Adam Smith On The Scottish Highlands And The Origins Of Commercial Society

ADAM SMITH ON THE SCOTTISH HIGHLANDS AND THE
ORIGINS OF COMMERCIAL SOCIETY
Dimitrios Ioannis Halikias1,2
Abstract: This article addresses Adam Smith’s account of the origins of commercial
society. By examining Smith’s treatment of the Scottish Highlands — a paradigmatic
example of feudal predation — it considers the degree to which Smith believes the
transition to commercial society can be brought about by deliberate human design, not
merely uncoordinated human action. Modern Europe’s transition from feudalism to
commerce followed an unplanned, idiosyncratic course for historically contingent
reasons. Yet in the Highlands, Smith’s political economy was consistent with an ambi-
tious state-driven reform programme to induce social progress. Once introduced, mar-
kets might be able to run on their own, directed by a natural, self-correcting invisible
hand. The initial establishment of commercial society, however, may demand a more
concerted exertion of state power.
Keywords: Adam Smith, Scottish Highlands, Highland clearances, invisible hand,
feudalism, commercial society.
Introduction
Adam Smith’s argument in favour of commercial society centres on the natu-
ralness of the market economy.3
The Wealth of Nations details the ‘natural
progress of opulence’, the means by which the ‘natural inclinations of man’
give rise to universal prosperity.4
Smith consistently emphasizes the fortuitous,
perhaps providential alignment of our natural propensities and motivations
HISTORY OF POLITICAL THOUGHT. Vol. XLI. No. 4. Winter 2020
1 Department of Government, Harvard University, 1737 Cambridge St., Cambridge,
MA 02138, USA. Email: dhalikias@g.harvard.edu
2 I am grateful to Isaac Nakhimovsky, Richard Tuck, Eric Nelson and Leah Downey
for their help with this project in its various stages of development. I also wish to thank
the Editor and the anonymous reviewers for History of Political Thought for their con-
structive comments and Paul Prosser for his assistance throughout the submission pro-
cess.
3 Unless otherwise noted, all citations from Adam Smith come from the Liberty Fund
reprintings of the Glasgow editions original published by Oxford Clarendon Press:
Adam Smith, The Theory of Moral Sentiments, ed. D.D. Raphael and A.L. Macfie
(Oxford, 1976), henceforth ‘TMS’; Adam Smith, An Inquiry into the Nature and Causes
of the Wealth of Nations, ed. R.H. Campbell, A.S. Skinner and W.B. Todd (2 vols.,
Oxford, 1976), henceforth ‘WN’; Adam Smith, Lectures on Jurisprudence, ed. R.L.
Meek, D.D. Raphael and P.G. Stein (Oxford, 1978), henceforth ‘LJ’; Adam Smith,
Essays on Philosophical Subjects, ed. W.P.D. Wightman and J.C. Bryce (Oxford, 1978),
henceforth ‘EPS’; Adam Smith, Lectures on Rhetoric and Belles Lettres, ed. J.C. Bryce
(Oxford, 1983), henceforth ‘LRBL’; and Adam Smith, Correspondence of Adam Smith,
ed. E.C. Mossner and I.S. Ross (Oxford, 1977), henceforth ‘Correspondence’.
4 WN, III.i.1–3.
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SMITH ON THE ORIGINS OF COMMERCIAL SOCIETY 623
with macro-systems of collective justice and utility.5
An account of nature
underwrites Smith’s most famous metaphor — the invisible hand — the
mechanism by which natural impulses inadvertently lead us to benefit our fel-
lows.6
There are at least three distinct ways, however, in which Smith can be read
as attributing naturalness to the market economy. First, the market might be
natural insofar as it reflects or grows out of a core feature of human nature.
This interpretation is the subject of the extensive literature on Smith’s place in
the tradition of natural sociability.7
Second, the market might be natural inso-
far as it is governed by self-correcting natural laws.8
This interpretation is
often deployed by Smith’s classical-liberal readers. For Friedrich Hayek, for
example, Smith’s market is like a garden — in need of occasional pruning, but
generally best left alone to grow according to a natural course of develop-
ment.9
Consequently, this is the interpretation attacked by those who argue
that Smith relies much less on a theory of the self-correcting invisible hand
than is often assumed.10
This article deals with a third interpretation of the ‘naturalness’ of Smith’s
commercial society. Rather than examine the degree to which the market
itself is naturally self-regulating, it deals with Smith’s account of the origin of
market institutions. To extend Hayek’s metaphor, a garden needs an appropriate
environment to grow and flourish. The land must be cleared and the seedlings
planted. How does the analogous institutional environment for commercial
society come about? On some readings, Smith believes the transition to the
commercial age is the natural consequence of impersonal historic forces, and
he is sceptical of deploying deliberate political action to facilitate social pro-
gress.11
This article responds to those interpretations by exploring Smith’s
account of how commercial institutions emerged in the past and how they
5 See, for example, TMS, II.ii.3.5, III.2.30–32, IV.1.11 and VI.ii.intro.
6 WN, IV.ii.7–11 and TMS, IV.1.10.
7 For discussions of Smith and natural sociability, see I. Hont, Politics in Commercial
Society (Cambridge, 2015); P. Sagar, The Opinion of Mankind: Sociability and the
Theory of the State from Hobbes to Smith (Princeton, 2018); and L. Herzog, Inventing the
Market: Smith, Hegel, and Political Theory (Oxford, 2013).
8 A classic statement is J. Viner, ‘Adam Smith and Laissez Faire’, Journal of Politi-
cal Economy, 35 (2) (1927).
9 Hayek uses this metaphor repeatedly. See F. Hayek, ‘Pretense of Knowledge’, in
The Collected Works of F.A. Hayek, ed. B. Caldwell (Chicago, 2013), Vol. 15, p. 372;
F. Hayek, ‘Degrees of Explanation’, in ibid., p. 210; and F. Hayek, The Road to Serfdom,
ed. B. Caldwell (Chicago, 2007), p. 71.
10 See E. Rothschild, Economic Sentiments: Adam Smith, Condorcet, and the Enlight-
enment (Cambridge, 2002), pp. 116–56; and E. Rothschild, ‘Adam Smith and Conserva-
tive Economics’, The Economic History Review, 45 (1) (1992), pp. 74–96.
11 For different versions of this thesis, see J. Pitts, A Turn to Empire (Princeton,
2006), p. 34; and Hont, Politics in Commercial Society, p. 115.
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might be brought about in the future. It does so by reading Smith’s discussion
of Europe’s transition out of feudalism alongside his treatment of the Scottish
Highlands.12
Smith’s theoretical discussions of feudalism rely on examples
drawn from the Highlands, a paradigmatic model of aristocratic predation in
Smith’s own day. The Highlands were seen in the Scottish Enlightenment as a
testing ground for theories of social and political improvement.13
While Smith
criticized some of the Highland reforms underway in his lifetime, he wel-
comed many of the attempts to dramatically transform Highland society.
Read in that context, Smith emerges as a cautious champion of state action, a
reformist who believes that in certain circumstances state-driven transforma-
tion can be necessary to overcome feudalism and to establish commercial
society.
This article enters a longstanding debate over the role of politics in Smith’s
theory of social progress. Recent scholarship has resisted especially enthusi-
astic interpretations of Smith as an anti-political thinker, a thinker who
believes politics can be reduced to mere economic management.14
Neverthe-
less, many of his readers continue to argue that Smith believes economic and
social progress largely operate outside state involvement. It is for this reason,
for example, that Smith is often read as a critic of imperialism and colonial-
driven social improvement.15
The conceit of the imperialists, on this reading
of Smith, is their hubristic belief that the state can engineer progress. A
sceptical, anti-imperial Smith believes that commercial society and social
improvement are organic achievements that cannot be rudely imposed from
above. While Smith’s criticisms of colonial practices in India and North
America may support such readings, the case of the Highlands complicates
the matter. In feudal societies like the Highlands, Smith’s political economy is
consistent with a dramatic role for state intervention in facilitating the
624 D.I. HALIKIAS
12 For discussions of Smith’s response to and role in Highland improvement, see
J. Viner, ‘Guide to John Rae’s Life of Adam Smith’, in J. Rae, Life of Adam Smith (New
York, 1965), pp. 89–101; A.J. Youngson, After the Forty-Five: The Economic Impact on
the Scottish Highlands (Edinburgh, 1973), pp. 63–4; and F. Jonsson, Enlightenment’s
Frontier: The Scottish Highlands and the Origins of Environmentalism (New Haven,
2013), pp. 121–44.
13 See S. Sebastiani, The Scottish Enlightenment: Race, Gender, and the Limits of
Progress (New York, 2013), pp. 12–13.
