Introduction
The thinker most commonly recognized in the history of political thought as the most prescient observer of America is surely Alexis de Tocqueville. As he tells us in the introduction to his masterwork, his aim was to offer his report on “what I saw in America.” At the same time, as we know, Democracy in America is a classic because it is not just about America. Tocqueville himself says so: “I confess that in America I saw more than America; I sought there an image of democracy itself, of its penchants, its character, its prejudices, its passions; I wanted to become acquainted with it if only to know at least what we ought to hope or fear from it.”Footnote 1 Tocqueville’s book is at once a study of America and a study of the new transformative phenomenon of which America is the exemplar.
This essay of course is not about Tocqueville, but I begin this essay on Adam Smith with Tocqueville for a specific reason. This reason is not the fact that Smith’s thought influenced Tocqueville’s thought; while an important subject in itself (one I treat elsewhere), it is not my focus here.Footnote 2 Instead, I here aim to provide a reexamination of the significance of Smith’s own treatment of America in his masterwork, An Inquiry into the Nature and Causes of the Wealth of Nations. The reason I begin this essay with Tocqueville—and especially with Tocqueville’s comment on what he saw in America—is that, with one small emendation, I believe it captures very well the reason why Smith was himself so interested in America. Indeed, I can imagine Smith in 1776 saying, in his own right, that in America he saw more than America, and in fact found there “an image of commercial society itself, of its penchants, its character, its prejudices, its passions.” Smith, like Tocqueville, clearly sought to provide his readers with a better understanding of America, an understanding on which they could draw as they sought to navigate the complex relations between America and their own countries. Yet Smith, like Tocqueville, also saw that the case of America was about more than just America. In his hands, the story of the American colonial crisis becomes a case study that illustrates and further illuminates several of his core arguments in favor of commercial society.Footnote 3
These arguments break down along three lines. One concerns economic policy and institutions. In his treatment of the American crisis, Smith goes to considerable lengths to show that the crisis was primarily the result of misguided economic policy. In so doing, he presents the American colonial crisis as a case study illustrating two core principles of his economic theory: the pernicious effects of mercantilism and the beneficial effects of free trade. A second aspect of Smith’s treatment concerns moral theory. A key element of his treatment of the colonial crisis is his study of the psychology of the colonial leaders. On this front, he especially notes the degree to which these colonial leaders were driven by a desire for respect and recognition of their “importance.” In so doing, his treatment of the motives and moral psychology of these leaders illustrates the practical political effect of several key concepts treated in The Theory of Moral Sentiments—an important if underemphasized point of contact between this book and the Wealth of Nations. Here, Smith also calls prominent attention to the ambition of the American colonial leaders and how it transformed the colonists from “shopkeepers, tradesmen, and attornies” into “statesmen and legislators,” which is a crucial new phenomenon that Smith sought to bring to the attention of his British audience. Finally, in addition to presenting the American crisis as a case study for his economic theory and his moral theory, it also serves as a case study for his political theory, and specifically his theory of international relations. On this front, Smith regards the efforts of the colonists to claim their rightful place among the world’s nations as the manifestation of a key moment in a long transformative process that he believed would in time fundamentally reshape the global order.
In each of these three senses—economic, moral, and political—Smith can be said to have seen in America much more than just America. In crafting his narrative of the colonial crisis as case studies for his lessons on these three fronts, he sought to provide his readers with practical illustrations of the theoretical principles at the heart of his system. Furthermore, the American crisis not only served to illustrate Smith’s theoretical principles, but it is also significant for how it provided a present-day illustration. Smith, in fact, often used the case-study approach to illuminate key elements of his theory; his frequent references to the real consequences of policies in real regimes across history—from ancient Athens and Rome to early modern France and Holland to precolonial North and South America, among others—attest to his concerns for the relationship of theory to practice. Yet the American colonial crisis offered Smith something different from these other cases: a high-stakes geopolitical event playing out before his audience in real time, and in ways that would directly affect his audience’s interests. As such, the American crisis provided Smith an opportunity to bring the principles of his theory home to his readership in an especially relevant way.
