On Adam Smith's program of enriching of people and the sovereign.

I am at an Adam Smith event hosted by GMU, so I will be relatively brief today.

In his contribution to the workshop, my friend, Craig Smith (Glasgow), called attention to the following passage in Smith’s (1776) Wealth of Nations:

Political oeconomy, considered as a branch of the science of a statesman or legislator, proposes two distinct objects; first, to provide a plentiful revenue or subsistence for the people, or more properly to enable them to provide such a revenue or subsistence for themselves; and secondly, to supply the state or commonwealth with a revenue sufficient for the publick services. It proposes to enrich both the people and the sovereign.’ (WN IV.int. 1, 138)

By ‘sovereign’ here Smith means the Crown and her ministers.

Ever since Knud Haakonnssen’s (1981) The Science of a Legislator: The Natural Jurisprudence of David Hume and Adam Smith the first sentence has received considerable attention. (As regular readers know, I have gotten interested in the science of the legislator because of my attempt to understand the liberal art of government and Smith’s views on active statecraft.)

In introducing the passage, Craig emphasizes that for Smith ‘the politics of a commercial society involves the maintenance of the order necessary for trade and the creation of the space that people require to pursue their goals.’ This seems absolutely right to me.

But it is worth noting, too, that Smith proposes to enrich people and sovereign. This is very much supposed to be a win-win political project in which the pie is expanded for ordinary folk as much as it expands the crown’s and the government’s resources. That is, Smith is very much unlike contemporary libertarians or conservatives (not the same thing) who wish to starve the behemoth. Smith here creates a species of liberalism in which the state’s interests (as characterized by the sovereign’s interests) in having access to resources is not ignored at all.

As I have argued elsewhere, Smith promotes the development and, in particular, exercise of state capacity by the national executives of European states. He advocates policies and instruments that enhance the state’s capacity to create a rule-following, impartial bureaucracy, which will be fairer to the poor and enhance economic growth, and thereby also strengthen the resources available to itself. (This is very clear in his treatment of Chinese bureaucracy at WN 5.1.d.17, pp. 729-730 & WN .5.2.d.5-7, p. 838-9.)

Now, Smith’s general strategy to get to such a win-win project is not just the promotion of freedom of trade and movement, but also to look for mechanisms and institutions that are (as contemporary economists might say) incentive compatible. Wealth of Nations is very much directed at political elites (often associated with an entrenched landed aristocracy), who are sketched a picture in which an expanding pie allows them to use the state to do more for the right ends in public spirited fashion and, thereby, also — once their self-interest is rightly understood — benefit themselves.