The Wealth of Nations in the 1790s

The Wealth of Nations in the 1790s SANDRA SHERMAN In The Wealth of Nations (1776), Adam Smith describes an "invisible hand" that trumps the intentions of economic actors, reconciling their motives with public concerns and guiding the market towards utilitarian ends: Every individual is continually exerting himself to find out the most advantageous employment for whatever capital he can command. It is his own advantage, indeed, and not that of the society, which he has in view. But the study of his own advantage naturally, or rather necessarily leads him to prefer that employment which is most advantageous to the society. . . . [Every individual] generally, neither intends to promote the publick interest, nor knows how much he is promoting it. By preferring the support of domestick to foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. ' 81 82 / SHERMAN The Glasgow edition of The Wealth of Nations compares this model to a self-regulating "machine" whose operation is naturally efficient, independent of any controlling principles except those built in.2 Accordingly, government has "no strictly economic functions" (35).3 In levying taxes, enacting laws, and undertaking public works, government "is part of [Smith's] general model" (36), that is, it facilitates private action. Indeed, Smith explicitly minimizes the need for public initiative, noting that sovereigns should "provide a plentiful revenue or subsistence for the people, or more properly . . . enable them to provide such a revenue or subsistence for themselves" (IV Intro. 1). To liberal historians, such restriction of public authority places Smith among post-Hobbesian thinkers who embraced a "non-political model of society, which, by virtue of being a closed system of inter-acting forces, seemed to sustain its own existence without the aid of an outside political agency. " This last quality tints this "model of society with anti-political overtones," such that social benefits issue from—indeed depend on—private actors' pursuit of their own ends.4 Smith avows that "I have never known much good done by those who affected to trade for the publick good" (IV ii. 9). Yet like most modern commentaries the Glasgow edition delineates the boundaries of Smith's benign, self-regulating regime, beyond which even Smith acknowledges that private action may not serve the public.5 Citing Smith's proviso respecting the profit motive, the editors observe that functions such as defense and justice, as well as certain public works are "unlikely to be provided by the market because 'the profit could never repay the expence of any individual or small number of individuals' (IV. ix. 51)," 35. Notably, Smith includes parish schools for the laboring poor among such unprofitable services (V i. f. 55), and in this regard the editors perceive a certain scepticism in Smith's generally optimistic analysis, noting that he "did not believe that the public could rely on the market, not least because the poor could scarce afford to maintain their children even in infancy" (39). Such apparent skittishness regarding the humane potential of private enterprise, hailed as philosophical "complexity," fascinates economists disillusioned by the idea of a value-free economics "of which Adam Smith is often regarded as the founder. "6 From the perspective that celebrates such complexity, the market is not Smith's alpha and omega. Indeed, no matter what one's perspective, Smith undeniably cites incidents of poverty as grounds for public action.7 Yet while numerous modern readers acknowledge Smith's socially conscientious reservations towards economic liberalism, and view The Wealth of Nations as a plea for free markets tempered by an admission that The Wealth of Nations in the 1790s I 83 trade is not a cure-all, such clarity was uncommon in the years after the text's publication. In this article, I discuss late eighteenth-century exponents of laissez-faire who saw in Smith's notion of a self-regulating market a formula for rigid but respectable opposition to traditional paternalism, groaning...