’ will the society be prosperous and happy. 80 An organised system

76
WN, IV.v.a.36, pp. 522-3.
77
Smith says: ‘The act of navigation is not favourable to foreign commerce, or to the growth of that
opulence which can arise from it…As defence, however, is of much more importance than opulence, the
act of navigation is, perhaps, the wisest of all the commercial regulations of England’ (WN, VI.ii.30, pp.
464-5).
78
WN.IV.ix. 51, pp 687-8
79
WN. IV.ix.51, p. 687.
80
WN, IV.v.b.43, p. 540; WN,V.i.a.39-40, pp. 705-706

16
of justice underpinned by regular armies affords ‘to industry, the only encouragement

which it requires, some tolerable security that it shall enjoy the fruits of its own labour.’ 81

2. Education.

Beyond these exceptions the system of natural liberty there is the less well-known

example of Smith’s advocacy of a publicly funded compulsory education system to offset

the problems generated by economic development. Smith noted that among the ‘lower’

metropolitan orders, the education of children is ‘greatly neglected’. This leaves people

with no ideas of ‘amusement…but riot and debauchery’. 82 The ‘spirit’ of commercialism

as well as its characteristic mode of production (specialization) has a detrimental effect

on moral character because it sinks the courage of mankind and tends to extinguish

martial spirit’. The new independence of working children undermines the traditional

‘authority’ of fathers with the effect that the young, when at leisure, fall into bad habits of

‘drunkenness and riot’. 83 Though Smith thought commercialization was natural,

inevitable and basically positive he was keenly aware of ‘the disadvantages of a

commercial spirit.’ As he summarised them: ‘The minds of men are contracted and

rendered incapable of elevation, education is despised or at least neglected, and heroic

spirit is almost utterly extinguished’. 84

So, for the sake of public order Smith advocated the establishment of a compulsory and

publicly funded school system to inculcate patterns of civility suitable for market society

subjects. 85 Smith suggests that at a ‘very small expense the public can

facilitate…encourage, and…even impose upon almost the whole body of the people, the

81
WN, I.xi.i., p. 256
82
LJ(B), 329-30, pp. 539-40
83
LJ (B) 330, p. 540
84
LJ(B), 333, p. 541
85
WN.V.i.i.5-6, p. 815. WN.V.i.f.57, p. 786.

17
necessity of acquiring those most essential parts of education’ namely reading, writing

and accounting. 86 A basic education will make a people ‘more capable of seeing through

the interested complaints of faction and sedition’. Further, educated people are ‘more

respectable’ and orderly because more inclined to acknowledge the authority of their

‘lawful superiors’. 87 Therefore the ‘state derives no inconsiderable advantage’ from the

‘instruction’ of the working poor (the rich were expected to fund their own education)

due to its projected positive effect on political and social tranquillity. In fact, Smith

suggests that even if the public were to derive no such advantage his suggestion would

still be worth acting upon, 88 presumably in the name of human flourishing.

3. Commercial/Market Interventions.

Other violations of the system of natural liberty in the name of economic and political

expediency are suggested by Smith. For example, in contradiction of his famously held

view that the state should neither ‘force nor…allure’ the flow of trade beyond which it

would ‘naturally flow…of its own accord’ 89 he identified two general ‘cases in which it

will generally be advantageous to lay some burden upon foreign, for the encouragement

of domestick industry. The first is when some particular sort of industry is necessary for

the defence of the country….The second…is when some tax is imposed at home upon the

produce of the latter’ in which case ‘it seems reasonable that an equal tax should be

imposed upon the like produce of the former’. 90 Elsewhere he argues that the state

86
WN V.i.f.54. p. 785. For a fuller discussion of Smith’s views here see: James E. Alvey, ‘Moral Education
as a Means to Human Perfection and Social Order: Adam Smith’s View of Education in Commercial
Society’, History of the Human Sciences, Vol 14 (2) 2001, pp. 1-18.
87
WN.V.i.g.61, p. 788.
88
WN.V.i.f.61, p. 88.
89
WN.,II.v.31, p. 372
90
WN, IV.ii. 23-31, pp. 463-5; See also WN, IV.v.a.36, pp. 522-3.

