Nicholas Phillipson
Page 29
The industry of Great Britain, instead of being accommodated to a great number of small markets, has been principally suited to one great market. Her commerce, instead of running in a great number of small channels, has been taught to run principally in one great channel. But the whole system of her industry and commerce has thereby been rendered less secure; the whole state of her body politick less healthful, than it otherwise would have been. In her present condition, Great Britain resembles one of those unwholesome bodies in which some of the vital parts are overgrown, and which, upon that account, are liable to many dangerous disorders scarce incident to those in which all the parts are more properly proportioned. A small stop in that great blood-vessel, which has been artificially swelled beyond its natural dimensions, and through which an unnatural proportion of the industry and commerce of the country has been forced to circulate, is very likely to bring on the most dangerous disorders upon the whole body politick. The expectation of a rupture with the colonies, accordingly, has struck the people of Great Britain with more terror than they ever felt for a Spanish armada, or a French invasion.24
This vivid and suggestive pathology of current fears about the consequences of the loss of the American colonies emphasized Smith’s virtuosity as an analyst of contemporary beliefs. But it is also notable for Smith’s uncharacteristic failure to provide the illustrations that were needed to give substance to his conjectures about the effects of colonial trade on America and the mother country’s trade with Europe. It was to provoke the early and powerfully argued retort from Thomas Pownall, a recent governor of Massachusetts, that ‘you stretch your reasoning nicely. You in words advance upon the ground of probable reasons for believing only, you prove by probable suppositions only; yet most people who read your book, will think you mean to set up an absolute proof, and your conclusion is drawn as though you had.’25 It was the response of a critic who understood Smith’s method better than most and was in a good position to question the way in which he had used America as the illustration on which the credibility of a vast system had come to depend.
Smith’s attack on the commercial system and the wretched spirit of monopoly of its mercantile apostles was animated by more than an enlightened philosopher’s outrage at the triumph of superstition. Having dismissed the claims of the nobility, merchants and manufacturers that theirs and the public interest were the same, Smith was now in a position to wind up his discussion with his new philosophical claims about the nature of the public interest. He had shown Quesnay and the économistes that a system of perfect liberty did not have to be created by a single revolutionary act of legal despotism. All that was needed was a sovereign who was prepared to remove ‘obstructions’ to the workings of the market, leaving the rest to nature. For surely a man living in a state of perfect liberty would prefer to employ his resources at home, in a place whose laws, customs and people he knew best rather than in overseas ventures. And would this not contribute more effectively to the task of stimulating local industry and circulating wealth than ‘an equal capital employed in the foreign trade of consumption’? For every individual
generally, indeed, neither intends to promote the publick interest, nor knows how much he is promoting it. By preferring the support of domestick to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.26
Not only was this to become the most famous and most influential claim of the Wealth of Nations, it was the foundational political claim of the enlightened philosopher whose understanding of the public interest had deeper philosophical roots than all but a handful of his Scottish friends can have realized.
It went without saying that Smith’s political prescriptions for creating a system of perfect liberty were pragmatic, and recognized the need for a gradual approach to the removal of obstructions – anything else would inevitably provoke serious and probably dangerous opposition. ‘To expect, indeed, that the freedom of trade should ever be entirely restored in Great Britain, is as absurd as to expect that an Oceana or Utopia should ever be established in it. Not only the prejudices of the publick, but what is much more unconquerable, the private interests of many individuals, irresistibly oppose it.’27 This was the pragmatism of the jurist who was always mindful of the fact that the supreme end of government was preserving the rules of justice on which sociability ultimately depended. Smith summed it up in this way:
All systems either of preference or restraint, therefore, being thus completely taken away, the obvious and simple system of natural liberty establishes itself of its own accord. Every man, as long as he does not violate the laws of justice, is left perfectly free to pursue his own interest his own way, and to bring both his industry and capital into competition with those of any other man, or order of men. The sovereign is completely discharged from a duty, in the attempting to perform which he must always be exposed to innumerable delusions, and for the proper performance of which no human wisdom or knowledge could ever be sufficient; the duty of superintending the industry of private people, and of directing it towards the employments most suitable to the interest of the society.28
Smith was now ready to consider the problems modern rulers faced in matters of defence, justice, public works, education and that bane of all early modern sovereigns, religion, all of which played their part in helping to preserve and, if possible, enhance the citizen’s capacity for sociability. Much of the review drew on his Glasgow lectures and his habit of analysing problems historically in order to identify practices and beliefs that had been inherited from earlier periods of history and now seemed redundant. He was particularly interested in the costs of different aspects of government and their implications for taxation, realizing that nothing did more to provoke outrage than unfair, arbitrary taxes. Promoting sociability had everything to do with maintaining an acceptable tax system.
