Adam Smith on Inequality Between the Rich and the Poor

Found in An Inquiry Into the Nature and Causes of the Wealth of Nations (Cannan ed.), vol. 2

The Scottish moral philosopher Adam Smith (1723–1790) was the author of two books, The Theory of Moral Sentiments (1759) and An Inquiry into the Nature and Causes of the Wealth of Nations (1776).

In the opening of his discussion Of the Expence of Justice in Book V of Wealth of Nations, Smith discusses the requirements for the administration of justice in the different levels of societal development, defined by Smith as hunter-gatherer, shepherd/pastoral, agricultural, and commercial societies.

Most people are not violent towards one another, says Smith, since there’s little benefit to violence against another person unless you’ve been seized by violent passions. Most people, most of the time, aren’t governed by violent passions.

Violence against property is a different matter: when a thief steals, they gain the stolen property as well as injuring the person who loses it. In a hunter-gatherer society or a society of shepherds, there is little property to defend. And so, once property starts to be established, more resources are required to administer justice. He writes, in Book 5, Chapter 2 of Wealth of Nations,

But avarice and ambition in the rich, in the poor the hatred of labour and the love of present ease and enjoyment, are the passions which prompt to invade property, passions much more steady in their operation, and much more universal in their influence. Wherever there is great property, there is great inequality. For one very rich man, there must be at least five hundred poor, and the affluence of the few supposes the indigence of the many. The affluence of the rich excites the indignation of the poor, who are often both driven by want, and prompted by envy, to invade his possessions. It is only under the shelter of the civil magistrate that the owner of that valuable property, which is acquired by the labour of many years, or perhaps of many successive generations, can sleep a single night in security. He is at all times surrounded by unknown enemies, whom, though he never provoked, he can never appease, and from whose injustice he can be protected only by the powerful arm of the civil magistrate continually held up to chastise it. The acquisition of valuable and extensive property, therefore, necessarily requires the establishment of civil government. Where there is no property, or at least none that exceeds the value of two or three days labour, civil government is not so necessary. (WN V.ii.2)

This passage is often-quoted and supports multiple readings. Someone with deep concern about inequality and skepticism of markets might read this as proof that a property-based society is inherently unjust. A reader concerned about the preservation of stability and property might read this as an argument for protection by the government against not only theft, but also redistribution.

A more neutral reading of this passage recognizes a concern Smith expresses elsewhere in his work, that production will not exceed consumption and land and technology will not be improved to further increase production (and, through the accumulation of stock and the division of labour, increase the wealth of nations) if producers and improvers cannot be sure that they will be able to enjoy the fruits of their labour.

Smith may not have meant this passage as a statement of an insoluble problem with commercial society (whether a problem stemming from the injustice of inequality or the drive for redistribution), but simply a practical concern, one that may even be easily solved, if a society is to function smoothly. These multiple readings are just one example of why so many people find value in reading Smith’s work.