18
sometimes has a proper role in controlling investment and restricting profits 91 and it

might also be proper to impose a legal rate of interest intended to favour ‘a more

extensive access to credit particularly by such groups as small firms and sober investors

which would otherwise be discriminated by the actions of speculative projectors’. Further

‘speculative projectors’ might ‘have to be legally restrained in order tor reduce the

occurrence of moral hazard and adverse selection’. 92 Finally, while admitting that ‘few’

monopolies are ‘harmless’, he defends the utility of temporary monopolies in the case of

inventions and new books ‘as an encouragement to the labours of learned men’ 93

He justified all these measures by speaking of their necessity: ‘The object of the

publick works and institutions above mentioned is to facilitate commerce in general. But

in order to facilitate some particular branches of it, particular institutions are necessary,

which again require a particular and extraordinary expence’. 94 In other words, he is able

to offer no plausible justification for these interventions except to say that they are

necessary; which is another way of saying that he does not know why the economy does

not fully equilibrate — why the system of natural liberty does not properly assert itself—

in order to meet the necessary ends that these extraordinary measures are introduced to

achieve.

4. Imperialism and Liberty.

It has been noted above that Smith disliked imperialism because it was synonymous

with mercantilism and therefore an unmitigated violation of the laws of natural liberty.

91
WN, IV.vii.c.61, p. 612.
92
Asso, P. F, ‘The Home Bias Approach in the History of Economic Thought: Issues on Financial
Globalization from Adam Smith to John Maynard Keynes,’ in Jochen Lorentzen and Marco De Cecco (eds)
Markets and Authorities: Global Finance and Human Choice, Cheltenham: Edward Elgar, 2002, p. 27; WN
II.iv.15; WN II.iv.p. 357.
93
LJ(A) ii.31-3, p. 83.
94
WN.,V.i.e.1, p.731.

19
Further, it threatened food security and exacerbated inter-state conflict , which in turn led

to high public debt, high taxes and patronage and political corruption problems.

However, Smith made a number of what were, to his mind, judicious exceptions to his

general proposition that the empire should be dissolved in cases where they enhanced the

global mobility of labour and goods. First of all, some infant industries established in

existing colonies could be justifiably granted monopoly privileges for an initial period so

as to secure their success. The example he had in mind was the establishment of any

experimental and ‘dangerous and expensive’ trade in ‘some remote and barbarous nation’

which he likened to ‘temporary monopoly’ laws that protected patent and copyright. 95

Therefore he countenanced a degree of ‘commercial mercantilism’ if the circumstances

seemed to require it, going so far as to describe the above strategy as ‘the easiest and

most natural way’ to compensate private citizens for hazardous ventures ‘of which the

publick is afterwards to reap the benefit’. 96

He also suggested that Britain would be wise to maintain a military presence in India.

As Eileen Sullivan has observed, although Smith is inconsistent in his position on the

Indians’ level of civilisation (he vascillated between describing it as ‘barbarous’ and

cultured) he ‘wrote quite definitely’ that because India was economically undeveloped

‘she’ required a greater than usual English military and political presence if she were to

become a useful trading partner.’ Accordingly he advocated the establishment of armed

forts and merchant settlements in India and suggested that the ‘territorial acquisitions of

the East India Company should be retained, turned over to the Crown, and used as a

95
WN, V.i.e.p.754.
96
WN, V.i.e.p.754.

20
source of revenue’. 97 In a similar vein, he argued for the retention of armed forts and

settlements along the coast of West Africa in order ensure the free flow of trade: He

explained that there were ‘[s]ome particular branches of commerce’ that were ‘carried on

with barbarous and uncivilized nations’ that required ‘extraordinary protection.’ In order

to defend the ‘the goods of the merchants who trade to the western coast of

Africa….from the barbarous natives, it is necessary that the place where they are

deposited, should be, in some measure, fortified’. 98

Smith pragmatism where Britain’s imperial interests were concerned is nowhere better

exemplified than in his attitude to the ‘American problem’. Here we find Smith in a

particularly practical — even crafty—mood and it is in his excurses on the subject that

we gain some appreciation of the underlying reasons for his willingness to temper his

defence of liberty with the realities of political life.