Smith clearly relished the task of using conjectural history to explain the changing needs of society in matters of defence, justice and public works; the discussions are lavishly illustrated and generally provocative. The discussion of defence was designed to show libertarians who believed that the country’s defence needs could be best secured with citizen militias that, ‘It is only by means of a standing army … that the civilization of any country can be perpetuated, or even preserved for any considerable time.’29 In the discussion of justice he reiterated his uncomfortably luminous dictum that, ‘Civil government, so far as it is instituted for the security of property, is in reality instituted for the defence of the rich against the poor, or of those who have some property against those who have none at all.’30 It was a way of reminding citizens and magistrates that the task of maintaining a viable system of justice meant preserving inequality and fostering the sense of security on which improvement depended, something that demanded a rigorously impartial enforcement of the rules of justice in societies in which partialities were deeply ingrained. Smith’s doubts about the competence of modern governments were pervasive, nowhere more so than in his discussion of the duties of sovereigns in providing roads, canals, bridges and so forth, on which the progress of commerce depended. (In later editions he would add a complementary chapter on trading companies.) These were resources whose costs should fall on users and local organizations, and not on taxpayers and the sovereign. ‘The abuses which sometimes creep into the local and provincial administration of a local and provincial revenue, how enormous soever they may appear, are in reality, however, almost always very trifling, in comparison of those which commonly take place in the administration and expenditure of the revenue of a great empire. They are, besides, much more easily corrected.’31 In the same way, Smith thought that the costs of maintaining a judiciary could always be met out of the fees of court. The real problem was the cost of defence. This was bound to be a charge on
the taxpayer, would be heaviest in technologically advanced societies, and could all too easily become ruinous in an age of incessant warfare. Smith’s fears of the costs of modern warfare pervade the entire discussion of governance.
Smith’s treatment of these fundamental sovereign duties was largely distilled from his Glasgow lectures and earlier sections of the Wealth of Nations. However, in considering the sovereign’s educational duties, he turned to a subject he had not discussed before, drawing on his own academic experience and on the lessons that could be learned from Scotland’s recent past. How were the schools and universities, on which the education of citizens and magistrates depended, to be funded? Rich countries with wealthy churches were more likely to have had well-endowed universities like Oxford, which soon became little more than closed corporations run for the benefit of professors rather than students. In poor countries like Scotland, with poorly endowed universities, professors had to live off student fees and were thus naturally more responsive to the interests of their students. Only an experienced and committed teacher like Smith could have written: ‘Such is the generosity of the greater part of young men, that, so far from being disposed to neglect or despise the instructions of their master, provided he shows some serious intention of being of use to them, they are generally inclined to pardon a great deal of incorrectness in the performance of his duty, and sometimes even to conceal from the publick a good deal of gross negligence.’32 Smith wrote at surprising length about the history of the philosophy curriculum, a subject which particularly interested him; his notes and essays on the subject were to survive the bonfire on which the rest of his unpublished papers perished. What he had to say about the way in which the teaching of philosophy had been perverted by theology in the Christian era would have been familiar enough to most readers, but it mattered because these theologically contaminated universities would always be responsible for training up most of the teachers on whom public education depended.
While there was nothing that could be done about this, Smith was generally optimistic about the future of education in Protestant states that encouraged the sort of independency and toleration characteristic of the Quaker culture of Pennsylvania and the moderate Presbyterianism of modern Scotland. In states like Scotland ministers of religion were obliged to rely on learning, good manners and the respect of rich and poor, rather than on flattery and state patronage for preferment. A clergy of this sort would be likely to produce good teachers who understood the great enlightened dictum that, ‘Science is the great antidote to the poison of enthusiasm and superstition’, and that well-educated men made good citizens.33 ‘An instructed and intelligent people … are always more decent and orderly than an ignorant and stupid one. They feel themselves, each individually, more respectable, and more likely to obtain the respect of their lawful superiors, and they are therefore more disposed to respect those superiors.’34 Nor would the costs of such education be excessive, universities being funded out of student fees, and the cost of a system of compulsory parochial education run on Scottish lines being negligible. It was for this reason that Smith was able to comment ‘there is scarce perhaps to be found any where in Europe a more learned, decent, independent, and respectable set of men, than the greater part of the presbyterian clergy of Holland, Geneva, Switzerland, and Scotland’.35 Indeed, the only positive role that the sovereign might possibly play in the provision of popular education was by encouraging ‘the frequency and gaiety of publick diversions … that is by giving entire liberty to all those who for their own interest would attempt, without scandal or indecency, to amuse and divert the people by painting, poetry, musick, dancing’, for this would ‘easily dissipate … that melancholy and gloomy humour which is almost always the nurse of popular superstition and enthusiasm’.36
Smith’s discussion of taxation and the public debt brought the Wealth of Nations to a close and returned for the last time to the two philosophers whose presence pervades the entire book – Quesnay and, above all, Hume. In the discussion of the problems of taxing a commercialized nation Smith paid particular attention to the fashionable view that land should form the basis of a modern tax system, and more particularly to the ‘very ingenious’ version of that view on which the économistes’ fiscal system was based, a version which, as we have seen, he thought impracticable as well as being theoretically unsound.37 His own views were largely an elaboration of Hume’s: a viable tax system was one that reflected the distribution of national wealth and was easy and cheap to collect; anything else would be seen as arbitrary and oppressive. His meticulous review of the British tax system was carefully designed to show that the space for new tax opportunities was much more restricted than some politicians and theorists were apt to believe, and concluded that, in spite of all its imperfections, it was probably the most equitable in Europe: a system which could be improved but could not be transformed without a constitutional revolution so massive as to be utopian.
