thissortofcapitalisthereforeconstantlygoingfromandreturningtothe
handsofitsowner，Thewholecapitalofasocietyfallsunderthesametwoheads。Itsfixedcapitalconsistschieflyof（1）
machines，（2）buildingswhicharethemeansofprocuringarevenue，（3）agriculturalimprovements，and（4）theacquiredand
usefulabilitiesofallmembersofthesociety（sincesometimesknownas\"personalcapital\"）。Itscirculatingcapitalisalso
composedoffourparts——（1）money，（2）provisionsinthehandsofthedealers，（3）materials，and（4）completedworkinthe
handsofthemanufacturerormerchant。Nextcomesthedistinctionofthegrossnationalrevenuefromthenet——thefirst
beingthewholeproduceofthelandandlabourofacountry，thesecondwhatremainsafterdeductingtheexpenseof
maintainingthefixedcapitalofthecountryandthatpartofitscirculatingcapitalwhichconsistsofmoney。Money，\"the
greatwheelofcirculation，\"isaltogetherdifferentfromthegoodswhicharecirculatedbymeansofit;itisacostly
instrumentbymeansofwhichallthateachindividualreceivesisdistributedtohim;andtheexpenditurerequired，firstto
provideit，andafterwardstomaintainit，isadeductionfromthenetrevenueofthesociety。Indevelopmentofthis
consideration，Smithgoesontoexplainthegaintothecommunityarisingfromthesubstitutionofpapermoneyforthat
composedofthepreciousmetals;andhereoccurstheremarkableillustrationinwhichtheuseofgoldandsilvermoneyis
comparedtoahighwayontheground，thatofpapermoneytoawaggon—waythroughtheair。Inproceedingtoconsiderthe
accumulationofcapital，heisledtothedistinctionbetweenproductiveandunproductivelabour——theformerbeingthat
whichisfixedorrealisedinaparticularobjectorvendiblearticle，thelatterthatwhichisnotsorealised。Theformeris
exemplifiedinthelabourofthemanufacturingworkman，thelatterinthatofthemenialservant。Abroadlineofdemarcation
isthusdrawnbetweenthelabourwhichresultsincommoditiesorincreasedvalueofcommoditiesandthatwhichdoesno
morethanrenderservices:theformerisproductive，thelatterunproductive。\"Productive\"isbynomeansequivalentto
\"useful\":thelaboursofthemagistrate，thesoldier，thechurchman，lawyer，andphysicianare，inSmith’ssense，unproductive。
Productivelabourersaloneareemployedoutofcapital;unproductivelabourers，aswellasthosewhodonotlabouratall，
areallmaintainedbyrevenue。Inadvancingindustrialcommunities，theportionofannualproducesetapartascapitalbears
anincreasingproportiontothatwhichisimmediatelydestinedtoconstitutearevenue，eitherasrentorasprofit。Parsimony
isthesourceoftheincreaseofcapital;byaugmentingthefunddevotedtothemaintenanceofproductivehands，itputsin
motionanadditionalquantityofindustry，whichaddstothevalueoftheannualproduce。Whatisannuallysavedisas
regularlyconsumedaswhatisspent，butbyadifferentsetofpersons，byproductivelabourersinsteadofidlersor
unproductivelabourers;andtheformerreproducewithaprofitthevalueoftheirconsumption。Theprodigal，encroachingon
hiscapital，diminishes，asfarasinhimlies，theamountofproductivelabour，andsothewealthofthecountry;noristhis
resultaffectedbyhisexpenditurebeingonhome—made，asdistinctfromforeign，commodities。Everyprodigal，therefore，isa
publicenemy;everyfrugalmanapublicbenefactor。Theonlymodeofincreasingtheannualproduceofthelandandlabour
istoincreaseeitherthenumberofproductivelabourersortheproductivepowersofthoselabourers。Eitherprocesswillin
generalrequireadditionalcapital，theformertomaintainthenewlabourers，thelattertoprovideimprovedmachineryorto
enabletheemployertointroduceamorecompletedivisionoflabour。Inwhatarecommonlycalledloansofmoney，itisnot
reallythemoney，butthemoney’sworth，thattheborrowerwants;andthelenderreallyassignstohimtherighttoacertain
