The Project Of Empire

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Contents

CHAPTEE I

The Personality and Breadth of View of Adam Smith

PACE

Chapter I The Personality And Breadth Op View Of Adam Smith

§ 1. Personality and Character.

By way of preliminary it is necessary to get rid of some popular prejudices about the character and personality of Adam Smith.

Those who think he was a kind of parrot who could only say “cheap food,” “competition,” “let alone,” “ devil take the hindmost,” and other simple cries, will be surprised to hear that, with the possible exception of Lord Bacon, he was the most broad¬ minded and most sympathetic of all the philosophers who have condescended to make themselves intel¬ ligible to the common man. He had planned “ a connected history of the liberal sciences and elegant arts.” For this purpose he had collected a mass of material and written a variety of papers, some of which, published by his executors, illustrate in a curious manner his breadth of view. Tftere is, for example, a fragment on the affinity between music, dancing, and poetry. This is of special interest at the present time with the revival of the methods

CHAP.

of the classical “pantomime” dances. Adam Smith shows, by “philosophic art,” that dancing (of the descriptive kind) is capable of affecting us much more than statuary or painting, and that like epic poetry it can represent all the events of a long story. In another paper he made a comparison of English and Italian metres to the admiration of Dr. Johnson, who said he could have hugged him for his preference of rhyme to blank verse. There is an essay on the formation of languages and a history of astronomy. His appreciation of Newton’s great discovery shows that it was not for want of mathe¬ matics that he did not set much store by political arithmetic.

The influence of Newton is shown by the analogies adopted to illustrate two of the fundamental principles of the Wexdth of Nations. First, the theory of natural and market values: “ The natural price, therefore, is as it were the central price to which the [market] prices of all commodities are continually gravitating.

. . . But whatever may be the obstacles which hinder them from settlifig in this centre of repose and con¬ tinuance, they are constantly tending towards it.” ^

Secondly, the theory that “naturally every indi¬ vidual endeavours to employ his capital as near home as he can ”—a principle that is constantly appealed to —is expressed in similar terms; “ Home is in this manner th% centre, if I may say so, round which the capitals of the inhabitants of every country are continually circulating and towards which they are

Book I. chap. ii.

. PERSONALITY OF ADAM SMITH 3

tending, tliough by particular causes they may some¬ times be driven off and repelled from it toward more distant employments.” ^

The catalogue ^ of Adam Smith’s library illustrates the variety of bis tastes and learning. He was widely read in history, law, geography, and books of travel. He knew all the best men of his time—Pitt, Burke, Hume, Reynolds,® for example, in England; and in France, Turgot, Voltaire, Quesnay, Rousseau, and the philosophers who were sowing the seeds of the revolution in France.

For the greater part of his life Adam Smith lived in touch with the great world and the real world, and not in a world of abstractions, though for the final composition of the Wealth of Nations he retired to the quiet of his native town, Kirkcaldy, for a period of seven years (1767-1773).

§ 2. “ The Theory of Moral SentimentsT

The Adam Smith of popular tradition is supposed to be the apostle of selfishness—the creator and glorifier of the “ economic man.”

The real Adam Smith, about twenty years before the publication of the Wealth of Nations, made a world-wide reputation by his Essay on the Theory of Moral Sentiments. The basis of the whole theory is not selfishness but sympathy; the ptactical test of right conduct is the judgment of the impartial

^ Book IV. chap. ii. 2 Edited by Dr. Bonar, 1894.

^ The writer is the fortunate possessor of Adara Smith’s presentation copy of the Wealth of Natio^is to Sir Joshua Reynolds.

