The Wealth of Nations

mention of cleanliness, and the remarks on security are removed to the chapter on the accumulation of capital. The two sections on the natural wants of mankind are omitted,62 illustrating once more the difficulty which economists have generally felt about consumption. The next four sections, on division of labour, develop into the first three chapters of Book I of the Wealth of Nations. At this point in the lectures there is an abrupt transition to prices, followed by money, the history of commerce and the effects of a commercial spirit, but in the Wealth of Nations this is avoided by taking money next, as the machinery by the aid of which labour is divided, and then proceeding by a very natural transition to prices. In the lectures the discussion of money led to a consideration of the notion that wealth consisted in money and of all the pernicious consequences of that delusion in restricting banking and foreign trade. This was evidently overloading the theory of money, and consequently banking is postponed to the Book about capital, on the ground that it dispenses with money, which is a dead stock, and thus economises capital, while the commercial policy is relegated by itself to Book IV. In the lectures, again, wages are only dealt with slightly under prices, and profits and rent not at all; in the Wealth of Nations wages, profits and rent are dealt with at length as component parts of price, and the whole produce of the country is said to be distributed into them as three shares.

The next part of the lectures, that dealing with the causes of the slow progress of opulence, forms the foundation for Book III of the Wealth of Nations. The influence of commerce on manners disappears as an independent heading, but most of the matter dealt with under it is utilised in the discussions of education and military organisation.

Besides consumption, two other subjects, stock-jobbing and the Mississippi scheme, which are treated at some length in the lectures, are altogether omitted in the Wealth of Nations. The description of stock-jobbing was probably left out because better suited to the youthful hearers of the lectures than to the maturer readers of the book. The Mississippi scheme was omitted, Smith himself says, because it had been adequately discussed by Du Verney.

Here and there discrepancies may be found between the opinions expressed in the lectures and those expressed in the book. The reasonable and straightforward view of the effects of the corn bounty is replaced by a more recondite though less satisfactory doctrine. The remark as to the inconvenience of regulations on foreign commerce having been alleviated by the fact that they encourage trade with countries from which imported raw materials came and discourage it with those from which manufactured goods came63 does not reappear in the book. The passage in the Lectures is probably much condensed, and perhaps misrepresents what Adam Smith said. If it does not, it shows him to have been not entirely free from protectionist fallacies at the time the lectures were delivered.64

There are some very obvious additions, the most prominent being the account of the French physiocratic or agricultural system which occupies the last chapter of Book IV. The article on the relations of church and state (Bk. V, ch. i, pt. iii, art. 3) also appears to be a clear addition, at any rate in so far as the lectures on police and revenue are concerned, but, as we shall see presently, tradition seems to say that Smith did deal with ecclesiastical establishments in this department of his lectures on jurisprudence, so that possibly the lecture notes are deficient at this particular point, or the subject was omitted for the particular year in which the notes were taken. Then there is the long chapter on colonies. The fact of colonies having attracted Adam Smith’s attention during the interval between the lectures and the publication of his book is not very surprising when we remember that the interval coincided almost exactly with the period from the beginning of the attempt to tax the colonies to the Declaration of Independence.

But these additions are of small importance compared with the introduction of the theory of stock or capital and unproductive labour in Book II, the slipping of a theory of distribution into the theory of prices towards the end of Book I, chapter vi, and the emphasising of the conception of annual produce. These changes do not make so much real difference to Smith’s own work as might be supposed; the theory of distribution, though it appears in the title of Book I, is no essential part of the work and could easily be excised by deleting a few paragraphs in Book I, chapter vi, and a few lines elsewhere; if Book II were altogether omitted the other Books could stand perfectly well by themselves. But to subsequent economics they were of fundamental importance. They settled the form of economic treatises for a century at least.

They were of course due to the acquaintance with the French Économistes which Adam Smith made during his visit to France with the Duke of Buccleugh in 1764⁠–⁠6. It has been said that he might have been acquainted with many works of this school before the notes of his lectures were taken, and so he might. But the notes of his lectures are good evidence to show that as a matter of fact he was not, or at any rate that he had not assimilated their main economic theories. When we find that there is no trace of these theories in the Lectures and a great deal in the Wealth of Nations, and that in the meantime Adam Smith had been to France and mixed with all the prominent members of the “sect,” including their master,