I offer one final note at the outset. It is convenient that our opening quotation ends with Tocqueville’s reference to what we ought “to hope or fear” from democracy. Tocqueville’s capacity to see both the promise as well as the potential danger of modern democracy has long been recognized as one of his signature achievements. But Smith deserves to be seen similarly. For even though Smith championed commercial society and sincerely believed it to be manifestly superior to the other forms of social order with which he was familiar, he was hardly a blind partisan. As recent scholars have done much to show, Smith was acutely well aware of commercial society’s potential shortcomings—and echoes of his concerns on this front can also be found in his treatment of the American crisis.Footnote 4
Economic policy: Mercantilism and free trade
Smith’s treatment of the American crisis is largely to be found in the fourth and fifth books of the Wealth of Nations. Footnote 5 The Wealth of Nations was published in March 1776, a fact important for Smith’s treatment of American affairs in two ways. One is that publication of the Wealth of Nations at this relatively early period in the War of Independence helped make it a key point of reference for many of the leading figures in the revolutionary and constitutional periods.Footnote 6 (At the time of its publication, it had been less than a year since shots were fired at Lexington and Concord on April 19, 1775, and the British still remained in control of Boston, which they would not vacate until March 17, eight days after the Wealth of Nations had been released in London.) Thomas Jefferson, for example, famously called the Wealth of Nations “the best book extant” on political economy and warmly encouraged others to read it. Jefferson’s enemy Alexander Hamilton was no less engaged with it, not only using it as a point of reference for his own writings on banking and manufacturing, but even going so far as to write a now lost commentary on it in 1783. James Madison likewise carefully engaged the text, drawing on its arguments in favor of freedom of religion and against establishment in framing his famous arguments for the large republic in Federalist #10. Footnote 7 But perhaps no American was more engaged with the text than Benjamin Franklin. Scholars once speculated about whether Franklin might have read drafts of the Wealth of Nations prior to publication, and indeed whether he might even have made edits to early drafts of the text that were later incorporated in the published work.Footnote 8
Smith’s book thus left its mark on the American Founders. But for our purposes even more important is the profound mark that the American crisis left on Smith. Herein lies the second reason why the publication of the Wealth of Nations in 1776 is significant. Though he lived most of his life in Scotland, Smith relocated to London in 1773. During the years in which he was preparing the final draft of the work, Smith enjoyed considerable access to the highest circles of British government. Recent scholars have described him as “a highly connected political operative,”Footnote 9 and this—coupled with the remark of the Duke of Buccleuch to David Hume (which Hume noted in a letter to Smith) that Smith was “very zealous in American affairs”Footnote 10—suggest the degree of Smith’s involvement in deliberations on the colonial crisis. The facts of his individual relationships further bear this out. Smith was for many years an advisor to Lord Townshend, promulgator of the notorious 1767 Acts bearing his name that were despised in America for the taxes they imposed on imported British goods (tea most famously). Smith also advised Lord Shelburne, chief agent for colonial affairs in India and America, who was responsible for the Quebec Act of 1774 that enraged so many Americans in providing self-governance to Canada. Smith was also close to Alexander Wedderburn, the solicitor-general, who in the wake of General John Burgoyne’s defeat at Saratoga in late 1777 requested advice on colonial affairs from Smith, which Smith delivered in his memo of early 1778.Footnote 11 All told, Smith was at once deeply familiar with American affairs and also, we can surmise, played a role in advising several of the key architects of the policies that led to the crisis. This makes all the greater the tragedy of Smith’s decision to have all of his private papers burned on his death, depriving us of any extensive documentary record in his own hand of his involvement in advising these and other figures.