portionoftheannualproduceofthelandandlabourofthecountry。Asthegeneralcapitalofacountryincreases，soalso
doestheparticularportionofitfromwhichthepossessorswishtoderivearevenuewithoutbeingatthetroubleof
employingitthemselves;and，asthequantityofstockthusavailableforloansisaugmented，theinterestdiminishes，not
merely\"fromthegeneralcauseswhichmakethemarketpriceofthingscommonlydiminishastheirquantityincreases，\"but
because，withtheincreaseofcapital，\"itbecomesgraduallyworeandmoredifficulttofindwithinthecountryaprofitable
methodofemployinganynewcapital\"——whencearisesacompetitionbetweendifferentcapitals，andaloweringofprofits，
whichmustdiminishthepricewhichcanbepaidfortheuseofcapital，orinotherwordstherateofinterest。Itwasformerly
wronglysupposed，andevenLockeandMontesquieudidnotescapethiserror，thatthefallinthevalueoftheprecious
metalsconsequentonthediscoveryoftheAmericanmineswastherealcauseofthepermanentloweringoftherateof
interestinEurope。Butthisview，alreadyrefutedbyHume，iseasilyseentobeerroneous。\"Insomecountriestheinterestof
moneyhasbeenprohibitedbylaw。But，assomethingcaneverywherebemadebytheuseofmoney，somethingought
everywheretobepaidfortheuseofit，\"andwillinfactbepaidforit;andtheprohibitionwillonlyheightentheevilofusury
byincreasingtherisktothelender。Thelegalrateshouldbeaverylittleabovethelowestmarketrate;soberpeoplewillthen
bepreferredasborrowerstoprodigalsandprojectors，whoatahigherlegalratewouldhaveanadvantageoverthem，being
alonewillingtoofferthathigherrate。（27）
Astothedifferentemploymentsofcapital，thequantityofproductivelabourputinmotionbyanequalamountvaries
extremelyaccordingasthatamountisemployed——（1）intheimprovementoflands，mines，orfisheries，（2）inmanufactures，
（3）inwholesaleor（4）retailtrade。Inagriculture\"Naturelaboursalongwithman，\"andnotonlythecapitalofthefarmeris
reproducedwithhisprofits，butalsotherentofthelandlord。Itisthereforetheemploymentofagivencapitalwhichismost
advantageoustosociety。Next，inordercomemanufactures;thenwholesaletrade——firstthehometrade，secondlythe
foreigntradeofconsumption，lastthecarryingtrade。Alltheseemploymentsofcapital，however，arenotonlyadvantageous，
butnecessary，andwillintroducethemselvesintheduedegree，iftheyarelefttothespontaneousactionofindividual
enterprise。
ThesefirsttwobookscontainSmith’sgeneraleconomicscheme;andwehavestateditasfullyaswasconsistentwiththe
necessarybrevity，becausefromthisformulationofdoctrinetheEnglishclassicalschoolsetout，androunditthediscussions
ofmorerecenttimesindifferentcountrieshaveinagreatmeasurerevolved。Someofthecriticismsofhissuccessorsand
theirmodificationsofhisdoctrineswillcomeunderournoticeasweproceed。
Thecriticalphilosophersoftheeighteenthcenturywereoftendestituteofthehistoricalspirit，whichwasnopartofthe
endowmentneededfortheirprincipalsocialoffice。Butsomeofthemosteminentofthem，especiallyinScotland，showeda
markedcapacityandpredilectionforhistoricalstudies。Smithwasamongstthelatter;Kniesandothersjustlyremarkonthe
masterlysketchesofthiskindwhichoccurintheWealthofNations。Thelongestandmostelaborateoftheseoccupiesthe
thirdbook;itisanaccountofthecoursefollowedbythenationsofmodernEuropeinthesuccessivedevelopmentofthe
severalformsofindustry。Itaffordsacuriousexampleoftheeffectofdoctrinalprepossessionsinobscuringtheresultsof
historicalinquiry。WhilsthecorrectlydescribestheEuropeanmovementofindustry，andexplainsitasarisingoutof
adequatesocialcauses，heyet，inaccordancewiththeabsoluteprincipleswhichtaintedhisphilosophy，protestsagainstitas
