In reading key parts of Adam Smith’s books, ‘The Theory of Moral Sentiments’ and ‘The Wealth of Nations’, we find that the term ‘natural’ is ever present in his writing and refers to an idea of ‘natural liberty’. He believed that a system of ‘natural liberties’ should be in place. By ‘natural liberties’ Smith meant what many economists now feel compelled to describe as laissez-faire, due to the loaded nature of the term ‘natural liberty’, or the idea that rather than state intervention they should let the economy run it’s own course.
In ‘The Wealth of Nations’ Smith aimed to show that the most productive economic policy was that of leaving the economy alone. He used the idea of ‘natural liberty’ to explain how individual self-interest, the division of labour and the idea of an ‘invisible hand’ could increase the common good. Smith worked not merely on his own ideas but was also influenced by a number of other thinkers, for example his tutor Frances Hutchenson, and philosophers such as Hume and Locke.
Hopefully as this essay proceeds it will become clear as to the case that Smith made for ‘natural liberty’ and how it affected his views not only on economics but also on jurisprudence. In order to start discussing the case Smith made for ‘natural liberty’ it is important to understand that he believed that it was simply wrong to restrict people’s liberty. Smith argued that a moral framework existed within society that self-interest must also abide by.
He believed that an individuals actions cannot purely be justified by claiming that something was done for the common good. He described this moral framework as an ‘impartial spectator’ thus Smith emphasis the difference between sympathy and self-interest. Moreover, Smith seemed to base both his economic and jurisprudential arguments for ‘natural liberty’ on an idea that was centred around this moral belief. In the ‘Wealth of Nations’ Smith refers to the idea of ‘the obvious and simple system of ‘natural liberty’.
What he meant by this was that in a state of nature all things are free and equal and that they should be left on there own just as nature is, man should be allowed to follow actions that are natural to them provided the security of society is not affected. (Smith: 1976a: 687) Smith saw the ‘natural system’ as having only three main functions, its duty of defence, establishing a system of justice, and maintaining of public works that would otherwise not be administered under private control because it was not profitable.
Both Smith and Hume, in their positive endorsement of modern independence praised an independent thinking that separated them and the ‘civic humanist nostalgia for a classical ideal of citizenship. ‘ (Hont and Ignatieff, Needs and justice in the Wealth of Nations) This particular view, of leaving the economy to balance out itself, was opposed by several philosophers such as Robert Wallace and James Steurt, who pointed out the need for a safeguard of the market in grain by a police of magistrates and central authorities. The idea of a ‘police’ was an element of mercantilism and therefore Smith was strongly opposed to the idea.
Moreover he felt that an ‘police’ would infringe upon the ‘natural liberties’ of the economy. Smith, in the ‘Wealth of Nations’ identified the feature of a commercial society, which he claimed emerged from a comparison between commercial society and the savage nation. He was concerned with the apparent superior wealth of the lowest member of a civilized society when compared to the most respected member of the savage nation. Smith uses the example of how an industrious and frugal peasant in a commercial society was able to live better than an African king.
Smith, first attempted to resolve the problem between the state and the individual, and more specifically the role the state had in society and its economy. Smith used the ideology of natural order, from which he coined the idea of ‘natural liberty’, to try and solve this problem. Smith first mentions this system in ‘The Theory of moral Sentiments’ where he claims that human conduct is naturally motivated by six activities: self-love, sympathy, the desire to be free, a sense of propriety, a habit of labour and the propensity to exchange one thing for another.
In this Smith argues that it is not the benevolence of others but rather their self-interest and the overwhelming desire to better them selves that benefits society. The system of ‘natural liberty’ was put into question when Smith adamantly claimed that if the market for labour and the market for food were freed of intervention, then the result in the long run would be that the price of labour and food would balance out, this would create a way in which the poor would never go hungry.
This theory was seen as the most radical of all his theoretical claims and earned him a reputation for being a dogmatic projector. (Hont and Ignatieff: 1983:14) When applied to economics, the rules of ‘natural order’ show Smith to be strongly opposed to state intervention in industry. Smith describes how through the division of labour man increases his productivity and thus his individual profit, but naturally becomes dependant on other members of society. It is this process that Smith believes will benefit industry the most.