Chief among these policies were Britain’s economic policies. As mother country to the colonies Britain claimed a monopoly on transatlantic colonial trade. But one of Smith’s aims in his treatment of this monopoly was to uncover a hidden truth: the very trade monopoly that was ostensibly of such great benefit to the British in fact ran counter to the true interests of mother country and colonies alike to such a degree that it threatened catastrophic disorder on both sides of the Atlantic.Footnote 12 Smith used some of his most apocalyptic language to describe the likely upshot of this misguided economic policy. Monopolistic colonial trade, he explains, in “forcing towards it a much greater proportion of the capital of Great Britain than what would naturally have gone to it, seems to have broken altogether that natural balance which would otherwise have taken place among all the different branches of British industry.” For Britain, the result of this unnatural forcing has been that “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.” With this, Smith introduces his apocalyptic image:
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 blood, of which the circulation is stopt in some of the smaller vessels, easily disgorges itself into the greater, without occasioning any dangerous disorder; but, when it is stopt in any of the greater vessels, convulsions, apoplexy, or death, are the immediate and unavoidable consequences. (WN IV.vii.c.43)
None of Smith’s readers would have missed his point: the consequences of bad economic policy are not merely economic, but rather threaten to hasten the death of the body politic itself, a point Smith makes here with considerable rhetorical flourish.Footnote 13 But in addition to his striking use of the images of aneurysm and apoplexy, Smith also frames his argument in this passage in terms of a substantive distinction between natural and unnatural, free and forced. Smith’s treatment of the political disaster consequent to mercantile trade policy thus uses the American crisis as a dramatic practical illustration of one of the cornerstones of his entire theoretical project, namely, the ways in which “unnatural” inducements impede the maximization of mutual returns under conditions of “natural balance.”
The American crisis, insofar as it was precipitated by misguided mercantilist policy, thus served as an illustration of Smith’s central theoretical principle regarding the benefits of natural capital flow and the dangers of artificial political impositions on this flow. Smith, however, also uses the American colonial crisis to demonstrate several other key principles of his economic theory. One is the concept of unintended consequences. The penchant for monopoly that animated British mercantile policy toward the colonies becomes, in Smith’s hands, a prime example of shortsighted and narrow-minded economic thinking. Smith takes the example of the monopoly on tobacco as a particular case in point. He begins by noting that British merchants dealing in enumerated commodities such as tobacco have a clear advantage over merchants from other nations also dealing in tobacco. French merchants, excluded from the colony trade, are compelled to buy tobacco from the British, rendering it more expensive for French consumers than it may otherwise have been. All of this, Smith admits, is obvious. What Smith knows is not obvious (and no less true), though, is that by suppressing the global demand for tobacco, British monopoly of the tobacco trade served to discourage Americans from planting as much tobacco as they might otherwise have, limiting total supply. The result was that the very monopoly that was ostensibly so advantageous to Britain in fact merely served to inflate artificially the price of tobacco for British consumers; in this way, Smith explains that even as the monopoly allowed British merchants a “relative advantage” over French merchants, in “depressing the industry and produce” of the colonies, the monopoly was disadvantageous in an “absolute” sense—the only real sense that ultimately matters to a consumer. The case of the American tobacco trade serves, in Smith’s hands, as an illustration of unintended consequences.Footnote 14
Smith’s aim in presenting the facts of the tobacco monopoly in the way that he does is to shed light on important truths that common sense is often insufficient to reveal, and which certain parties find it in their interest to conceal. Smith would go even further on this front, using the story of British mercantile policy to illustrate another core tenet of his system. On this front, one of Smith’s concerns is to show that the monopolistic trade policies that precipitated the colonial crisis were in fact never meant simply to benefit “Britain.” Instead, as Smith is deeply concerned to show, the trade policies in question were consistently advocated by elites aware of the ways in which they could profit from them, and indeed how they could profit from them at the direct expense of ordinary citizens. In his treatment of colonial policy, Smith thus continually emphasizes that all of these policies have been designed to benefit the merchants and have come at the cost of the interests of consumers. As he puts it in one of the shortest and most direct paragraphs in the whole of his treatment of the colonial crisis: “It is thus that the single advantage which the monopoly procures to a single order of men is in many different ways hurtful to the general interest of the country” (WN IV.vii.c.62). Smith goes even further, for the policies benefiting the British merchant elites not only came at the expense of consumers on the national level, but also came at the expense of consumers internationally: “All the original sources of revenue, the wages of labour, the rent of land, and the profits of stock, the monopoly renders much less abundant than they otherwise would be. To promote the little interest of one little order of men in one country, it hurts the interest of all other orders of men in that country, and of all men in all other countries” (WN IV.vii.c.60).