5. America.

Smith took a particular interest in American affairs because America was an important

case study for his economic theories, the application of which he believed could end ‘the

cycle of violence’ to which the perpetuation of the colonial system had given rise. 99 In

line with his general attitude towards the empire he decreed that voluntary separation was

the best option for all concerned: ‘[t]he complete emancipation of America’ would

immediately deliver Britain from ‘extraordinary expence’ 100 and guarantee prosperity-

generating freedom of trade for all. 101

97
Eileen P. Sullivan, ‘Liberalism and Imperialism: J.S. Mill’s Defense of the British Empire’, Journal of
the History of Ideas, Vol 44 (4) 1984, pp. 599-617, 603.
98
WN, V.i.d-e, p. 731.
99
Ross, Life of Smith, xxiv; p. 250; WN, IV.vii.c., p.: 592
100
Smith, A. 1987 [1778]. ‘Smith’s Thoughts on the State of the Contest with America’, February 1778
(hereafter cited as Memorandum), Edited by David Stevens, Appendix B, Adam Smith, The

21
 Smith wrote at length on the topic in the Wealth of Nations and in a private

memorandum he prepared for Alexander Wedderburn following General Burgoyne’s

surrender at Saratoga in October 1777. 102 In it Smith outlined four options or courses of

action for ending the ‘unhappy’ conflict with America. The first would ‘end in the

complete submission of America’ with ‘all the different colonies… acknowledging…the

supremacy of the mother country’ as well as ‘contributing their proper proportion

towards defraying the expence of the general Government and defence of the Empire.’

Smith wrote that this result could be achieved either by force (1a) or by ‘treaty’ (1b). By

‘treaty’ Smith meant an imperial union (see below). The second option would ‘end in the

complete emancipation of America’ with ‘not a single acre of land, from the enterance

into Hudson's Straits to the mouth of the Mississipi, acknowledging the supremacy of

Great Britain’. The third would restore the old colonial system of 1763 with the ‘colonies

acknowledging the supremacy of the mother country, allowing the Crown to appoint the

Governors, the Lieutenant-Governors, the secretaries and a few other officers in the

greater part of them, and submitting to certain regulations of trade; but contributing little

or nothing towards defraying the expence of the general Government and defence of the

empire.’ The fourth and final solution would involve ‘the submission of a part, but of a

part only, of America; Great Britain, after a long, expensive and ruinous war’ with

Britain acknowledging ‘the independency of the rest.’ 103

Smith did not much like the complete-submission-by-force component of option 1 (1a),

concluding that to force submission would gain nothing but the ‘disgrace’ of oppressing

Correspondence of Adam Smith, Mossner, E.C., and Ross, I.S., (eds.), Oxford: Oxford University Press, p.
382.
101
WN; IV.vii.c: 617; Memorandum, pp. 382-3.
102
Ross, Life of Smith, p. 16.
103
Memorandum, pp. 379-80

22
‘a people whom we have long talked of, not only as of our fellow subjects, but as of our

brethren and even as of our children.’ He reckoned that , unfortunately, this ‘solution’

would ‘meet with scarce any opposition’ in Britain. 104 Complete ‘submission’ by treaty

(that is, by the establishment of an imperial parliament, 1b) struck Smith as far more

attractive since it would enable ‘both parts of the empire’ to enjoy ‘the same freedom of

trade’ as well as share ‘in their proper proportion both in the burden of taxation and in the

benefit of representation.’ It would also obviate the need for an ‘expensive military force’

to police the colony. Since the ‘leading men’ of America would be representatives in the

imperial union, the allegiance of the Americans seemed assured. 105 Complete and

voluntary separation (option 3) seemed to Smith ideal; it was not only ‘advantageous’ but

also ‘necessary’ and ‘natural’. 106 Certainly it fits with his free market philosophy and

intense dislike of monolithic government. Yet he doubted that British pride would permit

it 107 and saw himself as isolated in advocating the idea. 108 (Option 4 (partial submission

after a ‘ruinous war’) was an alternative with little to recommend it).

