Saturday, February 16, 2008

Adam Smith the Pragmatic Free-Trader

Here are two references from Adam Smith on the reasons for free trade remaining less likely than utopia and the pragmatic reason why the total abolition of protective tariffs was not really practical politics (or finance) for governments facing a shortfall in taxation from other sources to meet it budgetary ambitions.

To expect, indeed, that the freedom of trade should ever be entirely restored in Great Britain, is as absurd as to expect that an Oceana, or Utopia should ever be established in it. Not only the prejudices of the public, but what is much more unconquerable, the private interests of many individuals, irresistibly oppose it.

[Wealth Of Nations, IV.ii.43, page 471 (Glasgow Edition of WN, Oxford University Press; or pages 437-8 of Edwin Canaan’s edition of WN, 1937, Random House)].

Here is the reference to Britain becoming a free-port if only the government’s customs could be raised some other way:

From the above consideration it appears that Britain should by all means be made a free port, that there should be no interruption of any kind to forreign (sic) trade, that if it were possible to defray the expencgovernments faced wites of government by any other method, all duties, customs, and excise should be abolished, and that free commerce and liberty of exchange should be allowed with all nations and for all things.’

[Lectures in Jurisprudence, paragraph 269, page 514, student notes of Adam Smith’s lectures, report dated ‘1766’ (but believed to be 1763-64), Glasgow Edition, Oxford University Press; or page 209 of Lectures on Justice, Police, Revenue and Arms delivered in the University of Glasgow by Adam Smith reported by a student in 1763, edited and introduced by Edwin Canaan, Oxford University Press, 1896]

Clearly, Adam Smith was pragmatic about the need to meld the necessity for fee-trade reform matched by its practicality in the light of the institutional circumstances prevailing at the time.

In his comment on the ‘man of system’ who would use violence to conquer ‘the rooted prejudices of the people’ instead of ‘by reason and persuasion’, he referred to Solon, a law maker of ancient Athens, who, Adam Smith paraphrased, ‘when he cannot establish the best system of laws, he will endeavour to establish the best that the people can bear’ [Moral Sentiments, VI.ii.2.16: page 233]


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