The great Adam Smith was born sometime in early June 1723. I’m not going to spend time figuring out which day because it doesn’t really matter.
To commemorate Smith’s birthday, Reason magazine asked various people to give their favorite quotes from Smith and comment on them. I like a lot of the choices. Among my favorites are the ones noted by Dan Hannan, Russ Roberts, and Don Boudreaux.
Here are four of my other favorites:
Nobody ever saw one animal by its gestures and natural cries signify to another, this is mine, that yours; I am willing to give this for that. When an animal wants to obtain something either of a man or of another animal, it has no other means of persuasion but to gain the favour of those whose service it requires. A puppy fawns upon its dam, and a spaniel endeavours by a thousand attractions to engage the attention of its master who is at dinner, when it wants to be fed by him. Man sometimes uses the same arts with his brethren, and when he has no other means of engaging them to act according to his inclinations, endeavours by every servile and fawning attention to obtain their good will. He has not time, however, to do this upon every occasion. In civilised society he stands at all times in need of the cooperation and assistance of great multitudes, while his whole life is scarce sufficient to gain the friendship of a few persons. In almost every other race of animals each individual, when it is grown up to maturity, is entirely independent, and in its natural state has occasion for the assistance of no other living creature. But man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in his favour, and show them that it is for their own advantage to do for him what he requires of them. Whoever offers to another a bargain of any kind, proposes to do this. Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.
The folly of empire:
To found a great empire for the sole purpose of raising up a people of customers may at first sight appear a project fit only for a nation of shopkeepers. It is, however, a project altogether unfit for a nation of shopkeepers; but extremely fit for a nation whose government is influenced by shopkeepers. Such statesmen, and such statesmen only, are capable of fancying that they will find some advantage in employing the blood and treasure of their fellow-citizens to found and maintain such an empire. Say to a shopkeeper, Buy me a good estate, and I shall always buy my clothes at your shop, even though I should pay somewhat dearer than what I can have them for at other shops; and you will not find him very forward to embrace your proposal.
The second sentence in the quote above is one of my all-time favorite pithy Smith statements. It reads as if it could have been written last week.
Smith’s early cost/benefit analysis of empire:
The maintenance of this monopoly has hitherto been the principal, or more properly perhaps the sole end and purpose of the dominion which Great Britain assumes over her colonies. In the exclusive trade, it is supposed, consists the great advantage of provinces, which have never yet afforded either revenue or military force for the support of the civil government, or the defence of the mother country. The monopoly is the principal badge of their dependency, and it is the sole fruit which has hitherto been gathered from that dependency. Whatever expence Great Britain has hitherto laid out in maintaining this dependency has really been laid out in order to support this monopoly. The expence of the ordinary peace establishment of the colonies amounted, before the commencement of the present disturbances, to the pay of twenty regiments of foot; to the expence of the artillery, stores, and extraordinary provisions with which it was necessary to supply them; and to the expence of a very considerable naval force which was constantly kept up, in order to guard, from the smuggling vessels of other nations, the immense coast of North America, and that of our West Indian islands. The whole expence of this peace establishment was a charge upon the revenue of Great Britain, and was, at the same time, the smallest part of what the dominion of the colonies has cost the mother country. If we would know the amount of the whole, we must add to the annual expence of this peace establishment the interest of the sums which, in consequence of her considering her colonies as provinces subject to her dominion, Great Britain has upon different occasions laid out upon their defence. We must add to it, in particular, the whole expence of the late war, and a great part of that of the war which preceded it.
The late war was altogether a colony quarrel, and the whole expence of it, in whatever part of the world it may have been laid out, whether in Germany or the East Indies, ought justly to be stated to the account of the colonies. It amounted to more than ninety millions sterling, including not only the new debt which was contracted, but the two shillings in the pound additional land tax, and the sums which were every year borrowed from the sinking fund. The Spanish war, which began in 1739, was principally a colony quarrel. Its principal object was to prevent the search of the colony ships which carried on a contraband trade with the Spanish Main. This whole expence is, in reality, a bounty which has been given in order to support a monopoly. The pretended purpose of it was to encourage the manufactures, and to increase the commerce of Great Britain. But its real effect has been to raise the rate of mercantile profit, and to enable our merchants to turn into a branch of trade, of which the returns are more slow and distant than those of the greater part of other trades, a greater proportion of their capital than they otherwise would have done; two events which, if a bounty could have prevented, it might perhaps have been very well worth while to give such a bounty.