involvinganentireinversionofthe\"naturalorderofthings。\"Firstagriculture，thenmanufactures，lastlyforeigncommerce;
anyotherorderthanthisheconsiders\"unnaturalandretrograde。\"Hume，amorepurelypositivethinker，simplyseesthe
facts，acceptsthem，andclassesthemunderagenerallaw。\"Itisaviolentmethod，\"hesays，\"andinmostcasesimpracticable，
toobligethelabourertotoilinordertoraisefromthelandmorethanwhatsubsistshimselfandfamily。Furnishhimwith
manufacturesandcommodities，andhewilldoitofhimself。\"\"Ifweconsulthistory，weshallfindthat，inmostnations，
foreigntradehasprecededanyrefinementinhomemanufactures，andgivenbirthtodomesticluxury。\"
Thefourthbookisprincipallydevotedtotheelaborateandexhaustivepolemicagainstthemercantilesystemwhichfinally
droveitfromthefieldofscience，andhasexercisedapowerfulinfluenceoneconomiclegislation。Whenprotectionisnow
advocated，itiscommonlyondifferentgroundsfromthosewhichwereincurrentusebeforethetimeofSmith。Hebelieved
thattolookfortherestorationoffreedomofforeigntradeinGreatBritainwouldhavebeen\"asabsurdastoexpectthatan
OceanaorUtopiashouldbeestablishedinit\";yet，mainlyinconsequenceofhislabours，thatobjecthasbeencompletely
attained;andithaslatelybeensaidwithjusticethatfreetrademighthavebeenmoregenerallyacceptedbyothernationsif
thepatientreasoningofSmithhadnotbeenreplacedbydogmatism。Histeachingonthesubjectisnotaltogetherunqualified;
but，onthewhole，withrespecttoexchangesofeverykind，whereeconomicmotivesaloneenter，hisvoiceisinfavourof
freedom。Hehasregard，however，topoliticalaswellaseconomicinterests，andonthegroundthat\"defenceisofmuch
moreimportancethanopulence\"，pronouncestheNavigationActtohavebeen\"perhapsthewisestofallthecommercial
regulationsofEngland。\"Whilstobjectingtothepreventionoftheexportofwool，heproposesataxonthatexportas
somewhatlessinjurioustotheinterestofgrowersthantheprohibition，whilstitwould\"affordasufficientadvantage\"tothe
domesticovertheforeignmanufacturer。Thisis，perhaps，hismostmarkeddeviationfromtherigourofprinciple;itwas
doubtlessaconcessiontopopularopinionwithaviewtoanattainablepracticalimprovementThewisdomofretaliationin
ordertoprocuretherepealofhighdutiesorprohibitionsimposedbyforeignGovernmentsdepends，hesays，altogetheron
thelikelihoodofitssuccessineffectingtheobjectaimedat，buthedoesnotconcealhiscontemptforthepracticeofsuch
expedients。Therestorationoffreedominanymanufacture，whenithasgrowntoconsiderabledimensionsbymeansofhigh
duties，should，hethinks，frommotivesofhumanity，bebroughtaboutonlybydegreesandwithcircumspection，——though
theamountofevilwhichwouldbecausedbytheimmediateabolitionofthedutiesis，inhisopinion，commonlyexaggerated。
ThecaseinwhichJ。S。Millwouldtolerateprotection——that，namely，inwhichanindustrywelladaptedtoacountryiskept
downbytheacquiredascendencyofforeignproducers——isreferredtobySmith;butheisopposedtotheadmissionofthis
exceptionforreasonswhichdonotappeartobeconclusive。（28）Heisperhapsscarcelyconsistentinapprovingtheconcession
oftemporarymonopoliestojoint—stockcompaniesundertakingriskyenterprises\"ofwhichthepublicisafterwardstoreap
thebenefit。\"（29）
HeislessabsoluteinhisdoctrineofGovernmentalnoninterferencewhenhecomestoconsiderinhisfifthbookthe
\"expensesofthesovereignorthecommonwealth。\"Herecognisesascomingwithinthefunctionsofthestatetheerection
andmaintenanceofthosepublicinstitutionsandpublicworkswhich，thoughadvantageoustothesociety，couldnotrepay，
andthereforemustnotbethrownupon，individualsorsmallgroupsofindividuals。Heremarksinajusthistoricalspiritthat
