Apart from his personal attachment to the Physiocrats we must also remember that Smith more than shared their predilection for agriculture.
Nothing can be more incorrect, though it is frequently done, than to regard Smith as the prophet of industrialism and to contrast him with the Physiocrats, the champions of agriculture. When the Wealth of Nations appeared in 1776 the economic transformation known to history as the Industrial Revolution, which consisted in the rapid substitution of machine production for the old domestic régime, had as yet scarcely begun. Hargreaves and Arkwright had doubtless some inventions to their credit. The one had produced the spinning jenny in 1765, and the other had perfected the water frame in 1767, improvements that had given considerable impetus to the cotton trade. James Watt,[148] who was known to Smith, took out a patent for a steam-engine in 1769. But these inventions were as yet quite novel, and required time before they could modify the industrial system. The more important among them, Crompton’s “mule”[149] and Cartwright’s weaving machine, were as yet of the future. These dates are significant; they prove conclusively that the Industrial Revolution had scarcely begun when Smith’s great work appeared. Moreover, several of the more important themes treated of in the Wealth of Nations may be discovered in the course of lectures which Smith delivered at Glasgow about 1759, so that it is quite impossible to establish anything like an exact connection between the Industrial Revolution which was just beginning and the ideas embodied in the Wealth of Nations. One cannot even say that Smith was particularly enamoured of the manufacturing régime—apart from the mechanical advance which it implied. For, as Marx says,[150] the characteristic trait of English economic life, despite the undisputed advance that industry was making at that time, was commercial rather than industrial.[151] Especially was this true of Glasgow, where Smith made most of his observations. Glasgow then was an essentially commercial town, principally engaged in the importation of American tobacco.[152]
Far from constituting a prophetic manifesto of the new age, Smith’s work reveals even to the most superficial reader a thorough abhorrence of traders and manufacturers. All his sarcasm is reserved for them, all his criticism levelled at them. While the interest of landed proprietors and workers appears to him always to accord with a country’s general interest, that of traders and manufacturers “is never exactly the same with that of the public,” the manufacturers having “generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.”[153]
Again, when it comes to choosing between capitalists and workmen the issue is not long in doubt. It is quite clear from more than one passage that Smith’s sympathy was wholly with the workers. Several paragraphs could be cited in proof of this. Suffice it to recall the very sympathetic way in which he speaks of the high wages of workmen and contrast it with his discussion of profits. “Is this improvement in the circumstances of the lower ranks of the people to be regarded as an advantage or as an inconveniency to the society? The answer seems at first sight abundantly plain. Servants, labourers and workmen of different kinds, make up the far greater part of every great political society. But what improves the circumstances of the greater part can never be regarded as an inconveniency to the whole. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, cloath, and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, cloathed, and lodged.”[154] The tune changes when he comes to speak of profits. He is of opinion that high profits raise the price of commodities much more than high wages, and he dismisses the consideration of the problem with this ironical remark: “Our merchants and master-manufacturers complain much of the bad effects of high wages in raising the price, and thereby lessening the sale of their goods both at home and abroad. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people.”[155] The contrast is significant. It is still more deeply marked in that phrase which one is surprised not to see more frequently quoted by the champions of labour legislation. “Whenever the legislature attempts to regulate the differences between masters and their workmen, its counsellors are always the masters. When the regulation, therefore, is in favour of the workmen, it is always just and equitable; but it is sometimes otherwise when in favour of the masters.”[156]
This is not the tone of most of his contemporaries. Nor do we meet with this note in the writings of the appointed champions of the industrial system—the MacCullochs, the Ures, and the Babbages of the next fifty years. His words ring with that generous pity which proved a source of inspiration to Lord Shaftesbury and Michael Sadler in their efforts to secure the passing of the Factory Act of 1833.
Smith cannot, accordingly, be regarded as the herald of dawning industrialism. He clung to agriculture with all the tenacity of his nature, and no opportunity of showing his preference was ever missed. The difficulties of agriculture are quite beyond those of any other craft. “After what are called the fine arts, and the liberal professions, however, there is perhaps no trade which requires so great a variety of knowledge and experience.”[157] Not only is it more difficult, but it is also more useful. Between agriculture, manufacture, and commerce he draws a long comparison (to which we shall have to make reference again) purporting to show that of all employments agriculture is the most profitable field of investment, and the one most in accord with the general interest. For the more progressive nations “the natural course of things” would seem to suggest the investment of capital firstly in agriculture, in the second place in industry, and finally in foreign trade. The whole of Book III is an endeavour to show how the policy of European nations had for many centuries been hostile to agriculture and how the natural order had been inverted in the interests of merchants and artisans. Agriculture had always been the victim. In his theory of taxation he shows how a portion of the taxes on profits and wages ultimately falls upon property. In his discussion of duties on imported corn—those duties which aroused the indignation of Ricardo against the landlords—he reveals the same partiality. And he even goes the length of saying that it is not because of their personal interest, but owing solely to a badly conceived imitation of the doings of merchants and manufacturers, that “the country gentlemen and farmers of Great Britain so far forgot the generosity which is natural to their station, as to demand the exclusive privilege of supplying their countrymen with corn and butchers’-meat.”[158]
Smith’s preference for agriculture and agriculturists need not be further insisted upon. Despite his own theory of division of labour, he still cherished a secret regard for the Physiocratic prejudice. He never subjected agriculture to the indignity of equal treatment along with other forms of economic activity. In his work at least it still retains its ancient pre-eminence.
II: THE “NATURALISM” AND “OPTIMISM” OF SMITH
In addition to the conception of the economic world as a great natural community created by division of labour, we can distinguish in Smith’s work two other fundamental ideas, around which his more characteristic theories group themselves. First is the idea of the spontaneous origin of economic institutions, and secondly their beneficent character—or, more briefly, Smith’s naturalism and optimism.
The two ideas, though frequently intermingled and sometimes even confused in Smith’s work, must be carefully distinguished by the historian of economic thought.
Spontaneity and beneficence were intimately connected for Smith. In the eighteenth century anything natural or spontaneous was immediately voted good, and the terms “natural,” “just,” and “advantageous” were often used as synonymous. Smith did not escape the confusion of ideas. Having shown the natural origin of economic institutions, he imagined that at the same time he had demonstrated their useful and beneficent character.[159] The confusion is no longer permissible. To give a scientific demonstration of the origin of social institutions and to gauge their value from the point of view of the general interest are two equally legitimate but very different intellectual pursuits. We may agree with Smith that our economic organisations,