14 See D. Winch, Adam Smith’s Politics: An Essay in Historical Revision (Cam-
bridge, 1978); K. Haakonssen, The Science of a Legislator: The Natural Jurisprudence
of David Hume and Adam Smith (Cambridge, 1981); and D. Luban, ‘Adam Smith on
Vanity, Domination, and History’, Modern Intellectual History, 9 (2) (2012), pp.
275–302.
15 Important examples include: Pitts, A Turn to Empire; L. Hill ‘Adam Smith’s Cos-
mopolitanism: The Expanding Circles of Commercial Strangership’, History of Political
Thought, 31 (3) (2010), pp. 449–73; and E. Rothschild, ‘Adam Smith in the British
Empire’, in Empire and Modern Political Thought, ed. Sankar Muthu (Cambridge,
2012).
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emergence of market institutions. The oppressive feudal aristocracy cannot
be expected to disintegrate from within. Whatever is organic or natural in
Smith’s account of the transition to commercial society is ultimately a kind of
constructed naturalness.16
A demanding set of political and economic condi-
tions must be in place before the market can govern itself.17
This article proceeds in three sections. The first section treats Smith’s
general account of how modern Europe transitioned from feudalism to com-
mercial society. Feudalism, according to Smith, is a vicious yet stable social
order. The feudal equilibrium is broken by an external political shock (usually
from an empowered central government), which facilitates the emergence of
commerce. Commercial society arises from a combination of central political
power that weakens the aristocracy, and capital surpluses that finance eco-
nomic transition. For historically contingent reasons, Europe’s social transi-
tion was uncoordinated. But these two preconditions of reform could, in
principle, be implemented in a more systematic fashion elsewhere. The
second section explores what kind of state intervention might be needed to
facilitate the transition to the commercial age. It does so by reading Smith’s
discussions of the Scottish Highlands alongside the contemporaneous reform
efforts underway in the Highlands in the late eighteenth and early nineteenth
centuries. Two reforms in particular — the diminishing of the clans and the
land clearances — conformed to Smith’s implicit and explicit recommenda-
tions for Highland improvement and to the broader logic of Smithian political
economy. The third section presents evidence that a subsequent generation of
reformers and critics saw in Smith’s critique of feudalism the theoretical justi-
fication for the Highland clearances.
The article concludes by addressing the scope of this thesis. Smith does not
believe a uniform programme of social reform should be applied everywhere.
He is aware of the dangers of deploying systematic agendas to transform
existing societies. Still, the case of the Highlands illuminates one crucial
element of his approach to what today is termed developmental economics. In
particular circumstances, a robust exertion of state power can be necessary to
break a vicious feudal cycle and to usher in the progressive powers of
commerce. Government intervention within established commercial societies
may imprudently frustrate the natural workings of the market, but aggressive
state intervention may be necessary to establish market institutions in the
first place.
16 The gap between the political origin of market institutions and their self-correcting
nature once established parallels David Hume’s account of artificial virtues like justice.
Such virtues are constructed — albeit in a non-deliberate manner — but become self-
sustaining once embedded in social life. David Hume, A Treatise of Human Nature, ed.
L.A. Selby-Bigge and P.H. Nidditch (Oxford, 1978), Bk. III, Part II, pp. 477–501.
17 Cf. Karl Polanyi’s famous quip: ‘Laissez-faire was planned’. K. Polanyi, The
Great Transformation (Boston, 2001), p. 147.
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I
The History of Feudalism
and the Contingency of Commercial Society
In the final pages of The Theory of Moral Sentiments, Adam Smith promises
to one day produce ‘an account of the general principles of law and govern-
ment’, a project he terms ‘the history of jurisprudence’.18
That project was
never finished in full, but important elements of it can be found in Smith’s
Lectures on Jurisprudence and throughout the Wealth of Nations.19
The pur-
pose of jurisprudence, Smith explains, is to ‘lay down exact and precise rules
for the direction of every circumstance of our behaviour’.20
The aim is to
develop the theoretical foundation for a system of positive laws that will
achieve ‘natural justice’ for society.21
To that end, Smith develops an influen-
tial conjectural history of human development through distinct phases of
social life: ‘hunting, pasturage, farming, and commerce’.22
Hunting societies
are collections of independent families living together for mutual advantage
without social or political distinctions.23
The second stage, the ‘age of shep-
herds’, is characterized by the introduction of private property, inequality and
government.24
Property becomes a source of political power for shepherd
chieftains, who use their wealth to purchase the loyalty of their dependents.25
With the transition to agriculture, tribal chiefs become hereditary lords. They
continue to use their wealth to maintain the support of their dependents,
whose status is regularized as slaves, serfs and retainers. The rise of economic
specialization and centralized political institutions marks the final develop-
mental stage — commerce. Manufactures and trade take primacy, and the
division of labour drives unprecedented economic prosperity.
Smith’s conjectural history of social evolution is a story of historical
progress towards a more perfect achievement of ‘natural justice’. But left
ambiguous in this history is the role of politics in directing social and
economic improvement. To put the question bluntly: Is social progress a
626 D.I. HALIKIAS
18 TMS, VII.iv.37.
19 TMS, Advertisement.2.
20 TMS, VII.iv.7.
21 TMS, VII.iv.8. Smith contrasts the natural jurisprudence tradition of Grotius to
which he belongs with the systematic moral theories of medieval casuistry. TMS,
VII.iv.34–7.
22 LJ(B), 149. See also LJ(A), I.27 and the opening of Book V of the Wealth of
Nations. For discussions of the ‘four-stage theory’ of history see R. Meek, Social Science
and the Ignoble Savage (Cambridge, 1971): and I. Hont, ‘The Language of Sociability
and Commerce: Samuel Pufendorf and the Theoretical Foundations of the “Four-Stages”
Theory’, in I. Hont, Jealousy of Trade: International Competition and the Nation-State
in Historical Perspective (Cambridge MA, 2005).
23 LJ(A), IV.4.
24 LJ(A), IV.7; WN, V.i.b.12.
25 LJ(A), IV.9.
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consequence of uncoordinated organic evolution, or can progress be engi-
neered from above by an empowered state? In an oft-quoted passage from an
early lecture, Smith seems to say the former:
Man is generally considered by statesmen and projectors as the materials of
a sort of political mechanics. Projectors disturb nature in the course of her
operations in human affairs; and it requires no more than to let her alone,
and give her fair play in the pursuit of her ends, that she may establish her
own design . . . Little else is required to carry a state to the highest degree of
opulence from the lowest barbarism, but peace, easy taxes, and a tolerable
administration of justice; all the rest being brought about by the natural
course of things. All governments which thwart this natural course, which
force things into another channel, or which endeavor to arrest the progress
of society at a particular point, are unnatural, and to support themselves are
obliged to be oppressive and tyrannical.26
We have here a familiar Smithian line of reasoning: state intervention with
an eye towards social engineering will obstruct the natural course of eco-
nomic development. Smith is clear, however, that this natural tendency only
emerges within the context of secure political and economic institutions.27
It
is only after the establishment of ‘peace, easy taxes, and a tolerable adminis-
tration of justice’ that nature takes over the course of human progress. The
implication is that there is something unnatural about the imposition of peace,
the acquisition of taxes and the enforcement of justice. There is something
unnatural about politics, in other words. Political artifice is necessary for
nature to succeed. To understand the political pre-requisites for natural pro-
gress, Smith instructs us to consult history.
History, Smith explains, helps us to identify general patterns of change that
can be used to direct systematic reform in the future:
The design of historical writing . . . has in view the instruction of the reader.
It sets before us the more interesting and important events of human life,
points out the causes by which these events were brought on and by this
means points out to us by what manner and method we may produce similar
good effects or avoid similar bad ones.28
26 These remarks are quoted by Dugald Stewart in his ‘Account of the Life and
Writings of Adam Smith’, EPS, p. 322. Elsewhere, Smith repeats the metaphor of a natu-
ral course of water unproductively channelled by artificial barriers. See, for example,
WN, IV.v.a.3; and TMS, III.5.10.
27 Cf. WN, IV.v.b.43. On this point see N. Rosenberg, ‘Some Institutional Aspects of
the Wealth of Nations’, Journal of Political Economy, 68 (6) (1960), pp. 557–70. See
also J. Muller, Adam Smith in His Time and Ours: Designing the Decent Society (Prince-
ton, 1995).
28 LRBL, ii.17, emphasis added. For another statement of this purpose of history, see
LRBL, ii.62.
