The Wealth of Nations_ Books 4-5 - Adam Smith [22]
This is an interesting statement when we consider the emphasis which Smith gave to the point that all our actions are subject to the scrutiny of our fellows, together with the stress which he placed (in The Theory of Moral Sentiments) on our natural desire not just to be praised, but to be praiseworthy. However, as the statement just quoted, and indeed the whole tenor of the discussion suggests, Smith believed that the diligence of the teacher can only be relied on where the stated efficiency criteria are met.
But while Smith’s treatment of education confirms his earlier argument that people who supply public services should be paid in such a way as to induce efficiency delivery, he went further in enunciating principles which have a wider application. First, he argued that public bodies (such as universities) should not, ideally, have a monopoly of the services which they provide.162Secondly, he suggested that public bodies should be so placed as to be able to compete effectively in the labour market for appropriate services.163Thirdly, he drew attention to the dangers of self-government,164and fourthly, to the need for freedom of choice on the part of the customer.165He also recognized that there could be circumstances under which external scrutiny could be needed, while warning that
The person subject to such jurisdiction is necessarily degraded by it… It is by powerful protection only that he can effectually guard himself against the bad usage to which he is at all time exposed; and this protection he is most likely to gain, not by ability or diligence in his profession, but by obsequiousness to the will of his superiors, and by being ready, at all times, to sacrifice to that will the rights, the interest, and the honour of the body corporate of which he is a member.166
Government and Constraint
Perhaps I have said enough now to support Lionel Robbins’ judgement that Smith’s advocacy of economic freedom ‘rested on a two-fold basis: belief in the desirability of freedom of choice for the consumer, and belief in the effectiveness, in meeting this choice, of freedom on the part of the producers’.167At the same time, my account of key aspects of Books IV and V is designed to confirm Jacob Viner’s definitive assessment of Smith’s position:
Adam Smith was not a doctrinaire advocate of laissez-faire. He saw a wide and elastic range of activity for government, and he was prepared to extend it even further if government, by improving its standard of competence, honesty and public spirit, showed itself entitled to wider responsibilities.168
This passage reminds us of Smith’s preoccupation with what he took to be the baleful influence of mercantile and manufacturing interests, and also of a further link with the historical analysis of the emergence of the exchange economy.
Smith associated the fourth economic stage with the advent of freedom in the ‘present sense of the term’: that is, with the elimination of the relationship of direct dependence which had been a characteristic of the feudal/agrarian period. Politically, the significant and associated development appeared to be the diffusion of power that followed the emergence of new forms of wealth, which, at least in the particular circumstances of England, had been reflected in the increased significance of the House of Commons and in the emergence of a situation where liberty was secured ‘by an assembly of the representatives of the people, who claim the sole right of imposing taxes’.169Smith was far from equating political with personal liberty, nor did he suggest that absolutism was incompatible with the fourth economic stage. But what he did seem to recognize was that ‘free governments’, especially of the kind which had been confirmed by the English Revolution Settlement, now operated within a relatively sensitive political and economic environment. It is interesting to note, for instance, how often Smith referred