State Political Epistemology in (and at the start of) Wealth of Nations

Chapter 4 of the first Book of Smith’s (1776) Wealth of Nations, “Of the Origin and Use of Money,” is much quoted and criticized for its stylized account of the origin and use of money. And one often gets the impression that people who cite it have not read much of the subsequent chapters in which Smith returns to the topic and significantly complicates his narrative.

The narrative of the chapter is inscribed in two conceptual contrasts: first, the movement from rude to commercial society (see WN 1.4.1-2), which just is co-extensive with the extent of the division of labor; and, second, the development from uncivilized (or “barbarous” [WN 1.3.8]) to civilized nations (WN 1.4.11). In immediate context it is not entirely clear how Smith understands this second contrast. But I have argued elsewhere that this just involves the movement from a kind of anarchism to being law-governed. In what follows I present some converging evidence for this thought, but that’s not the main point in what follows.

In the first chapter of WN, on the division of labor, Smith notes, “It is the great multiplication of the productions of all the different arts, in consequence of the division of labour, which occasions, in a well-governed society, that universal opulence which extends itself to the lowest ranks of the people.” (WN 1.1.10, p. 22.) Regular readers know that I like this sentence. But in immediate context, Smith does not describe what a “well-governed society” is. We are likely to think it involves the rule of law for Smith. And nothing I state in what follows will contradict that. But in what follows, I show that it also involved state political epistemology (to be explained below).

To the best of my knowledge the very first functions of established government are mentioned in the chapter on “The Origin and Use of Money.” And my point is that these functions have an epistemic character. That is, the way exceptions to laissez-fare are first introduced by Smith all involve considerable state capacity in what with a nod to Tom Pink (recall) — I have been calling witnessing truth. To avoid confusion, I don’t mean to suggest that for Smith the state itself originates in these functions, although I do suspect that these exemplify what it means, for Smith, to be a civilized and well-governed nation.

As a terminological aside, I treat the state as “machinery of record” (a term I introduced with Nick Cowen) when it it collects and disseminates data on the population, property, prices, etc. I use ‘witnessing truth’ when the state uses its authority to publicly announce and impose the truth in some fashion. These two functions are often intertwined and often presuppose each other and similar epistemic and bureaucratic capacities. But it’s useful to separate them conceptually. I will treat both as key parts of the state’s political epistemology (which I leave undefined).

The passage that I wish to discuss occurs in the context of the development of metallic money. I quote the passage that I have in mind and then discuss it:

The weighing of gold in particular is an operation of some nicety. In the coarser metals, indeed, where a small error would be of little consequence, less accuracy would, no doubt, be necessary. Yet we should find it excessively troublesome, if every time a poor man had occasion either to buy or sell a farthing's worth of goods, he was obliged to weigh the farthing. The operation of assaying is still more difficult, still more tedious, and, unless a part of the metal is fairly melted in the crucible, with proper dissolvents, any conclusion that can be drawn from it, is extremely uncertain. Before the institution of coined money, however, unless they went through this tedious and difficult operation, people must always have been liable to the grossest frauds and impositions, and instead of a pound weight of pure silver, or pure copper, might receive in exchange for their goods, an adulterated composition of the coarsest and cheapest materials, which had, however, in their outward appearance, been made to resemble those metals. To prevent such abuses, to facilitate exchanges, and thereby to encourage all sorts of industry and commerce, it has been found necessary, in all countries that have made any considerable advances towards improvement, to affix a publick stamp upon certain quantities of such particular metals, as were in those countries commonly made use of to purchase goods. Hence the origin of coined money, and of those publick offices called mints; institutions exactly of the same nature with those of the aulnagers and stampmasters of woollen and linen cloth. All of them are equally meant to ascertain, by means of a publick stamp, the quantity and uniform goodness of those different commodities when brought to market.—Wealth of Nations, (1.4.7, pp. 40-1 in Glasgow edition)

The trustworthy public stamp presupposes the state’s ability to weigh and assay at scale in an efficient and reliable fashion, and the technology to fix a fairly uniform mark to metal. (Anyone who watches Pawn Stars with regularity will learn a lot about uniformity in coinage at different ages.) In the quoted passage, Smith emphasizes the technical and epistemic difficulty of coinage and of the component parts of the process. The process also presupposes the ability to recognize and track down counterfeiters, a topic Smith does not discuss, I think, before Book 4 of Wealth of Nations, where Smith explicitly notes the expense and skill involved in coinage (4.6.19, p. 551). So, lurking here are complex issues about the function and bureaucratic organization of state institutions that witness truth.

Smith invites the reader to understand the nature of “aulnagers and stampmasters of woollen and linen cloth” in the same fashion. Smith’s point is that when state institutions are capable of mastering the technical skill involved in securing uniformity and reliability of (to simplify) we may call ‘measures, weights, and coinage,’ they thereby reduce epistemic uncertainty in major parts (wool, linen, etc.) of the economy and generates more trust, which facilitates (as Hobbes already emphasizes) more commercial activity. Smith reinforces this very point a few pages down when he calls attention to, how in Charlemagne’s age, “The fair of Troyes in Champaign was at that time frequented by all the nations of Europe, and the weights and measures of so famous a market were generally known and esteemed.” (WN 1.4.10) 'Esteem’ here is what we would call ‘trustworthy’ or at least its effect.

In context, Smith treats a debased or clipped coin itself as ‘disordered.’ (WN 1.5.41, p. 63) As an aside, it is worth noting that later, throughout the Wealth of Nations (e.g. 3.2.3), Smith has a tendency to tread the middle-ages as ‘disorderly’ and ‘disordered.’ So, the passage on the fair of Troyes takes on some poignancy as a site of orderliness and thereby the production of good order (and economic activity). This is, I suspect, constitutive of what Smith calls ‘civilization.’

Political Economists (and economists) are likely to discuss these matters in terms of how the state is a coordination device or reduces transaction costs. And nothing I say is meant to deny that. But if one puts it in such terms one may miss the significant efforts at mastering and maintaining the intellectual infrastructure to staff and oversee these “public offices.” And miss that Smith first introduces apt state functions in terms of witnessing truth. (I don’t mean to suggest this exhausts his normative account of the state.)

So, for example, in his classic (1927) paper, “Adam Smith and Laissez Faire” (Journal of Political Economy (35:2), Jacob Viner never discusses the material I have noted here, and only quotes the subsequent passage that “The sterling mark upon plate, and the stamps upon linen and woollen cloth, give the purchaser much greater security than any statute of apprenticeship." (224; that’s from WN 1.10.c.13, p. 139) And, in fact Viner, who seems to be alert to what I call Smith’s normative account of the state, criticizes Smith for taking “coinage for granted as a government function without considering any possible alternative.” (pp. 226-227) Viner may be right that Smith ought to have considered possible alternatives, but Viner fails to convey Smith’s arguments involving the state’s political epistemology, let alone its significance.