CHAP.

spectator. “ When the happiness or misery of others depends in any respect on onr conduct we dare not, as self-love would suggest to us, prefer the interest of one to that of many.” And yet it is “ not the soft power of humanity, it is not that feeble spark of benevolence which nature has lighted up in the human heart, that is thus capable of counteracting the strongest impulses of self-love. It is a stronger power, a more forcible motive which exerts itself on such occasions. It is reason, principle, conscience, the inhabitant of the breast, the man within, the great judge and arbiter of our conduct.”^

The man within is the ideal of humanity; he is the true impartial spectator to whom the final appeal must be made. To this work on moral philosophy Adam Smith made some important additions just before his death in 1790. One passage is strangely pathetic: “ It is only to the virtuous and humane that the infirmities of old age are not the objects of contempt and aversion. In ordinary cases, an old man dies without being much regretted by anybody. Scarce a child can die without rending asunder the heart of somebody.” It was found on his death that his property was much less than had been expected, because he had given away the greater part in secret charity.

It may perhaps be thought a matter of little

^ The need for emphasising the moral philosophy of Adam Smith is shown by the following quotation from the Introduction to Byles’s Sophisms of Free Trade signed by the editors W. S. Lilly and C. S. Devas : “No doubt Adam Smith regarded his political economy as a branch of his moral philosophy. But unfortunately his moral philosophy is in no true sense moral.”—(9^;. ciL. Introduction, p. xviii, note.

1 PERSONALITY OF ADAM SMITH 5

importance in applying the ideas of Adam Smith to our present economic problems to show that he was not a “one-eyed flatfish with the side on which there is an eye always in the mud,” but a man as keen in his appreciation of art and literature as his principal detractor—and with a far wider outlook and larger sympathies.

§ 3. Humanist and Nationalist.

Adam Smith had, no doubt, an exceptional genius for dealing with the economic side of human affairs, and he is rightly regarded as the founder of syste¬ matic political economy as distinct from the allied moral and social sciences; but his influence as an economist was enormously increased owing to his breadth of view, both moral and intellectual. Adam Smith was emphatically a great humanist, and that is the reason why, in treating of new economic problems, it is well to refresh our sympathies and sharpen our wits by a study of the master mind in this part of life. In particular we may learn of Adam Smith that questions of foreign trade require for their adequate discussion a reference to the great ideas of humanity and nationality as well as the more material interests of cheapness and plenty.

In the whole range of the history of perversions there is no more curious error than the j)opular idea that Adam Smith treated of the wealth of nations from the cosmopolitan standpoint, and that List, as opposed to Adam Smith, is the founder of national economy. If the two men are to be named by these

CHAP. I two names, then it is Adam Smith who must be ranked as the nationalist and List as the cosmo¬ politan. ^List^ had apparently taken his views of Adam Smith not from the original source but from the “ school,” and indeed it is to the “ school ” that he constantly refers. Most of his criticism, though valid as against the dogmas of the “ school,” is quite irrelevant as applied to the real Adam Smith. The nationalism of Adam Smith is so important that it is best treated in a separate chapter.

^ Of. The National System of ToUiical Economy by Friedrich List (edition Longmans, 1904). Introductory Essay by present writer, p. xiv.

Chapter II The Nationalism Op Adam Smith

§ 1. The Individual, the Family, and the Nation.

In the last edition of the Moral Sentiments, which was revised by the author just before his death, a new part was introduced,^ which gives clearly his mature views on the relations of the individual to the family, the nation, and the world at large. The treatment of the family is interesting in connection with recent socialistic attacks, and gives a philo¬ sophical foundation to the common thought of the average Englishman. Adam Smith lays the greatest stress on the importance of the family relationships being intimate and continuous. The mere tie of blood is not enough. He goes so far, indeed, as to disapprove of the education of boys at distant great schools, and of young men at distant great colleges, a practice which he considered had hurt most essentially the domestic morals both of Prance and England. “ From their parents’ house they may, with propriety and advantage, go out every day to attend public schools: but let their dwelling be always at home.

^ Part vi.

CHAP.

Surely no acquirement whicli can possibly be derived from what is called a public education can make any sort of compensation for what is almost certainly and necessarily lost by it.”

