On the Wealth of Nations

by P. J. O'Rourke

  None of these predictions, except the last, pleased Smith. But he had a cool and detached – one might say an Impartial Spectator's – view of the conflict.

  In The Wealth of Nations, Smith expressed moral and utilitarian objections to what our modern, more ostentatiously moral (if less useful) thinkers call colonialism:

  Folly and injustice seem to have been the principles which presided over and directed the first project of establishing those colonies; the folly of hunting after gold and silver mines, and the injustice of coveting the possession of a country whose harmless natives, far from having ever injured the people of Europe, had received the first adventurers with every mark of kindness and hospitality.9

  Smith was unmodern in applying the pejorative 'harmless' to Native Americans. He was more so in his opinions that 'the present grandeur of the colonies of America'10 was an improvement on pre-Columbian conditions despite 'the savage injustice of the Europeans … ruinous and destructive to several of these unfortunate countries'.11 Smith was also unmodern in crediting colonial accomplishments to Western civilization instead of, say, Pocahontas: 'the colonies owe to … Europe the education and great views of their active and enterprising founders.'12 But Smith gave Western civilization negative as well as positive credit: 'It was, not the wisdom and policy, but the disorder and injustice of the European governments, which peopled and cultivated America.'13 The lack of opportunities at home, not the abundance of opportunities overseas, caused the colonies to grow.

  Smith was critical of the British government with its 'mean and malignant expedients of the mercantile system'14 whose trade restrictions were 'impertinent badges of slavery'15 imposed on the Americans 'without any sufficient reason, by the groundless jealousy of the merchants and manufacturers of the mother country'.16

  Smith was so infuriated by the trade restrictions on the American colonies that, uncharacteristically, he indulged himself in a protracted jeremiad – his 'nation of shopkeepers' tirade.

  The slur that Britain was nothing more than that is often attributed to the diminutive Corsican who was soon to give the British more trouble even than the Americans. But it was a common phrase, used to describe any commercial nation. Louis XIV is supposed to have said it about the Dutch. Note that Smith didn't think the leaders of his country rose anywhere near to the level of being shopkeepers:

  To found a great empire for the sole purpose of raising up a people of customers, may at first sight appear a project fit only for a nation of shopkeepers. It is, however, a project altogether unfit for a nation of shopkeepers; but extremely fit for a nation whose government is influenced by shopkeepers. Such statesmen, and such statesmen only, are capable of fancying that they will find some advantage in employing the blood and treasure of their fellow citizens, to found and maintain such an empire. Say to a shopkeeper, Buy me a good estate, and I shall always buy my clothes at your shop, even though I should pay somewhat dearer than what I can have them for at other shops; and you will not find him very forward to embrace your proposal. But should any other person buy you such an estate, the shopkeeper would be much obliged to your benefactor if he would enjoin you to buy all your clothes at his shop. [And so on for two pages until the diatribe ends in exasperation:] Under the present system of management, therefore, Great Britain derives nothing but loss from the dominion which she assumes over her colonies.17

  The inspiration for this philippic was, however, the only thing about the American Revolution that Smith found inspirational. We Americans are stirred by the political thinking of our national patriarchs. Adam Smith was not.

  Smith was an idealist but he did not have the Romantic's faith in pure ideas, the faith which was beginning to take hold in France and, indeed, in America. Smith did not think so highly of ideas that when he saw a good thing he automatically thought a good idea had caused it. God moves in a mysterious way, let alone Massachusetts.