Of all of the ways in which the revisionist scholarship of the past half century has led us to rethink Smith and his aims as a political economist, perhaps the most significant has been the rediscovery of Smith’s deep solicitude for universal human well-being, and in particular the well-being of the least well off. Indeed, where Smith’s name was once often associated with cowboy capitalism and greed-is-good doctrines, today almost all Smith scholars accept as given that Smith’s arguments on behalf of the market economy had their origin in a deep concern to alleviate poverty through generation of what he was fond of calling a “universal opulence” that was capable of extending “to the lowest ranks of the people” (WN I.1.10).Footnote 15 Although this is generally accepted as one of the core foundational tenets of Smith’s system, less well appreciated are all of the different ways in which this concern manifests itself across his writings. In his account of the American colonial crisis we find yet another, as it is clear that he meant to use his account of the ill effects of British mercantile policy as an illustration of the disproportionate ill effects it had on ordinary consumers in Britain and beyond.
One last aspect of Smith’s treatment of British economic policy toward the colonies deserves attention before we turn to the moral and political elements of his treatment. This concerns not his diagnosis of the ill effects of this economic policy, but rather the cure that he envisions for these ill effects. For on this front, we once again find Smith using the crisis of the colonies to illustrate one of his core principles. In this case, the principle in question concerns the type of political action mostly likely to restore the equilibrium that has been disturbed by British policy. Smith is aware that at least some of those who are persuaded by his arguments for the system of natural liberty may be tempted to try to reestablish this system as quickly and thoroughly as possible. But here and elsewhere Smith warns that a remedy of this sort is likely to be as bad if not worse than the disease. Rather than call for the sudden dismantling of this overgrown system, Smith counsels his readers to take a longer, more “moderate and gradual” path to reestablishing the system of natural liberty:
Some moderate and gradual relaxation of the laws which give to Great Britain the exclusive trade to the colonies, till it is rendered in a great measure free, seems to be the only expedient which can, in all future times, deliver her from this danger, which can enable her or even force her to withdraw some part of her capital from this overgrown employment, and to turn it, though with less profit, towards other employments; and which, by gradually diminishing one branch of her industry and gradually increasing all the rest, can by degrees restore all the different branches of it to that natural, healthful, and proper proportion which perfect liberty necessarily establishes, and which perfect liberty can alone preserve. (WN IV.vii.c.44)
The lesson Smith would have British students of the American crisis take away from his narrative is that however urgent the crisis may be, it remains the case that the only genuinely effective solution will be one that is gradual, patient, and extended. In so doing, Smith uses the case of the American crisis as a practical illustration, for British legislators, of the core commitment to gradualism and incremental change that has long been recognized as central to his political economy and political science.
Moral theory: Recognition and honorable ambition
Our focus to this point has been on the ways in which Smith presents the American colonial crisis as a case study for his economic theory. Now I want to shift gears and turn to the ways in which he presents the colonial crisis as a case study for his moral theory. For, in fact, Smith clearly recognized the role played in the American crisis by a number of the central ideas of his moral theory. His narrative of this crisis can be read as an effort to illustrate the practical political upshot of certain of the moral and psychological phenomena that are the focus of his other great book, The Theory of Moral Sentiments.
Perhaps the most important of these phenomena is what Smith in The Theory of Moral Sentiments describes as a desire “[t]o be observed, to be attended to, be taken notice of with sympathy, complacency, and approbation” (TMS I.iii.2.1). Smith himself in The Theory of Moral Sentiments uses a wide range of different names at different points to describe various elements or manifestations of this phenomenon, sometimes speaking of “love of praise” (TMS III.ii.2), and sometimes speaking of “love of distinction” (TMS IV.i.8). Any adequate account of his moral theory requires a careful disaggregation of these different phenomena. For our purposes, what is important is how the core element that is common to all of them—the desire for respect and recognition of one’s importance—figures into Smith’s treatment of the colonial crisis. Smith conspicuously emphasizes the revolutionary leaders’ desire for respect and recognition of their importance in his account of the motives that led them to decide to take up arms against the crown. Thus his account of what lies behind the grievance of taxation without representation:
Should the parliament of Great Britain, at the same time, be ever fully established in the right of taxing the colonies, even independent of the consent of their own assemblies, the importance of those assemblies would from that moment be at an end, and with it, that of all the leading men of British America. Men desire to have some share in the management of publick affairs chiefly on account of the importance which it gives them. Upon the power which the greater part of the leading men, the natural aristocracy of every country, have of preserving or defending their respective importance, depends the stability and duration of every system of free government. (WN IV.vii.c.74)
Smith’s claim deserves careful attention on several levels. First, in this passage, Smith bears witness to his keen appreciation of the interrelationship of economic and moral motives in practical action. Smith, that is, recognizes that colonial resistance to British taxes cannot be entirely explained in terms of economic self-interest. Though the colonists’ consciousness of the way in which British trade tariffs hurt their interests is a key part of the story, telling the full story also requires attending to their moral psychology.