It has been suggested that Smith personally preferred the imperial union solution to all

others. 109 On a superficial reading such interpretations seem plausible: Smith devotes far

more attention to the imperial union or ‘states-general’ solution than to any other option.

In fact he mentions the idea twelve times in the Wealth of Nations and again in the

Memorandum. But, as Klaus Knorr has rightly pointed out, ‘this is in no way indicative

104
Memorandum, p. 381.
105
Memorandum, 381-2
106
Memorandum, p. 382.
107
Memorandum, p. 384.
108
Memorandum, pp. 379-380.
109
Fay, C.R., ‘Adam Smith and the Dynamic State’, The Economic Journal, Vol. 40 (157), 1930, pp. 25-
34, p. 34.; J. Shield Nicholson, A Project of Empire, London: MacMillan and Co, 1909, p. x. See also
David Stevens, ‘Adam Smith and the Colonial Disturbances’, in Andrew S. Skinner and Thomas Wilson
(eds) Essays on Adam Smith, Oxford: Clarendon Press, 1975., p. 206.

23
of his own preference. If the best solution was separation there was not much to be said

about it. If it was imperial reform, then it was necessary to show what kind of

reorganisation would remedy’ the existing system. 110 That separation is preferred to all

other solutions seems more likely given the strength and ubiquity of Smith’s other anti-

imperialist and free market commitments. The advocacy of ‘supra-national governance’

and ‘transposition of government activity to a higher than national level’ certainly runs

counter to his advertised laissez-faire-ism. 111

The tone and substance of all the textual evidence seems to point to Smith’s preference

for voluntary separation. He declared that: ‘The complete emancipation of America’

would immediately deliver Britain from ‘extraordinary expence’ 112 and guarantee

prosperity-generating freedom of trade for all. Now, instead of being ‘turbulent and

factious subjects’ the Americans would ‘become our most faithful, affectionate, and

generous allies’ in much the same manner as ancient Greece and her liberated colonies. 113

That voluntary separation was favoured is further supported by the fact that option 3 of

the Memorandum – the ostensible resumption of the old colonial relationship of 1763–is

really voluntary separation cunningly promoted as accommodation. Since the

Memorandum was a private document for Wedderburn’s eyes only, we can be reasonably

sure that Smith was sincere in proposing the following Machiavellian strategy: the

‘English ministry and the American leaders should agree to restore the old colonial

relationship of 1763, with the understanding, not communicated to the English people,

110
Klaus E. Knorr, British Colonial Theories, 1570-1850, Toronto: University of Toronto Press, 1944, pp.
187-8.
111
John Berdell, International Trade and Economic Growth in Open Economies, Cheltenham: Edward
Elgar, 2002. p. 30
112
Memorandum, p. 382.
113
WN, IV.vii.c.66, p. 617.

24
that gradually the link should be severed’. 114 This scheme of deception (Smith would

probably prefer to call it a noble lie) would satisfy both sides since the British public

would ‘mistak[e]’ and the American leadership fully ‘understan[d] the meaning of the

scheme.’ Hopefully, in the long term, the scheme would ‘bring about an event which, in

the present distressful situation of our affairs, is, perhaps, of all those which are likely to

happen, the most advantageous to the state’. But again, Smith holds out little hope for

this option due to the fact that ‘ the policy, the secrecy, the prudence necessary for

conducting a scheme of this kind’ are lacking in the ‘British Government’ due to ‘the

nature and essence of our constitution’. 115

In any case, since Smith seemed utterly convinced that his first preference – voluntary

separation – was unlikely to eventuate, he pragmatically devoted his energies to framing

the only acceptable alternative: an imperial parliamentary union or ‘states-general’

whereby the colonies accepted financial and practical responsibility for defence and civil

administration. By the same token, in devising his scheme Smith was well aware that he

was violating a key principle of his social science, namely his aversion to any kind of

rationalistic constructivism or utopianism. 116 He defends himself—not very

convincingly–– by suggesting that at least his ‘new Utopia’ was no ‘more useless and

chimerical than the old one’ though admittedly less ‘amusing’. 117 And although his

adumbration of the plan ran counter to one important aspect of his social science it did

conform neatly with another of them; namely, the necessity for caution and gradualism

when enacting social reform.

