#WealthofTweets: Book 3.4
How the Commerce of the Towns Contributed to the Improvement of the Country
5 Feb • 28 tweets • adamsmithworks/status/1357724720834183170
OK so chapter 4 of Book 3 of #WealthOfNations is a lot of*chef's kiss* and a little "...wat." Let's dive in. (III.iv.)
Towns getting rich helped the country get rich in three ways:
1. They provide a market for the country.
2. They provided entrepreneurial people with the money to buy and improve land
3. They largely ended domination and war.
(III.iv.1–4) #WealthOfTweets #SmithTweets
3) is another wildly underappreciated argument from Smith: The commercial society that towns fostered improved governing institutions to reduce violence and increase security so that development can even happen.
That's good. That's huge. (III.iv.4) #WealthOfTweets #SmithTweets
Here's the basis for that claim: Without developed markets, landowners have nowhere to spend their riches. So they spend them on feeding, clothing, and housing "retainers and dependents", who are thus wholly dependent on their lords. (III.iv.5–8) #WealthOfTweets #SmithTweets
Wholly dependent people are...wholly dependent. That means they have to do things like go to war when they're told, even if it's for silly slights or minor disputes. (III.iv.5–8) #WealthOfTweets #SmithTweets
Because every lord who maintains hundreds of people effectively commands a small army, the king has WAY less authority. He can't command the lords or protect their subjects from them. For governance? That's bad. (III.iv.5–8) # WealthOfTweets #SmithTweets
It's a very Smith thing to get annoyed that people think this is where feudal law comes from. Feudal law was instituted to try to bring all of the law under the jurisdiction of the king instead. (III.iv.8–9) #WealthOfTweets #SmithTweets
The point of feudal law was to weaken the lords and strengthen the king, but it couldn't fix the root cause of dysfunctional governance by the lords because it stemmed from the economic system, not the legal one. (III.iv.9) #WealthOfTweets #SmithTweets
"All for ourselves, and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind."
Things look bad.
But just wait: there's a classic Smithian plot twist coming. (III.iv.10)
Feudal law used pretty violent methods to try to achieve its objectives, but failed. The "silent and insensible operation of foreign commerce and manufacturers gradually brought [that achievement] about." (III.iv.10) #WealthOfTweets #SmithTweets
The selfishness of the lords meant that once they had foreign commerce and manufactures to spend their money on, they spent it on themselves instead of maintaining a retinue. They paid "productive" people through the market instead. (III.iv.10) #WealthOfTweets #SmithTweets
(Now we know why Smith spent all that time on II.iii. Even if we still wish he'd used almost ANY OTHER WORDS.) (III.iv.10) # WealthOfTweets #SmithTweets
So the lords are now spending the money that used to directly support thousands of poor people on, like, diamond buckles or something produced by only a few. This SOUNDS bad. (III.iv.10) #WealthOfTweets #SmithTweets
Smith doesn't say this, but people weren't doomed without a lord to support them. They were freed from their dependence on the lords to farm or move away. Not saying it always ended well, but it wasn't diamond buckles ➡ mass famine. (III.iv.10–11) #WealthOfTweets #SmithTweets
Lords, by spending all their money on themselves, pay the wages and profits of a lot of people. But lords only pay a small portion of the wages & profits of any specific people. They maintain their independence of the lords they supply. (III.iv.11–12) #WealthOfTweets #SmithTweets
So "for the gratification of the childish, the meanest and the most sordid of all vanities, they gradually bartered their whole power and authority." (III.iv.10) This phrasing is just THE BEST. #WealthOfTweets #SmithTweets
All of this *waves hands* is why there's not very much old money in market society. It gets spent and distributed through wealth creation rather than hoarded for power and security. #MoreSilverTeaSetsFewerDespots (III.iv.16) #WealthOfTweets #SmithTweets
For economic development this is Very Good News. The end of arbitrary rule by lords and the rise of the freedom of yeomen/tradespeople meant peace and good governance ➡ stock accumulation ➡ the division of labor ➡ wealth! (III.iv.10–13) #WealthOfTweets #SmithTweets
Vain, selfish landowners and self-interested merchants brought about this huge improvement, though they "had not the least intention to serve the publick." That phrasing sounds familiar, somehow. (III.iv.17) #WealthOfTweets #SmithTweets
And here, dear readers, is the part that makes us go "...wat." (III.iv.18–19)
After ALL THOSE PAGES on the importance of emerging order and good government to the ability of countries to develop, Smith now says that the way that it happened in Europe was contrary to the natural course of things. (III.iv.19) #WealthOfTweets #SmithTweets
But when Smith says this he opens up a whole mess of problems for all the arguments he's made up until now. (III.iv.19)
He now says agriculture should drive the growth of cities. But he just spent Book III describing how it didn't, and in his time doesn't. So how can it be the natural order? (III.iv.19) #WealthOfTweets #SmithTweets
He can't use the single example of the American colonies as proof of a natural order that applies in all places and times(III.iv.19) #WealthOfTweets #SmithTweets
So the end of book III takes most of the beginning of Book III apart. And now we want a cup of tea. (III.iv.19) #WealthOfTweets #SmithTweets
It's not the MOST satisfying ending to Book III, which contains some of the best Wealth of Nations content, in the humble opinion of the SmithTweeters. But it's the end we got.
So. What did we learn? #WealthOfTweets #SmithTweets
1. Towns and countries: they benefit each other.
2. Hoarding huge tracts of land: bad for everyone.
3. Towns: they're where freedom comes from.
4. Diamond buckles > power. That's good. #WealthOfTweets #SmithTweets
Tomorrow we move on to Systems of Political Oeconomy and other 18thC spellings. See you soon for Book IV! # =WealthOfTweets #SmithTweets
See also the AdamSmithWorks Reading Guide for the chapter.