An Interview with Adam Smith: Part 3

1776 and the american founding education system of natural liberty hispanic america forgiveness role of government adam smith biography considerations concerning the first formation of languages american colonies moral sentiments administration of justice colonialism public finance wealth creation corruption political ambition

Alejandra Salinas for AdamSmithWorks

This text presents Smith’s ideas in the manner of an imaginary dialogue or interview with a contemporary person, where Smith answers the questions of our time (formulated here in the voice of the interlocutor) mainly on the basis of the arguments put forward in his writings.

December 30, 2020
Part III: Colonialism, Education, and Government[1]

Read Part 1 and Part 2 here.

Your economic and moral analysis extends to different times and places. For example, you address the case of European colonialism in America. Could you elaborate on this issue?

I have, indeed, been interested in analyzing various situations and problems that arose throughout human history, among which are the processes of conquest and colonization of the American continent at the hands of European powers. In that field, I apply my moral, political, and economic theory to point out several problems. On the one hand, these processes combined a series of unfortunate factors, such as the plundering of native peoples, the desire of the colonizers to achieve easy wealth, and the consequent injustice of the entire colonizing project, which in the case of the Spanish colonies was said to be “justified” by the evangelization of the natives.[1] 

That said, the great differences between the British colonies and the Spanish colonies should be noted. In the former, the abundance of land, the freedom allowed by a system of self-government, low taxes, and the impartial administration of justice soon facilitated the generation of activities conducive to general prosperity. The favorable environment for this was the unintended and certainly beneficial consequence of a certain European intellectual tradition brought to that region of the American continent: the diffusion of ideas that would allow greater freedom and equality, which would flourish in the creation of prosperous republics.[2]

What are the differences with the Spanish colonies, then?

The Spanish and Portuguese colonies also suffered the negative effects of discretionary governments, monopolies, devaluations, tariffs, and high taxes. Even worse, they had a poor administration of justice that favored groups close to power (for example, the protection of wealthy debtors rather than industrious and saving creditors). This kind of policy is always unfortunate because addressing only the interest of minorities at the expense of the majority damages the interest of all. It also destroys the productive spirit of the company (by guaranteeing profit through monopoly), and encourages spuriously financed consumption.[3]

In the economic field, I cannot but criticize the policies applied by Spain to its colonies. To take another example, the case of mining production in Peru: although the value of silver depreciated in Europe, the local producer continued to pay high taxes to the crown. Although in the long term that tax was reduced, the profitability of mining production collapsed. Despite this fact, the laws encouraged mining investment because the levies on that industry filled the (insatiable) coffers of public finances.[4]

These historical examples only illustrate my concern to explain the genuine causes of wealth creation, which are none other than free labor, competitive markets, and limited government. I fear that these factors do not change with the historical, cultural, or geographical contexts.

Today the concern about corruption has spread globally. What are in your opinion some of the causes and manifestations of corruption?

My approach to the analysis of corruption is broader since, in my opinion, it consists of a wide range of distortions of the sentiments, actions, and principles that sustain the system of natural liberty. First, there is a moral distortion when certain people ignore the limits to their ambition or show indifference to the fate of those living in worse conditions. Secondly, there is an economic distortion when governments prevent individuals from freely developing their productive capacities, which, as we have seen, is a necessary condition for economic growth. Finally, there is a political distortion every time attempts are made to direct, manipulate, or discriminate against the majority of people to favor a few groups close to political power. 

Let’s look in more detail at these types of distortions, please.

Anyone who has read the last edition of A Theory of Moral Sentiments will note that I included a section on the distortions of moral sentiments. I wish to draw attention to an idea put forward there, namely, that the admiration of the rich and the powerful, combined with the neglect of the poor, is “the great and most universal cause of the corruption of our moral sentiments.”[5] I am convinced that to a large extent the emulation of the rich and the powerful is based on the confusion between means and ends. That is when money and power are wrongly seen as good in themselves, as a synonym for happiness.

