Adam Smith – anti-American philosopher
By Madawc Williams
Adam Smith saw the future, and he hated it. He was a clever Scot, the son of a customs official and the grandson of a Scottish MP, always in a small way part of the establishment. And he was always very flattered by any attention from the real establishment, the rich and titled oligarchs who ran 18th century Britain. As far as he was concerned, this system of oligarchy was fine. He reckoned it to be perfectly compatible with the laissez faire economics that he is best remembered for. Like many other people since his day, he was horrified when the economic changes he had promoted produced drastic political consequences he had not expected.
Smith has been systematically doctored to hide his opposition to the American War of Independence. No British edition of The Wealth of Nations has Book Five of this work, apart from the very scholarly and expensive Glasgow edition of 1976. None of his biographers speak plainly about his views, even though they are as clear as one might wish for.
“In their present elevation of spirits, the ulcerated minds of the Americans are not likely to consent to any union even upon terms the most advantageous to themselves. One or two campaigns, however, more successful than those we have hitherto made against them, might bring them perhaps to think more soberly upon the subject of their dispute with the mother country.”
This comes from a confidential memorandum to the British government written by Smith in 1778, two years after the Declaration of Independence, three years before America won decisively at Yorktown and five years before the Peace of Paris formally recognised American independence. It can be found in the Glasgow Edition of the Correspondence of Adam Smith (page 381 ), but you would be very lucky to find it or see it referred to anywhere outside this heavy, scholarly and expensive volume. (A volume that does not even offer English translations of several rather interesting letters discussing complex ideas that are written in late 18th century French.)
Smith had a fairly consistent view of the struggle. In The Wealth of Nations, which actually appeared in the same year as the Declaration of Independence, he says
“The colonies may be taxed by their own assemblies, or by the parliament of Great Britain” (Glasgow Edition, p 619).
Also
“Stamp-duties, it is evident, might be levied without any variation in all countries where the form of law process … are the same or nearly the same.” (Ibid, p935).
The laissez-faire future that Adam Smith was hoping for and predicting was 18th century Britain writ large. Only a great deal of judicious cutting and filling-in made him seem to be the prophet of the various subsequent world free market systems that actually emerged. The American War of Independence was the point at which things began to go wrong, from his point of view. Thus:
“The Americans, it has been said, when they compare the mildness of their old government with the violence of that which they have established in its stead, cannot fail both to remember the one with regret and to view the other with detestation. That these will be their sentiments when the war is over and when their new government, if ever that should happen, is firmly established among them, I have no doubt.” (Correspondence of Adam Smith, p 384).
He did seriously believe that the North Americans would view the government established by George Washington and Thomas Jefferson as being a great step down from the benign rule of Lord North and George III.
Nor was there the least inconsistency or alteration in his views. He had been a close friend of Charles Townsend, who pioneered the policy of trying to impose taxes on the North American colonies. This was a policy which shrewder observers prophesied would lead to the loss of those colonies, and did indeed start the process that led to the War of Independence. Though there is no direct evidence that Smith was involved in this policy, it was very much in line with his beliefs, and he continued to uphold the principle even with the benefit of hindsight.
This is not the only link. Lord North used The Wealth of Nations as a source of ideas for new taxes to finance the continuing war, and gave Smith a nice well-paid job as a Customs Commissioner as a reward.
Adam Smith was no democrat. He did propose that the North Americans should be given parliamentary representation. But he never said they had a right to be given such representation before they were taxed. He made no protest at the curtailing of a well-established local autonomy, the process that sparked off the revolt. Nor did he wish to alter the constitutional balance. In his schemes for American representation, his hope and expectation was that
“the monarchical and democratic parts of the constitution would, after the union, stand in exactly the same degree of relative force with regard to one another as they had done before.” (The Wealth of Nations, p 625).
Later on, after George III’ s government had clearly lost the war, Smith’s main hope was that trade might be resumed with “our revolted subjects”. But
“I have little anxiety about what becomes of the American commerce. By an equality of treatment to all nations, we might soon open a commerce with the neighbouring nations of Europe infinitely more advantageous that that of so distant a country as America.” (Correspondence, p 271).
Smith had no objection to the considerable increase in royal power that had been occurring under George III. This increase had been fiercely denounced by Edmund Burke, who did support the War of Independence. Royal power was effectively curbed and limited by the successful revolt of the North Americans against this increasing power. It was on this basis that Burke supported the establishment against the much more radical challenge of the French Revolution.
Adam Smith was altogether more consistent. He was at all times wholeheartedly on the side of George III and his ministers, though he was naturally disappointed by their actual performance. In June 1776 he wrote
“The American Campaign has begun awkwardly. I hope, I cannot say that I expect, it will end better”.
He was reacting to the retreat of General Howe from Boston, which the British government had tried to abolish as a port and commercial centre, in retaliation for the ‘Boston Tea Party’.
Smith’s friend Alexander Wedderburn was more optimistic.
“I have a strong persuasion that in spite of our wretched Conduct, the mere force of government clumsily and unsteadily applied will beat down the more unsteady and unmanageable Force of a democratic Rebellion.”
He was very nearly right, too. Washington only won by a very small margin, and had he lost, there would probably have been no subsequent revolution in France. A very different world might have developed as a result.
In 1788 a Frenchman called Pierre-Samuel Dupont de Nemours wrote to Smith congratulating him on his contribution to the work of the French Economists. This group are nowadays referred to as the “Physiocrats”, but Economists is what Smith called them, and what they called themselves. Dupont foresees that France is about to experience a “useful revolution”, to which Adam Smith’s work has contributed. He was to spend most of the rest of his life in exile, having only just escaped the guillotine in the revolution as it actually happened.
Adam Smith has been set up as an icon for several subsequent world orders, with his actual opinions ignored when they did not happen to fit the needs of the day. But those who do not learn from history are doomed to repeat it. Laissez fa ire economics would be best translated as let-it-be economics: you let the society follow its own direction, without trying to control the result. And if you do this you will not, of course, control the result. This might seem a mere platitude, except that time and again people ignore it. Governments unleash market forces, thinking that the effects will be merely economic with no social impact. And it’s never yet proved true.
Non-market societies can remain much the same across the centuries. The Chinese Empire was much the same for 2000 years, until Western power broke it up. But any society that allows full freedom for market forces had better take an attitude of ‘let it be’. Because there is no knowing what other sorts of freedoms a free market will bring, or what traditional values it will overturn. You can merely be confident that nothing will stay the same.
Some things are predictable. Market forces are homogenising – they make different groups of people ever more similar to each other. Thatcher & Co. signed away British sovereignty when they agreed to Europe becoming a single market. Despite all of the present troubles, only the breaking of trade ties with the rest of Europe could stop Britain from becoming just one more region of a developing European superstate. And since any such move would leave to a massive slump in living standards, a thousand times worse than the present recession, it just isn’t going to happen.
Had the New Right properly studied Adam Smith, rather than covering up his anti-Americanism and using him as a cultural icon, they might have foreseen how dangerous their economic policies were to their other objectives. They have damaged state socialism, vandalised the work of the post-1945 consensus, but by they have not actually built anything. Every one of their social goals is further away than when they came to power at the start of the 1980s. Families count for less, nations are less sovereign, and Britain and America have continued to lose ground to the state-orientated economies
This article appeared in November 1992, in Issue 32 of Labour and Trade Union Review, now Labour Affairs. You can find more from the era at https://labouraffairsmagazine.com/very-old-issues-images/ and https://labouraffairsmagazine.com/very-old-issues-images/m-articles-by-topic/.
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