It is beyond the scope of the present inquiry to consider the validity of Adam Smith’s general philo¬ sophical ideas; but the point is, that properly to understand his economics we must at any rate under¬ stand his attitude as regards the moral foundations of society. His individualism wears a different aspect if we remember that he was a passionate admirer of home and home life; and that on his view from the home as the centre the sympathies of the individual are extended through ever-widening circles of friends and acquaintances, until in this way the family is naturally linked with the state or nation.

“ The state or sovereignty in which we have been born and educated and under the protection of which we continue to live is in ordinary cases the greatest society, upon whose happiness or misery our good or bad conduct can have much influence. Not only we ourselves, but all the objects of our kindest affections, our children, our parents, our relations, our friends, our benefactors, all those whom we naturally love and revere the most, are commonly comprehended within it; and their prosperity and safety depend in some measure upon its prosperity and safety. . . . When we compare it with other societies of the same kind we are proud of its superiority and mortified in some degree if it appears in any respect below them. All n NATIO-NALISM OF ADAM SMITH 9

the illustrious characters -which it has produced in former times, its -warriors, its statesmen, its poets, its philosophers, and men of letters of all kinds, we are disposed to view with the most partial admiration and to rank them (sometimes most unjustly) above those of all other nations. The patriot who lays down his life for the safety or even for the vain glory of this society appears to act -with the most exact propriety. . . . But though this sacrifice appears to be perfectly just and proper we know how diflficult it is to make it and how few people are capable of making it. His conduct, therefore, excites not only our entire approbation but our highest wonder and admiration, and seems to merit all the applause which can be due to the most heroic virtue. The traitor, on the contrary, who in some peculiar situation fancies he can promote his own little interest by betraying to the public enemy that of his native country; who, regardless of the judgment of the man within the breast, prefers himself in tbis re.speet so shamefully and so basely to all those with whom he has any connection, appears to be, of all villains, the most detestable.” ^

§ 2. Adam Smith not Cosmopolitan.

The following passage is still more remarkable as throwing light on Adam Smith’s nationalism; “ The love of our country seems not to be derived from the love of mankind. The former sentiment is altogether independent of the latter, and seems sometimes even

^ Theory of Moral Sentiments^ part vi. section ii. chap. ii.

CHAP.

lo A PROJECT OF EMPIRE

to dispose us to act inconsistently with it. Trance may contain, perhaps, near three times the number of inhabitants which Great Britain contains. In the great society of mankind, therefore, the prosperity of France should appear to be an object of much greater importance than that of Great Britain. The British subject, however, who upon that account should prefer on all occasions the prosperity of the former to that of the latter country, would not be thought a good citizen of Great Britain. We do not love our country merely as part of the great society of mankind; we love it for its own sake, and inde¬ pendently of any such consideration.” ^ Adam Smith, indeed, shows that the sentiment of nationality and patriotism may be pushed too far, and that the “mean principle of national prejudice is often founded upon the noble one of the love of our own country.” He admits that France and England may each of them have some reason to dread the increase of the naval and military power of the other, but “ it is beneath the dignity of two such great nations to envy the internal happiness and prosperity of the other, the cultivation of its lands, the advancement of its manufactures, the increase of its commerce, the security and number of its ports and harbours, and its proficiency in all the arts and sciences.” ^

It is important to observe, however, that even as regards material and economic interests on Adam Smith’s view the ■ prosperity of our own country

' Theory of Moral Sentiments, part. iv. section, ii. chap. ii.

2 Ibid.

n NATIONALISM OF ADAM SMITH; Jii

ought to be our chief concern, though, as is shown in detail in the Wealth of Nations, we gain indirectly from the prosperity of our neighbours. “ The love of our country seems in ordinary cases to involve in it two principles; first, a certain respect and reverence for that constitution or form of government that is actually established; and secondly, an earnest desire to render the condition of our fellow-citizens as safe, respectable, and happy as we can. He is not a citizen, who is not disposed to respect the laws and obey the civil magistrate; and he is certainly not a citizen who does not wish to promote, by every means in his power, the welfare of the whole society of his fellow-citizens.”