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If we can understand the European transition from feudalism to commerce,
we will learn how to induce similar transformations in contemporary feudal
societies. Not all feudal societies will follow the circuitous trajectory that
modern Europe took. After all, European development was ‘unnatural and
retrograde’, inconsistent with rational principles of natural improvement.29
Yet by studying European history, we can learn how the liberty and opulence
that emerged there in an unplanned, uncoordinated manner may be brought
about elsewhere in a more direct and rational way through deliberate political
choices.
The two historical episodes most relevant for our purposes are Smith’s dis-
cussions of the end of slavery and feudalism. Both slavery and feudalism are
built on abject social dependence. Both have been mostly abolished in north-
west Europe for idiosyncratic reasons, though they remain prevalent through-
out the world.30
Both are stable social orders that are initially weakened by the
intervention of a powerful central government.
As Smith repeatedly claims, slavery does not serve anyone’s economic
interest. The free labourer, the slave and the slave master are all made materi-
ally worse off by the institution. Slave masters would profit more if they freed
their slaves and employed them as labourers.31
Slavery persists not because of
economic self-interest, but because of the master’s ‘love of domination and
authority over others’.32
The great irony in the history of abolition, Smith con-
tinues, is that free republics are less likely to abolish slavery than are despotic
monarchies. Where slave masters are free to participate in government, they
fiercely defend their right to own and abuse their slaves. Only a powerful
monarch (with the assistance of a powerful church) has the power and the
incentive to grant the slaves their freedom in order to weaken his aristocratic
rivals. This was true of ancient Rome, where the condition of slavery was far
more severe in the Republic than it was in the Empire.33
It is also true of mod-
ern Europe, where slavery persists in countries with weak monarchies or
weak churches.34
The intervention of a powerful king is the external force
necessary to break the vicious but stable slave-equilibrium.
The same pattern runs through Smith’s discussion of the end of feudalism.
With the collapse of the Roman Empire, Western Europe fell from a condition
of opulence and civilization to ‘the lowest state of poverty and barbarism’.35
628 D.I. HALIKIAS
29 WN, III.i.9. See also WN, I.x.c.26.
30 The principle exception is that slavery — or something quite like it — persists in
Scotland’s coal and salt mines. LJ(A), iii.126–8.
31 LJ(A), iii.111–14, 126–30; LJ(B), 138–40; and WN, III.ii.9.
32 LJ(A), iii.114–22. See Luban, ‘Adam Smith on Vanity, Domination, and History’.
33 LJ(A), iii.126–8; and LJ(B), 134–6.
34 LJ(A), iii.122; and LJ(B), 142.
35 WN, III.ii.1.
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Medieval Europe was the age ‘of feudal anarchy’.36
In the ‘barbarous govern-
ments’ that arose, the ‘administration of justice appears for a long time to have
been extremely corrupt’.37
Weak monarchs lacked the power to protect their
subjects from ‘the oppression of the great lords’.38
Political weakness pro-
duced economic devastation. Cities became deserted, and the countryside was
left uncultivated.39
The question Smith takes up in the third book of the
Wealth of Nations is how Europe escaped this vicious, feudal age. Like slav-
ery, feudalism is a stable social order. It is ultimately brought down, Smith
explains, not by internal contradiction, but by the external arrival of trade and
luxury goods. Nothing else could accomplish what ‘the silent and insensible
operation of foreign commerce and manufactures gradually brought about’.40
But commerce itself could only arrive once two pre-requisites were in place:
the centralization of political power, and the accumulation of capital sur-
pluses to finance economic transition.41
Lords and chieftains in pre-commercial societies use their wealth to sup-
port a class of dependents, thereby securing their loyalty. Luxury and com-
merce destabilize that equilibrium. Once commerce arrives, feudal lords
squander their wealth on luxury goods instead of using it to maintain political
dominance. For something as frivolous as ‘a pair of diamond buckles’, feudal
chieftains impoverish themselves and sacrifice the basis of their power.42
Able to exploit the ‘expensive vanity of the landlord’, merchants and traders
accumulate wealth and grow independent of his control.43
In time, the combi-
nation of commercial expansion and luxury consumption destroys the feudal
families and drives social and economic progress. The nobility, ‘the greatest
opposers and oppressors of liberty that we can imagine’, is destroyed by the
spread of ‘arts and luxury’.44
Commerce brought moral corruption for the feu-
dal elite, but was ultimately an instrument of social progress.45
Natural human
vanity can be harnessed to destroy the few even as it benefits the many.
Smith gives two reasons to account for why so many societies remain trapped
in stable, impoverished conditions. First, there are ‘natural impediments’ to
improvement. Commerce requires the accumulation of capital surpluses.
36 WN, III.ii.7.
37 WN, V.i.b.15.
38 WN, III.iii.8.
39 WN, III.ii.1; and LJ(A), iv.117.
40 WN, III.iv.10.
41 WN, III.iv.1–4.
42 WN, III.iv.10.
43 WN, III.iv.13.
44 LJ(A), iv.165–6.
45 See I. Hont, ‘Adam Smith’s History of Law and Government as Political Theory’,
in Political Judgment: Essays for John Dunn, ed. R. Bourke (Cambridge, 2009), pp.
131–71.
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Trade is only possible if we produce more of a good than we consume of it,
but surpluses are difficult to acquire in a feudal, subsistence economy.
Second, there is ‘the oppression of civil government’. Weak and corrupt gov-
ernments make justice and peace impossible, thereby precluding the possibil-
ity of agrarian improvement and commerce.46
These two obstacles point to
the two key determinants of social progress. In order to transition to commer-
cial society, states must accumulate capital surpluses (either from agrarian
improvement or from urbanization) to finance economic transition, and they
must develop centralized political institutions that can impose peace, order
and justice.
The natural obstacle to the emergence of commerce is tied to the low
productivity of feudal economies. The feudal families that ruled Western
Europe following the fall of Rome relied on primogeniture and entail to keep
large estates intact.47
The problem with aristocratic estate management was
that landed lords lacked the incentives and the inclination to improve agrarian
production. Their claim to power was secured through heredity, and they suc-
cumbed to ‘that indolence, which is the natural effect of the ease and security
of their situation’ but which rendered them ‘not only ignorant, but incapable
of that application of mind which is necessary to foresee and understand the
consequences of any publick regulation’.48
Improvements necessitate a care-
ful attention to profits and a corresponding ‘exact attention to small savings
and small gains’. Yet the hereditary feudal lord is incapable of making mar-
ginal calculations. He is more drawn ‘to ornament which pleases his fancy,
than to profit for which he has so little occasion’.49
In short, a large landed
estate has ‘very little chance of being farther improved than it is at present’
because the aristocrats have no incentive to improve their land, and because
they tend to grow too indolent to introduce significant reforms.50
The second obstacle is even more fundamental. In pre-commercial societ-
ies, constant warfare makes peace, commerce and prosperity impossible.
Smith terms this political turbulence the ‘oppression of civil government’.
Feudal societies lack strong, centralized states, leaving the people subject to
the oppression of local lords. When a people lives under the constant fear of
oppression and theft, they ‘have no motive to be industrious’.51
There is no
reason to invest in costly agrarian improvement in conditions of uncertainty.
Likewise, the ‘imperfection of the law with regard to contracts’ undermines
basic market relationships, and the ‘difficulty of conveyance from one place
630 D.I. HALIKIAS
46 LJ(B), 285.
47 WN, III.ii.2–7.
48 WN, I.xi.p.8.
49 WN, III.ii.7. Compare this desire for ornament to the lords’ vain desire for baubles
and trinkets. WN, III.iv.10–15.
50 LJ(A), I.166–7.
51 LJ(B), 287.
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to another’ makes it impossible to engage in trade.52
This latter difficulty
comes in two forms, both deriving from state weakness. Weak states are
unable to build the physical infrastructure needed to facilitate trade, and they
are unable to protect merchants from the predation of lords and brigands.
Similar to what contemporary social scientists term the poverty and vio-
lence traps of economic development, feudal Europe was caught in a vicious
cycle of weak state capacity and badly aligned economic incentives. Com-
merce — the ‘silent and insensible’ force that ultimately drives social pro-
gress — cannot emerge in such an environment.53
Europe was only able to
escape this cycle, Smith explains, because of the alliance between the king
and the cities against the aristocracy. This alliance overcame the two obsta-
cles to opulence, and made it possible for commerce to arise. Politically, cities
gave kings the military strength to defeat the oppressive feudal elite. Eco-
nomically, cities accumulated the capital surpluses needed to facilitate trade
and finance economic improvement.
