The Online Library of Liberty

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• II: Political Analysis
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• III: War and the State
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• IV: Political Economy and Theory
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• Adam Smith: Economic Utilitarian
• Roepke: Laissez Faire and Social Order
• Government-induced Boom & Bust
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• Professor Friedman's Instrumentalism
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• Entrepreneurship and Justice
• Externalities & Government Intervention

Adam Smith: Economic Utilitarian

T.D. Campbell and I.S. Ross

• University of Glasgow and University of British Columbia

“The Utilitarianism of Adam Smith's Policy Advice.” Journal of the History of Ideas 42(January-March 1981):73–92.

Was Adam Smith (1723–1790) a utilitarian? In his practical attitudes, his major writings, and his policy recommendations, Smith must be viewed as “a practicing and contemplative utilitarian.” Although he avoided discussing possible conflicts between justice and utility in justifying and applying trade restraints, it was the criterion of utility (the greatest happiness of the greatest number) that preoccupied him. General utility rather than justice or rights was decisive in his taxing and anti-smuggling actions as a Commissioner of Customs and in his advice to the British government on such topics as the American war for Independence.

Smith may be regarded as a rule-utilitarian by his recourse to the criterion of utility in his evaluations of social, political, or economic systems. When Smith refers to justice, he insists on the utility of justice. Smith's “whole approach to social philosophy is summed up in the thesis that practices whose origins and supports lie in unreflective human sentiments, molded and harmonized by the socializing effects of life in a community, are admirable well adapted to the divinely planned end of human welfare.” Unintended utilitarian consequences flowed from nonutilitarian motivations.

To determine whether Smith's moral criterion was in fact utilitarian, the authors study events from Smith's biography that involve Smith's making value judgments on key moral and political issues. They conclude that Smith's policy advice was utilitarian from considering Smith's evaluations and advice on the following topics: the Union of 1707 of Scotland and England, the secession of the American colonies from Britain, the monopolistic tendencies in trade and in some professions, and, finally, Smith's attitude toward smuggling.

It was on utilitarian grounds of the long-range benefits to both countries rather than on the grounds of Scottish rights that Smith approved of the forcible incorporation and union of Scotland and England in 1707.

On the issue of American secession from Britain, Smith gave consistently utilitarian advice in his correspondence, in the Wealth of Nations (1776), and in his famous 1778 memorandum. His gloomy view of British military intervention was not so much that it was unjust to America but that it was badly mismanaged and likely to fail. In February 1778, Smith wrote a memorandum to Lord North's government on the American question. In discussing four possible options to resolve the conflict, Smith never raises the question of rights or justice in the rebellion but does emphasize utilitarian considerations. In his Wealth of Nations the crux of Smith's argument over retaining or giving up the American colonies is that monopoly control of retaining the colonies benefits only the merchants rather than general utility.

Likewise Smith's defense of economic liberalism was utilitarian and not in favor of liberty for its own sake. He admitted restrictions of economic liberty for legitimate purposes of government or for the national interest.

In 1778, Smith, the apostle of free trade, accepted the lucrative post of Commissioner of Customs. As a customs officer he was zealous in administering the laws against smuggling. Smith's inconsistency in accepting the post that violated economic freedom is mitigated by the fact that he was never a total advocate of laissez faire which he considered a utopian dream. He supported trade barriers which could raise revenues for government and so opposed smuggling for utilitarian reasons. When he discovered that he owned items prohibited by the custom laws, he burnt them to set a utilitarian example or respect for law. In effect he balanced two utilitarian considerations: the economic consequences of customs law and “the serious long term disutility of lack of respect for the law itself.”