Under the present system of management, therefore, Great Britain derives nothing but loss from the dominion which she assumes over her colonies.
Smith’s prediction of the outcome of the revolutionary war and the future of the United States:
Unless this or some other method is fallen upon, and there seems to be none more obvious than this, of preserving the importance and of gratifying the ambition of the leading men of America, it is not very probable that they will ever voluntarily submit to us; and we ought to consider that the blood which must be shed in forcing them to do so is, every drop of it, blood either of those who are, or of those whom we wish to have for our fellow-citizens. They are very weak who flatter themselves that, in the state to which things have come, our colonies will be easily conquered by force alone. The persons who now govern the resolutions of what 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.
But hey, what did he know?
READER COMMENTS
Richard Fulmer
Jun 6 2023 at 3:36pm
The first quote reminds me of Walter E. Williams’ discussion of seduction and rape: https://youtu.be/p1oY-IzANis
Mark Brady
Jun 6 2023 at 3:58pm
“The great Adam Smith was born sometime in early June 1723. I’m not going to spend time figuring out which day because it doesn’t really matter.”
The fact of the matter is that no one now knows on which day he was born. We do know that he was baptized on June 5 in the Old Style (Julian) calendar, which at that time was eleven days behind the New Style (Gregorian) calendar that was used in Catholic Europe.
Great Britain and its overseas possessions adopted the Gregorian calendar following the Calendar (New Style) Act 1750. For the full story, go here: https://en.wikipedia.org/wiki/Old_Style_and_New_Style_dates
Warren Platts
Jun 6 2023 at 4:24pm
We all gotta admire the famous Scottish Commissioner for Managing and Causing to be Levied and Collected His Majesty’s Customs, and Subsidies and other Duties in that part of Great Britain called Scotland, and also the Duties of Excise upon all Salt and Rock Salt Imported or to be Imported into that part of Great Britain called Scotland. Here are a few of my favorite quotes:
On China Shock-magnitude import shocks:
On the relation of domestic corporate income taxes and import tariffs:
On Great Britain’s own Jones Act:
On Section 232-style tariffs:
On optimal tariffs:
Mark Brady
Jun 6 2023 at 9:02pm
“On the relation of domestic corporate income taxes and import tariffs.”
In the passage that you quote Adam Smith is surely considering the equivalence of excise taxes on domestically produced goods and import tariffs on foreign produced goods. This characterized the policy that British governments sympathetic to free trade implemented in the nineteenth century to raise revenue.
Jon Murphy
Jun 6 2023 at 9:14pm
All of Mr Platts quotations are incorrect interpretations of what he claims they are.
Warren Platts
Jun 7 2023 at 7:01am
Absolutely not. It is quite clear that the Scottish Commissioner for Managing and Causing to be Levied and Collected His Majesty’s Customs, and Subsidies and other Duties in that part of Great Britain called Scotland, and also the Duties of Excise upon all Salt and Rock Salt Imported or to be Imported into that part of Great Britain called Scotland was what I would call a mild protectionist. He was against mercantilism, not reasonable protection for “workmen.” There’s a big difference, even though free trade true believers cannot fathom that difference. One of these days I’m going to travel to Scotland to go through the olde records to figure out exactly how many free traders (er, I mean smugglers) that Smith personally had hanged without benefit of clergy.
Jon Murphy
Jun 7 2023 at 7:21am
I have no doubt you believe that, but it just isn’t so. Smith was stauchly against protectionism; he explicitly says so in multiple places in WN, TMS, his letters, his official papers, his lectures, etc. Indeed, in a few places, he even refers to it as “manifestly unjust” and a “violation of the natural system of liberty.”