Second, Smith here makes clear not only that understanding the moral psychology of political actors is important if we hope to provide a full account of their actions, but also that this moral psychology has great political implications. In one of the most striking phrases in the passage, Smith forthrightly insists that “the stability and duration of every system of free government” depends precisely on the proper expression of the moral psychological motives at issue. In his later memorandum of February 1778 on American affairs, he again returns to this point, insisting that “the principal security of every government arises always from the support of those whose dignity, authority, and interest, depend on its being supported.”Footnote 16 Coming as they do from a founding father of the liberal political tradition, these arresting claims about the relationship between political stability and the recognition of dignity deserve a great deal more attention than they have received thus far.Footnote 17
Third and most significantly, this passage bears particular witness to the role of one specific element of our moral psychology in practical politics, namely, our desire that others recognize our importance. Our solicitude for the esteem and approbation of spectators—as well as our solicitude for our esteem and approbation of our own selves, which is brought home to us by the impartial spectator—are foundational principles of Smith’s moral system. In The Theory of Moral Sentiments, Smith uses these phenomena to explain why actors in a wide range of practical situations act in the way they do. And here in his treatment of the colonial crisis in the Wealth of Nations, Smith prominently deploys this concept to explain colonial resistance. Not only did British taxation hurt the colonists’ economic interests, but British taxation without representation serves to obviate the political role of the leading American figures, thereby depriving them of any sense of importance in either their own eyes or the eyes of others.Footnote 18 Thus the note on which Smith ends this key paragraph:
The leading men of America, like those of all other countries, desire to preserve their own importance. They feel, or imagine, that if their assemblies, which they are fond of calling parliaments, and of considering as equal in authority to the parliament of Great Britain, should be so far degraded as to become the humble ministers and executive officers of that parliament, the greater part of their own importance would be at an end. They have rejected, therefore, the proposal of being taxed by parliamentary requisition, and like other ambitious and high-spirited men, have rather chosen to draw the sword in defence of their own importance. (WN IV.vii.c.74)
In demonstrating the political significance of this concern for importance and recognition of importance, Smith uses the American crisis account in the Wealth of Nations to illustrate a central concept of The Theory of Moral Sentiments. This is itself significant for two reasons. One concerns that great bugbear Smith scholars seem destined never to escape: the “Adam Smith Problem” of how the seemingly other-directed moral theory of The Theory of Moral Sentiments may comport with the seemingly self-interested economic principles of the Wealth of Nations. Yet in his account of the American crisis, Smith offers a clear point of contact between the two works. Furthermore, in showing how the concern for recognition and respect shapes practical action, and indeed action of great political significance, Smith presents the American crisis as an illustration of the practical political upshot of the concepts described in The Theory of Moral Sentiments.
To this point I have sought to emphasize, with regard to the overlaps between Smith’s moral theory and his account of the American crisis, the ways in which concern for respect connects these two sides of his project. Yet this is only one side of Smith’s moral theory. Another side concerns virtue. In The Theory of Moral Sentiments, and especially in Part VI—dedicated to a study “Of the Character of Virtue” and newly added to the sixth edition of the text published in 1790—Smith gives a considerable amount of attention to the concept of virtue. Elsewhere, I argue that in Part VI Smith is especially concerned to develop an account of the virtues best suited to the specific needs of a modern commercial society.Footnote 19 Thus, while Smith admires certain virtues associated with classical or Christian traditions, his main aim is to develop an account of the particular virtues that enable individuals living in a modern market society to flourish. In this vein, for example, Smith uses his treatment of prudence to show how proper direction of the self-interest on which commercial society is founded can itself lead to genuine virtue. The Wealth of Nations is not a book about virtue, even if concerns about virtue manifest themselves at certain crucial moments, as in Smith’s notorious claims about the corruption of the “intellectual, social, and martial virtues” (WN V.i.f.50) that are presently the focus of much scholarly attention.Footnote 20 But even if virtue is not often an explicit theme in Wealth of Nations, at several points in the text Smith takes up the theme of the proper direction of the self-regarding sentiments that lies at the heart of his treatment of the virtue of prudence in The Theory of Moral Sentiments. One such instance is his treatment of the ambition of the colonial revolutionary leaders.
