As a politician Smith was doubtless attracted by the prospect of introducing a strong democratic and republican strain into parliament, though he pretends to think that the balance of the constitution would not be affected. He points out also that the constitution would be completed by such a union, and was imperfect without it, for “the assembly which deliberates and decides concerning the affairs of every part of the empire, in order to be properly informed, ought certainly to have representatives from every part of it.”[32] In the last chapter of the Wealth of Nations he describes the project as at worst “a new Utopia, less amusing, certainly, but no more useless and chimerical than the old one,” and shows how the British system of taxation might be extended along with representation in parliament to the colonies in such a way as to produce a great addition to the imperial revenue and a large permanent surplus for the redemption of debt. In this way the debt could be discharged in a comparatively short period, and as revenue would be continually released, the most oppressive taxes could be gradually reduced and remitted. By this prescription “the at present debilitated and languishing vigour of the empire” might be completely restored. Labourers would soon be enabled to live better, to work cheaper, and to send their goods cheaper to market. Cheapness would increase demand, and the increased demand for goods would mean an increased demand for the labour of those who produced them. This again would tend both to raise the numbers and improve the circumstances of the labouring poor. Lastly, as the consuming power of the community grew, there would be a growth in the revenue from all those articles of consumption which remained subject to taxation.
The plan of an imperial parliament and imperial taxation could not be realised. Smith himself saw that the economic and constitutional objections were great, though “not unsurmountable.” Upon one point, however, he was clear. If it were impracticable to extend the area of taxation, recourse must be had to a reduction of expenditure; and the most proper means of retrenchment would be to put a stop to all military outlay in and on the colonies. If no revenue could be drawn from the colonies, the peace establishments “ought certainly to be saved altogether.” Yet the peace establishments were insignificant compared with what wars for the defence of the colonies had cost. But for colonial wars the national debt would have been paid off. It was urged that the colonies were provinces of the British Empire:—
“But countries which contribute neither revenue nor military force towards the support of the empire, cannot be considered as provinces. They may perhaps be considered as appendages, as a sort of splendid and showy equipage of the empire. But if the empire can no longer support the expence of keeping up this equipage, it ought certainly to lay it down; and if it cannot raise its revenue in proportion to its expence, it ought, at least, to accommodate its expence to its revenue. If the colonies, notwithstanding their refusal to submit to British taxes, are still to be considered as provinces of the British Empire, their defence in some future war may cost Great Britain as great an expence as it ever has done in any former war. 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 realise 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.”
With these ever-memorable and resounding words he ends the great Inquiry, not vaguely admonishing some shadowy cosmopolis of economic men, but straightly beckoning his own countrymen and their rulers off the broad way of wantonness and mischief to the harder paths of an inglorious but fruitful economy.
The reader of this little volume will not expect or desire an excursus upon the multitudinous treatises, critical and apologetical, that have sprung out of the Wealth of Nations. The vitality of the book may be measured by the numbers of its detractors and defenders. Among the former the modern historical school of Germany claims notice; for has not its distinguished and erudite leader, Professor Schmoller, placed Adam Smith somewhere below Galiani, Necker, Hoffmann, Thünen, and Rümelin?
Perhaps the reason why economists of the modern historical school so often fail as valuers of men and books, is that they are enjoined by the very laws of their existence to be “learned”; and “learning” requires that obscure and deservedly forgotten writers should be rediscovered and magnified at the expense of surviving greatness. Too many modern critics of “Smithianismus,” instead of attending to the author’s own works and so penetrating his philosophy, seek him elsewhere, rummage in the literature of the period, overhaul every book, good, bad, or indifferent, characterise it in the text, and place its title-page and date in a footnote. Such labour, however useful to others, is apt to destroy the perspective and warp the judgment.
A man who snares facts is of all men the most likely to be caught in a theoretical trap. Here is an example. In 1759 Adam Smith wrote a book on moral sentiments which he founded on the natural instinct of sympathy. In 1776 he wrote a book on economic sentiments, which he derived from self-love or the desire of man to improve his position. Upon these facts the following theory is built up by the historical school of Germany:—
“Smith was an Idealist as long as he lived in England under the influence of Hutcheson and Hume. After living in France for three years, and coming into close touch with the materialism that prevailed there, he returned a Materialist. This is the simple explanation of the contrast between his Theory (1759), written before his journey to France, and his Wealth of Nations (1776), composed after his return.”[33]
Most of this nonsense has been blown to the four winds by Mr. Cannan’s publication of the Lectures delivered at Glasgow before Adam Smith went to France; but a vast quantity of similar rubbish is embedded in the economic literature of the last thirty or forty years, and a difficulty which learned investigators have invented and solved has been dignified in Germany by the name of “Das Adam Smith Problem.”
The truth, as Smith conceived it, is that men are actuated at different times by different motives, benevolent, selfish, or mixed. The moral criterion of an action is: will it help society, will it benefit others, will it be approved by the Impartial Spectator? The economic criterion of an action is: will it benefit me, will it be profitable, will it increase my income? Smith built his theory of industrial and commercial life upon the assumption that wage-earners and profit-makers are generally actuated by the desire to get as high wages and profits as possible. If this is not the general and predominant motive in one great sphere of activity, the production and distribution of wealth, the Wealth of Nations is a vain feat of the imagination, and political economy is not a dismal science but a dismal fiction. But there is nothing whatever either to excite surprise or to suggest inconsistency in the circumstance that a philosopher, who (to adopt the modern jargon of philosophy) distinguished between self-regarding and other-regarding emotions, should have formed the first group into a system of economics and the second into a system of ethics.