theperformanceofthesefunctionsrequiresverydifferentdegreesofexpenseinthedifferentperiodsofsociety。Besidesthe
institutionsandworksintendedforpublicdefenceandtheadministrationofjustice，andthoserequiredforfacilitatingthe
commerceofthesociety，heconsidersthosenecessaryforpromotingtheinstructionofthepeople。Hethinksthepublicat
largemaywithproprietynotonlyfacilitateandencourage，butevenimposeuponalmostthewholebodyofthepeople，the
acquisitioninyouthofthemostessentialelementsofeducation。Hesuggestsasthemodeofenforcingthisobligationthe
requirementofsubmissiontoatestexamination\"beforeanyonecouldobtainthefreedominanycorporation，orbeallowed
tosetupatradeinanyvillageortowncorporate。\"Similarly，heisofopinionthatsomeprobation，eveninthehigherand
moredifficultsciences，mightbeenforcedasaconditionofexercisinganyliberalprofession，orbecomingacandidatefor
anyhonourableoffice。Theexpenseoftheinstitutionsforreligiousinstructionaswellasforgeneraleducation，heholds，
maywithoutinjusticebedefrayedoutofthefundsofthewholesociety，thoughhewouldapparentlypreferthatitshouldbe
metbyihevoluntarycontributionsofthosewhothinktheyhaveoccasionforsucheducationorinstruction。Thereismuch
thatissound，aswellasinterestingandsuggestive，inthisfifthbook，inwhichheshowsapoliticalinstinctandabreadthof
viewbywhichheisfavourablycontrastedwiththeManchesterschool。But，ifwemaysaysowithoutdisrespecttosogreat
aman，therearetracesinitofwhatisnowcalledPhilistinism——alowviewoftheendsofartandpoetry——whicharose
perhapsinpartfrompersonaldefect;andacertaindeadnesstothehighaimsandperennialimportanceofreligion，which
wasnodoubtchieflyduetotheinfluencesofanagewhenthecriticalspiritwasdoinganindispensablework，inthe
performanceofwhichthrtransitorywasapttobeconfoundedwiththepermanent。
ForthesakeofconsideringasawholeSmith’sviewofthefunctionsofgovernment，wehavepostponednoticinghis
treatmentofthephysiocraticsystem，whichoccupiesapartofhisfourthbook。HehadformedtheacquaintanceofQuesnay，
Turgot，andothermembersoftheirgroupduringhissojourninFrancein1765，andwould，ashetoldDugaldStewart，had
thepatriarchoftheschoollivedlongenough，havededicatedtohimtheWealthofNations。Hedeclaresthat，withallits
imperfections，thesystemofQuesnayis\"perhapsthenearestapproximationtothetruththathadyetappearedonthesubject
ofpoliticaleconomy。\"Yetheseemsnottobeadequatelyconsciousofthedegreeofcoincidencebetweenhisowndoctrines
andthoseofthephysiocrats。DupontdeNemourscomplainedthathedidnotdoQuesnaythejusticeofrecognisinghimas
hisspiritualfather。itis，however，alleged，ontheotherside，thatalreadyin1753Smithhadbeenteachingasprofessora
bodyofeconomicdoctrinethesameinitsbroadfeatureswiththatcontainedinhisgreatwork。Thisisindeedsaidby
Stewart;and，thoughhegivesnoevidenceofit，itispossiblyquitetrue;ifso，Smith’sdoctrinaldescentmustbetracedrather
fromHumethanfromtheFrenchschool。Theprincipalerrorofthisschool，that，namely，ofrepresentingagriculturallabour
asaloneproductive，herefutesinthefourthbook，thoughinamannerwhichhasnotalwaysbeenconsideredeffective。
Tracesoftheinfluenceoftheirmistakenviewappeartoremaininhisownwork，as，forexample，hisassertionthatin
agriculturenaturelaboursalongwithman，whilstinmanufacturesnaturedoesnothing，mandoesall;andhisdistinction
betweenproductiveandunproductivelabour，whichwasdoubtlesssuggestedbytheiruseofthoseepithets，andwhichis
scarcelyconsistentwithhisrecognitionofwhatisnowcalled\"personalcapital。\"TothesamesourceM’Cullochandothers
