“Very difficult, perhaps altogether impossible”: Smith’s political science

This citation has garnered popularity among certain circles—not solely due to its nod toward lower taxes but also for the warm reassurance it provides regarding political processes. The implication that governance is largely about not intervening—eschewing warfare and refraining from tax hikes—offers a sense of comfort. For contemporary economists who consider themselves the rightful descendants of WN, the suggestion that political science might not be overly complex is an enticing one.

However, the core argument of Book V diverges significantly. Across an extensive discourse, Smith illustrates that the presence of peace and a fair legal system is not only historically rare but also constantly under threat. When any society seems to possess these qualities, they are neither a product of the natural order nor the result of wise governance; they are, instead, more akin to happenstance.

Smith’s writing style is not that of an esoteric philosopher; rather, he is methodical and thorough, presenting arguments and counterarguments at length, expecting readers to engage with his thoughts. Book V demands a particularly patient reading approach, as it amalgamates numerous topics within the ostensibly focused discussion on state finances. The organization of state expenditures, revenues, and debts belies the diversity of subjects covered, from the status of English universities and the theory of societal stages to church-state relations, corporate governance dilemmas, toll road operations, and the organizational ramifications of gunpowder. It would be reductive to claim Smith ties these topics together under a singular thesis. However, collectively, his nuanced explorations underscore the substantial challenges in achieving and maintaining a government that isn’t “oppressive and tyrannical.”

Peace

The opening of Book V presents a comprehensive account of the history of warfare and military organization. Its most politically significant conclusion asserts the inevitability and superiority of a standing army in modern contexts, necessitating a continuous public budget to support it. This requirement arises not only from the benefits of specialization and labor division but is also a reflection of the first chapter’s exploration of those very advantages. Unlike herders or yeoman farmers, those engaged in commerce and manufacturing face a perpetual opportunity cost when it comes to military service. Herding societies, like the Mongols, bring their wealth to war, while farmers can afford seasonal downtime between planting and harvesting. Conversely, participants in a commercial society cannot easily abandon their livelihoods without incurring damage to their wealth—essentially jeopardizing the nation’s prosperity. Therefore, a commercial society must fund a full-time professional military.

Two critical observations emerge from this discussion. Firstly, for Smith, the history of government is fundamentally intertwined with the history of warfare and military structure. As he elaborates in Theory of Moral Sentiments (TMS), he examines the moral psychology behind obedience, elucidating why individuals consent to governance. The configuration of government at any moment is significantly shaped by the military organization suited to the prevailing economic and technological conditions.

Secondly, modern circumstances present a particularly fertile ground for a regression to the despotism associated with nomadic herding societies. The feudal fragmentation of military authority, as discussed in Book III, has vanished, undermined by the commercial evolution of medieval cities and the nobility’s desire for luxuries. The era of citizen militias, lauded by Machiavelli and the civic republican tradition, was fleeting. In a commercial society, the sovereign funds a unified military and its equipment, including costly artillery and ships. Though the sovereign may lack the personal dominion over military organization that Genghis Khan once wielded, the difference is negligible.

Military organization is not the only topic Smith addresses in Book V. Warfare resurfaces in the chapter on religion, where he refrains from attributing the wars of religion solely to religious fervor, instead highlighting the entanglement of church and state. “If politics had never sought the aid of religion, had the victorious faction never adopted the doctrines of one sect over another,” he posits, then denominations could have thrived in a climate of free and peaceful competition (V.i.g.8, emphasis added). However, as Ryan Griffiths astutely points out, in societies where this entanglement is already established, which at that time included all societies except the United States, the risk of cycles of persecution and retribution remains ever-present, complicating damage control for the historical record of persecution. Moreover, there’s a predictable and permanent rationale for political figures to invoke religious justifications, steering their societies toward religious discord. “[E]ach political party has either found it or imagined it to be in its interest to ally with various contending religious factions” (Vi.g.7). The prudent policy of promoting liberal religious freedom is one that “positive law has perhaps never yet established, and probably never will in any nation” (Vi.g.8).

This language echoes sentiments expressed in Book IV, where Smith remarks that establishing genuine free trade is a utopian endeavor, and that the sound policy of allowing America to separate peacefully is “a measure which has never been, and likely will never be, adopted by any nation in the world.” In all these instances, Smith is willing to articulate desirable political outcomes, yet he remains acutely aware of the political mechanisms that render such outcomes seemingly unattainable.