114
G.H. Guttridge, ‘Adam Smith and the American Revolution’, The American Historical Review, Vol. 38
(4) 1933, pp. 714-720, p. 715 (my emphasis).
115
Memorandum, p. 384 (my emphasis).
116
See, for example: WN. IV.ix.50-1, p. 687; TMS.VI.ii.2.17, pp. 233-4.
117
WN, V.iii. 687, p. 934.

25
 He wrote that the wise and benevolent leader will always approach longstanding social

arrangements — no matter how ‘abusive’— with caution.

[H]e will content himself with moderating, what he often cannot annihilate without
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…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 inconveniencies
which may flow from the want of those regulations which the people are averse to
submit to…like Solon, when he cannot establish the best system of laws, he will
endeavour to establish the best that the people can bear. 118

The Parliamentary union seems to have been a perfect example of accommodating

‘public arrangements’ to the deep-rooted ‘prejudices of the people’, of establishing, not

so much the ‘best system of laws’, as ‘the best that the people can bear’. In fact Smith’s

whole discussion speaks of a political realist subordinating the liberal idealogue. Instead

of explicitly pushing for complete and voluntary separation and thereby satisfying his

belief that empire was a major impediment to liberty, free trade and international peace,

he offers instead what to him must have been a highly unsatisfactory compromise (i.e. an

imperial parliament) or else the use of deception to surreptitiously achieve his ideal (i.e.

complete and peaceful separation).

5. Slavery.

Smith’s treatment of slavery is a particularly telling example of the extent to which he

was prepared to surrender principle to the exigencies and realities of political and

economic life.

Thomas Clarkson in his History of the Abolition of the Slave Trade (1808) lauded

Smith for denouncing slavery by holding up slave traders ‘in a degrading light’ and ‘the

injured Africans’ in an ‘honourable’ one. He went on to congratulate the University of

118
TMS, VI.ii.2.16, p. 233

26
Glasgow for producing professors (Hutcheson and Millar are also mentioned) willing to

offer ‘public testimony against the continuence of the cruel trade’. 119 More recently

Charles Griswold has suggested that ‘Smith was well known as a critic of slavery and

esteemed by abolitionists of his time’ 120 But if we read Smith’s text carefully, his attitude

to slavery is rather pragmatic and, at times, even complacent. 121

Smith concedes that almost every personal and natural right due to a person is violated

by the institution of slavery; the slave has no right to: ‘the fruits’ of his own labour; to

property; to dignity; to freedom from arbitrary imprisonment and punishment; and to

marry whom he wishes, if at all. In fact, ‘properly speaking’ ‘he’ has no ‘liberty at all’. 122

But there is never any sustained or explicit condemnation of the institution on the

grounds that it is a violation of such basic rights.. Nor does Smith at any point

recommend abolition. As Smith admits himself, it is far easier (and doubtless more

interesting for a political economist) to argue that slavery is an extremely inefficient

institution from an economic point of view and therefore not in the interests of slaver

owners. He criticised the practice of slavery not so much because it was inhumane (a fact

that he readily acknowledged, though not, significantly in the context of advocating

abolition 123) or a denial of a person’s self-ownership — especially in the most ‘sacred’

