“But though the profusion of government must, undoubtedly, have retarded the natural progress of England towards wealth and improvement, it has not been able to stop it. The annual produce of its land and labour is, undoubtedly, much greater at present than it was either at the Restoration or at the Revolution. The capital, therefore, annually employed in cultivating this land, and in maintaining this labour, must likewise be much greater.
In the midst of all the exactions of government, this capital has been silently and gradually accumulated by the private frugality and good conduct of individuals, by their universal, continual, and uninterrupted effort to better their own condition. It is this effort, protected by law and allowed by liberty to exert itself in the manner that is most advantageous, which has maintained the progress of England towards opulence and improvement in almost all former times, and which, it is to be hoped, will do so in all future times. England, however, as it has never been blessed with a very parsimonious government, so parsimony has at no time been the characteristical virtue of its inhabitants.
It is the highest impertinence and presumption, therefore, in kings and ministers, to pretend to watch over the economy of private people, and to restrain their expense, either by sumptuary laws, or by prohibiting the importation of foreign luxuries. They are themselves always, and without exception, the greatest spendthrifts in the society. Let them look well after their own expense and they may safely trust private people with theirs. If their own extravagance does not ruin the state, that of their subjects never will.(I, 328)”
Adam Smith, An inquiry into the Nature and Causes of the Wealth of Nations (1776), Book II, Chapter 3. (Paragraphed)
The Great Adam Smith (1723 – 1790), one of the key figures of the Scottish Enlightenment, was a moral philosopher and a pioneer of political economy. Smith is widely cited as the father of modern economics.
In terms of prevailing economic thought toward policy there are many resemblances between the time of Adam Smith and the times in which we live today. Mercantilism was the dominant theory and practice when Smith wrote The Wealth of Nations in 1776, and its promotion and support of an enormous array of interferences in the economy for the benefit of the then-prevailing business and political interests was the main target of his wrath. Smith was no apologist for merchants and manufacturers and he had no regard for, as he put it, “that insidious and crafty animal, vulgarly called a statesman or politician, whose councils are directed by the momentary fluctuations of affairs”. He put his confidence in free markets and common people, not government controls and political elites, and slowly but steadily his vision of a fair and competitive society, while never fully achieved, replaced beliefs and values of Mercantilist doctrine.
It would appear we have come full circle in economic affairs. In many areas of our life and economy Mercantilism has returned. Wherever we turn, the government mandates and controls as never before. Congress is discussing expensive mandates in the area of health care, the President has just announced tariffs on imports of Chinese tires, the auto industry operates under government supervision, the financial sector is under the close supervision and regulation of the Treasury and the Federal Reserve, pay scales of the highly paid and the least paid are becoming under the eye of czars, the collapsed housing sector benefits from government largess. One might well ask, how are these programs different in any significant way from those of the Mercantilists Thomas Mun and James Steuart that Adam Smith criticized so harshly?
And are today’s political leaders any less careless of the public’s long-term interests or any less extravagant when spending the tax dollar or any less willing to promote the interests of the rich and the powerful over that of the poor and the powerless than those of Smith’s day?
In his time, Adam Smith was a radical and revolutionary preaching the gospel of the market and the benefits of liberty. In our time, we need be no less radical and revolutionary as we rededicate ourselves to his ideals and principles to ensure the continuation of our freedom and prosperity to the next generation.
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