Once they had been emancipated by the king and clergy, former slaves
moved to towns, which, with the support of the king, became significant
urban centres.54
The king allied with these cities against the aristocracy just
as he allied with the slaves against their masters. Feudal lords despise ‘the
burghers, whom they consider not only as of a different order, but as a parcel
of emancipated slaves’. At the same time, the lords are constantly at war
with the king, who aspires to establish centralized sovereignty. Faced with
this political dynamic, the king realizes that the burghers are ‘the enemies
of his enemies, and it was his interest to render them as secure and independ-
ent of those enemies as he could’.55
Together, the burghers and king wage
war against the lords, conquering ‘all the nobility in their neighbourhood;
obliging them to pull down their castles in the country, and to live, like
other peaceable inhabitants, in the city’.56
Having so guaranteed a degree of
‘order and good government’, the cities expand their commercial reach,
establishing industry and trade.57
Once that commerce takes root, vain
aristocrats squander their wealth in the pursuit of ‘trinkets and baubles’.
This launches a virtuous cycle: a weakened aristocracy is unable to pre-
vent commerce from spreading; once commerce arrives, the vain aristoc-
racy squanders its wealth on luxury consumption. That profligacy further
52 LJ(B), 303.
53 For the similarities between Smith’s approach and theories of economic develop-
ment today, see B.R. Weingast, ‘Adam Smith’s Theory of Violence and the Political
Economics of Development’, in Organizations, Civil Society, and the Roots of Develop-
ment, ed. N.R. Lamoreaux and J.J. Wallis (Chicago, 2017), pp. 51–81.
54 LJ(A), iv.141–4; LJ(B), 57; and WN, III.iii.2–7.
55 WN, III.iii.8.
56 WN, III.iii.10. Cf. Niccolo Machiavelli, Discourses on Livy, trans. H. Mansfield
and N. Tarcov (Chicago, 1996), pp. 111–13.
57 WN, III.iii.12–16.
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weakens the power of the aristocracy relative to the king, who cements
political control, enforces justice more effectively, and furthers the expan-
sion of commerce. As Smith summarizes:
the nobility necessarily fell to ruin as soon as luxury and arts were intro-
duced. Their fall everywhere gave occasion to the absolute power of the
king . . . The luxury which followed on the arts ruined their power . . . We
see too that this indeed must always be the case; the power of the nobles has
always been brought to ruin before a system of liberty has been estab-
lished . . . the people therefore never can have security in person or estate till
the nobility have been greatly crushed. Thus the government became abso-
lute, in France, Spain, Portugal, and in England after the fall of the great
nobility.58
Commerce overcomes feudal anarchy, but commerce can only arise from a
combination of centralized political power and capital accumulation. In
Europe’s peculiar case, cities played the crucial role in the transition. First,
they amassed the capital surpluses necessary to finance manufacturing and,
eventually, agricultural improvement.59
The countryside was trapped in a sub-
sistence economy, but towns could accumulate the capital stocks needed to
finance improvements in the land. Second, by using these financial resources,
towns contributed to the monarchy’s war against the aristocracy. The combi-
nation of urbanization and state formation produced the virtuous commercial
cycle that continually weakens the power of an abusive feudal aristocracy.
Still, as Smith repeatedly reminds his readers, the case of Europe is thor-
oughly atypical.60
Agrarian improvement in the land ought to precede eco-
nomic development in the city. Europe did the opposite, however, developing
urban centres before improving agrarian production. This ‘unnatural and ret-
rograde’ path produced a sub-optimal course of development.61
As evidence,
Smith contrasts European progress — which was ‘necessarily both slow and
uncertain’ — with colonial North America, where a natural course of develop-
ment has produced a faster and more stable path to opulence.62
Urbanization is
one means of strengthening the state and accumulating capital surpluses, but
it is not a necessary means.
The abolition of feudalism in modern Europe is a complex case of social
and economic development. Smith’s discussion of that history points to
his general theory of social progress. As with slavery, it is unlikely that the
632 D.I. HALIKIAS
58 LJ(A), iv.164–6.
59 WN, III.iv.1–4 and III.iii.12. As he summarizes: ‘every where in Europe the great-
est improvements of the country have been owing to such overflowings of stock origi-
nally accumulated in towns’. WN, I.x.c.26.
60 The course of modern European development has been ‘in many respects, entirely
inverted’. WN, III.i.8–9.
61 WN, III.i.9.
62 WN, III.iv.18–20.
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feudal equilibrium will disintegrate from within. On the contrary, an external
political shock from an empowered state has historically been the necessary
first step. Having initially weakened the power of the feudal aristocracy, a
powerful monarchy combined with capital accumulation facilitates the arrival
of commerce. Commerce brings luxury, which in turn exploits the vanity of
the wealthy to drive uncoordinated social progress. Other countries are not
bound to follow Europe’s idiosyncratic, contingent course of development.
But to escape feudal predation, Smith suggests, they will need to adhere to the
same general mechanisms of historical change.
II
The Scottish Highlands
and the Logic of Smithian Political Economy
The previous section reconstructed Smith’s model of historical development
and emphasized the role of political centralization and capital accumula-
tion in driving social improvement. This section turns from theoretical
mechanisms of progress to practical means of establishing commercial
society. It does so by examining Smith’s discussions of the Scottish High-
lands in the context of contemporaneous improvement schemes underway
throughout Smith’s life. Importantly, Smith’s discussions of aristocratic,
feudal societies centre on examples drawn from the Scottish Highlands, a
case study of both theoretical and practical interest. Smith — like many of
his contemporaries — took the Highlands to be a paradigmatic feudal soci-
ety. Consequently, the Highlands are plagued by the two classic feudal
obstacles to commercial improvement: weak central government and eco-
nomic incentives that preclude capital accumulation. Following the defeat
of the 1745 Jacobite rebellion, the Hanoverian state introduced a series
of measures to weaken the Highland clans and to reorganize agrarian
management. These agrarian reforms would eventually culminate in the
infamous Highland clearances, the rural dispossession of thousands of
subsistence farmers. Smith welcomed the attack on the feudal social order
that was underway in his lifetime. Though the land clearances would begin
in earnest in the decades following Smith’s death, they too aligned with
Smith’s specific comments on the Highlands and with the broader logic of
his political economy. While dissenting from other reform measures,
Smith’s sympathy with Highland improvement schemes illustrates the
type of active, state-led reform programme that Smith believed could
effectively bring about social progress.
The Wealth of Nations opens with Smith’s famous discussion of the divi-
sion of labour. The first two chapters of the book introduce the pin factory, the
self-love (not benevolence) of the butcher, and the human disposition to
truck, barter and exchange. They present, in other words, the core of Smith’s
thesis: Economic specialization combined with commerce and exchange is
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the engine that drives prosperity.63
In chapter three, however, Smith turns to
the limits of commercial opulence: ‘the Division of Labour is limited by the
Extent of the Market’.64
Specialization allows labourers to produce a surplus.
They can exchange that surplus for the surplus of different goods produced by
other specialized labourers. All this is only possible, however, in a market,
and markets depend on commercial infrastructure and on the protection of
property rights. The first example Smith offers of a society in which defective
institutions make market exchange impossible is the Scottish Highlands.
There commerce cannot take root because there is no specialization, and there
is no specialization because there is no physical or legal infrastructure to facili-
tate exchange. The Highlanders are trapped in a subsistence economy because
the state has failed to build the canals or highways necessary to integrate the
Highlands into a broader market. Without the division of labour or the pos-
sibility of trade, every farmer in the Highlands ‘must be a butcher, baker and
brewer for his own family’.65
From the opening pages of the Wealth of
Nations, Smith casts the Highlands as the feudal foil for flourishing commer-
cial societies.
In contrasting the benefits of modern commerce with the backward poverty
of the Scottish Highlands, Smith is not at all atypical. Throughout the eight-
eenth century, as the Lowlands enjoyed unprecedented prosperity, the High-
lands appeared to remain frozen in time. As Samuel Johnson quipped of his
trip through the Highlands and Hebrides with James Boswell, this was ‘a
country upon which perhaps no wheel has ever rolled’.66
Like the indigenous
peoples of North America, Highlanders were racialized as an exotic, primitive
people, a relic of an earlier age.67
Upon the completion of his celebrated jour-
ney with Johnson, for example, Boswell noted that the two were greeted in
London in the fashion of adventurers returning home from an exotic journey
abroad: ‘I am really ashamed of the congratulations which we receive. We are
addressed as if we made a voyage to Nova Zembla, and suffered five persecu-
tions in Japan.’68
Boswell reports that when he described his proposed journey
634 D.I. HALIKIAS
63 WN, I.i–I.ii.
64 WN, I.iii.
65 WN, I.iii.2.
66 S. Johnson, A Journey to the Western Islands of Scotland, in Johnson and Boswell
in Scotland, ed. Pat Rogers (New Haven, 1993), p. 69. Two centuries later, Hugh
Trevor-Roper made the same joke: ‘Frances Hutcheson was lecturing on Locke and
Shaftesbury in Glasgow while carts were unknown twelve miles away.’ H. Trevor-
Roper, ‘The Scottish Enlightenment’, Studies on Voltaire and the Eighteenth Century,
58 (1967), pp. 1656–7.