Smith was not a radical, true. He wanted gradual removals of trade barriers and protections (as one of your quotes shows). But that does not make him a protectionist.
Don Boudreaux
Jun 7 2023 at 9:19am
Calling Adam Smith “a mild protectionist” is akin to calling Charles Darwin “a mild creationist” or Hayek “a mild socialist.” Pedants can find in the works of great scholars passages that can be twisted and taken out of context in order to seemingly confirm the pedants’ misinterpretation of the great-scholars’ lessons. Yet such pedantic exercises confirm only the pedants’ dogmatism.
Jon Murphy
Jun 7 2023 at 9:30am
It’s for this reason, Don, that I think some Smith commentators make too much of Smith’s discussion of the Navigation Acts. Given that his comment about them being the “wisest” of the commercial regulations comes after about 400 pages of him calling those commercial regulations “absurd,” “foolish,” and “manifestly unjust,” it seems like a backhanded compliment.
Jon Murphy
Jun 7 2023 at 9:31am
Actually “insincere” is the better word than “backhanded compliment.”
Warren Platts
Jun 7 2023 at 12:40pm
No sir. Commissioner Smith was not against tariffs per se. Smith advocated for reasonable, modest tariffs that served the dual purpose of raising revenue and protecting workmen. Smith even advocated for export tariffs. In regard to Britain’s export ban on wool at the time, Smith had this to say:
Nowhere does Smith say he is for 100% unilateral free trade 100% of the time. Indeed Smith says:
But here is the one passage that supposedly justifies that view:
But that passage is always taken out of context! What Smith was against was the “mercantile system” of rent-seekers lobbying for prohibitory tariffs that grant monopolies and encourage lawless smuggling while striving for a constant trade surplus. This is very different from protectionism. Protectionism and mercantilism are two completely different models. In fact, they are diametrically opposed. The former seeks to raise wages for workmen, while the latter seeks to immiserate workmen in order to be “competitive.”
Unless people recognize the difference between protectionism and mercantilism, then reading Wealth of Nations is bound to produce cognitive dissonance as, for example, where Jon, above, has to resort to hypothesizing that Smith was being sarcastic in his discussion of the Navigation Acts!
Nowhere is such cognitive dissonance more evident than when people try to explain away the fact that Adam Smith took the job of Scottish Commissioner for Managing and Causing to be Levied and Collected His Majesty’s Customs, and Subsidies and other Duties in that part of Great Britain called Scotland, and also the Duties of Excise upon all Salt and Rock Salt Imported or to be Imported into that part of Great Britain called Scotland. By all accounts Commissioner Smith performed his duties diligently and with more assiduity than his predecessor.
Yet if Adam Smith was an ardent advocate of 100% unilateral free trade 100% of the time, then for him to take that job and not slow roll it, then that makes him the biggest hypocrite in economic history. However, by all accounts Smith’s personal integrity was of the highest order. Therefore, he could not have been a hypocrite. But the cognitive dissonance disappears once one recognizes that Commissioner Smith actually was for modest, optimal tariffs that only minimally interfered with foreign trade, and that raised revenue while at the same time provided reasonable protection for workmen.
(As for Darwin, he was a great student of, and never once ridiculed the creationist William Paley. The grain of truth in creationism that Darwin agreed with is that the wonderful adaptations of living organisms require a special explanation. Thus, rather than just shrugging off biological adaptations the way David Hume did, Darwin’s contribution was to provide a materialistic special explanation.)
Jon Murphy
Jun 7 2023 at 12:47pm
Your entire response is nothing more than factually incorrect statements, unrelated quotes that do not justify your claims, and a bizarre ad hominem.
Do you have any solid evidence?