What Smith finds especially interesting in the ambition of the colonial revolutionary leaders is the transformative effect it had on them. This transformative effect is particularly emphasized in his account of the representatives to the Continental Congress:
The persons who now govern the resolutions of that they call their continental congress, feel in themselves at this moment a degree of importance which, perhaps, the greatest subjects in Europe scarce feel. From shopkeepers, tradesmen, and attornies, they are become statesmen and legislators, and are employed in contriving a new form of government for an extensive empire, which, they flatter themselves, will become, and which, indeed, seems very likely to become, one of the greatest and most formidable that ever was in the world. … Almost every individual of the governing party in America, fills, at present in his own fancy, a station superior, not only to what he had ever filled before, but to what he had ever expected to fill; and unless some new object of ambition is presented either to him or to his leaders, if he has the ordinary spirit of a man, he will die in defence of that station. (WN IV.vii.c.75)
Here, Smith claims that the sense of self-importance felt by these American leaders not only shaped their actions, but also transformed their self-conceptions. Specifically and revealingly, we are told this sense of self-importance transformed them from the “shopkeepers, tradesmen, and attornies” into “statesmen and legislators.” In so doing, Smith provides an illustration of how the American context provided a means of channeling ambition, a sentiment that he himself often suggested could take both more and less noble forms (see, for example, TMS I.iii.2.1–9) into what has been called “honorable ambition.”Footnote 21 This is evident specifically in his insistence on the degree to which the revolutionaries committed themselves to “die in defence” of their new stations.
In floating the possibility of whether some “new object of ambition” might be extended to these leaders—a reference to his suggestion earlier in the paragraph for establishing leaders of the former colonies as parliamentary representatives in London in order to provide “a new and more dazzling object of ambition” to “the leading men of each colony”—Smith further attests to his recognition of the power of this new ambition and the need to manage it by steering it effectively. In so doing, Smith also calls attention to how these transformed colonial leaders serve to subvert traditional assumptions regarding the potential of men of the modern commercial world—what later would be disparagingly dismissed as the “bourgeois” world—to realize the nobility characteristic of the statesmen and legislators of antiquity.Footnote 22 A half century before Tocqueville, Smith thus recognized that social conditions in America were quickly bringing about revaluations of virtue and honor that heralded a new world very different from the world of Europe and the ancien régime. In these passages, Smith also sought to bring these revaluations home to the statesmen and legislators in Britain to whom the Wealth of Nations was in such large part addressed.
International relations: Commerce and equality
Having now examined the ways in which Smith’s account of the American crisis was crafted to illustrate several of the fundamental principles of both his economic theory and his moral theory, in this section I turn to its connections to his political theory, and specifically his theory of international relations. Smith has not historically been treated as a theorist of international relations, though there are recent signs that this has started to change.Footnote 23 This is welcome, for Smith was a sophisticated theorist of international relations, one who carved out for himself a unique space on the spectrum of eighteenth-century realists and eighteenth-century idealists. Specifically, Smith manages to combine optimistic faith in the long-term progress of global commercial society with a remarkably realist appreciation of the simple fact of the inevitability of war and the destruction that often accompanies it.Footnote 24 Leaving a fuller exploration of this position for another occasion, here I focus on the side of his international relations theory that manifests itself in his treatment of the colonial crisis, namely, his understanding of the equality of nations.
On this front, Smith was as aware as any eighteenth-century political theorist of the ways in which the spread of global commerce was rapidly transforming traditional relations among nations. His key lesson on this front can be expressed in a sort of paradox: the very structures and institutions that seem on the face of things to be exacerbating the inequality of nations in the short term are likely to promote the equality of nations in the long term. Appreciating this can help us understand Smith’s position on imperialism and colonialism. That Smith was troubled by the exploitative tendencies of imperialism is now well-appreciated in the wake of a number of important studies of his critiques of such institutions as the East India Company.Footnote 25 Yet his understanding of the tendencies and global implications of commercial empire goes further. What Smith was most concerned to show in his treatments of commercial empire was a lesson consonant with his understanding of unintended consequences more generally: it is precisely the most selfish and short-sighted efforts of commercial empires to aggrandize themselves and dominate their rivals that ultimately bring about, counterintuitively, international equality. And this, too, is a lesson that Smith saw reflected in the American crisis.