refertheoriginofSmith’sview，whichtheyrepresentasanobviouserror，that\"individualadvantageisnotalwaysatruetest
ofthepublicadvantageousnessofdifferentemployments。\"Butthatviewisreallyquitecorrect，asProfessorNicholsonhas
clearlyshown。（30）Thattheformtakenbytheuseofcapital，profitsbeinggiven，isnotindifferenttotheworkingclassasa
wholeevenRicardoadmitted;andCairnes，asweshallsee，builtorthisconsiderationsomeofthemostfar—reaching
conclusionsinhisLeadingPrinciples。
OnSmithstheoryoftaxationinhisfifthbookitisnotnecessaryforustodwell。Thewell—knowncanonswhichhelays
downasprescribingtheessentialsofagoodsystemhavebeengenerallyaccepted。Theyhavelatelybeenseverelycriticised
byProfessorWalker——ofwhoseobjections，however，thereisonlyonewhichappearstobewellfounded。Smithseemsto
favourtheviewthatthecontributionoftheindividualtopublicexpensesmayberegardedaspaymentfortheservices
renderedtohimbythestate，andoughttobeproportionaltotheextentofthoseservices。Ifheheldthisopinion，which
someofhisexpressionsimply，hewascertainlysofarwronginprinciple。
Weshallnotbeheldtoanticipateundulyifweremarkhereonthewayinwhichopinion，revoltedbytheaberrationsofsome
ofSmithssuccessors，hastendedtoturnfromthedisciplestothemaster。Astrongsenseofhiscomparativefreedomfrom
thevicioustendenciesofRicardoandhisfollowershasrecentlypromptedthesuggestionthatweoughtnowtorecurto
Smith，andtakeuponcemorefromhimthelineoftheeconomicalsuccession。Butnotwithstandinghisindisputable
superiority，andwhilstfullyrecognisingthegreatservicesrenderedbyhisimmortalwork，wemustnotforgetthat，ashas
beenalreadysaid，thatworkwas，onthewhole，aproduct，thoughanexceptionallyeminentone，ofthenegativephilosophy
ofthe18thcentury，restinglargelyinitsultimatefoundationonmetaphysicalbases。ThemindofSmithwasmainlyoccupied
withtheworkofcriticismsourgentinhistime;hisprincipaltaskwastodiscreditandoverthrowtheeconomicsystemthen
prevalent，andtodemonstratetheradicalunfitnessoftheexistingEuropeanGovernmentstodirecttheindustrialmovement。
Thisofficeofhisfellinwith，andformedapartof，thegeneralworkofdemolitioncarriedonbythethinkerswhogavetohis
perioditscharacteristictone。Itistohishonourthat，besidesthisdestructiveoperation，hecontributedvaluableelementsto
thepreparationofanorganicsystemofthoughtandoflife。Inhisspecialdomainhehasnotmerelyextinguishedmanyerrors
andprejudices，andclearedthegroundfortruth，buthasleftusapermanentpossessioninthejudiciousanalysesof
economicfactsandideas，thewisepracticalsuggestions，andtheluminousindicationsofallkindswithwhichhiswork
abounds。Belongingtothebestphilosophicalschoolofhisperiod，thatwithwhichthenamesofHumeandDiderotare
associated，hetendedstronglytowardsthepositivepointofview。Butitwasnotpossibleforhimtoattainit;andthefinal
andfullynormaltreatmentoftheeconomiclifeofsocietiesmustbeconstitutedonotherandmorelastingfoundationsthan
thosewhichunderliehisimposingconstruction。
Ithasbeenwellsaidthatofphilosophicdoctrinesthesaying\"Bytheirfruitsyeshallknowthem\"iseminentlytrue。Andit
cannotbedoubtedthatthegermsoftheviciousmethodsandfalseorexaggeratedtheoriesofSmithssuccessorsaretobe
foundinhisownwork，thoughhisgoodsenseandpracticalbentpreventedhisfollowingouthisprinciplestotheirextreme
consequences。TheobjectionsofHildebrandandotherstotheentirehistoricaldevelopmentofdoctrinewhichtheGermans
designateas\"Smithianismus\"areregardedbythosecriticsasapplicable，notmerelytohisschoolasawhole，but，thoughin
alessdegree，tohimself。Thefollowingarethemostimportantoftheseobjections。Itissaid——（1）Smithsconceptionofthe