  Smith was critical of the colonists. He considered them to be not so much sterling patriots as skinflints with their sterling: 'The English colonists have never yet contributed any thing towards the defence of the mother country, or towards the support of its civil government. They themselves, on the contrary, have hitherto been defended almost entirely at the expence of the mother country.'18

  In Smith's memorandum to Wedderburn the brilliance of Thomas Jefferson, James Madison, Alexander Hamilton, Thomas Paine, et al., was dismissed in one sentence: 'In their present elevation of spirits, the ulcerated minds of the Americans are not likely to consent to any union even upon terms the most advantageous to themselves.'19

  Smith detected the ordinary self-seeking – 'by no means the weak side of human nature' – behind America's revolutionary idealism. In The Wealth of Nations he debunked the Founding Fathers:

  The persons who now govern the resolutions of what they call their continental congress, feel in themselves at this moment a degree of importance which, perhaps the greatest subjects in Europe scarce feel. From shopkeepers, tradesmen, and attornies, they are become statesmen and legislators, and are employed in contriving a new form of government.20

  Smith did not regard that new form of government as an opportunity for mankind to achieve splendid new social ideals. Smith saw America as a practical problem. We Americans, the most practical of people, might pay attention to Smith's perspective on the American Revolution. We might doff some of our idealistic trappings, look in the political mirror, and see ourselves for what we are, a practical solution.

  Even in the heady days leading up to the Declaration of Independence there was a prosaic and businesslike aspect to the American Revolution. The French Revolution did not get its start in a tiff over customs duties. The sans-culottes were not middle-class entrepreneurs like Paul Revere and Sam Adams, and running around without pants they weren't likely to become so. The Jacobins didn't put on feather bonnets to stage a commercial protest. If there ever had been a Paris Tea Party, the revolutionaries wouldn't have been dumping oolong, they would have been scalping everyone in sight and then each other. No beer is named after Dr Guillotin.

  To the practical problem of America, Adam Smith had a practical solution – get out of there. 'Great Britain should voluntarily give up all authority over her colonies, and leave them to elect their own magistrates, to enact their own laws, and to make peace and war as they might think proper … It might dispose them … to favour us in war as well as in trade, and, instead of turbulent and factious subjects, to become our most faithful, affectionate, and generous allies.'21 (Which, though Smith's advice was not followed, America has turned out to be, except in 1812, and during the Civil War, and when we were feeling neutral about Germany in the nineteen-teens and the nineteen-thirties, and in the Suez crisis, and anytime a question of Ireland has been involved.)

  Smith didn't think his practical solution was practical. He called it 'a measure as never was, and never will be adopted, by any nation in the world'.22 Smith's perceptions about why 'Peace Now' always falls on deaf ears still apply. The current political reality in Tibet, Chechnya, the West Bank, and maybe, alas, Baghdad was accurately described by Adam Smith:

  No nation ever voluntarily gave up the dominion of any province, how troublesome soever it might be to govern it … Such sacrifices, though they might frequently be agreeable to the interest, are always mortifying to the pride of every nation, and what is perhaps of still greater consequence, they are always contrary to the private interest of the governing part of it, who would thereby be deprived of the disposal of many places of trust and profit, of many opportunities of acquiring wealth and distinction, which the possession of the most turbulent, and, to the great body of the people, the most unprofitable province seldom fails to afford.23

  Smith had another even less practical solution to the American problem, a merger with Great Britain. Benjamin Franklin had proposed such an idea in the 1750s, but tempers had been cooler then. Smith seemed to feel that he was now almost the only person in favor of it. He told Wedderburn that poli
tical agglomeration 'seems scarce to have a single advocate … if you except here and there a solitary philosopher like myself'.24

  Nonetheless in The Wealth of Nations, Smith wrote that he thought making America part of Great Britain 'can at worst be regarded but as a new Utopia, less amusing certainly, but not more useless and chimerical than the old one'.25 He was citing the same work of visionary fiction that he'd earlier mocked. There's something about America, prosaic as the place and its populace may be, that makes people dream. Smith told Wedderburn, 'The plan … would certainly tend most to the prosperity, to the splendour, and to the duration of the empire.'26 Smith argued the advantages of Anglo-American union in book 4 of Wealth and again in book 5, making a total of a dozen references to the subject. He thought that his concept could be extended 'to all the different provinces of the empire inhabited by people of either British or European extraction'.27 (Lest this be thought racist, he favored including the Irish.) He even foresaw, without wincing, the Bush/Blair relationship:

  In the course of little more than a century, perhaps, the produce of American might exceed that of British taxation. The seat of the empire would then naturally remove itself to that part of the empire which contributed most to the general defence and support of the whole.28

  If Smith's dream had been effected sooner, in 1776 instead of during the Iraq War, we'd be living in a different world. There might have been no American Civil War, world wars, Cold War, or poke-noses from the EU Commission on Everything. On the other hand, there might have been ten thousand Belfasts where 'a military government would naturally be established' and where a billion people were 'at all times ready to take arms in order to overturn it'.

  As it is, we're living in a different world anyway. And it's interesting that Smith didn't have the dream about America that actually came true. The United States would prove Adam Smith's own thesis: wealth depends on division of labor; division of labor depends on trade; trade depends on natural liberty; therefore Freedom = Wealth.

  If anything the United States has provided an embarrassment of proof. What will archaeologists of the distant future make of the American empire's ruins? They'll dig up SUVs obviously too big ever to have moved. They must have been for ceremonial purposes. The ubiquitous remains of swimming pools, the countless types and kinds of sneakers, and the ruins of more fast-food outlets than any estimate of twenty-first-century population can account for will convince thirty-first-century scholars that we were semiaquatic, six-legged creatures who worshipped fat in cars.

  But Adam Smith was too practical a man to dream up anything that silly. And since we Americans are ourselves so practical we should heed not only what Smith had to say about our revolution but what he had to say about the thing that our revolution eventually would get us, an empire like Britain's.

  The lambasting that Smith gave to the British imperialists could be given to anyone who intends to profit from an empire. It doesn't matter if the expected gain is crass – commercial prosperity – or noble – democracy. A successful empire is not an array of cowed dependencies, importunate client states, and outposts held by bribery or force. 'They may perhaps,' Smith wrote, 'be considered as appendages, as a sort of splendid and showy equipage of the empire.'29

  Adam Smith thought that the mistakes of British imperial policy were so grave and so dangerous to individuals that he used an ardent condemnation of that policy as his final passage in The Wealth of Nations:

  The rulers of Great Britain have, for more than a century past, amused the people with the imagination that they possessed a great empire on the west side of the Atlantic. This empire, however, has hitherto existed in imagination only. It has hitherto been, not an empire, but the project of an empire; not a gold mine, but the project of a gold mine … It is surely now time that our rulers should either realize this golden dream, in which they have been indulging themselves, perhaps, as well as the people; or, that they should awake from it themselves, and endeavour to awaken the people. If the project cannot be completed, it ought to be given up … Great Britain should free herself from the expence of defending those provinces in time of war, and of supporting any part of their civil or military establishments in time of peace, and endeavour to accommodate her future views and designs to the real mediocrity of her circumstances.30

  CHAPTER 11

  The Wealth of Nations, Book 5 'Of the Revenue of the Sovereign or Commonwealth' Adam Smith, Policy Wonk

  Adam Smith was human, and never more so than in book 5 of The Wealth of Nations. No one can resist giving advice. As a 'solitary philosopher', Adam Smith's advice was good. He applied his lofty intellect to such great political issues as the war in America. But in book 5 he also applied his intellect to mundane political issues. He yielded to the temptation to slide down Olympus.