67 To James Boswell, for example, the Highlanders appeared ‘so like wild Indians
that a very little imagination was necessary to give one an impression of being upon an
American river’. J. Boswell, A Tour to the Hebrides with Samuel Johnson, in Johnson
and Boswell in Scotland, ed. Rogers, p. 177.
68 Ibid., p. 312.
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in 1764, Voltaire responded by ‘looking at me as if I had talked of going to the
North Pole’.69
Though Smith does not write systematically about the Highlands, he rou-
tinely offers it as an example in his discussions of pre-commercial peoples.
This means that Smith offers some restrained words of praise for the High-
landers. Consistent with his general complaints about commercial society,
Smith notes the respects in which Highlanders resist the vices of modern Eng-
land. In the uncultivated regions of Scotland, ‘even the meanest porter can
read and write, because the price of education is cheap and a parent can
employ his child in no other way at six or seven years of age’.70
In England, on
the other hand, where specialization has made child labour economically
desirable, poor children are never provided with an education.71
Similarly,
because they remain untouched by commerce, Highlanders remain a fero-
ciously martial people. Whereas commercial peoples grow ‘effeminate and
dastardly’ because of luxury and the arts, the Highlanders retain their virtue.
Recent history, Smith notes, confirms that observation: ‘In the year 1745 four
or five thousand naked unarmed Highlanders took possession of the unim-
proved parts of this country without any opposition from the unwarlike inhab-
itants.’72
Unlike many of his contemporaries and ours, however, Smith does not
romanticize Highland society. He unsentimentally describes the crushing
poverty that persists in his day. Even now, Smith observes, ‘a halfstarved
Highland woman frequently bears more than 20 children’, but it is rare that
more than two survive infancy.73
Because it is trapped in the feudal age, the
Highlands are plagued by Smith’s two key obstacles to economic develop-
ment. First, civil oppression from a decentralized feudal political structure
makes commercial exchange impossible. Second, badly organized agrarian
management makes it impossible for the Highlands to produce the needed
surpluses to finance economic transition.
One of Smith’s most striking discussions of the Highlands comes in the
midst of his extended treatment of the end of feudalism from Book III of the
Wealth of Nations. The key feature of feudal society is the total dependence of
tenants and retainers on the great lords. Such a condition was ubiquitous
‘some years ago in the highlands of Scotland’, and ‘in some places it is so at
this day’.74
The social dependence of the tenants is the foundation of the
political power of the feudal barons, who become the masters of all who live
69 Ibid., p. 4.
70 LJ(B), 329.
71 To deal with the problem, Smith advocates state-sponsored public education. See
LJ(B), 330 and WN, V.i.f.55.
72 LJ(B), 331.
73 WN, I.viii.37–8.
74 WN, III.iv.6.
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in their estates.75
The first example Smith offers of such domination is the case
of ‘Cameron of Lochiel’, a Highland clan chief who wielded absolute author-
ity over his tenants. That feudal power was most clearly seen when Lochiel
exploited his domination to raise an army in the 1745 rebellion.76
No central
power existed in the Highlands that could control these feudal clans. Immedi-
ately following these references to recent Highland history, Smith proceeds to
his account reconstructed above of how luxury consumption ultimately under-
mines the feudal aristocracy. The Highlands are the backdrop for Smith’s
entire discussion of the emergence of commercial society.77
Smith’s presentation of the Highlands as a typical feudal society came in
the context of enormous reform efforts throughout the eighteenth century to
modernize the Highlands’ clan-based social order.78
Because of the Highlands’
relative isolation and independence, Jacobitism flourished in the region, ulti-
mately producing the great rebellions of 1715 and 1745. Following the second
of these rebellions, it became clear that the Highland problem could be
ignored no longer. A brutal military occupation gave way to a series of radical
reforms that aimed to bring about the transformation of Highland society. Par-
liament abolished indigenous Scottish courts and forbade clan chieftains from
conscripting tenants into military service. Traditional Highland dress was
banned, speaking Gaelic made a criminal offence, and the clans disarmed.
Immediately, Highland reform transitioned from questions of political con-
trol and security to broader aims of social and economic improvement. The
Highlands became a laboratory for experimentation, testing out the reigning
social, economic and political theories of the day. The confiscated lands of
Jacobite clans were placed under the control of the Board of Annexed Estates,
which was charged with the transformation of Highland society. Formalized
with the Annexing Act of 1752, the Board took as its purpose ‘the better
civilizing and improving of the Highlands of Scotland, and preventing Disor-
ders there for the future’.79
Beginning with the Board of Annexed Estates
and extending through to the mid-nineteenth century, these measures led to
636 D.I. HALIKIAS
75 WN, III.iv.7.
76 WN, III.iv.8; cf. LJ(A), i.129 and LJ(B), 159.
77 WN, III.iv.9–24.
78 For scholarship on the aftermath of the Forty-Five and the agrarian reforms
imposed on the Highlands, see A.M. Smith, Jacobite Estates of the Forty-Five (Edin-
burgh, 1982); A. MacKillop, ‘More Fruitful than the Soil’: Army, Empire and the Scot-
tish Highlands, 1715–1815 (East Linton, 2000); G. Plank, Rebellion and Savagery: The
Jacobite Rising of 1745 and the British Empire (Philadelphia, 2006); and R. Mitchison,
‘Government and the Highlands, 1707–1745’, in Scotland in the Age of Improvement,
ed. R. Mitchison and N.T. Phillipson (Edinburgh, 2nd edn., 1996).
79 From the debate over the Annexing Act as recorded in The Parliamentary History
of England from the Earliest Period to the Year 1803, ed. T.C. Hansard (London, 1813),
Vol. 14, p. 1235. See also Jonsson, Enlightenment’s Frontier, pp. 29 ff.
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substantial agrarian reforms, culminating in the infamous Highland clear-
ances of the 1820s and ’30s.
To the extent that they were underway in his lifetime, Smith welcomed
many of these reforms. Praising recent interventions, he noted that Highland
peasants were ‘till very lately’ — until the post-1745 reforms, that is — at the
mercy of their rapacious lords.80
These lords, as lords in all feudal societies,
lived by the maxim ‘all for ourselves, and nothing for other people’.81
Highland
society before 1745 was governed by the ‘steel bow’, the people remained
subject to the arbitrary will of corrupt lords.82
Such ‘steel-bow tenants’ were
entirely dependent on their masters, and though better off than slaves, theirs
was the worst form of free tenancy.83
‘Nothing’, Smith emphatically observes,
‘can be more an obstacle to the progress of opulence’ than the rule by man, not
law, that characterized Highland society.84
Political turbulence brought by the
lack of centralized power made it impossible for the king to collect revenue,
enforce contracts or administer justice.85
Without the regular enforcement of justice, theft and rapine made trade
impossible, and without commerce, there was no hope for economic develop-
ment or prosperity.86
Smith believed an empowered central government must
dismantle feudal political institutions before the improving powers of com-
merce can be unleashed. The English government occupying the Highlands
agreed. Recognizing the intolerable danger posed by unsecured highways, the
Board of Annexed Estates made security of travel and trade a foremost
national priority.87
In addition to policing established highways, the Board
energetically introduced new transportation networks throughout the High-
lands.88
That reform aligned directly with Smith’s discussion of the need for
physical infrastructure to bring the Highlands into a broader economic mar-
ket.89
Writing in 1775, Samuel Johnson credited these interventions with
modernizing and civilizing the Highlands:
By a strict administration of the laws, since the laws have been introduced
into the Highlands, this disposition to thievery is very much repressed.
Thirty years ago no herd had ever been conducted through the mountains,
80 LJ(A), iv.158. Elsewhere Smith notes: ‘So lately as in the year 1745 this [feudal]
power remained in the Highlands of Scotland.’ LJ(B), 159.
