1142 REPORT—1885. 
science. Since, however, this kind of political economy is still somewhat current in 
the market-place, since the language of newspapers and public speakers still keeps 
up the impression that the professor of political economy is continually laying down 
laws which practical people are continually violating, it seems worth while to try 
to make clear the relation between the economic science which we are concerned 
to study and the principles of Governmental interference—or rather non-inter- 
ference—which are thought to have been of late so persistently and in some cases 
so successfully outraged. 
It must be admitted at once that there is considerable excuse for the popular 
misapprehension just mentioned; since for more than a century the general 
interest taken in the analysis of the phenomena of industry has been mainly due 
to the connection of this analysis with a political movement towards greater 
industrial freedom. No researches into the historical development of economic 
studies before Adam Smith can displace the great Scotchman from his position as 
the founder of modern political economy considered as an independent science, 
with a well-marked field of investigation and a definite and peculiar method of 
reasoning, And no doubt the element of Adam Smith’s treatise which makes the 
most impression on the ordinary reader is his forcible advocacy of the ‘system of 
natural liberty ;’ his exposition of the natural ‘ division of labour ’—tending, if 
left alone, to become an international division of employments—as the main cause 
of the ‘universal opulence’ of ‘ well-governed’ societies; and of the manner’ in 
which, in this distribution of employments, individual capitalists seeking their own 
advantage are led ‘by an invisible hand’ to ‘prefer that employment of their 
capital which is most advantageous to society.’ 
At the same time Adam Smith was too cool and too shrewd an observer of 
facts to be carried, even by the force and persuasiveness of his own arguments, 
into a sweeping and unqualified assertion of the universality of the tendency that 
he describes. His advocacy of natural liberty in no way blinds him to the perpetual 
and complex opposition and conflict of economic interests involved in the unfettered 
efforts of individuals to get rich. He even goes the length of saying that ‘the 
interest of the dealers in any particular branch of trade or manufacture is always 
in some respects different from, and even opposite to, that of the public.’ To take 
a particular case, he is decidedly of opinion that the natural liberty of bankers to 
issue notes may reasonably be restrained by the laws of the freest Governments. 
He is quite aware, again, that the absence of Governmental interference does not 
necessarily imply a state of free competition, since the self-interest of individuals 
may lead them, on the contrary, to restrict competition by ‘voluntary associations 
and agreements.’ He does not doubt that Governments, central or local, may find 
various ways of employing wealth—of which elementary education is one of the 
most important—which will be even economically advantageous to society, though 
they could not be remuneratively undertaken by individual capitalists. “In short, 
however fascinating the picture that Adam Smith presents to us of the continual 
and complex play of individual interests constituting and regulating the vast fabric 
of social industry, the summary conclusion drawn by some of his disciples that the 
social production of wealth will always be best promoted by leaving it altogether 
alone, that the only petition which industry should make to Government is the 
petition of Diogenes to Alexander that he would cease to stand between him and 
the sunshine, and that statesmen are therefore relieved of the necessity of examin- 
ing carefully the grounds for industrial intervention in any particular case—this 
comfortable and labour-saving conclusion finds no support in a fair survey of Adam 
Smith’s reasonings, though it has been no doubt encouraged by some of his phrases. 
To attribute to him a dogmatic theory of the natural right of the individual to 
absolute industrial independence—as some recent German writers are disposed to 
do’—is to construct the history of economic doctrines from one’s inner con- 
sciousness. 
It is true, as I have said, that among Adam Smith’s disciples there were not a 
? £g., v. Scheel, in Schénberg’s Handbuch der politischen Ochonomie, p. 89, 
speaks of ‘ Die naturrechtliche Wirthschaftstheorie oder der Smithianismus.’ 
