The Father of Capitalism, Adam Smith on Slavery & Inheritance
“The Wealth of Nations” is perhaps the signature founding document of the world’s foremost economy predicated on the principles of capitalism enunciated and enumerated in Adam Smith’s seminal work.
Excerpts of Smith’s thoughts on slavery and the generational transfer of wealth as discussed in his treatise have been put together, not as juxtaposition of countervailing principles, but as examples, to show how far the country has strayed, or evolved, from the ideological intentions of the founding architects of the economic, political, and social structures and frameworks around which the country was formed and built…
“Adam Smith on the Abolition of Slavery and the Incompatibility of Democracy and Inherited Wealth
Adam Smith argued not only that slavery was morally reprehensible, but that it causes economic self-harm. He provided economic and moral ammunition for the abolitionist movement that came to fruition after his death in 1790. Smith was pessimistic about the potential for full abolition, but he was on the side of the angels.
To meet the criteria of ‘evident justice and utility’, Adam Smith supported a tax on wealth inherited by children ‘who have got families of their own, and are supported by funds separate and independent of their father’.
Smith’s The Wealth of Nations, published in 1776, contains perhaps the best known economic critique of slavery.
Smith argued that free individuals work harder and invest in the improvement of land, motivated by their interest in earning a higher income, than slaves. Smith refers to ancient Italy, where the cultivation of corn degraded under slavery. The cost of slavery is “in the end the dearest of any,” Smith writes.
If there was one thing the Revolutionary generation agreed on — and those guys who dress up like them at Tea Party conventions most definitely do not — it was the incompatibility of democracy and inherited wealth.
With Thomas Jefferson taking the lead in the Virginia legislature in 1777, every Revolutionary state government abolished the laws of primogeniture and entail that had served to perpetuate the concentration of inherited property.
Jefferson cited Adam Smith, the hero of free market capitalists everywhere, as the source of his conviction that (as Smith wrote, and Jefferson closely echoed in his own words), “A power to dispose of estates for ever is manifestly absurd. The earth and the fullness of it belongs to every generation, and the preceding one can have no right to bind it up from posterity. Such extension of property is quite unnatural.” Smith said: “There is no point more difficult to account for than the right we conceive men to have to dispose of their goods after death.”
The states left no doubt that in taking this step they were giving expression to a basic and widely shared philosophical belief that equality of citizenship was impossible in a nation where inequality of wealth remained the rule.
North Carolina’s 1784 statute explained that by keeping large estates together for succeeding generations, the old system had served “only to raise the wealth and importance of particular families and individuals, giving them an unequal and undue influence in a republic” and promoting “contention and injustice.” Abolishing aristocratic forms of inheritance would by contrast “tend to promote that equality of property which is of the spirit and principle of a genuine republic.”
Others wanted to go much further; Thomas Paine, like Smith and Jefferson, made much of the idea that landed property itself was an affront to the natural right of each generation to the usufruct of the earth, and proposed a “ground rent” — in fact an inheritance tax — on property at the time it is conveyed at death, with the money so collected to be distributed to all citizens at age 21, “as a compensation in part, for the loss of his or her natural inheritance, by the introduction of the system of landed property.” ”
https://www.economist.com/lexingtons-notebook/2010/10/14/you-cant-take-it-with-you
//quillette.com/2020/06/22/the-father-of-capitalism-and-the-abolition-of-slavery/
I have generally held that egalitarian democracy and free-market capitalism, though not mutually exclusive, are opposing and competing principles in America’s society and systems…
Apparently, Smith’s formulation of Capitalism was to be the economic counterpart of Democratic governance….
So here’s a couple of. questions:
Smith and others argued that slavery and the generational transfer of wealth were antithetical to Democracy and Capitalism, so why did it take nearly 100 years and a Civil War to abolish slavery, and why hasn’t unfettered generational transfer of wealth been eliminated?
07/31/2020 @ 9:37 am
The real reason is a horrible one. In terms of productivity, Smith was wrong. He was right about Rome but he didn’t see the coming difference between Roman slavery and American slavery, particularly once plantation owners could process cotton as fast as it could be picked due to the invention of the cotton gin. That led to the abuse of field labor to an extent Smith never saw. During his lifetime he may have been right. Smith believed that self-interest would result in more gains than obedience, but in the South they mixed obedience with fear. It was preferable to work oneself to death than to be whipped constantly. Slavery became so abusive that it became profitable.
07/31/2020 @ 2:27 pm
@Koshersalaami;
“Slavery became so abusive that it became profitable.”
This is absolutely the best single sentence summation of slavery I’ve ever read….Thanks
I will definitely save and re-use it, with your permission, of course.
08/01/2020 @ 9:22 am
I’m honored that you would. Permission granted, of course.
08/01/2020 @ 4:19 pm
@Koshersalaami;
What is your take on the Smith, and Jefferson, et al notion of “the incompatibility of democracy and inherited wealth”?
Actually, I thought that you would react and expound on the second of my inquiries more readily than the first….
08/11/2020 @ 1:02 am
I thought I’d answered this over a week ago. I must have been interrupted while I typed and never finished.
Too much inherited wealth leads to aristocracy, which is exactly what the Founding Fathers were trying to avoid. It absolutely leads to a sense of entitlement. See the Trump kids. Unfettered transitional wealth hasn’t been eliminated
because those who inherit are powerful by virtue of that wealth and want to preserve their positions. Unfettered enough and it becomes predatory, which it has. A consequence of that predatory nature is a reduction in general prosperity, which has also happened since the early eighties.