81 WN, III.iv.10.
82 LJ(B), 292.
83 WN, III.ii.13.
84 LJ(B), 288.
85 WN, III.iv.6–7. Cf. LJ(B), 171.
86 LJ(B), 303.
87 Plank, Rebellion and Savagery, p. 117.
88 Smith, Jacobite Estates of the Forty-Five, pp. 175–81.
89 WN, I.iii.2–4.
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without paying tribute in the night to some of the clans; but cattle are now
driven, and passengers travel without danger, fear, or molestation.90
One year later, Smith echoed Johnson’s assessment, writing that thanks to
the effects of recent political centralization brought primarily by the Union,
‘the middling and inferior ranks of people in Scotland gained a compleat
deliverance from the power of an aristocracy which had always before
oppressed them’.91
Highland society could only make progress, Smith sug-
gests, if an empowered state first diminished the power of the clan chieftains
and guaranteed peaceful travel, communication and trade. Such was the diag-
nosis and treatment put into place in the post-revolutionary Highlands.
In this way, the Highlands overcame one of the principal obstacles to eco-
nomic prosperity — the ‘oppression of civil government’. But what of the
other obstacle, the need for capital accumulation? An empowered central gov-
ernment alone is not sufficient to facilitate the transition to commercial soci-
ety. A further requirement is the development of a new kind of estate
management. Highland estates were traditionally owned by powerful clan
elites and worked by subsistence tenant farmers. To Smith, this was the
worst possible arrangement. Estates need to be decentralized by breaking the
authority of the feudal aristocracy, and rationalized by consolidating them
under the management of relatively well-capitalized individual farmers.
To this end, Smith proposes breaking up large estates so that those who
own the land would have the incentives and the means to improve it. Should
an estate be ‘divided into a number of small possessions each having a sepa-
rate master, it would soon be cultivated to a high degree’.92
This is because a
‘small proprietor . . . who knows every part of his territory . . . is generally of
all improvers the most industrious, the most intelligent, and the most success-
ful’.93
Such persons have economic interests that align with the country’s and
have the incentives to pursue profit and improvement. Importantly, however,
there is a limit to how far these estates should be broken up. Tenants with
small, subsistence landholdings have the incentive to improve their lands but
not the capital needed to undertake substantial reform.94
The basic problem
with feudal agrarian arrangements is that while aristocrats lack the incentives
to pursue improvement, subsistence tenants lack the means. This, Smith
argued, was the condition of the Highland economy:
There still subsists in many parts of Scotland a set of people called Cotters
or Cottagers, though they were more frequent some years ago than they are
now. They are a sort of out-servants of the landlords and farmers. The usual
638 D.I. HALIKIAS
90 Johnson, Journey to the Western Islands of Scotland, p. 96.
91 WN, V.iii.89.
92 LJ(A), i.167.
93 WN, III.iv.19.
94 In this respect, small tenant farmers are almost as unproductive as slaves and serfs.
Cf. WN, III.ii.8; LJ(B), 290; and LJ(A), iii.113–14.
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reward which they receive from their masters is a house, a small garden for
pot-herbs, as much grass as will feed a cow, and, perhaps, an acre or two of
bad arable land.95
In this description of the cotters, Smith again takes the Highlands as a
synecdoche for feudal tenant relationships in general.96
Feudalism as a historic
European social order is identified explicitly with the condition of contempo-
rary Scotland. In the contemporary Highlands and in Europe’s feudal past,
tenant farmers are entirely dependent on their lords for economic subsistence
and political security.97
They are vulnerable to political domination and
unable to pursue economic improvement. Because of their precarious leases
and tiny landholdings, such cotters (steel-bow tenants) are not much better
off than the ‘savage’ or the slave.98
Subsistence farmers lack the capital
needed to invest in new, more efficient agricultural and pastoral methods.
Only a large landowner has the capacity to undertake the necessary economic
modernizations.99
The solution, Smith writes, is the removal of subsistence tenants. Only by
clearing their land of these cotters will landowners be able to introduce the
necessary reforms to produce a surplus. As Smith straightforwardly observes:
‘by the removal of the unnecessary mouths, and by exacting from the farmer
the full value of the farm, a greater surplus . . . was obtained for the propri-
etor’.100
This prescription of rural land dispossession immediately follows
Smith’s discussion of feudal estate arrangements in the Highlands. He even
nods to the ‘complaints of depopulation’ that arose in response to land clear-
ances, but insists that a reduction in the population of these estates is neces-
sary for improving economic cultivation.101
Surpluses are necessary for the division of labour and for economic pro-
gress. To produce these surpluses, the land must be cleared and rationalized
into consolidated estates. Depopulation is a precondition for improved agri-
cultural productivity. It is for precisely this reason, Smith notes, that ‘the
diminution of the number of cottagers and other small occupiers of land . . .
has in every part of Europe been the immediate fore-runner of improvement
and better cultivation’.102
Highland tenant farmers must be removed from
95 WN, I.x.b.49.
96 Smith echoes James Steuart, who also described the ‘cotters’ of Highland Scotland
as representative of medieval tenant farmers. J. Steuart, An Inquiry into the Principles of
Political Oeconomy: Being an Essay on the Science of Domestic Policy in Free Nations
(London, 1767), Bk. I, ch. 16, pp. 103–5.
97 LJ(A), iv.158–9.
98 LJ(B), 286–7; WN, III.ii.13.
99 See Rosenberg, ‘Institutional Aspects’, pp. 559–62.
100 WN, III.iv.13.
101 WN, III.iv.13.
102 WN, I.xi.l.10.
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their holdings for agricultural improvement and social progress to take hold.
The removal of the tenants transitions agrarian production away from poultry
and towards the more lucrative raising of cattle. This too is a mark of eco-
nomic progress. The beef industry in particular benefited from Scottish estate
centralization and land clearances. Smith frequently cites improvements in
Scottish pasturage as evidence for the mutual benefits of economic integra-
tion and trade. In this regard, the Highland reforms extended the sphere of
commerce — the ‘extent of the market’ — and built on the earlier work of
English-Scottish Union. Before Union and the post-’45 reforms, ‘in many
parts of the highlands of Scotland, butcher’s-meat was as cheap or cheaper
than even bread made of oatmeal’. Once commerce linked Highland beef pro-
duction with English demand, prices in Scotland tripled, bringing unprece-
dented wealth to Highland estates.103
Elsewhere Smith notes that ‘of all the
commercial advantages . . . which Scotland has derived from the union with
England, this rise in the price of cattle is, perhaps, the greatest. It has . . . raised
the value of all highland estates’.104
Part of Smith’s explanation for the profitability of the beef industry is that
opening new markets allowed English demand to raise prices in Scotland.105
But just as importantly, Scottish beef productivity rose because of efficient
new pasturage methods that involved clearing the land of cottagers to central-
ize holdings. In the cotter system, too much of the produce of the land is
wasted in supporting small subsistence farmers, instead of raising cattle.
Improving the land requires capital stock accumulation which is not possible
if too much surplus is spent on supporting a class of economically unproduc-
tive tenant farmers.106
Improvement requires surplus, and surplus requires
clearing the land of ‘unnecessary mouths’. The landowner has a greater inter-
est in raising cattle than he does in supporting a class of subsistent tenants. It is
more profitable to feed cows than to feed cotters. Smith’s proposal for land
reform also informed the improvement schemes the Duke of Buccleuch
implemented in his own estates. Under Smith’s tutelage and advisement,
Buccleuch reformed the laws of entail that perpetuated the great estates of
families, consolidated land holdings so that tenants had the incentives and
requisite capital stocks to improve the land, and cleared his estates of cotters
in order to move to the more profitable model of pasturage.107
To summarize, Smith consistently argues in favour of centralizing political
control and rationalizing estate management. Landed aristocrats have no
incentive to improve their lands, while subsistence farmers have no means to
640 D.I. HALIKIAS
103 WN, I.xi.b.8.
104 WN, I.xi.l.3; cf. WN, I.xi.l.11.
105 WN, I.xi.l.2.
106 WN, I.xi.l.3.
107 B. Bonnyman, The Third Duke of Buccleuch and Adam Smith (Edinburgh, 2014),
pp. 62–75, 129 ff.
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make the investments needed for improvement. Consequently, Smithian
political economy favours clearing subsistence cotters and consolidating
estates, while simultaneously breaking down the established power of the feu-
dal elite. Neither leisurely aristocrats nor small, impoverished cottagers can
run an effective agricultural system. Estates should instead be managed and
owned by capital-rich ‘men of scheme and project’ who have ‘both the desire
and the ability of improving’ their lands.108
This logic of land clearance is the
heart of the reasoning underlying the mass eviction of Highland tenant
farmers.109
Under the leadership of reform-minded landowners, lands were
consolidated and converted from labour-intensive agricultural estates to less
labour-intensive pasturage for sheep and cattle. Though the greatest of these
clearances took place after his death, Smith could observe in 1787 that the
process of depopulation was well underway in the Hebrides and the High-
lands, where ‘the number of such small occupiers is now, no doubt, very much
diminished’.110
That does not mean that Smith embraced all the reforms underway in the
Highlands. On the contrary, he criticizes attempts to promote urbanization
and to subsidize the herring industry. In a letter to Henry Beaufoy, a parlia-
mentarian who chaired a committee on British fisheries, Smith expresses his
pessimism about ongoing attempts to build fishing villages in the Highlands.
