Tuesday, March 06, 2007

Adam Smith's Long Agenda for Public Works and Public Institutions

Nice to see that Gus Hurwitz, writing on a Blog related in some way to Prof. Randall C. Picker, of the University of Chicago Law School, is a reader of Adam Smith.

He writes about ‘Adam Smith on Public Works’, and quotes from Book V, Wealth of Nations (WN V.i.d: pp 724 et ceq) on the ‘third and last duty of the sovereign or commonwealth’. He comments:

‘Smith doesn't offer many examples of Public Works, so Mill makes up one of his own: the lighthouse. And Mill's lighthouse becomes one of the bases for Coase's Lighthouse—a familiar beacon that we saw, at least briefly, earlier in this quarter.

I would suggest that Adam Smith mentioned many examples of ‘public works and public institutions’, corresponding to a substantial expenditure of tax payer’s taxation, far greater than is normally supposed by fast readers.

He was interested in those ’public works and institutions’ (keeping in mind both together is important; dropping ‘public institutions’ is a common editorial action and quite misleading.

Of the public works that would facilitate commerce in general’ consider Smith’s list: ‘good road, bridges, navigable canals, harbours, &c’. The many thousands of bridges required, even in a country as small as Britain, thousands of miles of roads, navigable canals, and large acreage of harbours and their long sea walls, dredging capacity, and workforce to construct and maintain them, suggests a long construction agenda, probably lasting several generations (it actually took longer).

Turning to the public institutions, the agenda was even bigger. Part III in the section Gus quotes from includes a long critical discourse on private co-partneries and Royal Charter joint stock companies, institutions under which companies exercised their functions, regulated by laws.

It has a long section of the institutions for the education of youth, bringing into the frame the education of children through to university. To carry our Smith’s recommendations would involve schools in every parish, plus teaching staff, and reform of the universities on the Glasgow model (he slays into Oxford’s failings). He even advocates public health measures to ‘prevent leprosy or any other loathsome and offensive disease’ (page 788), an area, as we know that could only grow, however funded. To cap it all he gives a long discourse on religious reform as part of the ‘Instruction of People of all Ages’.

Lastly, he consider measures for ‘supporting the Dignity of the Sovereign’, or in modern terms, the expense of government, no mean loose change operation in any country. What was the prerogative of sovereigns became the ‘dignity of governments’ and, as a necessary public institution, its buildings and furnishings were appropriate charges on the public purse.

Gus should look a little closer at Book V to counter-act his impressions as they stand at present. But congratulations for actually reading the book, including what he calls ‘all of my favorite passages’. Lawyers, after all, are trained to read the small print.

[Read Gus Hurwitz at: http://picker.typepad.com/network_industries/2007/03/adam_smith.html]


Blogger Gus said...


Egads, I'd not thought my post on Picker's class blog would have been read by anyone outside of the class. But, it seems, I was wrong. To the point that I found your post through a post on Brad Delong's blog.

I've put up a response there (http://delong.typepad.com/sdj/2007/03/adam_smith_soci.html).

Basic gist, I agree that Smith gives us examples; but in the context of Mill's Lighthouse, the argument is that the lighthouse is more necessarily a publig good than the examples that Smith gives. Coase takes issue with this, to argue that even lighthouses can be private works.

But nonetheless, great to see that my post made it outside of the school's closed ecosystem.


11:05 pm  
Blogger Gavin Kennedy said...


Apologies for intruding on a class discussion out of ignorance as to what the medium was about. Your piece showed up on my Google Alerts and as I am currently working on that section of Adam Smith's thinking about public expenditure and taxation, I was drawn to follow the statements made there.

I agree, I didn't consider your views absolutely wrong (a not uncommon feaure of statements about Smith); I considered them incomplete.

Smith was writing in the third quarter of the 18th century and capital accumulation was fairly primitive, as was individual ownership of capital.

3:37 pm  

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