Sunday, January 29, 2006

Not a Nation of Shopkeepers

Adam Smith is often credited with ‘sayings’ or ‘bon mots’ made out of something he is thought to have said, but didn’t, or at least didn’t in the form or meaning attributed to him. Harmless fun perhaps, but repeated three or four times and original allusion to his authority for passing on a less than correct rendition of his actual words if forgotten, and the error becomes scriptural.

Take an amusing New Year piece by Professor George Gregoriou, William Paterson University, New Jersey, USA, in GreekNews for 9th January (I have only just received notice of it):

OK, we are just a nation (or a world) of shoppers. Our civilization has done this to its credit: produced consumer goods for every pocketbook, which is the message with every holiday, religious or secular. Shop till you drop. We are, as Adam Smith (1776) said of the British, a nation of shopkeepers. America and the world responded to this call, with vengeance.”

That is not quite what Adam Smith said at the time, when average incomes were well below what today we would consider to be absolute poverty on a frightening scale, even compared to the relative poverty ‘suffered’ by too many today in what we describe distastefully as slums.

The reference to a ‘nation of shopkeepers’ is found in Book IV.vii of “Wealth of Nations” (apologies for the vague reference; as explained earlier I am in France and separated from my Glasgow Edition of Smith – the copy I am using here is J. R. McCulloch’s 1863 edition, p. 276). Smith discusses ‘Colonial Policy’ and contrasts the expense of defending colonies (in particular the American colonies) with the actual revenue generated for the mother country. In short, he finds contrasting their costs with benefits shows them to be of negative worth, and the arguments for fighting for them spurious.

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.”

I believe it was Napoleon, not Smith, who described Britain as a ‘nation of shopkeepers’.
In case there is a misunderstanding of Smith’s views about shopkeepers, I suggest you read his praise of their essential role in wholesale and retail distribution. describing them as ‘productive labour, an interesting statement in view of common misunderstandings about his distinction between ‘productive’ (growth enhancing) and ‘unproductive’ (growth inhibiting) labour. See “Wealth of Nations”, Book II.v, page 160.

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