Smith develops this lesson in two stages with specific regard to the colonial crisis. In the first instance, he is concerned to show that British mercantile and military policies, even as they were designed to grow the power of the empire, have in fact had the opposite effect. Specifically, the colonization of the New World that originally was justified on the grounds that it would enrich and empower the empire has in fact served to overextend it to the point that continued holding of the colonies only serves to weaken and impoverish it. On these grounds, Smith suggests—in both the Wedderburn memo and the conclusion to the Wealth of Nations—that with regard to the colonies, the course of action in Britain’s best interest is to grant them their independence. It is the particular way in which he makes this counterintuitive argument, though, that deserves our attention. Smith presents this argument in the words with which he concludes the Wealth of Nations as a whole:
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 compleated, it ought to be given up. If any of the provinces of the British empire cannot be made towards contribute to 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. (WN V.iii.92)
This is an arresting note on which to end. Smith here begins by reprising a theme with which we are already familiar, namely, the ways in which merchant and political elites misrepresented the colonial project to the people as a source of universal opulence even as they knew it to be much less than that. But to this Smith now adds two further claims. One is that not only were the colonies not anything like the enriching gold mine they had been represented as, but in fact the colonies impoverished Britain owing in large part to the increased military spending they required. A second new claim is even more striking: not only have the colonies impoverished rather than enriched Britain, but they also served to humble rather than glorify Britain. In calling Britons, in the closing line of this work, to accept the “real mediocrity” of their circumstances, Smith calls for nothing less than a willing and self-conscious sacrifice of the pleasing image of Britain’s imperial grandeur as well as a clear-eyed acceptance of the reality of the new and more middling place in the world she was destined to occupy in the wake of the colonial crisis.
Part of Smith’s lesson, then, with regard to international relations was that even the most self-serving sort of commerce would serve in time to humble the proud and bring the greatest nations down closer to the level of the other nations of the world. Yet Smith also saw global commerce not simply as a force that would humble great nations, but one that would raise up poor nations. Smith was steadfast in insisting that as commerce became both more free and more extensive, nations would become more equal.Footnote 26 He nowhere makes this point so clearly as in his account of the likely long-term effect of the colonization of the New World. In a famous paragraph, Smith claims, with some (perhaps justified) hyperbole, that “[t]he discovery of America, and that of a passage to the East Indies by the Cape of Good Hope, are the two greatest and most important events recorded in the history of mankind.” Smith thinks these benefits are so great that not only is it “impossible that the whole extent of their consequences can have been seen” in the two or three centuries since the inception of the colonial projects, but also that “[w]hat benefits, or what misfortunes to mankind may hereafter result from those great events no human wisdom can foresee” (WN IV.vii.c.80). This reinforces a characteristically Smithean lesson on the limits of human wisdom—a lesson Smith continues to insist on in his treatment of the crisis.
