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The Revolutions of Adam Smith and Thomas Jefferson

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One of the most fascinating aspects of Independence Day is that the year the Declaration of Independence was signed — 1776 — was the same year that saw the publication of Adam Smith’s famous treatise on economics, An Inquiry into the Nature and Causes of the Wealth of Nations. That is quite a coincidence, one that had enormous ramifications for liberty.

Throughout history, government officials have controlled and regulated economic activity. They were convinced that this was a necessary and essential role for the government, especially to protect the poor.

For example, in the Middle Ages there were anti-speculation laws, which made it illegal for “middle men” to encounter farmers on their way to market, buy their product, and then bring it to market and sell it at a higher price. That type of activity was considered improper profiteering at the expense of the poor.

Along came Adam Smith and published the most revolutionary economic concept in history. He said that people didn’t need government to control and regulate economic activity and that, in fact, everyone, including the poor, would be better off if government stopped doing so. The French later came up with a term for Smith’s concept: Laissez faire; laissez passer. Let it be. Let it pass. Leave government entirely out of the realm of economic activity.

In the same year, Thomas Jefferson published the most revolutionary political concept in history. He said that man’s rights don’t come from government but rather from nature and God. He pointed out that the only reason that people call government into existence is to protect the exercise of these natural, God-given rights.

What are such natural, God-given rights? They include, but are not limited to, life, liberty, and the pursuit of happiness.

Now, combine Jefferson’s revolutionary political concept with Smith’s revolutionary economic concept.

Everyone, not just Americans, has the fundamental right to sustain his life through labor and economic activity. To do that, he has the fundamental right to engage in any occupation, trade, or profession.

He also has at the fundamental right to engage in peaceful trades with others, which necessary increases his standard of living. That is because in every trade both parties are giving up something they value less for something they value more.

People also have the fundamental right to accumulate the fruits of their earnings and trades and to decide what to do with it — spend, donate, invest, squander, or whatever.

A question naturally arises: Given that economic liberty is a natural, God-given right and given that it benefits mankind economically, why do the following government programs exist in the United States: income taxation, mandatory charity (e.g., Social Security, Medicare, Medicaid, farm subsidies, education grants, and corporate welfare), economic regulations, occupational licensure laws, price controls, minimum-wage laws, a central bank, government-imposed fiat (i.e., paper) currency, trade wars, immigration controls, and much more governmental interference with economic activity?

Jefferson also pointed out that whenever any government — any government — becomes destructive of people’s natural, God-given rights, it is the right of the people to alter the government or even abolish it in favor of new government that protects, not destroys, people’s natural, God-given rights.

It seems to me that the principles enunciated by Adam Smith and Thomas Jefferson are worth pondering on Independence Day and beyond.

This post was written by:

Jacob G. Hornberger is founder and president of The Future of Freedom Foundation. He was born and raised in Laredo, Texas, and received his B.A. in economics from Virginia Military Institute and his law degree from the University of Texas. He was a trial attorney for twelve years in Texas. He also was an adjunct professor at the University of Dallas, where he taught law and economics. In 1987, Mr. Hornberger left the practice of law to become director of programs at the Foundation for Economic Education. He has advanced freedom and free markets on talk-radio stations all across the country as well as on Fox News’ Neil Cavuto and Greta van Susteren shows and he appeared as a regular commentator on Judge Andrew Napolitano’s show Freedom Watch. View these interviews at LewRockwell.com and from Full Context. Send him email.