He worries there that the costly investment in building homes will not be paid
back from the meagre earnings of the fishermen.111
That scepticism towards
induced urbanization is consistent with Smith’s repeated insistence that the
‘natural’ path to opulence begins with agrarian improvement, not with city
commerce. It is also consistent with Smith’s criticisms of herring bounties to
encourage the Highland fishing industry. In a lengthy addition to the third
edition of the Wealth of Nations, Smith criticizes such bounties as part of his
general attack on mercantile economic thinking.112
Smith favoured trans-
formative reforms in the Highlands to establish centralized state power and to
clear lands in service of agrarian efficiency. The Highlands thus serve as a case
study for what Smith takes to be the necessary political interventions to intro-
duce commercial society. Their example does not contradict Smith’s wariness
of political meddling within a functioning commercial system. Favouring an
exertion of state power to create the conditions for commerce to emerge is dif-
ferent from favouring active political management to support a set of preferred
108 LJ(A), i.166.
109 On this point, see Jonsson, Enlightenment’s Frontier, p. 144.
110 ‘Adam Smith: Two Letters to Henry Beaufoy, MP’, in the Scottish Journal of
Political Economy, 43 (5) (1996), p. 587.
111 Ibid., pp. 587–8.
112 See WN, IV.v.a.29–40. See also Adam Smith’s letter to John Sinclair, Correspon-
dence, letter 299, p. 327.
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industries. Smith’s sympathy for state-led social transformation in the High-
lands is consistent with his polemic against mercantile industrial policy.
III
Highland Reformers and the
Legacy of Smithian Political Economy
Karl Marx identified the transformation of the Scottish Highlands as a paradig-
matic case of capitalism’s ascent over a feudal political and economic order.
Only in the Scottish Highlands, ‘the promised land of modern romance’,
Marx writes, can we clearly see the ‘systematic character’ of the land expro-
priation the transition to capitalism requires.113
To Marx, the Highland land
clearances of the late eighteenth and nineteenth centuries were a straightfor-
ward application of Smithian political economy. Commercial society requires
the imposition of an empowered, centralized government to eliminate feudal
obstacles to progress and to reorganize land holdings. In practice, this transi-
tion entails clearing Highland tenant farmers and driving them abroad or to
manufacturing centres. All this, Marx tells us, is contained in the Wealth of
Nations. The division of labour requires capital surpluses, and such surpluses
necessitate land clearances.114
This connection between the Highland clearances and Smith’s prescription
for the transition to commercial society was also made by champions of
forced Highland depopulation. In his widely read annotated edition of the
Wealth of Nations, J.R. McCulloch adds a footnote to Smith’s Book I discus-
sion of the persistence of subsistence farmers in the Highlands. Obliquely
referring to the ongoing clearances, McCulloch notes of these quasi-feudal
tenant farmers: ‘At present this class is nearly extinct.’115
In his attached essay
reflecting on Smith’s political economy, McCulloch emphasizes the neces-
sary role of emigration in relieving a developing society of its excess popula-
tion. He argues that Smith’s theory of development implies that it may be
necessary to forbid the construction of cottages and to expel tenant farmers
from the land in order to facilitate agrarian improvement.116
Another commentator, David Buchanan, is even more explicit about the
connection between the clearances and Smith’s political economy. In an 1814
annotated edition of the Wealth of Nations, Buchanan argues that on Smith’s
642 D.I. HALIKIAS
113 K. Marx, Capital Volume I, in Karl Marx and Frederick Engels Collected Works,
Vol. 35 (New York, 1996), p. 718. See also K. Marx, ‘The Duchess of Sutherland and
Slavery’, in Marx and Engels Collected Works, Vol. 11, (New York, 1979), pp. 486–94;
and K. Marx, ‘Forced Emigration’, in ibid., pp. 528–34.
114 Marx, Capital Volume I, pp. 704 ff. See also Karl Marx, The Poverty of Philoso-
phy, in Marx and Engels Collected Works, Vol. 6 (New York, 1975), p. 173.
115 A. Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, ed. J.R.
McCulloch (4 vols., Edinburgh, 1828), Vol. 1, p. 193.
116 Ibid., Vol. 4, pp. 155–6.
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view, substantial depopulation is a necessary precondition for agricultural
improvement. In a passage explicated above, Smith notes that ‘the removal of
the unnecessary mouths’ and the ‘unnecessary part of [the] tenants’ is a prereq-
uisite for improvements in agrarian production.117
Buchanan comments in a
footnote to that passage: ‘It is in consequence of the same revolution that the
tenants of the highlands of Scotland have for some years past been deprived of
their lands, and forced to America in quest of new settlements.’118
Buchanan
further develops that observation in his commentary on the Wealth of Nations.
Returning to the connection between depopulation and capital formation, he
once again offers the Highlands as an example. Where Smith recommends the
removal of ‘unnecessary mouths’, Buchanan defends the eviction of ‘useless
hands’:
The land, formerly overspread with small tenants or labourers, was peopled
in proportion to its produce; but under the new system of improved cultiva-
tion and increased rents, the largest possible produce is obtained at the least
possible expence; and the useless hands being, with this view, removed, the
population is reduced, not to what the land will maintain, but to what it will
employ . . . [Emigration] is indeed the necessary consequence of those
improvements by which the landlords profit.119
In an influential book on the Highlands, a leading reformer, the Earl of
Selkirk, celebrated emigration as a necessary step in an explicitly Smithian
programme of economic improvement.120
To Selkirk, depopulation was the only
way to achieve agrarian improvement and, ultimately, commercial progress.
He quotes Smith’s remark that ‘the diminution of cottagers and other small
occupiers of land’ is necessary for land improvement.121
For Selkirk, the
transformative reforms imposed in the aftermath of 1745 were necessary to
break the yoke of feudal oppression and economic misery that until recently
defined Highland life.122
Selkirk gives the same example Smith offered — the
117 WN III.iv.13.
118 A. Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, ed.
D. Buchanan (4 vols., Edinburgh, 1814), Vol. 2, p. 130 n. (d).
119 D. Buchanan, Observations on the Subjects Treated of in Dr. Smith’s Inquiry into
the Nature and Causes of the Wealth of Nations (Edinburgh, 1815), pp. 144–5.
120 For a discussion of Selkirk’s Smithian argument for Highland emigration see
Jonsson, Enlightenment’s Frontier, pp. 248–57. See also E. Richards, A History of the
Highland Clearances (Edinburgh, 1985), pp. 14–31.
121 T. Douglas, the Earl of Selkirk, Observations on the Present State of the High-
lands of Scotland: With a View of the Causes and Probable Consequences of Emigration
(London, 1805), p. 36. WN, I.xi.l.10. For a defence of Smith against Selkirk’s interpreta-
tion, see Robert Brown, Remarks on the Earl of Selkirk’s Observations on the Present
State of the Highlands of Scotland (Edinburgh, 1806), p. 13.
122 Selkirk, Observations, pp. 11–15.
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thriving Highland beef industry — as evidence of the economic prosperity
that land clearance and agrarian consolidation bring.123
The Edinburgh Review, a journal founded by liberal students of Dugald
Stewart (Smith’s student and biographer) and so named as a tribute to the
journal Smith contributed to, published a glowing review of Selkirk’s book.
The review again identifies the Highland clearances with the system of politi-
cal economy laid out in the Wealth of Nations. It explains that a Smithian
‘revolution’ in the ‘system of landed property, must be accompanied by an
entire change in the distribution of the inhabitants’. This revolution requires
the removal of small tenant farmers, such that eventually ‘the whole popula-
tion on each farm will ultimately be reduced to the number of families that are
absolutely required for this necessary business’.124
This programme of forced
removal is a ‘necessary part’ of the ‘subversion of the feudal economy, and
the gradual extension of the commercial system’.125
Romantic critics of rural
depopulation fail to realize that emigration is the solution, not the problem.