§3. Of Universal Benevolence.

The chapter in this section which is entitled “ Of universal benevolence ” ^ completes the survey of the moral duties of the individual to others. “Though our effectual good offices can very seldom be extended to any wider society than that of our own country; our good will is circumscribed by no boundary but may embrace the immensity, of the universe.” . . . “Nor does the magnanimous resignation to the will of the great Director of the universe seem in any respect beyond the reach of human nature. In the greatest public, as well as private disasters, a wise man ought to consider that he himself, his friends, and countrymen have only been ordered upon the forlorn station of the universe. A wise man should

^ Theory of Moral SentimentSy part vi. section ii. cliap. iii.

CHAP.

surely be capable of doing wbat a good soldier bolds himself at all times in readiness to do.” But although “ the idea of the divine being who rules the universe is of all objects of human contemplation by far the most sublime”; and although “ we look with reverence on the man who is capable of absorbing himself in contemplation of this kind,” we are told, as the conclusion of the whole matter, that “ the most sublime speculation of the contemplative philosopher can scarce compensate the neglect of the smallest active duty. The administration of the great system of the universe is the business of God and not of man. To man is allotted a much humbler department: the care of his own happiness, of that of his family, his friends, his country.” ^

§ 4. Two Popular Errors.

It ought to be abundantly clear from the fore¬ going passages that popular opinion on Adam Smith’s philosophy is fundamentally wrong on ' two points. In the first place, he did not inculcate any doctrines implying that every individual ought simply to look to his own interests, regardless of the interests of others; and in the second place, he did not main¬ tain that the policy of nations ought to be directed solely by cosmopolitan considerations. These two ideas, as so often happens with popular delusions,

c

^ Some writers have laid too much stress on Adam Smith’s “natural theology” and the optimism supposed to be based on it. In particular, the reference to the “invisible hand” which directs private people towards the public good has been strained to absurd lengths. Adam Smith was the ardent admirer of Hume and Voltaire, and his theology was not altogether uncritical.

n NATIONALISM OF ADAM SMITH 13

are in effect contradictory, except on the simple supposition that absolute laisser faire is best for the individual and also for humanity. This, however, so far as Adam Smith is concerned, is a greater delusion than the other two which it is advanced to reconcile.

The real Adam Smith never thought of the individual in isolation. The foundation of his whole system of moral philosophy is sympathy ; the test of right conduct is the opinion of the impartial spectator; the individual is a member of a family; and through the family life he is brought in touch with ever-widening circles of friends and associates until he naturally regards himself as a member of the state. And here for most practical purposes the sympathies of the individual find their natural boundaries; although no doubt in moments of exalta¬ tion he may indeed seek to enter into communion with the spirit of the universe, and in the same way he may on occasion regard himself as a citizen of the world and a lover of all humanity.

§ 5. Defence of more Importance than Opulence —the Navigation Act.

It is remarkable, in view of the attacks that have been made by List and others on the cosmopolitan ideas of Adam Smith on economic matters, that it is in the Wealth of Nations itself that thfe nationalism of Adam Smith finds the most unreserved and unqualified expression. “The great object of the political economy of every country is to increase the

CHAP.

riches and the power of that country.” J This reference to national power as the object and aim of national policy shows as always the influence on the mind of Adam Smith of historical development. That the reference is not merely a polite tribute to popular sentiment is shown by the application to the Navigation Laws. Here the leading idea is that though these laws may be prejudicial to the wealth of the nation they are to be approved on the very ground that “ defence is of more importance than opulence.” Writing of the famous Navigation Act of 1660 he points out that though England and Holland were not actually at war the most violent animosity subsisted between the two nations. “ It is not impossible, therefore, that some of the regula¬ tions of this most famous Act may have proceeded from national animosity. They are as wise, how¬ ever, as if they had been dictated by the most deliberate wisdom. National animosity at that par¬ ticular time aimed at the very same object which the most deliberate wisdom would have recommended —the diminution of the naval power of Holland, the only naval power which could endanger the security of England.”^ The application of this remarkable passage to the present time mutatis mutandis is too obvious to need comment.