socialeconomyisessentiallyindividualistic。Inthishefallsinwiththegeneralcharacterofthenegativephilosophyofhis
age。Thatphilosophy，initsmosttypicalforms，evendeniedthenaturalexistenceofthedisinterestedaffections，and
explainedthealtruisticfeelingsassecondaryresultsofself—love。Smith，however，likeHume，rejectedtheseextremeviews;
andhenceithasbeenheldthatintheWealthofNationsheconsciously，thoughtacitly，abstractedfromthebenevolent
principlesinhumannature，andasalogicalartificesupposedan\"economicman\"actuatedbypurelyselfishmotives。
Howeverthismaybe，hecertainlyplaceshimselfhabituallyatthepointofviewoftheindividual，whomhetreatsasapurely
egoisticforce，workinguniformlyinthedirectionofprivategain，withoutregardtothegoodofothersorofthecommunity
atlarge。（2）Hejustifiesthispersonalattitudebyitsconsequences，presentingtheoptimisticviewthatthegoodofthe
communityisbestattainedthroughthefreeplayofindividualcupidities，providedonlythatthelawpreventstheinterference
ofonememberofthesocietywiththeself—seekingactionofanother。Heassumeswiththenegativeschoolatlarge—though
hehaspassageswhicharenotinharmonywiththesepropositions——thateveryoneknowshistrueinterestandwillpursueit，
andthattheeconomicadvantageoftheindividualcoincideswiththatofthesociety。Tothislastconclusionheissecretly
led，aswehaveseen，byaprioritheologicalideas，andalsobymetaphysicalconceptionsofasupposedsystemofnature，
naturalright，andnaturalliberty。（3）Bythisreductionofalmosteveryquestiontooneofindividualgain，heisledtoatoo
exclusiveconsiderationofexchangevalueasdistinctfromwealthinthepropersense。This，whilstlendingamechanical
facilityinarrivingatconclusions，givesasuperficialcharactertoeconomicinvestigations，divorcingitfromthephysicaland
biologicalsciences，excludingthequestionofrealsocialutility，leavingnoroomforacriticismofproduction，andleadingto
adenial，likeJ。S。Mill’s，ofanyeconomicdoctrinedealingwithconsumption——inotherwords，withtheuseofwealth。（4）In
condemningtheexistingindustrialpolicy，hetendstoomuchtowardsaglorificationofnon—governmentandarepudiationof
allsocialinterventionfortheregulationofeconomiclife。（5）Hedoesnotkeepinviewthemoraldestinationofourrace，nor
regardwealthasameanstothehigherendsoflife，andthusincurs，notaltogetherunjustly，thechargeofmaterialism，inthe
widersenseofthatword。Lastly，（6）hiswholesystemistooabsoluteinitscharacter;itdoesnotsufficientlyrecogniethe
factthat，inthelanguageofHildebrand，man，asamemberofsociety，isachildofcivilizationandaproductofhistory，and
thataccountoughttobetakenofthedifferentstagesofsocialdevelopmentasimplyingalteredeconomicconditionsand
callingforalteredeconomicaction，oreveninvolvingamodificationoftheactor。Perhapsinalltherespectshere
enumerated，certainlyinsomeofthem，andnotablyinthelast，SmithislessopentocriticismthanmostofthelaterEnglish
economists;butitmust，wethink，beadmittedthattothegeneralprincipleswhichlieatthebasisofhisschemetheultimate
growthoftheseseveralvicioustendenciesistraceable。
GreatexpectationshadbeenentertainedrespectingSmith’sworkbycompetentjudgesbeforeitspublication，asisshownby
thelanguageofFergusononthesubjectinhisHistoryofCivilSociety。（31）Thatitsmeritsreceivedpromptrecognitionis
provedbythefactofsixeditionshavingbeencalledforwithinthefifteenyearsafteritsappearance。（32）Fromtheyear1783it
wasmoreandmorequotedinParliament。Pittwasgreatlyimpressedbyitsreasonings;Smithisreportedtohavesaidthat
thatMinisterunderstoodthebookaswellashimself，Pulteneysaidin1797thatSmithwouldpersuadethethenliving
generationandwouldgovernthenext。（33）
