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wonderful consequences might be inferred first feudalism must
fall； and if requisite； landowning itself； then all taxation ought
to be levied on the land； as being the source of all wealth； then
the exemption from taxation enjoyed by the nobility and clergy must
cease； finally the manufacturers must be deemed an unproductive
class； who ought to pay no taxes； but also ought to have no
State…protection； hence custom…houses must be abolished。
In short； people contrived by means of the most absurd
arguments and contentions to prove those great truths which they
had determined beforehand to prove。
Of the nation； and its special circumstances and condition in
relation to other nations； no further account was to be taken； for
that is clear from the 'Encyclop閐ie M閠hodique；' which says； 'The
welfare of the individual is conditional on the welfare of the
entire human race。' Here； therefore； no account was taken of any
nation； of any war； of any foreign commercial measures： history and
experience must be either ignored or misrepresented。 The great
merit of this system was； that it bore the appearance of an attack
made on the policy of Colbert and on the privileges of the
manufacturers； for the benefit of the landowners； while in reality
its blows told with most effect on the special privileges of the
latter。 Poor Colbert had to bear all the blame of the sufferings of
the French agriculturists； while nevertheless everyone knew that
France possessed a great industry for the first time since
Colbert's administration； and that even the dullest intellect was
aware that manufactures constitute the chief means for promoting
agriculture and commerce。 The Revocation of the Edict of Nantes
the wanton wars of Louis XIV the profligate expenditure of Louis
XV were utterly ignored by these philosophers。
Quesnay in his writings has adduced； and replied to； point by
point； the objections which were urged against his system。 One is
astonished at the mass of sound sense which he puts into the mouth
of his opponents； and at the mass of mystical absurdity which he
opposes to those objections by way of argument。 Notwithstanding；
all that absurdity was accepted as wisdom by the contemporaries of
this reformer； because the tendency of his system accorded with the
circumstances of France at that time； and with the philanthropic
and cosmopolitan ideas prevalent in that century。
Chapter 31
The System of Values of Exchange （Falsely Termed by the School； The
'Industrial' System） Adam Smith
Adam Smith's doctrine is； in respect to national and
international conditions； merely a continuation of the physiocratic
system。 Like the latter； it ignores the very nature of
nationalities； seeks almost entirely to exclude politics and the
power of the State； presupposes the existence of a state of
perpetual peace and of universal union； underrates the value of a
national manufacturing power； and the means of obtaining it； and
demands absolute freedom of trade。
Adam Smith fell into these fundamental errors in exactly the
same way as the physiocrats had done before him； namely； by
regarding absolute freedom in international trade as an axiom
assent to which is demanded by common sense； and by not
investigating to the bottom how far history supports this idea。
Dugald Stewart （Adam Smith's able biographer） informs us that
Smith； at a date twenty…one years before his work was published in
1776 （viz。 in 1755）； claimed priority in conceiving the idea of
universal freedom of trade； at a literary party at which he was
present； in the following words：
'Man is usually made use of by statesmen and makers of
projects； as the material for a sort of political handiwork。 The
project makers； in their operations on human affairs； disturb
Nature； whereas people ought simply to leave her to herself to act
freely； in order that she may accomplish her objects。 In order to
raise a State from the lowest depth of barbarism to the highest
degree of wealth； all that is requisite is peace； moderate
taxation； and good administration of justice ； everything else will
follow of its own accord in the natural course of things。 All
governments which act in a contrary spirit to this natural course；
which seek to divert capital into other channels； or to restrict
the progress of the community in its spontaneous course； act
contrary to nature； and； in order to maintain their position；
become oppressive and tyrannical。'
Adam Smith set out from this fundamental idea； and to prove it
and to illustrate it was the sole object of all his later works。 He
was confirmed in this idea by Quesnay； Turgot； and the other
coryphaei of the physiocratic school； whose acquaintance he had
made in a visit to France in the year 1765。
Smith evidently considered the idea of freedom of trade as an
intellectual discovery which would constitute the foundation of his
literary fame。 How natural； therefore； it was that he should
endeavour in his work to put aside and to refute everything that
stood in the way of that idea； that he should consider himself as
the professed advocate of absolute freedom of trade； and that he
thought and wrote in that spirit。
How could it be expected； that with such preconceived opinions；
Smith should judge of men and of things； of history and statistics；
of political measures and of their authors； in any other light than
as they confirmed or contradicted his fundamental principle？
In the passage above quoted from Dugald Stewart； Adam Smith's
whole system is comprised as in a nutshell。 The power of the State
can and ought to do nothing； except to allow justice to be
administered； to impose as little taxation as possible。 Statesmen
who attempt to found a manufacturing power； to promote navigation；
to extend foreign trade； to protect it by naval power； and to found
or to acquire colonies； are in his opinion project makers who only
hinder the progress of the community。 For him no nation exists； but
merely a community； i。e。 a number of individuals dwelling together。
These individuals know best for themselves what branches of
occupation are most to their advantage； and they can best select
for themselves the means which promote their prosperity。
This entire nullification of nationality and of State power；
this exaltation of individualism to the position of author of all
effective power； could be made plausible only by making the main
object of investigation to be not the power which effects； but the
thing effec