It is no doubt quite true that it was this very part of the •■old commercial policy which was first seriously attacked and modified by Huskisson (1825) and eventually the whole system was abandoned

^ Book II. cliap. V. • 2 Book iv. chap. ii.

II Nationalism Of Adam Smith 15

more than fifty years ago. Adam Smith also himself condemned the navigation acts so far as the colonies were concerned.

§ 6 . National Military Training as Part of the Education of Youth.

But for the present we are concerned only with the ideas of Adam Smith on nationality and the advancement of national power. These ideas are even more forcibly illustrated, and have a much more intimate bearing on present problems as they are set forth in the chapter on the education of youth.’-

One of the popular ideas on Adam Smith, founded apparently on a confusion between Adam Smith and Cobden, and a misunderstanding even of Cobden, is that he was a man who loved peace at any price, loved all countries more than his own, and hated the very idea of war. As a matter of fact, as shown in this chapter, Adam Smith regarded a military training as one of the most essential parts of the education of the youth of the nation. “ The art of war is certainly the noblest of all arts.” “ A coward, a man incapable either of defending or revenging himself wants one of the most essential parts of the character of a man. . . . Even though the martial spirit of the people were of no use towards the defence of the society, yet to prevent that sort of mental nfutilation and deformity and wretchedness which cowardice necessarily involves in it from spreading themselves through the

^ Book V. chap. i. part iii. article 2.

CHAP.

i6 A PROJECT OF EMPIRE

great body of the people would still deserve the most serious attention of government; in the same manner as it would deserve its most serious attention to prevent a leprosy or any other loathsome or offensive disease, though neither mortal nor dangerous, from spreading itself among them.” ^

Again, after describing the advantages of natural liberty, he goes on to indicate broadly the most important functions of the state; the first duty imposed is that of defence—“ the duty of protecting the society from the violence and invasion of other independent societies ”; and this is spoken of as one of the duties of the state, “ plain and intelli¬ gible to common understandings.” In treating of the expenditure of the state the first charge made on the revenue is for the expenses of defence; and in dealing with this topic he applies, according to his custom, the historical method and discusses the merits and demerits of militias and standing armies, and shows an intimate acquaintance with the “ noblest of all arts.” ^

§ 7. The Soldier and the Statesman Compared.

In the final addition to the Moral Sentiments, to which references have already been made, the glory of war is introduced in the discussion on the character of« virtue. Adam Smith compares the relative merits of the statesman who is at the head of one of the great political parties with the soldier

^ Book V. chap. i. part iii. article 2.

® Book V. chap. i. part i.

II

NATIONALISM OF ADAM SMITH 17

who has the conduct of a great national war. “ The leaders of the contending parties, though they may be admired by one half of their fellow-citizens, are commonly execrated by the other. Their characters and the merit of their respective services appear commonly more than doubtful. The glory which is acquired by foreign war is upon this account almost always more pure and more splendid than that which can be acquired in civil faction.” ’ “ The

hero who serves his country successfully in foreign war gratifies the wishes of the whole nation, and is on that account the object of universal gratitude and admiration.”

It must not be supposed, however, that the national¬ ism of Adam Smith was mainly dominated by ideas of territorial expansion and military glory. In this very chapter,' which gives his final views on national policy, we are told that the leader of a political party may sometimes render to his country a service much more essential and important than the greatest victories and the most extensive conquests. “ 11 0 may re-establish and improve the constitution, and from the very doubtful and ambiguous character of the leader of a party he may assume the greatest and noblest of all characters, that of the reformer and legislator of a great state; and by the wisdom of his institutions secure the internal tranquillity andhappiness of his fellow-citizens for many succeeding generations.”

