Sir James Steuart as the Apotheosis of Mercantilism and His Relation to Adam Smith

Abstract

The conventional wisdom holds two related propositions regarding Smith's presentation of his case for laissez-faire in The Wealth of Nations. One is that he employs, for the sake of expository convenience, a strawman -the mercantilist view -against which he presents the alternative of free trade [2; 15]. It has become accepted by some scholars that mercantilist writers held much more intelligent views and that Smith invented an opposition by distortion, making his alternative win by default [7; 23; 9; 11]. The other proposition, which has also gained currency since the 1940s, is that Smith falsely portrayed himself as an iconoclast in opposition to the mercantilist orthodoxy. It is nowadays alleged that Smith was instead merely offering an able articulation of an orthodox view which had already emerged [23; 11]. Laissez-faire prejudices were the dominant fashion, and Smith provided a rationalization of them ex post. We feel that this conventional wisdom about Smith is wrong, and we believe that this can be demonstrated by means of a close examination of the most prominent mercantilist writer in Smith's time (who was, in fact, an acquaintance of Smith): Sir James Steuart. Our case regarding Steuart can be easily summarized-he was virtually the complete antithesis of Smith. Although some older writers [1] sensed this, the more recent fashion has been to characterize Steuart as basically a classical liberal with Keynesian leanings, committed to the furtherance of economics as a science. The sophistication and trenchancy of his analysis is stressed, along with the manifest superiority of some of it to Smith's. We believe that we can demonstrate, quite apart from any Keynes-like demand management ideas, that Steuart presented a political economy and an approach to economic science that differed fundamentally from Smith. In short, Smith did not have to build a strawman; he had James Steuart. Furthermore, there is considerable evidence to suggest that Steuart's alternative gave a real run for the money and that Smith offered a truly radical program which gained considerable influence, overturning rather than rationalizing popular prejudices. In Section II, we outline the extent of Steuart revivalism in the literature. In Section III, we examine Steuart's emphasis on classes rather than individuals as units of analysis.