Jon Murphy
Jun 7 2023 at 1:38pm
As two case in points:
Warren writes:
True, but this is a strawman. I doubt you will find anyone who is 100% anything 100% of the time. Smith does, indeed discuss exceptions, but they are just that: exceptions to the general rule of free trade. Warren then gives a quote from Smith that actually proves Smith was against tariffs, especially for protectionist purposes:
This quote comes from page 471, paragraph 43. Paragraph 42 (which starts two pages earlier) is a condemnation of the argument that tariffs are needed to protect workers. He writes:
The rest of the paragraph (which is too long to quote here) details how after the last war, the great discharge of the army, navy, and related manufacturers did not lead to mass unemployment, but rather growth. He ends with a dig at the merchants and workers who demand tariffs for protection:
Given this paragraph immediately precedes Warren’s quote, his interpretation (which, even with context removed, doesn’t make a lick of sense) cannot be correct. Indeed, the paragraph in question (43) is about the political feasibility of adopting free trade. It’s very public choice. It has nothing to do with opposing free trade.
Further, Warren writes:
The second clause (“protecting workmen”) is factually incorrect, as demonstrated above. Smith does see tariffs as a source of revenue, but strictly rejects tariffs as a protectionist measure as improper, and even is highly skeptical of their ability to raise revenue in a proper manner (see page 472, as well as pages 894-899).
Further, to accept that Smith is a “mild protectionist,” we’d have to conclude Smith is inconsistent. Smith explicitly condemns, in no unclear terms, the protections afforded to the East India Company and other corporations. One would think that, after centuries of Smith scholarship, someone would notice such a glaring inconsistency. And yet, no one has mentioned it because it doesn’t exist.
Warren’s argument relies entirely on a single line about the Navigation Acts taken out of context. To get to his claim of Smith being a “mild protectionist,” he must ignore literally thousands pages of Smith’s writing, including several places where he explicitly condemns tariffs for protectionism and mercantilism.
Therefore, one must reject Warren’s claims as (to use Smith’s preferred adjective for describing protectionism and mercantilism) absurd.
Warren Platts
Jun 7 2023 at 5:45pm
Jon’s statement here is the typical interpretation given by free trade proponents: Smith was against all tariffs, except for a very few peculiar exceptions that are so rare as to be hardly worth mentioning…
But again, this stems from the conflation of protectionism and mercantilism; free traders generally tend to use the words interchangeably as if they referred to the same object the same way Morning Star and Evening Star refer to the same planet Venus.
Thus, in the specific context for the paragraphs Jon references, viz. mercantilist “high duties and prohibitions,” when these are rejected by Smith, since it is assumed that protectionism and mercantilism are the same thing, then it must seem obvious that there can be no protectionist middle ground. Therefore, Smith must be advocating for the elimination of all tariffs (barring those very rare, peculiar exceptions that aren’t even worth mentioning).
But again: this entirely begs the question: Why would Smith take the job of Scottish Commissioner for Managing and Causing to be Levied and Collected His Majesty’s Customs, and Subsidies and other Duties in that part of Great Britain called Scotland, and also the Duties of Excise upon all Salt and Rock Salt Imported or to be Imported into that part of Great Britain called Scotland if he hated tariffs of all sorts? That would be like an ardent abolitionist taking the job of a slave auctioneer!
This seeming contradiction goes away, however, once one realizes that when Smith is talking about “high duties and prohibitions” he’s talking specifically about prohibitory tariffs and outright import bans — not tariffs in general. Now, obviously, if a tariff were set at 150%, that would pretty much end all imports of that commodity. However, by abruptly lowering that tariff down to 15%, that would eliminate the de facto import ban, but would not eliminate the tariff entirely, yet would allow the “free” flow of imports. You gotta keep in mind that when Smith speaks of “freedom of trade,” he’s not using “free” in the same sense as Boudreauxvian economists; rather Smith is contrasting some trade with no trade. With a moderate tariff, there is still perfect freedom to trade if one wants to — or not. Certainly, most of the contemporary protectionists I talk to would be satisfied with 15% tariffs because such tariffs do indeed provide protection for home workmen, yet do not amount to import bans.
