What Is Human Nature? Two Views from Adam Smith
Two models of human nature in one book.
In Books I and II of the Wealth of Nations, Adam Smith lays out how the economy works. People seek material comfort and are naturally sociable--have a predisposition to "truck, barter, and exchange." From this derives market exchange, the division of labor, specialization, high productivity, accumulation and investment, higher productivity, comfort, and material wealth. This process driven by human nature, Smith says, starts in the countryside with the expansion of productivity in making the necessities of life, moves to the towns with the subsequent expansion of productivity in making the conveniences of life and then shows itself at last with the development of long-distance international trade in luxuries. That, at least, is the "natural" history of the economy.
But in Book III things change. Humans are no longer naturally sociable beings with a propensity to trade seeking material comfort. Instead, they are creatures of "rapine and violence," desperate for "power and protection," vain and seeking luxury, unwilling to take pains to pay attention to smalls savings and small gains, loving to domineer, mortified at even the thought of having to persuade his inferiors.
This is a different "Adam Smith problem" than is usually posed. And, I think, it is in many ways more interesting than the standard Adam Smith problem:
Adam Smith, from Book III of the Wealth of Nations:
According to the natural course of things... capital of every growing society is, first, directed to agriculture, afterwards to manufactures, and last of all to foreign commerce.... But though this natural order of things must have taken place... it has, in all the modern states of Europe, been, in many respects, entirely inverted. The foreign commerce of some of their cities has introduced all their finer manufactures, or such as were fit for distant sale; and manufactures and foreign commerce together have given birth to the principal improvements of agriculture. The manners and customs which the nature of their original government introduced, and which remained after that government was greatly altered, necessarily forced them into this unnatural and retrograde order....
When the German and Scythian nations overran the western provinces of the Roman empire, the confusions which followed so great a revolution lasted for several centuries. The rapine and violence which the barbarians exercised against the ancient inhabitants interrupted the commerce between the towns and the country. The towns were deserted, and the country was left uncultivated, and the western provinces of Europe, which had enjoyed a considerable degree of opulence under the Roman empire, sunk into the lowest state of poverty and barbarism.... [T]he chiefs and principal leaders of those nations acquired or usurped to themselves the greater part of the lands of those countries....
This original engrossing of uncultivated lands... might have been but a transitory evil.... [But] primogeniture hindered them from being divided by succession: the introduction of entails prevented their being broke into small parcels by alienation. When land... is considered as the means only of subsistence and enjoyment, the natural law of succession divides it... among all the children... equally dear to the father.... But when land was considered as the means, not of subsistence merely, but of power and protection, it was thought better that it should descend undivided to one.... The security of a landed estate... the protection which its owner could afford to those who dwelt on it, depended upon its greatness. To divide it was to ruin it.... The law of primogeniture, therefore, came... in the succession of landed estates, for the same reason that it has generally taken place in that of monarchies....
In the present state of Europe, the proprietor of a single acre of land is as perfectly secure of his possession as the proprietor of a hundred thousand. The right of primogeniture, however, still continues to be respected, and... is still likely to endure for many centuries.... Entails are the natural consequences of the law of primogeniture. They were introduced to... hinder any part of the original estate from being carried out of the proposed line either by gift, or devise, or alienation; either by the folly, or by... misfortune.... Great tracts of uncultivated land were, in this manner, not only engrossed by particular families, but the possibility of their being divided again was as much as possible precluded for ever.
It seldom happens... that a great proprietor is a great improver. In the disorderly times which gave birth to those barbarous institutions... [h]e had no leisure to attend to the cultivation and improvement of land. When the establishment of law and order afforded him this leisure, he often wanted the inclination, and almost always the requisite abilities.... To improve land with profit, like all other commercial projects, requires an exact attention to small savings and small gains, of which a man born to a great fortune, even though naturally frugal, is very seldom capable.... The elegance of his dress, of his equipage, of his house, and household furniture, are objects which from his infancy he has been accustomed to have some anxiety about.... There still remain in both parts of the United Kingdom some great estates which have continued without interruption in the hands of the same family since the times of feudal anarchy. Compare the present condition of those estates with the possessions of the small proprietors in their neighbourhood, and you will require no other argument to convince you how unfavourable such extensive property is to improvement....
If little improvement was to be expected from such great proprietors, still less was to be hoped for from those who occupied the land under them. In the ancient state of Europe, the occupiers of land were... all or almost all slaves.... Whatever they acquired was acquired to their master, and he could take it from them at pleasure.... This species of slavery still subsists in Russia, Poland, Hungary, Bohemia, Moravia, and other parts of Germany. It is only in the western and south-western provinces of Europe that it has gradually been abolished altogether. But if great improvements are seldom to be expected from great proprietors, they are least of all to be expected when they employ slaves for their workmen.... A person who can acquire no property, can have no other interest but to eat as much, and to labour as little as possible. Whatever work he does beyond what is sufficient to purchase his own maintenance can be squeezed out of him by violence only, and not by any interest of his own....
The pride of man makes him love to domineer, and nothing mortifies him so much as to be obliged to condescend to persuade his inferiors. Wherever the law allows it, and the nature of the work can afford it, therefore, he will generally prefer the service of slaves to that of freemen. The planting of sugar and tobacco can afford the expence of slave-cultivation. The raising of corn, it seems, in the present times, cannot. In the English colonies, of which the principal produce is corn, the far greater part of the work is done by freemen.... In our sugar colonies, on the contrary, the whole work is done by slaves, and in our tobacco colonies a very great part of it.... Both can afford the expence of slave-cultivation, but sugar can afford it still better than tobacco. The number of negroes accordingly is much greater, in proportion to that of whites, in our sugar than in our tobacco colonies...