Also, those who embark on a career of political ambition will abandon a life of freedom and independence to become “noble servants of a court.” The blind search for political admiration causes the ruin of many who enter the “circle of ambition” and then fail to leave it. [6] 

Last, there is a different kind of distortion, of a more intellectual nature, which is characteristic of a certain type of public official. In his eagerness for social and economic planning, this “man of system” confuses people with the pieces upon a chessboard and intends to arrange them according to his discretionary view. However, he does not realize that “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 chuse to impress upon it.” [7]

Both moral and intellectual distortions have negative consequences for individuals and societies in that they tend to create individual confusion, social disorder, and, in the case of the man of system, general impoverishment.

I would like to talk now about education. What are your thoughts on this important subject?

Education is an indispensable means to enable the development of individual capabilities. Let me start from the premise that people are born with quite equal abilities. That is, the difference in natural talents is less than we think; the inequality we observe arises rather from habits, customs, intellectual training, and different occupations. In this latter sense, we can say that the skills acquired by people are fundamentally the result of the division of labor, which allows them to “cultivate and bring to perfection” their talents.[8]

Some will find it too optimistic to think that people are born with the same capacities to develop, instead of recognizing that they are marked at birth by uneven talents and unequal material circumstances. I am not interested here to enter into an empirical or scientific discussion on the subject. I believe that the dilemma must be resolved within the moral framework. That is, how should we treat all people? My answer is the following: we must treat them as equal beings in dignity and in their aspiration to self-development in the material, ethical, and intellectual aspects. Education enables people to better fulfill those aspirations.

What type of education is required in modern societies?

Nowadays education is reduced mostly to technical or professional training, but that is a restricted view, limited to preparing people to get a job or to increasing productivity. Rather, education should help them generate mental abilities and moral qualities that complement the knowledge and skills acquired in the labor and professional fields. This is particularly necessary in commercial times, when excessive labor specialization tends to make the mind indolent or alienated, and weakens the civic spirit.[9]

Education strengthens the mental autonomy of workers and instills decency and “a regard for general rules.” I insist that an essential function of education is to form citizens with critical capacities, and enable them to judge correctly the conduct of the rulers and the interests of the country so that they are not carried away by “ delusions of enthusiasm or superstition.”[10]

How to organize the system of education in order to fulfill these objectives more effectively?

At the basic level, education should focus on matters that ordinary people can apply in their daily lives: reading, writing, and accounting. These contents can be taught by teachers whose salaries could be partially paid by families, no matter how poor they are. If the payment comes entirely from the State, teachers will soon begin to be negligent because they will know that income is guaranteed regardless of the quality of performance.[11] Governments often defend the legal regulation of wages, without taking into account that such legislation is never effective.[12] In this regard, we must not forget that teachers’ salaries are no exception to the rule that wages depend on the skills of the worker, the productive capacity of the employers, and the demand for their services. 

As for education after the end of the basic period, it should be taught in places where habits of concentration and rigorous study are encouraged. The fashion of traveling abroad at an early age and for long periods of time only feeds leisure and dissipated lives.[13]

The origins and the role of government
You did not publish any specific political book, although you did include political arguments in your lectures and writings. I'm interested in talking about this topic. Let's start at the beginning then: what are the origins of the institution of government?

The institution of government arose from the need to protect private property, a need derived from our sense of justice, from what must be recognized by others as our own. Historically, out of “the natural progress of society” the institution of ownership emerged, and so did the need to protect it.[14] The initial objective was then to avoid the escalation of disputes, eventually leading to social conflict. In this sense, every government is “an imperfect remedy” for our limited virtue and wisdom. If human beings were perfectly virtuous and wise, they could resolve disputes peacefully.[15] But the truth is that we are not perfect, and therefore we need an institution that organizes and ensures defense, security, and justice.

What types of governmental functions are derived from these ideas?