Indeed, the Highland clearances point to a general prescription for social
progress that ought to be introduced around the world.126
It is dangerous to conflate the reception of a thinker’s ideas with the ideas
themselves. Smith’s political economy in particular has been deployed in
service of a wide range of conflicting reform programmes.127
Even today,
a debate rages over whether Smith should be read as a thinker of the left or
of the right.128
Still, it is suggestive that Smith’s political economy was so
commonly deployed as a justification for the Highland clearances. To many
reformers, Smith’s model of improvement plainly required radical, state-
imposed social transformation before the market forces of a commercial
society could emerge. These interpretations were plausible, and they reso-
nated with Smith’s explicit recommendations for Highland reform and with
the broader logic of his theory of the transition from feudal to commercial
society.
644 D.I. HALIKIAS
123 Ibid., pp. 28–31.
124 F. Horner, ‘Lord Selkirk on Emigration’, Edinburgh Review, 17 (3) (1805),
p. 190.
125 Ibid., p. 192.
126 Ibid., p. 202.
127 See, for example, R. Whatmore, ‘Adam Smith’s Role in the French Revolution’,
Past & Present, 175 (1) (2002), pp. 65–89; and G.M. Liu, ‘ “The Apostles of Free
Trade”: Adam Smith and the Nineteenth-Century American Trade Debates’, History of
European Ideas, 44 (2) (2018), pp. 210–23.
128 See S. Fleischacker, ‘Adam Smith and the Left’, in Adam Smith: His Life,
Thought, and Legacy, ed. R.P. Hanley (Princeton, 2016), pp. 478–93; and J.R. Otteson,
‘Adam Smith and the Right’, in ibid., pp. 494–511.
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Conclusion
This article has argued that Smith believes an exertion of state power may be
necessary to overcome feudal social institutions and to induce the emergence
of commercial progress. Smith’s sympathy with the kinds of reforms under-
way in the Highlands throughout his lifetime and in the decades following his
death illuminates the practical implications of Smith’s political economy of
development. It is important to emphasize, however, that there were specific
features of Highland society — features of feudal dependence and political
decentralization — that made it an appropriate subject for such a programme
of state-driven social transformation. Smith did not believe that such a pro-
gramme should be universally adopted. After all, he readily understood that
for all its benefits, modern commerce brings with it substantial moral costs.
He laments the dehumanizing effects of the division of labour,129
the perpetual
quest for wealth,130
and the disappearance of martial virtue in commercial
states.131
Likewise, Smith’s tolerant social epistemology cuts against crude
narratives of civilizational progress. Cultural diversity across time and place
can often best be explained in terms of reasonable people responding to cir-
cumstances distinct to their situation.132
What differences exist among peo-
ples ‘arise not so much from nature, as from habit, custom, and education’.133
Whatever superior manners may exist in commercial societies are a product
of their social and economic conditions.
All this reflects the complexity of Smith’s progressive historical world
view. Social progress, which is driven primarily by institutional reform,
brings real moral costs even as it establishes clear overall improvement.
Infant exposure and slavery, for example, could be rationalized by societies in
specific historical circumstances. Nonetheless, Smith is clear that modern
Europe’s rejection of such practices constitutes unequivocal moral improve-
ment.134
The vocabulary of ‘savage’, ‘rude’ and ‘civilization’ used throughout
Smith’s writing are not merely analytic categories, but are imbued with a
vision of progress characteristic of eighteenth-century Scottish discourse.135
Precisely because social and political institutions so dramatically shape man-
129 Smith warns that the division of labour brings ‘mental mutilation, deformity, and
wretchedness’. WN, V.i.f.61.
130 Smith’s parable of the ‘poor man’s son’ depicts the desperate futility and mean-
inglessness of the pursuit of wealth. TMS, IV.1.8–10.
131 WN, V.i.f.58.
132 On this point, see Pitts, A Turn to Empire, p. 47.
133 WN, I.ii.4. Cf. LJ(B), 326.
134 See TMS, V.2.9, V.2.15, and VII.iv.36.
135 See Sebastiani, The Scottish Enlightenment, p. 49. For an opposing view, see
Pitts, A Turn to Empire, p. 34.
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ners and cultural practices, reforming these institutions is the most powerful
means of propelling social improvement.136
It is in the context of this progressive approach to history that we must read
Smith’s treatment of the Scottish Highlands. As we have seen, Smith recog-
nizes that modern Europe transitioned from feudalism to commercial society
without any systematic programme of political reform. A series of happy
accidents lay the foundation for the peace and prosperity modern northwest
Europe now enjoys. But this contingent history does not imply that all social
progress needs to arise in an unplanned, uncoordinated manner. On the con-
trary, the purpose of Smith’s historical examinations is to identify the ‘general
principles which ought to run through and be the foundation of the laws of all
nations’.137
Enlightened reformers armed with the knowledge of history will
be able to deploy state power to transform Highland society and to facilitate
the progress of history.
Adam Smith did not live to see the full impact of the Highland clearances.
We cannot know with certainty if he would have approved of the violent
expropriation of land that they entailed and that many justified with Smithian
arguments. We have already seen that Smith dissented from some of the mer-
cantile policies deployed by these improvers. More fundamentally, Smith
gives us conceptual resources to reject sweeping social and economic reforms
of this sort. The Wealth of Nations cautions against excessively idealistic
expectations for politics. To hope for total free trade, Smith warns for exam-
ple, ‘is as absurd as to expect that an Oceana or Utopia’ should ever be estab-
lished.138
His much-discussed critique of the ‘man of system’ similarly serves
as the basis of a sceptical opposition to political and economic utopian pro-
jects of all kinds.139
In the 1790 edition of the Theory of Moral Sentiments,
Smith introduces this argument to criticize political reformers who imagine
that drastically re-organizing society is no more difficult than re-arranging the
pieces on a chessboard. Smith probably targets these pages at the French
Revolution and its English supporters.140
It is possible, however, that Smith
would apply the same logic to criticize aggressive attempts to engineer com-
mercial society and market institutions. A principled, sceptical Smith might
object to the radical reconstruction of the Highlands just as vehemently as he
objected to the radical reconstruction of Ancien Regime France.
646 D.I. HALIKIAS
136 Citing Hume, Smith notes that commercial society features the rise of ‘order and
good government, and with them the liberty and security of individuals . . . who had
before lived almost in a continual state of war . . . and of servile dependency upon their
superiors’. WN, III.iv.4.
137 TMS, VII.iv.37. Cf. LJ(B), 1.
138 WN, IV.ii.43.
139 TMS, VI.ii.2.9–18.
140 On Smith’s target here, see Rothschild, Economic Sentiments, pp. 54–5.
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Such caveats notwithstanding, this article has attempted to show that
Smith’s treatment of the Highlands is consistent with an ambitious role for
state power in inducing social and economic progress. Smith is optimistic that
the lessons of history can be distilled into a systematic programme for practi-
cal reform. He identifies the centralization of state power and the reorganiza-
tion of agrarian holdings as critical steps in facilitating the emergence of
commercial society, and he singles out the Scottish Highlands as a region
where dramatic political reforms can be used to propel social progress.
A well-managed state will be able to maximally extract the fruits of nature.
The introduction of commerce begets a self-correcting feedback mechanism
that advances human progress and prosperity without active political manage-
ment. Yet Smith does not assume that commercial institutions will inevitably
emerge as a product of organic social evolution. History suggests that their
emergence is contingent, and that certain political preconditions are neces-
sary before natural improvement can take root. Once introduced, commercial
society might be able to run on its own, needing only an occasional pruning by
a Hayekian gardener-statesman. But the initial construction of commercial
society itself may require a more active exertion of state power. That, at least,
is the lesson of the Scottish Highlands, a case study in the necessity of state
intervention to overcome conditions of feudalism and to secure conditions of
commerce.
Smith’s support for these Highland reforms mirrors his enthusiastic sup-
port for Scottish union with England. As he recalled in a letter to William
Strahan, ‘Union was a measure from which infinite Good has been derived to
this country’.141
Yet at the time of Union, Smith continues, those benefits ‘ap-
peared very remote and uncertain’. Scotland lost its parliament, its aristocracy
was weakened, and its economy was faced with the daunting challenge of
transforming itself. It is no wonder that at the time ‘all orders of men con-
spired in cursing a measure so hurtful to their immediate interest’. Nonethe-
less, Smith concludes, the judgment of history is clear that Union was an
advance for Scottish prosperity and peace. An unpopular political decision
that brought tremendous social upheaval ultimately formed the basis of
a secure, flourishing future. Commercial society is a deliberate, political
choice — a costly choice at times, but ultimately a choice worth making.
Dimitrios Ioannis Halikias HARVARD UNIVERSITY
141 Adam Smith letter to William Strahan, 4 April 1760, Correspondence, letter 50,
pp. 67–9.
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Adam Smith On The Scottish Highlands And The Origins Of Commercial Society

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