Adam Smith on the need for “peace, easy taxes, and a tolerable administration of justice” (1755)
Found in The A B C of Finance
Dugald Stewart had in his possession some notes of lectures Adam Smith gave in 1755, some 21 years before the appearance of the Wealth of Nations (1776). Here Smith gives a pithy description of what he thought the government should do to encourage economic development:
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. All governments which thwart this natural course, which force things into another channel, or which endeavour to arrest the progress of society at a particular point, are unnatural, and to support themselves are obliged to be oppressive and tyrannical.
Dugald Stewart gave a presentation to the Royal Society of Edinburgh in 1793 three years after Smith’s death. He wanted to show the consistency of some of Smith’s ideas “at a very early period” two decades before the publication of The Wealth of Nations. One of these ideas was that if left alone a society will produce its own spontaneous order, or what he termed “her own designs.” Also in this passage Smith hints that he advocates a policy by the government of “laissez-faire” (or hands off), or again in his terms “to let her (nature) alone, and give her fair play in the pursuit of her ends”. The second idea in this “early Smith” is a clear statement of the policy of very limited government which he believed should limited to three things: peace, low taxes, and an acceptable (and presumable also cheap) system of justice. To what extent Smith continued to believe these principles in 1776 is open to debate. What is interesting here is that there is no mention of government provision of public goods which was later to play an important role in the Smithian state as described in Wealth of Nations.