Smith left utopian theorizing to the final pages of his book. His more immediate purpose was to discuss public credit and the consequences of war for public finance, the most topical of all the subjects discussed in the last book of the Wealth of Nations. The analysis followed much the same course as Hume’s had in 1752. In modern societies, it was all too easy for governments to finance warfare by mortgaging future tax revenues and piling up massive public debts which future generations would have to shoulder. It was a serious error to assume, as some had done, that these public debts were to be regarded as ‘the accumulation of a great capital superadded to the other capital of the country, by means of which its trade is extended, its manufactures multiplied, and its lands cultivated and improved much beyond what they could have been by means of that other capital only’.38 The cost of servicing ‘the enormous debts which at present oppress, and will in the long-run probably ruin, all the great nations of Europe’ would inevitably mean higher taxation and less economic activity.39 In 1764 Hume had followed this grim analysis through to a catastrophic conclusion by predicting ruinous increases in the land tax, which would ruin the landed classes and give rise to a new, deadly form of despotism. ‘Either the nation must destroy public credit,’ Hume exclaimed, ‘or public credit will destroy the nation. It is impossible that they can both subsist, after the manner they have been hitherto managed, in this, as well as in some other countries.’40
Hume had written with the costs of the War of the Austrian Succession and the Seven Years War in mind; Smith was thinking about the options open to government with a costly American war to finance. His analysis showed that the tax system could not be squeezed much further. Devaluation, apart from being contemptible, was only likely to produce marginal results at great cost to the economy. For Smith, the only practical solution was one based on recent Scottish experience. What, he asked, had done more to stimulate economic growth and tax takings in Scotland than the free trade with England and the colonies as established by the parliamentary Union of 1707? And would not a similar union between Great Britain, Ireland and the American colonies bring political as well as economic benefits? For it went without saying that this new union would be ‘incorporating’ in the sense that Ireland and America would be represented in the imperial parliament.
By the union with England, the middling and inferior ranks of people in Scotland gained a compleat deliverance from the power of an aristocracy which had always oppressed them. By an union with Great Britain the greater part of the people of all ranks in Ireland would gain an equally compleat deliverance from a much more oppressive aristocracy; an aristocracy not founded, like that of Scotland, in the natural and respectable distinctions of birth and fortune; but in the most odious of all distinctions, those of religious and political prejudices.
As the centre of political gravity shifted from America to London, Americans would discover that they had been delivered ‘from those rancorous and virulent factions which are inseparable from small democracies, and which have so frequently divided the affections of the
ir people, and disturbed the tranquillity of their governments, in their form so nearly democratical’. No doubt Ireland and America would be more heavily taxed than at present, but with a prudent management of tax resources, that burden ‘might not be of long continuance’. And the English might well discover that this new union would do something to keep alive that childish, ‘golden dream’ of Empire that had been so sedulously fostered by the mercantile interest. Smith’s conclusion may have lacked the touch of paranoia that characterized so much of Hume’s thinking about contemporary politics in the last years of his life, but it was still deeply pessimistic.
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; a project which has cost, which continues to cost, and which, if pursued in the same way as it has been hitherto, is likely to cost immense expence, without being likely to bring any profit; for the effects of the monopoly of the colony trade, it has been shewn, are, to the great body of the people, mere loss instead of profit. 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. If any of the provinces of the British empire cannot be made to contribute towards the support of the whole empire, it is surely time that 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.41