The Wealth of Nations

Despite its renown as the first great work in political economy. The Wealth of Nations is in fact a continuation of the philosophical theme begun in The Theory of Moral Sentiments. The ultimate problem to which Smith addresses himself is how the inner struggle between the passions and the “impartial spectator’ - explicated in Moral Sentiments in terms of the single individual - works its effects in the larger arena of history itself, both in the long-run evolution of society and in terms of the immediate characteristics of the stage of history typical of Smith’s own day.

The answer to this problem enters in Book 5, in which Smith outlines he four main stages of organization through which
society is impelled, unless blocked by deficiencies of resources, wars, or bad policies of government: the original “rude’ state of hunters, a second stage of nomadic agriculture, a third stage of feudal or manorial “farming”, and a fourth and final stage of commercial interdependence.

It should be noted that each of these stages is accompanied by institutions suited to its needs. For example, in the age of the huntsman, “there is scar any established magistrate or any regular administration of justice. “ With the advent of flocks there emerges a more complex form of social organization, comprising not only “formidable” armies but the central institution of private property with its indispensable buttress of law and order as well. It is the very essence of Smith’s thought that he recognized this institution, whose social usefulness he never doubted, as an instrument for the protection of privilege, rather than one to be justified in terms of natural law: “Civil government,” he wrote, “so far as it is instituted for the security of property, is in reality instituted for the defence of the rich against the poor, or of those who have some property against those who have none at all.” Finally, Smith describes the evolution through feudalism into a stage of society requiring new institutions such as market-determined rather than guild-determined wages and free rather than government-constrained enterprise. This later became known as laissez-faire capitalism; Smith called it the system of perfect liberty.

There is an obvious resemblance between this succession of changes in the material basis of production, each bringing its requisite alterations in the superstructure of laws and civil institutions, and the Marxian conception of history. Though the resemblance is indeed remarkable, there is also a crucial difference: in the Marxian scheme the engine of evolution is ultimately the struggle between contending classes, whereas in Smith’s philosophical history the primal moving agency is “human nature “driven by the desire for self-betterment and guided (or misguided) by the faculties of reason