Smith uses the example of a pin maker to describe the division of labour and how by undertaking this process the pin maker produces more sells more and thus benefits from the division of labour. Hont later agrees with Smith’s view of the division of labour and states, “it was the division of labour which explained why so great quantity of everything was produced that there is enough both to gratify the slothful and oppressive profusion of the great and at the same time abundantly supply the wants of the artisan and peasant. (Hont, the paradox of commercial society) Smith claims the rewards of the ‘division of labour’ are far greater than that which would have been achieved if one person tried to do all the parts of the process themselves. From these ideas of ‘natural liberty’ and the ‘division of labour’, Smith produced the idea of an ‘invisible hand’ which highlighted his ideas about society and benevolence and added to his argument for ‘natural liberty’.
The concept of an ‘invisible hand’, Smith uses this exact term in both the ‘Theory of Moral Sentiments’ and ‘The Wealth of Nations’, was used to try and explain the paradox of commercial society in both economic terms and as a benevolent result. Smith uses the example “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our necessities but of their advantages. (1976a: Book I chapter II) With this idea Smith attempts to determine whether or not the mechanism used to gain material wealth is of moral quality.
Smith explains that the desire to accumulate “baubles and trinkets”(used both in WN and TMS) was insatiable and that the demand for wealth, set in motion a cycle of production and employment led by an ‘invisible hand’. (Smith: 1976b: 184) Smith claimed that the ‘invisible hand’ led commercial society to make almost identical distributions of the necessities of life that would have been made, but without knowing or intending it and not intending it to be benevolent either. Smith: 1976b: 184-5) Hont claims that this idea from the ‘Theory of Moral Sentiments’ explains the paradox of commercial society as being the result of unintended consequences. (Hont and Ignatieff, Invisible Hand) This same concept is highlighted when Smith writes, “he intends only his own gain and he is in this, as in many other cases led by an invisible hand to promote an end which was no part of his intention. ” (Smith 1976a: 456) Thus the ‘invisible hand’ is seen as a supporting argument for ‘natural liberty’.
The system of ‘natural liberty’, which smith advocated was used to describe the economic conditions necessary to enforce common rules of propriety in market relations. Thus the concept of an ‘invisible hand’ is used by Smith to justify free trade, maximum competition and the limited role of government. Thus the ‘invisible hand’ that Smith is referring to is similar to ‘natural liberty’ in that it cannot and should not be controlled by an outside force but rather it will undoubtedly find it’s own balance.
Hont comments that Smith’s case for ‘natural liberty’ was not conducted on merely economic terms, but explains that part of his argument was based on jurisprudence. Smith’s position on property, like Morelly, drew upon the long established idea of natural jurisprudence. His views on private property rights argued further the thinking of that the time, Smith argued that the lack of human generosity coupled with a natural scarcity, meant that laws were required to deal with private ownership.
He believed that in order for society to improve, the individual had to be able to keep what they had created otherwise there would be no incentive to better their position. If this meant hat the poor suffered then so be it as distribution of property was not a role for law but for charity. However, there is a distinction in natural jurisprudence between ‘perfect rights’, such as property enforceable by law, and ‘imperfect rights’, such as charity, which Smith clearly recognizes.
Smith thus concludes that the excluded poor had a perfect right to the charity of the rich but the rich were not under any obligation by law to give charity. However it must be stated that Smith shows a clear gap between justice and benevolence, which he feels the rights of property revolve. The case made by Smith for the term ‘natural liberty’ is not limited to one part of his thinking, but rather is, as stated, a part of his moral, economic and jurisprudential ideas.
Smith does make a good case for the idea of ‘natural liberty’ claiming that the best option for both the economy and jurisprudence is to let them take their course and have limited involvement by the state. Smith claimed that state intervention would merely hinder the eventual balance that would come about both in economics and jurisprudence naturally. However, Smith also recognizes the necessity for state controlled defence, justice and public property, as both defence and justice are key to a societies development and public property would deteriorate for it would not be profitable to maintain for a private owner.
Moreover, as became apparent we needed to include Smith’s ideas about the ‘invisible hand’ and the ‘division of labour’, as both exemplified his reasoning behind the idea of ‘natural liberty’. In conclusion we see almost two cases for Smith’s term ‘natural liberty’, the first arising from “The Wealth of Nations”, a more economically directed book, and the second in the “Theory of moral Sentiments”, a more ethically and morally directed book.
However, due to the context in which the term is used and theories produced by Smith from the idea of ‘natural liberty’ the two cases merge and become a coherent idea that claims that the best way for economic and societal improvement to occur is to limit state intervention and let both areas follow their natural course. Thus Smith clearly reasoned his case for ‘natural liberty’ and used it to formulate his theories on the ‘impartial spectator’, the ‘division of labour’ and ‘the invisible hand’.