Commissioner Smith himself makes this point explicitly in the quote I provided above that both Jon and Don ignore. So here it is again:
High taxes, sometimes by diminishing the consumption of the taxed commodities, and sometimes by encouraging smuggling frequently afford a smaller revenue to government than what might be drawn from more moderate taxes. By removing all prohibitions, and by subjecting ***ALL*** FOREIGN MANUFACTURES to such moderate taxes as it was found from experience, afforded upon each article the greatest revenue to the public, OUR OWN WORKMEN MIGHT STILL HAVE A CONSIDERABLE ADVANTAGE IN THE HOME MARKET[!]; and many articles, some of which at present afford no revenue to government, and others a very inconsiderable one, might afford a very great one. (my emphasis)
Jon Murphy
Jun 8 2023 at 1:25pm
For the record, I didn’t ignore that quote. I provided citations to Smith as he considered, and ultimately rejected, the hypothetical use of tariffs as a proper source of revenue.
It should also be noted that tariffs as a revenue source are not the same as tariffs for protectionist purposes (as the Smith quote you chose, especially the bolded part, shows). That quote is rather strong evidence that Smith was not a protectionist. It is difficult to follow claim given you keep changing your thesis. Was Smith a “mild protectionist” (whatever that means)? Did he want moderate and equal tariffs for revenue generation rather than protection? Was he “against all tariffs, except for a very few peculiar exceptions that are so rare as to be hardly worth mentioning”? Was he a hypocrite? It’s hard to tell. You keep changing the thesis, often within the same paragraph.
Warren Platts
Jun 9 2023 at 6:48pm
Sorry, but this is simply not true. The section on excise taxes & tariffs (duties) as a revenue source is in Book V (Of the Revenue of the Sovereign or Commonwealth) Chapter II (Of the Sources of the General or Public Revenue of the Society) Part II (Of Taxes) Article IV (Taxes which it is intended should fall indifferently upon every different Species of Revenue) in the section “Taxes upon Consumable Commodities” after the discussion of capitation (head) taxes.
What Smith liked about excise taxes (taxes on home production for home consumption) is that everybody knew what items were to be taxed, and by exactly how much. Smith contrasted this to the foreign trade: the confusing, Byzantine customs system of duties, drawbacks, bounties, and bans where there were hundreds of different categories each with its own rates, writing, “In point of perspicuity, precision, and distinctness, therefore, the duties of customs are much inferior to those of excise.”
Smith describes how, at the start of a thousand year history, tariffs started off as innocent taxes on foreign merchants but then gradually evolved into the mercantile system prevalent in Smith’s day:
The original tariffs were “imposed indifferently upon exportation, as well
as importation” but subsequent tariffs were mostly “laid altogether upon importation.”
Smith then goes on to discuss how the mercantile system perverted incentives thus encouraging smuggling and cheating:
However, Smith wanted to reform and simplify the customs duties (tariff) system along the lines of the excise tax system, not eliminate it.
As for the claim that “tariffs as a revenue source are not the same as tariffs for protectionist purposes,” it is certainly not the case that any thing must only serve one function: tongues are for tasting and swallowing food; but they are also used for talking. Thus, there is certainly no logical contradiction to say a tariff can serve the dual purposes of both revenue raising and protection of workmen’s wages. Furthermore, it should be noted that the export led, mercantilist model depends on suppression of wages in order to be more “competitive” on the international market; but the protectionist model depends on high wages for workers in order to promote domestic consumption of domestic production.
In the first instance, mercantilist tariffs favor monopolies thus strangling revenue collection; but in Smith’s proposed reformed world, lower tariffs will raise even more revenue while eliminating the monopolies; but at the same time, the tariff will provide protection for workers’ wages by giving them “a considerable advantage in the home market.”
A modern example of a protectionist tariff would be Trump’s washing machine tariffs. They were not high enough to count as prohibitory, but they did increase employment and wages in the washing machine industry. No monopoly created: in fact, competition within the U.S. increased because of factories constructed by at least two foreign manufacturers. Moreover, there was no effort to turn the United States into a major exporter of washing machines, as the mercantilist model would recommend.
