Mises Wire

Facebook icon
LinkedIn icon
Twitter icon
Home | Blog | Big Government Adam Smith?

Big Government Adam Smith?


Tags Philosophy and MethodologyPolitical Theory


Since America seems to have entered an era of permanent political campaigning, what H.L. Mencken called politics' "advance auction of stolen goods" never stops. Those trolling for more power extol liberty in their speeches, while redefining it into something different (e.g., Rudy Giuliani's version in a 1994 speech: "Freedom is about authority. Freedom is about the willingness of every single human being to cede to lawful authority a great deal of discretion about what you do.") and propose or enact fresh assaults on Americans' liberty, including who will get to spend your income.

Some who want to make more use of the coercive power of the state (how many residents of Washington, D.C. does that leave out?) have even taken Adam Smith, long a patron saint of smaller government enthusiasts, and morphed him into a defender of ever bigger government. Even granting that Smith was far from perfect, as Rothbard proved in his History of Economic Thought, their invocation of Smith is stretched to the point of absurdity.

The truth is that Smith argued taxes were necessary, but only to fund the appropriate roles of government, all of which he viewed as expanding liberty. The first twist redefines liberty away from Smith's view--the absence of coercion by others--to assert that "true" liberty cannot be had without the provision of massive government help for people in every conceivable area of life. The second then transforms Smith's recognition that a government pursuing its very limited defensible role must be funded into the claim that taxes should be high enough to support whatever they want the government to do.

This redefined liberty requires a government large enough to help people with every problem they face, which, in turn, requires enough tax revenue to finance all that help. So, ignoring the destruction of taxpayers' liberty by the involuntary imposition of those taxes, proponents conclude that any government failure to "help" at others' expense would unacceptably sacrifice liberty. But that turns Smith's reasoning on its head.

Rather than justifying ever more taxes and deficits to fund the vast panoply of government "help" available today, Smith's view would drastically reduce both federal activities and taxes. One cannot read his work at all carefully without coming to that conclusion:

"The first duty of the sovereign...protecting the society from the violence and invasion of other independent societies...The second duty...protecting, as far as possible, every member of society from the injustice or oppression of every other member of it...The third and last duty...erecting and maintaining those public institutions and those public works, which, though they may be in the highest degree advantageous to a great society, are, however, of such a nature that the profit could never repay the expense to any individual or small number of individuals, and which it therefore cannot be expected that any individual or small number of individuals should erect or maintain."

"Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism but peace, easy taxes, and a tolerable administration of justice; all the rest being brought about by the natural course of things."

"Even the most ordinary degree of kindness or beneficence cannot, among equals, be extorted by force...justice only hinders us from hurting our neighbor...We may often fulfill all the rules of justice by sitting still and doing nothing."

"I have never known much good done by those who affected to trade for the public good. It is an affectation..."

"The man of system...seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board...in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might choose to impress upon it...if they are opposite or different, the game will go on miserably, and the society must be at all times in the highest degree of disorder."

"...no human wisdom or knowledge could ever be sufficient [for] the duty of superintending the industry of private people, and of directing it."

"The statesman who should attempt to direct private people would assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it."

"...public prodigality and misconduct...may consume [so much]...that all the frugality and good conduct of individuals may not be able to compensate the waste...occasioned by this violent and forced encroachment."

"After all the proper subjects of taxation have been exhausted, if the exigencies of the state still continue to require new taxes, they must be imposed upon improper ones."

"Let us not rashly conclude that [society] is capable of supporting any burden, nor even be too confident that she could support, without great distress, a burden a little greater than what has already been laid upon her."

"An inquisition into every man's private circumstances...in order to accommodate the tax to them, watched over all the fluctuations of his fortunes, would be a source of such continual and endless vexation as no people could support."

"The uniform, constant and uninterrupted effort of every man to better his condition...is frequently powerful enough to maintain the natural progress of things toward improvement, in spite both of the extravagance of government, and of the greatest errors of administration...it frequently restores health and vigor to the constitution, in spite, not only of the disease, but of the absurd prescriptions of the doctor."

What would Adam Smith's response to those who want to turn him into a mascot for big government? "All systems either of preference or of restraint therefore, being thus completely taken away, the obvious and simple system of natural liberty establishes itself of its own accord. Every man, as long as he does not violate the laws of justice, is left perfectly free to pursue his own interest in his own way."

The government needed to support a system of natural liberty is minuscule. It does not require trillions of dollars in taxes and onerous regulations each year, or the abuse of logic and intentionally vague weasel-words (such as "need" and "fair") to justify it. So Smith, far from concluding that government spending is too timid and its corresponding burdens too low, would contradict the charlatans making such claims, and go far in the other direction, rejecting as indefensible the vast majority of what the government already does.

Gary M. Galles is a professor of economics at Pepperdine University. He is the author of The Apostle of Peace: The Radical Mind of Leonard Read.


Image source:

Add Comment

Shield icon wire