Smith’searliestcriticswereBenthamandLauderdale，who，thoughingeneralagreementwithhim，differedonspecialpoints。
JeremyBenthamwasauthorofashorttreatiseentitledAManuelofPoliticalEconomyandvariouseconomicmonographs，
themostcelebratedofwhichwashisDefenceofUsury（1787）。Thiscontained（Letterxiii）anelaboratecriticismofa
passageintheWealthofNations，alreadycited，inwhichSmithhadapprovedofalegalmaximumrateofinterestfixedbuta
verylittleabovethelowestmarketrate，astendingtothrowthecapitalofthecountryintothehandsofsoberpersons，as
opposedto\"prodigalsandprojectors。\"SmithissaidtohaveadmittedthatBenthamhadmadeouthiscase。Hecertainly
arguesitwithgreatability;（34）andthetruedoctrinenodoubtisthat，inadevelopedindustrialsociety，itisexpedienttolet
theratebefixedbycontractbetweenthelenderandtheborrower，thelawinterferingonlyincaseoffraud。
Bentham’smainsignificancedoesnotbelongtotheeconomicfield。But，ontheonehand，whatisknownasBenthamismwas
undoubtedly，asComtehassaid，（35）aderivativefrompoliticaleconomy，andinparticularfromthesystemofnaturalliberty;
and，ontheother，itpromotedthetemporaryascendencyofthatsystembyextendingtothewholeofsocialandmoraltheory
theuseoftheprincipleofindividualinterestandthemethodofdeductionfromthatinterest。Thisalliancebetweenpolitical
economyandtheschemeofBenthamisseeninthepersonalgroupofthinkerswhichformeditselfroundhim，——thinkers
mostinaptlycharacterisedbyJ。S。Millas\"profound，\"butcertainlypossessedofmuchacutenessandlogicalpower，and
tending，thoughvaguely，towardsapositivesociology，which，fromtheirwantofgenuinelyscientificcultureandtheir
absolutemodesofthought，theywereincapableoffounding。
LordLauderdale，inhisInquiryintotheNatureandOriginofPublicWealth（1804），abookstillworthreading，pointedout
certainrealweaknessesinSmith’saccountofvalueandthemeasureofvalue，andoftheproductivityoflabour，andthrew
additionallightonseveralsubjects，suchasthetruemodeofestimatingthenationalincome，andthereactionofthe
distributionofwealthonitsproduction。
Smithstoodjustatthebeginningofagreatindustrialrevolution。Theworldofproductionandcommerceinwhichhelived
wasstill，asCliffeLesliehassaid，a\"veryearly\"andcomparativelynarrowone;\"theonlysteam—enginehereferstois
Newcomen’s，\"andthecottontradeismentionedbyhimonlyonce，andthatincidentally。\"Betweentheyears1760and
1770，\"saysMr。Marshall，\"Roebuckbegantosmeltironbycoal，Brindleyconnectedtherisingseatsofmanufactureswith
theseabycanals，Wedgwooddiscoveredtheartofmakingearthenwarecheaplyandwell，Hargreavesinventedthe
spinning—jenny，ArkwrightutilisedWyatt’sandHigh’sinventionsforspinningbyrollersandappliedwater—powertomove
them，andWattinventedthecondensingsteam—engine。Crompton’smuleandCartwright’spower—loomcameshortlyafter。\"
Outofthisrapidevolutionfollowedavastexpansionofindustry，butalsomanydeplorableresults，which，hadSmithbeen
abletoforeseethem，mighthavemadehimalessenthusiasticbelieverinthebenefitstobewroughtbythemereliberationof
effort，andalessvehementdenouncerofoldinstitutionswhichintheirdayhadgivenapartialprotectiontolabour。
Alongsideoftheseevilsofthenewindustrialsystem，Socialismappearedasthealikeinevitableandindispensableexpression
oftheprotestoftheworkingclassesandtheaspirationafterabetterorderofthings;andwhatwenowcall\"thesocial
question，\"thatinexorableproblemofmodernlife，roseintotheplacewhichithaseversincemaintained。Thisquestionwas
firsteffectuallybroughtbeforetheEnglishmindbyThomasRobertMalthus（1766—1834），not，however，undertheimpulse
ofrevolutionarysympathies，butintheinterestsofaconservativepolicy。