To be sure, one gets from reading Smith in this regard that the wage protection that comes from a revenue raising tariff is but a mere happy side effect. That is why I call Adam Smith a mild protectionist. No doubt if the government started raising too much money from tariffs (as happened in the United States in the 19th century a time or two), he would have argued for lowering tariff rates rather than raising them (as both options would have the same effect on revenue). That said, Smith many times elsewhere in Wealth of Nations expresses concern for the working class. Nowhere does he make the Antoinettish claim that if workers today will accept immiseration, then their grandchildren will be made better off.
Warren Platts
Jun 7 2023 at 7:05am
The corporate income tax (21% last I checked) is essentially a excise tax on all production (minus the cost of labor — who of course get taxed in turn). Therefore, if we were to follow Smith’s logic, there would be a 21% ad valorum tax on imports. Literally 90% of countries on Planet Earth follow Adam Smith’s logic in this regard. The United States is the exception that proves the rule.
Ahmed Fares
Jun 6 2023 at 4:38pm
There’s also this:
— Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, Book 5, Chapter 3
Ahmed Fares
Jun 6 2023 at 4:43pm
Right after I posted, I saw this in what I believe is an older David Henderson article with the same quote titled: Adam Smith on the Glory of War
https://www.econlib.org/archives/2018/04/adam_smith_on_t_2.html
Warren Platts
Jun 6 2023 at 5:59pm
Despite Adam Smith’s words of sympathy for the American colonists, he remained stalwart and loyal servant of the British Empire. Indeed, Smith even saw a bit of action personally during the American Revolution in 1779. When the Franco-American squadron led by John Paul Jones (also Scottish) aboard the USS Bonhomme Richard circumnavigated the British Isles on a raiding patrol, Commissioner Smith’s coastal anti-smuggling lookouts observed the rebel squadron off the east coast of Scotland. Smith quickly organized his modest Customs fleet and managed to scare off John Paul Jones’s squadron who were more interested in commerce raiding than a real fight. The squadron sailed to the south of the east coast of England where they attacked a convoy of 50 merchantmen heading for the Baltics and the Battle of Flamborough Head ensued. It was there that Jones famously yelled, “I have not yet begun to fight!”
Jon Murphy
Jun 6 2023 at 7:37pm
One of the things I love about Adam Smith is he doesn’t mince words. He’s pretty clear in what he means.
For example, Smith uses the word “absurd” 29 times in the Wealth of Nations. Almost half, 14 of those instances are him describing the commerical policy of England at the time (mercantilism) and the notions of protectionism (and, in one such case, he calls the system “absurd and foolish”).
Indeed, in one such case, he notes that protectionism (the corn laws, specifically) makes nations more vulnerable to famine, rather than protect them against it:
No guessing on Smith’s stance here.
And this was quite brave of him, too. Smith was attacking a well-entrenched system. He states in a letter to Andreas Holt that he took a lot of flack for Wealth of Nations, too, although to a lesser extent then he expected:
Happy birthday to Adam Smith. The world is a better place for his wisdom.
Monte
Jun 7 2023 at 11:49am
As a British citizen, Smith was far more pragmatic than ideological in his attitude towards the Revolution. If only George III had weighed more carefully Smith’s proposition “that Great Britain should voluntarily give up all authority over her colonies, and leave them to elect their own magistrates, to enact their own laws, and to make peace and war, as they might think proper”, conflict could have been avoided. This, of course, meant proposing “such a measure as never was, and never will be, adopted by any nation in the world.”
Regrettably, this was not to be the case. Instead, war ensued in arriving historically at what could have been settled 8 years earlier without shedding a single drop of blood:
Peace is only an armistice in an endless war. – Thucydides
robc
Jun 8 2023 at 8:48am
What he wanted, happened, it just took 140 years instead of 10.
Monte
Jun 8 2023 at 11:02am
More or less. Diplomatic relations had been re-established in 1785, culminating with The Great Rapprochement in 1895 (although tensions flared with the Democratic Party’s nomination of William Jennings Bryant and his Cross of Gold speech in 1896). But as you point out, Great Britain and the U.S. became associated powers with the outbreak of WWI, 140 years after American Independence, and formal allies during WWII.
Time heals all wounds until it reopens them…
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