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The Cambridge History of English and American Literature in 18 Volumes (1907–21).
Volume X. The Age of Johnson.

XIV. Philosophers

§ 14. The Wealth of Nations; Its relation to Sir James Steuart’s Inquiry into the Principles of Political Economy

Adam Smith is frequently spoken of as the founder of political economy. By this is meant that he was the first to isolate economic facts, to treat them as a whole, and to treat them scientifically. But, nine years before the publication of The Wealth of Nations, another work appeared which may be regarded as having anticipated it in this respect—Sir James Steuart’s Inquiry into the Principles of Political Economy. Steuart was a Jacobite laird, who, in 1763, returned from a long exile abroad. He had travelled extensively, and his work contains the result of observation of different states of society as well as of systematic reflection; but it is without merit in respect of literary form. It is presented to the public as “an attempt towards reducing to principles, and forming into a regular science, the complicated interests of domestic policy.” It deals with “population, agriculture, trade, industry, money, coin, interest, circulation, banks, exchange, public credit, and taxes”; and the author has a definite view of scientific method. He speaks, indeed, of “the art of political economy,” using the term “political economy” in much the same sense as that in which Smith used it in dealing with “systems of political economy” in the fourth book of his great work. But this art is the statesman’s business; and behind the statesman stands “the speculative person, who, removed from the practice, extracts the principles of this science from observation and reflection.” Steuart does not pretend to a system, but only to “a clear deducation of principles.” These principles, however, are themselves gathered from experience. His first chapter opens with the assertion, “Man we find acting uniformly in all ages, in all countries, and in all climates, from the principles of self-interest, expediency, duty and passion.” And, of these, “the ruling principle” which he follows is “the principle of self-interest.” From this point, the author’s method may be described as deductive, and as resembling that of Smith’s successors more than it does Smith’s own. Further, he recognises that the conclusions, like the principles from which they proceed, are abstract and may not fit all kinds of social conditions, so that “the political economy in each [country] must necessarily be different.” How far Smith took account of Steuart’s reasonings we cannot say; he does not mention his name: though he is reported to have said that he understood Steuart’s system better from his talk than from his book.

Adam Smith does not begin with a discourse on method; he was an artist in exposition; and he feared, perhaps unduly, any appearance of pedantry. He plunges at once into his subject: “The annual labour of every nation is the fund which originally supplies it with all the necessaries and conveniences of life which it annually consumes.” These first words suggest the prevailing theme. Wealth consists not in the precious metals, but in the goods which men use or consume; and its source or cause is labour. On this foundation, he builds the structure of his science; and—although he says nothing about it—we can trace the method which he regarded as appropriate to his enquiry. It may be described shortly as abstract reasoning checked and reinforced by historical investigation. The main theorems of the analytical economics of a later period are to be found expressed or suggested in his work; but almost every deduction is supported by concrete instances. Rival schools have, thus, regarded him as their founder, and are witnesses to his grasp of principles and insight into facts. He could isolate a cause and follow out its effects; and, if he was apt sometimes to exaggerate its prominence in the complex of human motives and social conditions, it was because the facts at his disposal did not suggest the necessary qualifications of his doctrine, although more recent experience has shown that the qualifications are needed.