As I said, the institution of government emerged to protect individual property and enforce the laws of justice. Government is meant to protect the liberty of citizens against external and internal dangers, to promote general prosperity, and to provide an impartial administration of justice.[16] There are also a few associated tasks, such as public works to facilitate transportation and commerce; partial financing of the provision of primary education, and the command of “good mutual offices.” The latter must always be done with prudence and moderation: to neglect it causes serious disorders, but “to push it too far is destructive of all liberty, security, and justice.”[17]

Note that the political direction and control of economic activity is NOT a legitimate power. Not only should people have the right and liberty to make their own decisions, in doing so they generate much greater value than any governmental plan can generate. On the other hand, the economy can never prosper without a proper administration of justice, which is the building-block of social trust. Overall, my main concern is that the limited functions of the government be fulfilled effectively.

Justice is a permanent topic of discussion and debate. Could you elaborate more on your idea of justice?

I would like to begin by clarifying that justice is an ambiguous concept. Justice can be seen both as a personal virtue and as a political principle or value.[18] According to the first meaning, justice mandates that we respect the life and property of other people, and comply with contracts, promises and obligations assumed voluntarily. In this regard, we must observe the rules of justice in all circumstances.[19]

As a political principle, the objective of justice is to protect individuals by providing security against harm and to secure the administration of justice.[20] The subsequent purpose of the institutions of justice is to guarantee exchanges between people based on property rights. As I mentioned, ownership of the fruits of our work is the foundation of all other property, and it is sacred and inviolable. We can say that the institutions of justice must serve three moral norms: respect for life, property, and personal rights.

How should one act in the face of breaches of justice?

I believe that the rules of justice support the entire social construct. If exceptions to these rules were admitted, resentment and animosity would multiply. Therefore, we need to enforce the necessary sanctions and punishments that follow after breaches of justice, despite our inclinations to otherwise.[21]

For some people, punishment is a harsh word…

Punishment for the violation of the norms of justice must be always assured. However, it must not be excessive. History shows how in the past severe punishments were applied to all kinds of rights violations, but as societies progressed, punishments were moderated and adapted to the recognition of our status as morally equal beings.[22] In this sense, I think that punishment should always be applied with some reluctance, in proportion to the damage caused, and in accordance with the most benign norm.[23]

Is there no place for forgiveness in your theory?

Of course, it is always possible to forgive those who commit unjust acts. But in relation to justice as a principle of social organization, I tend to think that forgiveness should always be the exception. I disagree with those who promote it by giving priority to the feeling of compassion towards criminals. They thus forget or overlook the fact that “mercy to the guilty is cruelty to the innocent.”[24]

In these matters, our first duty is to attend to the general interest, which requires respecting justice as a general rule. The occasion for forgiveness emerges sporadically, and only when social peace and civil stability are at risk.[25]

Language and communication

At the beginning of this conversation, you talked about hidden connections among various social phenomena. I want to ask you now how your defense of freedom is linked to your ideas about language and social communication.

Language and conversation are social mechanisms used to satisfy a basic, perhaps one of the strongest, human instincts: the need to persuade. Along with reason, persuasion helps us communicate our sentiments, interests, and beliefs to other people, and allows us to offer and get what we want in exchange. So we spend our lives cultivating the power of persuasion, largely based on the power of argumentation. In fact, I would go as far as to suggest that social processes are based on our willingness and ability to persuade others. Thus, a probable “hidden” connection between the system of natural liberty and persuasion is that free economic exchange is the consequence of the human need to convince others to make the desired exchanges. Somehow people find themselves saying, “Give me what I want, and you shall have what you want.”[26] 

In addition to persuasion in the market sphere, there is also a persuasive exchange in the political field. The desire to be recognized, and the lure of “leading and directing other people” should not be ignored. In this regard, speech is also an instrument of persuasion at the service of the political career. Besides, all persuasive conversation is based on a correspondence of sentiments and opinions between the interlocutors. For this correspondence to exist, it is necessary to establish free and honest interpersonal communications, based on trust. [27]

What are the political implications of the importance of persuasion thus understood?