119
Thomas Clarkson, The History of the Rise, Progress and Accomplishment of the Abolition of the Slave
Trade by the British Parliament in 2 Volumes, London: Longman, Hurst, Rees and Orme, 1808, 1. pp. 86-
7.
120
Charles Griswold. Adam Smith and the Virtues of Enlightenment, Cambridge: Cambridge University
Press, 1999, p.198
121
Knud Haakonssen has also noticed this omission, observing that ‘we have no record of a direct criticims
[of slavery] in terms of natural justice, despite the clarity of Smith’s standpoint. Instead he devotes all his
attention to explaining how this vile practice came to be so prevalent in the history of manknd—and to
arguing against the economy of it (Knud Haakonssen, The Science of the Legislator, Cambridge:
Cambridge University Press, 1981, p. 140).
122
LJ(A), iii. 90-99, pp 176-180.
123
He notes that ‘[i]t is evident that the state of slavery must be very unhappy to the slave himself’ (LJ (A)
iii.111-12), notes that ‘domestic slavery’ is ‘the vilest of all states’ (TMS 282) and itemises the the ill

27
form of property, namely labour—but because of its inefficient and maladaptive aspects.

For a start, ‘the experience of all ages and nations…demonstrates that the work done by

slaves...is in the end the dearest of any’ because it fails to harness the enormous

productive power of self-interest. As he wrote:

A person who can acquire no property, can have no other interest but to eat as
much, and to labour as little as possible. Whatever work he does beyond what
is sufficient to purchase his own maintenance, can be squeezed out of him by
violence only and not by any interest of his own. 124

Slavery is also an impediment to productivity and innovation 125 and an inhibitor of

population growth. 126 Nevertheless slave owners would always resist abolition on the

belief that slaves were the ‘most valuable part of their substance’. Further, if such a

policy were imposed, ‘a generall insurrection would ensue’. 127 Due to these factors and

because of humankind’s natural ‘love of dominion…over others’ Smith resigns himself

to the fact that slavery will never be abolished. 128 He surmises that wherever reform has

already taken place, it could not have much affected the economic interests of the

emancipators in question. 129 Therefore, despite the fact that slavery is the most egregious

possible violation of liberties —and especially of self-ownership— Smith resists

advocacy of reform.

This fact did not go unnoticed by at least one of his contemporaries; Arthur Lee, a

Virginian who had taken his MD at Edinburgh in 1764, criticised Smith for failing to

treatment and cruel treatment of slaves throughout history (LJ(A), iii. 90-99, pp 176-180; LJ(B), 136, p.
452; LJ(A), iii. 90-99, pp 176-180.
124
WN. III.ii.9: 387-8; WN.I.viii.41, pp.98-9.
125
WN. IV.ix.47: 684; and LJ(B) 299, p. 526.
126
LJ (A). iii.131, pp.192-3.
127
LJ(A), 116, p. 187
128
LJ A 114, 186, 117, 185, 187
129
For example: ‘The late resolution of the Quakers in Pennsylvania to set at liberty all their negro slaves,
may satisfy us that their number cannot be very great. Had they made any considerable part of their
property, such a resolution could never have been agreed to’ (WN, III.ii. 10, p. 388).

28
explicitly denounce the institution. 130 The passage which Thomas Clarkson had singled

out as evidence of principled condemnation by Smith is read by Lee as a kind of

misguided substitute for it. Smith had written of the relationship between African slaves

and American slave owners in the following terms:

There is not a negro from the coast of Africa who does not…possess a degree
of magnanimity which the soul of his sordid master is too often scarce
capable of conceiving. Fortune never exerted more cruelly her empire over
mankind, than when she subjected those nations of heroes to the refuse of the
jails of Europe, to wretches who possess the virtues neither of the countries
which they come from, nor of those which they go to, and whose levity,
brutality, and baseness, so justly expose them to the contempt of the
vanquished. 131

For Lee, Smith’s romantic and not particularly ‘authentic account of the African

slaves’ 132 coupled with his ‘bitter’ and unwarranted ‘invective’ against the Americans

signified that he had complacently succumbed to ‘slanderous prejudice’ as his chief

contribution to the debate when he should have ‘exerted his [considerable] abilities in

dissuading the Europeans from such a barbarous trade’. 133 Having decided that the cause

of emancipation was a hopeless one, Smith seems to have decided that it would be

pointless to press for reform. Yet, his silence on the question of emancipation and the

relationship of slavery to principles of natural justice and the system of natural liberty is

at odds with his reputation as a champion of liberty and especially of economic liberty.