^ Moral SentimeniSj part vi. section ii. chap. ii. JSec also chap. iii. on “ Self Command.” Ibid.

C

CHAP.

i8

§ 8. Adam Smith and Burke—Idea of Historical Growth.

Adam Smith and Burke were close friends, and had much in common in their general ideas of political philosophy. The former is so well known as the destroyer of old systems, and the latter as the most thorough opponent of revolutions, that the fundamental agreement between the two thinkers may seem surprising. But Adam Smith himself is reported to have said of Burke that “ he was the only man he had met with who thought as he did on the chief topics of political economy without previous com¬ munication.” ^ And following on the passage quoted above from the last words of Adam Smith, we find an appreciation of the historical growth of a great state which is in exact harmony with the dominant idea in Burke’s Reflections on the Revolution in France (published in the same year (1790) as this last edition of the Moral Sentiments). “ The man,” writes Adam Smith, “ whose public spirit is prompted altogether by humanity and benevolence will respect the established powers and privileges even of individuals and still more those of the great orders and societies into which the state is divided. Though he should consider some of these as in some measure abusive, he will content himself with moderating what he* often cannot annihilate without great

1 Burke said of the Wealth of Nations published: '‘Excellent; a dry abstract of which would convey no juster idea of it than the skeleton of a departed beauty would of her form when she was alive.”—Prior’s Life oj Burhe, p. 61 (George Bell, 1882).

n NATIONALISM OF ADAM SMITH 19

violence. . . . He will accommodate as well as he can his public arrangements to the confirmed habits and prejudices of the people. . . . Like Solon, when he cannot establish the best system of laws, he will endeavour to establish the best that the people can bear.” ^ It may be noted in passing that Adam Smith used precisely the same expression regarding the system of Corn Laws that prevailed in his day (13 Geo. III. c. 43) : “With all its imperfections we may, perhaps, say of it what was said of the laws of Solon, that though not the best in itself it is the best which the interests, prejudices, and temper of the times admit of. It may, perhaps, in due time prepare the way for a better.” ^

Burke himself could not have attacked more vehemently “the man of system who seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chessboard, but forgets that in the great chessboard of human society every single piece has a principle of motion of its own, and that if this is not taken account of the game of human society will go on miserably.”

Adam Smith allows that some general and even systematic idea of the perfection of policy and law may be necessary for directing the views of the statesman ; but he must not insist on establishing, and establish¬ ing all at once, and in spite of all opposition, everything which that idea may seem to require.

^ Moral Sentiments^ part vi. section ii. chap. ii.

^ Book IV. chap. v. ^ Sentiments, Icc. dt.

CHAP.

This insistence by Adam Smith on the growth of the nation and the constitution throws a new light on his attitude towards the system of natural liberty in general and the particular manifestation of that system in the policy of international free trade.

He did not expect that the freedom of trade would ever be entirely restored in Great Britain; and he thought that any approach to it should be made very gradually. “ The undertaker of a great manufacture who by the home markets being suddenly laid open to the competition of foreigners should be obliged to abandon his trade would no doubt suffer very consider¬ ably. . .. The equitable regard, therefore, to his interest requires that changes of this kind should never be introduced suddenly, but slowly, gradually, and after long warning.” ^ And the case is still stronger if we consider the question from the point of view of the labour employed. “Humanity may in this case require that the freedom of trade should be restored only by slow gradations, and with a good deal of reserve and circumspection. Were those high duties and prohibitions taken away all at once, cheaper foreign goods of the same kind might be poured so fast into the home market as to deprive all at once many thousands of our people of their ordinary employment and means of subsistence.” ^ “ The very bad policy of