I can imagine at least two implications. A person of “public spirit” will understand that the use of rational persuasion is the ideal tool for social exchange and political communication and that it should not be replaced by deception or coercion.[28] In contrast to the public-spirited mind, a person “of system” will tend to underestimate rationality and persuasion, since she views people as inert pieces on a chessboard, subject to manipulation, and not as the rational and free beings that they really are.

Considering that readers look mostly for inspiring and idealistic figures, I must confess that the portrait of lethargic workers, corrupt businessmen, and arrogant politicians can be a disincentive to read your books. Are there no heroes for you?

Of course, there are heroes! I have mentioned that social exchanges arise from sentiments of approval based on judgments and actions deemed correct. Correctness is expected of most people. But my analysis does not stop there. In my work, I also refer to exceptional people. We don’t just approve of them as we do with the rest, but we applaud and admire them.[29] Among these individuals are public-spirited statesmen, poets, philosophers, scientists, and all who “invented, improved or excelled in the arts that contribute to the subsistence, to the conveniency or the ornament of human life; all the great protectors, instructors, and benefactors of mankind.”[30]

Moreover, some people go even further than this. Their heroes are those who suffer and perish for the sake of truth, liberty, and justice (of their countries and of mankind). Evidently, every hero demonstrates extraordinary courage and self-control. Unfortunately, some people possess these attributes but use them to promote unfair causes. They also attract our attention, and they even receive some recognition for their courage: “The most heroic valour can be employed indifferently in the cause, either of justice or of injustice; and though it is no doubt much more loved and admired in the former case, it still appears a great and respectable quality even in the latter.”[31]

Certainly, I do not include these latter cases in the category of heroes—let’s say they are only bold and brave—but many people may not appreciate the difference between heroism and boldness. That is why I think it is appropriate to insist on the idea that heroism depends on the cause that is defended, and not on the qualities used to promote that cause.

Let’s go to the opposite case and ask: Who are the villains for Adam Smith?

In my opinion, many of the villains are among the rulers or the friends of political power. I already mentioned the members of factions and their fans as great corrupters of morals, and that certainly includes both groups in the category of villains. Among the most extreme historical examples, Borgia and Nero were unrelenting tyrants in exercising cruelty to their own people.[32] In a more metaphorical sense, it can be said that countries where rulers behave absurdly or oppressively are ruled by villains.

My position on how to act against these regimes is inspired by Locke. Where exorbitant taxes are established, the resistance of the people is justified because “no authority is altogether unlimited.”[33] In this sense, history teaches us that political power always tends to concentrate and become absolute. That is why I insist on calling for reflection and action, to protect the system of natural liberty from the clutches of that absolute power.

Now, if you’ll excuse me, I must prepare for my long daily walk, which helps me clear my mind and clarify ideas. Surely we can resume our conversation in the future...

I certainly hope so Mr. Smith. Let me thank you for your time and for your extraordinary contribution to the study and promotion of the ideas conducive to freer societies.

[1] WN 448, 561, 588-589.
[2] WN 572-575, 585.
[3] WN 586, 609-613.
[4] WN 186-188, 219-220.
[5] TMS 61.
[6] TMS 57.
[7] TMS 234.
[8] WN 28-29; LJ 493.
[9] LJ 541.
[10] TMS 163; WN 788.
[11] WN 785-786.
[12] WN 95.
[13] WN 773.
[14] LJ 201- 215; WN 710,715.
[15] TMS, 187.
[16] TMS, 81; WN 25; LJ 338.
[17] TMS 81.
[18] Vivenza (2010); LJ 200.
[19] TMS 84-88;138;175-176;269.
[20] TMS, 340-341; WN, 687, 708.
[21] TMS 175-176;88;77.
[22] LJ 130-131.
[23] TMS 172.
[24] TMS 88.
[25] TMS 240.
[26] LJ 493; WN 26.
[27] TMS 336-337.
[28] TMS 233.
[29] TMS 20, 30-31.
[30] TMS 134.
[31] TMS 238; 264.
[32] TMS 76,217.
[33] LJ 434-435.