Adam Smith: Appreciation of Economic Forces in History

No less a change had taken place in the condition of knowledge. Speculation had for a long time been feeling its way to a closer contact with the problems suggested by the growing wealth and industry of the modern world.

Adam Smith in his memorable work resumed, co-ordinated, and enlarged the labours of his numerous predecessors, and placed the study of economics on a new positive basis.

But the suggestive stimulus of his researches spread beyond the limits of the science with which he was immediately concerned. The indirect services rendered by political economy to history have not perhaps been adequately recognized. The elucidation of the sources of wealth in the present became a means of explaining the prosperity and decay of states in the past, which soon led to valuable results, the more striking as they were unexpected.

Hitherto wealth had been thought a source rather of degeneracy than of improvement. The great danger was always understood to be "luxury." Poverty was the parent of virtue. Primitive times were virtuous because they were poor. Pagan philosophers and Christian saints had agreed in condemning riches as the source of all evil, and denying the rich man a high place in their ideal republic or the city of God.





Political economy cleared up the confusion of thought here implied. The wealth of states has nothing to do with the excessive opulence of a small class. Never has the mass of the people in any country or in any age suffered from an overabundance of wealth. The excessive wealth of the few generally means the poverty of the many. In short, the evil lies in the great inequality of the distribution of wealth.

These common-places of economics would have been paradoxes in the early part of the 18th century, and the historians of that age show a profound ignorance of their bearing, as was only natural. So, when they have to explain the decay of a state they seek to show that it had lost its gold and silver, or that luxury had made fearful inroads, or that martial valour had somehow strangely declined.

The notion that poverty in the mass of the people was very often the chief and sometimes the only cause did not occur to them. When therefore Adam Smith devoted the third book of the Wealth of Nations to "the different Progress of Opulence in different Nations," it seemed as if a lamp had suddenly been lit in a dark place.

That book was in truth a lofty historical review of the facts of the past, guided by the principles of economic science. The question which has already come before us, and which exercised so much, as well it might, the thinkers of that age, the decline of Rome, was approached in a much more promising manner when one element of it, the decay of agriculture in Italy, was spoken of thus:-- "Tillage in that part of ancient Italy which lay in the which lay in the neighbourhood of Rome must have been very much discouraged by the distributions of corn which were frequently made to the distributions of corn which were frequently made to the people, either gratuitously or at a very low price. This corn was brought from the conquered provinces, of which several, instead of taxes, were obliged to furnish a tenth part of their produce at a stand price. The low price at which this corn was distributed to the people must necessarily have sunk the price of what could be brought to the Roman market from Latium or the ancient territory of Rome, and mush have discouraged its cultivation in that country."

This was catching a glimpse of a vera causa of the effect to be explained, and the vein of thought thus opened proved to be richer the further it was explored.





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