Explanations: Pessimism, Political Realism and Spontaneous Order.

Smith saw that there was much work to be done in order to realise his ideal of a system

of natural liberty and he had moments of deep pessimism about the possibility of a

130
Ross, Life of Smith, p. 171.
131
TMS, V. 2. 9., pp.206-7
132
Smith’s characterisation of African peoples is not consistent either; see for example WN, V.i.d-e, p. 731.
133
Arthur Lee, An Essay in Vindication of the Continental Colonies of America from a Censure of Mr
Adam Smith in his Theory of Moral Sentiments, London: Printed for the Author, 1764, pp. 10, 46.

29
system of natural liberty ever being allowed to establish itself. Even in his more

optimistic moments he doubted whether such a system could ‘ever be entirely restored’

due to the prejudices of the publick’ and the ‘unconquerable…private interests of many

individuals’. 134 Therefore his ideal of liberty was always tempered with considerations of

what ‘the people can bear’; what the people will accept and what, in fact, works. As he
135
suggests, ‘nothing is more difficult than perfectly to secure liberty’.

The good life and how to achieve it for the greatest number of people, seems to have

been Smith’s primary preoccupation. He doesn’t have a liberal agenda or political

program as such unless it is accepted that the achievement of economic prosperity,

stability, public order, human happiness and food and military security constitute a

political program; one might even argue that many of his violations of negative liberty

are the means for achieving liberty of the positive variety. In any case, these are the

issues around which Smith’s political economy is made to fit on an ad hoc basis, hence

his inconsistent commitment to liberty.

It should also be borne in mind that Smith is a spontaneous order theorist and can

therefore, by definition, only ever be a cautious reformer. 136 Gradualism is key here: The

wise legislator is one who is willing to ‘respect the established powers and privileges’ of

individuals as well as ‘the great orders and societies, into which the state is divided.’

Even if they are ‘in some measure abusive’ ‘he will have the wisdom to ‘content himself

with moderating, what he often cannot annihilate without great violence.’ And even the

dangerous and deep-seated ‘prejudices of the people’ will be treated, not with force but

134
WN,. IV.ii.43, p. 471.
135
LJ, p. 480.
136
For a discussion of the gradualism and conservatism of spontaneous order models in the Scottish
Enlightenment see Lisa Hill, ‘The Invisible Hand of Adam Ferguson’, The European Legacy, 3, (6), 1998,
pp. 42-65.

30
with ‘reason and persuasion’. The wise legislator respects the delicate concatenation of

social and historical forces that have brought social and political arrangements into being

and will, accordingly, ‘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

inconveniencies which may flow from the want of those regulations which the people are

averse to submit to.’ And ‘when he cannot establish the best system of laws, he will

endeavour to establish the best that the people can bear’ and what the ‘interests,

prejudices, and temper of the times would admit of.’ 137

His recommendations for how best to approach decolonisation and the dissolution of

the mercantile system is a good example. Though he was extremely desirous or reform he

cautioned against revolution. Recognizing that his long-term goal of establishing the

system of ‘perfect liberty’ throughout the globe was a tricky and potentially destructive

business he advised that it be executed with a good deal of ‘reserve and

circumspection.’ 138 ‘Humanity’ required that the market be opened ‘only by slow

gradations, and a ‘moderate and gradual relaxation’ of the relevant laws. 139 Were ‘duties

and prohibitions taken away all at once’ home markets would be immediately saturated

with ‘cheaper foreign goods’ that would suddenly deprive ‘many thousands of our people

of their ordinary employment and means of subsistence’. 140 Opening ‘the colony trade all

at once to all nations’ would also occasion ‘great permanent loss’ to investors. Smith

clearly saw the ‘manner’ and order of opening the colonial trade (and thereby restoring

137
TMS, VI.ii.2.16, p. 233. See also Memorandum (p. 381) where Smith says that the 'principal security of
every government arises always from the support of those whose dignity, authority and interest, depend
upon its being supported'.
138
WN, IV.ii.40, pp. 468-9.
139
WN IV.vii.c.44, p. 606.
140
WN, IV.ii.40, pp. 469

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‘the natural system of perfect liberty and justice’) as a process that would occur over time

and under the supervision of successive generations. 141 This approach is consistent with

the gradualist aspect of his theory of spontaneous order.

