By Atanu Biswas, Professor of Statistics, Indian Statistical Institute, Kolkata
Amid the continuing Iran War, this 9th of March marks the 250th anniversary of the publication of Adam Smith’s An Inquiry into the Nature and Causes of the Wealth of Nations, which is widely regarded as the foundation of economics. It’s rather interesting to note that the father of economics also had some very important views on the economics of war. Smith, in Book V of The Wealth of Nations, states that the cost of wars has been increasing along with the progress of economics and technology for three reasons: the expense of maintaining a standing army, the creation of costly but efficient warfare, and the prolonging of the wars. It would, however, have been unimaginable to Smith that 250 years later, the face of wars would be completely changed by the power of technology.
This militia question was a highly controversial issue in Scotland, particularly among the inner circle of Adam Smith’s close friends, during the 1750s to 1760s when he crafted his lectures. Of course, Smith referred to “the first duty of the sovereign” when he included a separate section on “arms” in his Lectures on Jurisprudence and even elaborated on this topic further in Book V of The Wealth of Nations, Chapter I, Of the expenses of the sovereign or commonwealth.
There are diverse opinions about Smith’s views on war and commerce from various scholars, all based on Smith’s own works, though. Martin Wight, one of the most prominent scholars on international relations in Britain in the twentieth century, wrote that Adam Smith believed in “a multiplicity of independent sovereign states… whose relationships are ultimately regulated by warfare”. But some experts think that it’s also possible that Smith saw the problem of warfare as a permanent one because of the existence of the nation-state. However, Donald Winch, in the 1978 book Adam Smith’s Politics, stated that Smith often talked of “the patriotic and heroic military virtues in glowing terms” and “always regarded the art of war as the noblest of arts”. It’s unclear, though, whether this proves him not to have been opposed to war.
At the time of Smith’s writing, one of the issues of discussion and disagreement among the Scots was that of defence, specifically that of a permanent army as opposed to a Scottish militia. Regarding the issue of just wars of defence, Smith was by no means a pacifist, for sure. Smith described the history in the first chapter of Book V of his book as follows: “The civil came to predominate over the military character, and the standing armies of Rome gradually degenerated into a corrupt, neglected, and undisciplined militia, incapable of resisting the attack of the German and Scythian militias, which soon afterwards invaded the western empire.” It’s then open to invasion by what Smith calls the “poor and barbarous nations”.
Note that most textual evidence regarding Adam Smith’s dislike of war was due to the high price, about which he was always complaining. In Edwin Cannan’s edition of The Wealth of Nations (1904), Smith comments that the real expenses of war are concealed from taxpayers who are safely ensconced in the metropole far from the war, while the government finances the war by increasing the national debt instead of increasing taxes. In Chapter III: Of Public Debts in The Wealth of Nations, Smith writes that most people will gladly pay slightly more taxes to support wars to get the “amusement” of reading about imperial conquests, unaware that the full costs of war have been added to the national debt.
Another prominent figure of the Scottish Enlightenment movement, David Hume, was a lifelong friend of Smith. It could be interesting to examine the contrasting views of Smith and Hume on the issues of international wars and trade. According to Maria Pia Paganelli and Reinhard Schumacher’s recent article, Hume connected wars with the nature of humans, whereas Smith connected wars with the greed of manufacturers and merchants who sought monopolies. Hume was a proponent of a militia, whereas Smith advocated a standing army. Smith was concerned about the military debt, whereas Hume supported the financing of wars by debt.
Smith is considered to be one of the pioneers of the school of thought that relates international trade “as an influence for peace”. “Smith hoped and expected commerce to become the universal alternative to war,” as Lisa Hill of the University of Adelaide portrayed in the 2009 book British International Thinkers from Hobbes to Namier.
However, as discussed by Paganelli and Schumacher, the wealth created through international trade results in a decrease in the cost of wars, an increase in the ability to fund wars through debt, which in turn results in a decrease in the cost of wars, and an increase in the propensity of those who have a vested interest in international trade to fight wars to expand their markets, thus increasing the frequency of wars. Smith, therefore, cannot assume that commerce shall lead to world peace.
Smith also warns us not to assume that peace is guaranteed, even as we support and promote commerce. This analysis mirrors that of Andrew Wyatt-Walter’s argument in a paper published in the Review of International Studies in 1996. Accord to Wyatt-Walter, Smith argued that nations had not been able to discover that “commerce could reveal a true harmony of interests”, but that conflict between them had been aggravated, partly by the friction that commerce produces between them, and partly because, in proportion as any nation was advanced, so was it exposed to aggression by others.
Overall, Adam Smith’s opinions on war are constantly being reinvented, even at this critical moment.