Tolerable Administration of Justice

Arguably, the two most widely referenced passages from Book V include the one I initially cited (often quoted in conservative discourse) and a passage addressing the debilitating effects of labor division. Yet central to the political discourse of Book V is this:

• “When the judicial is merged with the executive power, it is virtually impossible for justice not to be frequently sacrificed at the altar of what is colloquially termed politics. Those entrusted with the state’s significant interests may, even absent corrupt motives, sometimes feel compelled to sacrifice the rights of an individual for those interests. The impartial administration of justice is crucial for the liberty of each individual and their perception of personal security. For every individual to feel completely secure in their rights, it is essential that the judicial be separated from the executive power, and that it be rendered as independent as possible from that power.” (V.i.b.24)

Absent what we might now recognize as a robust separation of powers, we should not expect “a tolerable administration of justice.” However, this assertion follows a historical narrative of judicial authority which argues that such separation is a late, rare, and fortunate phenomenon. Indeed, Smith suggests it is improbable that such a separation could have emerged early enough to elevate any society “from the depths of savagery,” given that, during the hunting and herding stages of political evolution, adjudication typically coincided with the exercise of command. This remained true even during the era of monarchical governance over agrarian societies. The legacy of judicial mismanagement is deep-rooted, partly because rulers historically passed judgment in private cases as a means of generating revenue, leading to “several very gross abuses… As the ancient history of every country in Europe attests, such abuses were far from uncommon” (Vi.i.b.14). Given that judgments were routinely for sale, “the administration of justice appears to have been exceedingly corrupt; far from equitable and impartial even under the best monarchs, and entirely profligate under the worst” (V.i.b.15).

How did this seemingly insurmountable condition change? Two factors contributed, one general and one specific to England. The general factor was that rulers became too preoccupied, or considered themselves too exalted, or both, to continue rendering personal judgments. Roman consuls and European monarchs eventually delegated this responsibility to subordinates. Once this delegation occurred, an individual believing they had been grievously wronged could, in principle, appeal from the subordinate to a superior. This mitigated some abuses: a king might frown upon a judge or bailiff accepting bribes, especially if he was not a beneficiary. However, as long as judges and bailiffs remained genuinely dependent on the king, the sacrifice of justice “to what is vulgarly called, politics” persisted unchecked. Moreover, the corruption of judgments was only lightly monitored by vague royal oversight.

The specific factor was the fortuitous emergence of multiple overlapping judicial systems that could compete to attract cases and filing fees. This competition encouraged courts to develop reputations for fairness, impartiality, and incorruptibility, enhancing the quality of procedures available to litigants. This development is primarily examined in the context of England, notably the emergence of the equity-based court of exchequer. It remains unclear whether Smith believed this phenomenon was confined to England. It stands as a fortunate example of invisible hand processes: judges pursuing only the financial interests of their courts inadvertently promoted a rule of law that was not their intended goal. Yet, there is nothing inevitable about this process; it necessitates the combination of fee-based courts independent of direct royal control, a plurality of judicial systems, and sufficient overlap in jurisdiction to foster genuine competition for the same cases. Smith acknowledges that post-Glorious Revolution and post-Act of Union Britain has achieved a “tolerable administration of justice.” However, like his friend and mentor David Hume, he remains skeptical that the relatively favorable political conditions in late 18th-century Britain are inevitable or represent a natural state that can be taken for granted.

Taxes

While Smith’s arguments regarding political actors’ constant incentives to impose burdensome tariffs and taxes on commerce predominantly unfold in Books II and IV, the discourse on taxes in Book V continues to challenge the rosy vision of “peace, manageable taxes, and a tolerable administration of justice.” Some pressure to maintain high taxes will inevitably stem from warfare itself. However, at any given level of taxation, achieving a lighter burden through equitable distribution across a broader base proves difficult. In the context of 1776, this would entail a confederal union that spreads taxation and representation across “all the various provinces of the empire inhabited by individuals of British or European descent.” Should Ireland, the North American colonies, and the settler plantations of the West Indies be incorporated into such shared governance, the tax base would expand, thereby alleviating the burden. Yet, “the private interests of numerous powerful individuals, along with the entrenched biases of large groups, present formidable opposition, making it exceedingly challenging, perhaps altogether impossible, to overcome.” He continues with the “speculative” endeavor of envisioning such a multinational confederation. With a touch of dry humor, he remarks that this vision “can at worst be regarded as a new Utopia, less amusing, certainly, but no more useless and chimerical than the old one” (V.iii.68).

Conclusion

Adam Smith made unparalleled contributions to the formation of political economy, and we should consider both terms with diligence. His intellectual insights into what would later be termed political science match the seriousness of his contributions to what would later be known as economics. In my view, Smith emerges as the first significant social theorist to comprehensively grasp the modern state. Book V of WN reveals a profound understanding—one that Locke or even Montesquieu lacked—regarding the political structures emerging at that time. This comprehension encompasses a realistic portrayal of specific political actors—judges, kings, clergy, parliamentarians—as well as institutions like armies, churches, political parties, and bureaucracies. The political lessons derived from this understanding are far from simplistic. The vision of a free society he articulates may appear characterized by inertia: refrain from interfering with trade, avoid meddling in religion. Yet, as he asserts, such inaction will never lead us there. Executive overreach, judicial corruption, the intertwining of military and political power, imperialism and mercantilism fueled by nationalist fervor, and state-sponsored religious persecution of dissenters and nonbelievers are the normal state of affairs. Governments that are “oppressive and tyrannical” are the standard, and Smith meticulously outlines the obstacles to navigating our way toward the rare exceptions.

This article has been cross-posted from Liberty Matters, part of the Liberty Fund network. It is part of the series “Compounding Interest: Revisiting the Wealth of Nations at 250“.