Smith sought to advise leaders who needed to determine when action was needed and

when history and the mechanisms of spontaneous order should be allowed to do their

steady work. Three years after Smith’s death Dugald Stewart noted that the former sought

to improve society ‘not by delineating plans of new constitutions, but by enlightening the

policy of actual legislators.’ He also noted that such plans had ‘no tendency to unhinge

established institutions, or to inflame the passions of the multitude.’ 142 The wisdom of

the legislator consists in understanding where the limits of state action begin and end, in

understanding where the system of natural liberty was working well and where it needed

some help. As Edward Cohen has noted: ‘Smith’s analysis of the proper workings of

commercial society insists on the combination of visible and invisible hands and the

Science of the Legislator aims to provide the balance.’ 143 The legislator schooled in a

thorough knowledge of the laws of natural liberty knows the importance of proceeding

‘by trial and error and…retain[ing] what experience shows to be valuable.’ 144 It is not

only wisdom but real patriotism that is called forth when such a leader is compelled to

determine whether the ‘authority of the old system’ ought to be ‘support[ed]’ and ‘re-

141
WN IV.vii.c.44, p. 606.
142
Stewart, Dugald, ‘Account of the Life and Writings of Adam Smith, LL D’, I.S.Ross, (ed.), in Adam
Smith Essays on Philosophical Subjects, W.P.D.Wightman and J.C.Bryce (eds), Oxford: Oxford University
Press, 1980, pp. 309; 311.
143
Cohen, Edward S. ‘Justice and Political Economy in Commercial Society: Adam Smith’s “Science of
the Legislator”’, The Journal of Politics, Vol. 51 (1) 1992, pp. 50-72, pp. 62-4; 57.
144
. West, E.G. ‘Adam Smith’s Economics of Politics, History of Political Economy, Vol. 8 (4) Winter
1976, pp. 515-39:519, p. 523.

32
establish[ed] and to ‘give way to the more daring, but often dangerous spirit of

innovation.’ 145

Conclusion.

I have attempted to show that, despite his contemporary reputation as a stalwart

defender of liberty, Smith could not with justice be described as a high theorist of liberty

because the status of rights is unclear in his system. It is not that Smith has no theory of

rights and liberty; he does, but it is a confusing one without secure or consistently

defended foundations. It is hard to see whether rights really are natural and inviolable or

whether they are merely conventional, their authority conferred either by their protection

in positive law or the (relative and shifting) approval of the impartial spectator. More

than this, his defence of liberty is inconsistent, inconstant and partial. He defends it, not

as an end in itself, but for its effects; therefore he abandons the principle when he

believes it is failing to achieve such desired effects as food and military security,

innovation and entrepreneurship, prosperity, order, stability and even human flourishing

(as seen in the case of his compulsory education scheme). He is also disinclined to defend

principles of liberty in cases where he thinks the cause is already lost and this is seen

most vividly in his apparent complacency about the slave trade and his equally strategic

response to the the issue of American independence. As a spontaneous order theorist his

approach is necessarily gradualist and somewhat conservative therefore he will generally

only advocate change that he believes the people can —and are willing to — ‘bear’.

Because he is more inclined to approach problems from a policy perspective, Smith

often works back from the problem to the principle; but when the principle is no help in

relation to the problem he is prepared to violate it. Smith is therefore only a liberal when
145
TMS, p. 231.

33
 liberty gets the job done; if it keeps capital, labour and commodities moving and conflict,

disruption and unnecessary public cost at bay. His commitment to liberty is always

qualified and constrained by real-life circumstances and by his recognition that the

system of natural liberty sometimes fails to deliver. But Smith never explains these

market or spontaneous order failures; just as he never properly justifies the violation of

formerly inviolable rights in the name of expediency beyond the cursory assertion that it

is ‘necessary’ for the sake of ends that serve human flourishing.

34

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