But Smith also forthrightly insists these benefits have come at great costs, specifically to the indigenous peoples of the colonized territories. Thus his claim that while these efforts have benefited the European colonizers, “[t]o the natives, however, both of the East and West Indies, all the commercial benefits which can have resulted from those events have been sunk and lost in the dreadful misfortunes which they have occasioned.”Footnote 27 Smith thus not only explicitly recognizes these injustices, but perhaps even more strikingly he makes no effort to excuse or justify them. His claim is rather that what has transpired in the short term will lead to the emergence of a very different world order in the long term:
At the particular time when these discoveries were made, the superiority of force happened to be so great on the side of the Europeans, that they were enabled to commit with impunity every sort of injustice in those remote countries. Hereafter, perhaps, the natives of those countries may grow stronger, or those of Europe may grow weaker, and the inhabitants of all the different quarters of the world may arrive at that equality of courage and force which, by inspiring mutual fear, can alone overawe the injustice of independent nations into some sort of respect for the rights of one another. But nothing seems more likely to establish this equality of force than that mutual communication of knowledge and of all sorts of improvements which an extensive commerce from all countries to all countries naturally, or rather necessarily, carries along with it. (WN IV.vii.c.80)
A great deal can and should be said about this remarkable claim. One especially notable point is that Smith here leaves this claim at the level of a claim, without providing any sort of argument to substantiate it. But to say that he does not provide an argument here is not to say that he cannot provide an argument; indeed, in Smith’s detailed treatment elsewhere of the ways in which the progress of national opulence necessarily in time leads to national decline lies his explanation of the mechanism that will in time bring us closer to an equality of nations. Explicating this argument, however, would require considerably more detailed discussion than can be provided here.Footnote 28 I thus limit myself to one point: the story of American colonization, and specifically the forceful exploitation of the indigenous people of America as well as the commercial monopoly over the American colonists, was a vehicle of injustice exacerbating inequalities in the short term as well as a vehicle of justice that Smith believed would ultimately serve to promote greater global equality in time.
Concluding thoughts
Smith’s account of the colonial crisis in the Wealth of Nations, I have argued, sought first and foremost to illuminate the causes and likely course of the crisis for readers in Britain. But Smith’s account of America, as we have seen, was ultimately about far more than just America, for Smith in fact uses the American crisis to illustrate several of the core elements of his economic theory, moral theory, and political theory. In this respect, his study of the American crisis needs to be set next to several other of his detailed empirical studies of the rise and fall of a large number of other states—ancient and modern, civilized and precivilized—many of which, in their own ways, similarly use history and anthropology to represent Smith’s core theoretical teachings.
For all this, there is yet one further way in which Smith’s treatment of the American crisis served to reinforce his core lessons. However, this last way is not easily categorized as simply economic, moral, or political. In some deep sense, this last lesson transcends all of these categories even as it manifests itself in various discrete ways within each category; in this sense, this last lesson could be considered as the most fundamental one of all. At its heart it is a lesson in humility. Smith, writing in and for a British empire on the verge of the beginning of its fragmentation, even in 1776 saw that the power of legislators to reshape the course of events was limited. And indeed, at the core of Smith’s own understanding of human beings and human events is a powerful sense of the limits of the human mind, and thus the limits of human action, a sense that led him to counsel political actors to ensure that their actions are governed by prudence and humility. This commitment to prudence manifests itself in a variety of different places, but it emerges with particular clarity in his critique of mercantilism. Thus, in reviewing “the unfortunate effects of all the regulations of the mercantile system,” Smith is led to observe that these
not only introduce very dangerous disorders into the state of the body politick, but disorders which it is often difficult to remedy, without occasioning, for a time at least, still greater disorders. In what manner, therefore, the colony trade ought gradually to be opened; what are the restraints which ought first, and what are those which ought last to be taken away; or in what manner the natural system of perfect liberty and justice ought gradually to be restored, we must leave to the wisdom of future statesmen and legislators to determine. (WN IV.vii.c.44)
Herein lies one of the most characteristically Smithean elements of Smith’s entire system. Smith, as we have seen, was a clear-sighted student of the American crisis, one who was able to see in it a great deal of evidence of a large number of his fundamental arguments. At the same time, even while living in the midst of this crisis, Smith was able to preserve that sense of theoretical equanimity that prevented him from succumbing to the naïve belief that problems as complicated as the colonial crisis could be quickly and fully solved by any specific political action. Smith, instead, put his hope for the resolution of the crisis and the improvement of the condition of those affected by it in the passing of time and the progress of history rather than in human action of even the most well-intended and well-executed sort. And indeed, that all will be better in time, and only in time, was not only his ultimate response to the American crisis, but also, arguably, the central pillar of his hopeful social vision.
Acknowledgments
For many extremely helpful comments and suggestions on earlier versions of this essay, I am very grateful to an audience at Georgetown University as well as the other contributors to this volume. I am also deeply grateful both to an anonymous referee and to David Schmidtz in his capacity as Editor-in-Chief for their remarkably careful attention to the manuscript and their many extremely helpful suggestions, and to Carrie-Ann Biondi for outstanding copyediting.
Competing interests
The author declares none.
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