  Smith should have known better than to enmesh himself in the bureaucratic details of public policy. In The Theory of Moral Sentiments he warned against thinkers 'who reduced their doctrines into a … technical system of artificial definitions, divisions, and subdivisions'.1 Smith called this 'one of the most effectual expedients, perhaps, for extinguishing whatever degree of good sense there may be in any moral or metaphysical doctrine'.2

  Smith risked becoming as 'wise in his own conceit' as James Carville, Karl Rove, or Anthony Giddens. Already in book 4, on the subject of Spanish versus British colonies, Smith had embraced the central fallacy of the political advisor, the same fallacy he'd detected in the physiocrats: 'what forms the character of every nation, the nature of their government'.3 By the middle of book 5 Smith was holding forth like a world-weary Washington insider after a day full of the momentarily momentous policy crises beloved of world-weary Washington insiders:

  For though management and persuasion are always the easiest and the safest instruments of government, as force and violence are the worst and the most dangerous, yet such, it seems, is the natural insolence of man, that he almost always disdains to use the good instrument, except when he cannot or dare not use the bad one.4

  The mundane political issues of Smith's time were – it is sad to discover – exactly the same as ours: law and order, political pork, failures of the educational system, religion in politics, Byzantine tax code, burgeoning national debt, and runaway defense spending. Two and a quarter centuries of intractability in these policy matters would seem to indicate a certain … intractability.

  If we reconciled ourselves to this intractability, the modern overpopulation of political advisors, commentators, and experts could be culled. Space could be opened up in the New York Times for more lingerie ads. And Sunday morning TV partisan blather could be replaced with reruns of Curb Your Enthusiasm. If we wanted to have an opinion about some pressing issue, we could read book 5 of Wealth and spout the mixed-up pronouncements of Adam Smith.

  'Of the Expence of Justice'

  Despite the title of this section, Smith didn't have much to say about the expense of justice other than that it's expensive. 'Justice, however, never was in reality administered gratis in any country,'5 wrote Smith, putting a more dignified gloss on the comment of actor and murder suspect Robert Blake who said he was 'innocent until proven broke'.

  Smith lamented that the origin of judicial systems had more to do with sovereign revenue than sovereign fairness: 'The persons who applied to [the king] for justice were always willing to pay for it … This scheme of making the administration of justice subservient to the purposes of revenue, could scarce fail to be productive of several very gross abuses.'6 I'm thinking of speeding tickets in a certain New Hampshire small town which I won't name because I live there.

  I'll have to drive more slowly because Smith, like the political analysts of today, was at his best with the big picture. Smith was articulate on the enormous question, what is the abstract nature of justice? He was not so articulate on the small question, how do I get some?

  Adam Smith was so articulate on the abstract nature of justice that he could have gone into a television studio by him
self and been the host and all the guests on a Fox News show.

  'Civil government … is in reality instituted for the defence of the rich against the poor,'7 Smith wrote, sounding like the obligatory left-wing nut guest.

  Then he sounded like the right-wing nut host: 'in the poor the hatred of labour and the love of present ease and enjoyment, are the passions which prompt to invade property.'8

  Then the left-wing nut again: 'Wherever there is great property, there is great inequality.'9

  And then the guest who is even more of a right-wing nut than the host and who has had too much coffee: 'It is only under the shelter of the civil magistrate that the owner of that valuable property … can sleep a single night in security. He is at all times surrounded by unknown enemies, whom, though he never provoked, he can never appease.'10

  It all comes down to campaign strategies in the end. These civil magistrates, these politicos – laying down the law and meting out justice – who will they be? In choosing political leaders, Smith ruled out 'qualifications of the mind', which he considered to be 'always disputable, and generally disputed'.11 (As if qualifications of the mind were ever a factor in politics.) And successful businessmen are not the best candidates, because, Smith opined, 'authority of fortune … has been the constant complaint of every period of society.'12 (Plus so many rich people have been going to jail lately, not that that distinguishes them from politicians.) Smith thought chronological age had something to recommend it, being 'a plain and palpable quality which admits of no dispute'.13 In politics you can still be a fresh face and full of potential at fifty-three – Smith's age when Wealth of Nations was published. But what Smith favored most in political leaders was 'superiority of birth … antiquity either of wealth, or of that greatness which is commonly either founded upon wealth, or accompanied with it'.14 Smith believed that such a person's 'birth and fortune … naturally procure him some sort of … authority'.15