Adam Smith On Property Rights and His Good Sense In the Real World

Paul Sagar (14 March) wrote in “Bad Conscience” Blog HERE:

“Intelligent Libertarians, Regulation and Financial Crisis: An Essay”

“Law’s function, in Hobbes’ schema, was to protect all of our rights to survive; if the law stood between an individual and the loaf of bread they needed to carry on living, then the law ceased to have meaningful content. Violation of the property rights of the bread-holder were thus automatically justified, and the violator was automatically excused (though the law against bread-stealing would itself stay in place due to its general tendency to promote the wellbeing of all, considered collectively and systemically).

Smith disagreed. For him, property rights had to be enforced as foundational to the jurisprudential structure of society, and they had to apply in all cases. If a starving man stole a loaf of bread to survive, then he broke the law. Now, if apprehended and taken to court for such law-breaking, a judge might consider the circumstances and offer clemency to the bread thief whilst still finding him guilty. The point, however, is that the law continued to apply – but in this case, punishment might be forestalled on the grounds of extenuating circumstance (the bread thief, after all, was starving). Whereas for Hobbes the law against stealing bread ceased to have meaningful content because the bread-thief was starving, for Smith the law continued to apply (a violation of the bread-owners legal property rights had certainly occurred) but punishment for this violation might be mitigated by a sympathetic judge. Though equally it might not. (However, given what Smith says in his Theory of Moral Sentiments, it seems that he would personally have hoped that judges be sympathetic in such cases).

As a result, Smith made property rights foundational. They became, indeed, the central supporting pillar of his vision of (broadly) free-market commercial society. And it’s Smith’s vision that we have embraced. Steal a loaf of bread today and – even if you are starving – the authorities will still charge you with theft. If you are lucky, the magistrate will let you off with a slap on the wrist when you go to court – but then, she may not. Thus, the centrality of continuing absolute property rights – as envisaged by Smith and his natural law forbearers like Grotius, Pufendorf and Locke – goes to the heart of modern capitalist society. And insofar as Intelligent Libertarians uphold the inviolability of property rights, they are indeed following Adam Smith.
Yet perhaps many Intelligent Libertarians would be interested to know that Smith did not consider the same rules to apply from the perspective of the state. Whilst individuals were always bound by the rules of property, as enshrined in law, the state was sui generis. Here Smith followed his friend and intellectual interlocutor, the great philosopher and economist David Hume. Hume had argued that, in times of extreme national emergency, the government must do whatever was required to save the nation. Under ordinary circumstances it would of course be wrong for the government to burn the suburbs of the capital city – but if that was the only way to prevent the enemy’s approach then it must be done.

As Istvan Hont, the world’s most pre-eminent authority on the foundations of modern political economy has remarked:
“Hume had taken it for granted that magistrates had the right to open private granaries and distribute grain to the poor at set prices, not merely in a situation of actual starvation, but ‘even in less urgent necessities’. He had used this example to argue that ‘the rules of equity or justice depend entirely on the particular state and condition in which men are placed’. In situations of ‘extreme necessity’ it was ‘perfectly useless’ to insist on maintaining an unlimited right of private property. Smith followed this line, but seems to have closed off the case of ‘less urgent’ necessities. Only actual impending starvation appears to qualify as the ‘case of most urgent necessity’ which would justify the suspension of property rights in grain.”

Istvan Hont, “Needs and Justice in Adam Smith’s Wealth of Nations”, in Jealousy of Trade, (Harvard, 2005).
(Grain was a favoured 18th Century example, because fluctuations in the grain price and in extreme cases the lack of grain itself could cause riots amongst the common people that had the potential to topple governments).
The point is that for Smith, from the perspective of the state, extreme necessity justifies suspension of the law regarding property rights. If the only way to hold a nation together was for the state to violate the property rights of individual grain holders then so be it. Salus populi suprema lex est – the safety of the people is the supreme law.”

Comment
Yes, it was some months ago, and it got ‘lost’ for a while.

I was attracted to ‘Bad Conscience’ because it carried sensible comments and good ideas worth thinking about. The author also knows much above average about Adam Smith, which is worth reading. If all Libertarians wrote like this, they would have greater credibility.

He carries on the discussion about property rights and the state in today’s `blog post. Follow the link.