Adam Smith on Population Growth and Economic Development

Author(s): Joseph J. Spengler

Source: Population and Development Review, Vol. 2, No. 2 (Jun., 1976), pp. 167-180
Published by: Population Council
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 Adam Smithon
PopulationGrowth
and Economic
Development
JOSEPHJ.SPENGLER
"It was notthewisdomand policy,butthe
disorderand injusticeoftheEuropean
governments, whichpeopledand cultivated
America."
AdamSmith,WealthofNations,Bk.4,
Chap. 7

It is meet, in the bicentennialyear

of the publication of the Wealth of Nations, to examine Adam Smith's
treatmentof the economic development and population growth of so-
called backward countries.Not only was Smith the bridge between all
economic investigationthat came before his book appeared and what
came after.'He also was a principalmentorof Malthus,who wrote: "The
most importantargumentthat I shall adduce is certainlynot new. The
principleson whichit depends have been explainedin part by Hume, and
more at large by Dr. Adam Smith,"2and later: "The only authorsfrom
whose writings I had deduced the principle [of population], which
formedthe main argumentof the Essay, were Hume, Wallace, Adam
Smithand Dr. Price."3
Smithdid not draw a principleof populationfromsuch statementsof
his as that"everyspecies of animals naturallymultipliesin proportionto
the means of theirsubsistence,and no species can ever multiplybeyond
it" and that"the demand formen ... necessarilyregulatesthe production
of men" [79, 80],4 statementsthat may have suggested to Malthus the
idea of the Essay.5 This is not surprising,of course, because Smith was
treatingof distributionand wages [Bk. 1, chap. 8] whereas Malthus fol-
lowed the above quotation in his preface to the second edition of the
Essay with the observationthat "my object was to apply it to try the
truthof those speculationson the perfectibilityof man and society,which
at the time excited a considerableportionof the publick attention."6
167
168 ADAM SMITH ON POPULATION AND ECONOMIC DEVELOPMIENT

Malthuslike Smithmay be described as lookingupon man as respon-

sible forhis actionsand as a utilitymaximizersubject to the constraintof
institutionswhich Malthus stressed even more than did Smith. Smith
countedheavilyupon man's universal"desire of bettering"his "condition,
a desire which,though generallycalm and dispassionate,comes with us
fromthe womb, and never leaves us till we go into the grave" [324], a
desire optimallysatisfiablewhen "the obvious and simple systemof na-
tural libertyestablishesitself"as it does "of its own accord" when "all
systemsof preferenceor restraint"are "completelytaken away" [651].
Malthuswrote: "thatgreatvis medicatrixreipublicae,the desire of better-
ing our condition,and the fear of makingit worse,has been constantlyin
action, and has been constantlydirectingpeople into the rightroad, in
spite of all the declamationswhich tended to lead them aside."7
Nearlyall thatSmithhad to say on populationappeared in his Wealth
of Nations and the lecturenotes that anticipatedthisbook. His treatment
may be examined,of course,in termsof various facets of his work.8Here
I examine his views in termsof his discussion of adverse state interven-
tionismand its impact upon countriesless advanced than Britain.I shall
also touch upon several population-connectedissues Smith mentionsin
his Moral Sentimentswhereinhe treatsof behavioral propensities,ethical
theories,and so on. There he declares the "two great purposes of nature"
to be "the supportof the individual,and the propagationof the species."9
Therein also firstappeared Smith'suse of that seventeenth-century meta-
phor,the invisiblehand.

They [therich]are led by an invisiblehand to makenearlythesame dis-

tribution
of the necessariesof lifewhichwould have been made had the
earthbeen dividedintoequal portionsamongall itsinhabitants;
and thus,
withoutintendingit,without knowing ofthesociety,
it,advancetheinterest
andaffordmeanstothemultiplication ofthespecies.10

Determinantsof Economic Growth

Adam Smith'smajor concernin his Wealth of Nations was the determina-

tion and establishmentof the conditionsof economic growth.We shall
indicate the nature of these determinantsand the milieux withinwhich
theyflourishand growthproceeds, before turningto the role played by
population and to the adverse effectsof colonial and mercantilepolicy.

The Systemof Natural Liberty Prerequisiteto economic growthwas

the limitationof the sovereign'sduties to three "of great importance":
defense,administrationof justice, and the maintenanceof public works
that,though useful and essential,lay outside the interestand power of
JosephJ.Spengler 169

even a "small numberof individuals" [651]. In all otherareas, everyman

would be "leftperfectlyfreeto pursue his own interesthis own way," and
to compete with "any other man, or order of men" restrainedonly by
"the laws of justice."The sovereignwould be dischargedfrom"the duty
of superintendingthe industryof private people, and of directing it
towardsthe employmentsmost suitable to the interestof society"-a duty
"forthe proper performanceof which no human wisdom or knowledge
could ever be sufficient" [651]. No "statesman"or council or senate could
be trusted"to directprivatepeople in what mannertheyought to employ
theircapitals" [423]-no trustcould be put in "the skill of that insidious
and craftyanimal,vulgarlycalled a statesmanor politician,whose coun-
cils are directedby the momentaryfluctuationsof affairs"[435]. Afterall,
not even the "printeddebates of the House of Commons" were "always
the mostauthenticrecordsof truth"[697] and even of that monopolizing
creature of the state, "the regulated company" (or "corporation of
trades"), "perhaps the highest eulogy" "justly"bestowable upon it was
thatit was "merelyuseless" [693].
Corollaryto "theobvious and simplesystemof naturalliberty"[651]-
a systemof which one could more easily become conscious in an age
aware of natural orders and Newtonian systems,both well known to
Smith-was the responsibilityof the individual for his own well-being,
given rules of justice and fair play. "Every man is, no doubt, by nature,
firstand principallyrecommendedto his own care; and as he is fitterto
take care of himself,than of any other person, it is fitand rightthat it
should be so.""' Smithsharplylimitedthe responsibilityof individualsor
the state for alleviation of the misfortuneof the poor. To private and
public manifestationsof concernforthe welfare of the masses "Smith,in
Theoryof Moral Sentiments,set the limitprettyclearlywith his assertion
that'the peace and orderof societyis of more importancethan even the
reliefof the miserable.'"12 "Civil government,so far as it is institutedfor
the securityof property,is in realityinstitutedforthe defence of the rich
againstthe poor" [674].
Since men were essentiallyequal as Hume had asserted and Smith
assumed [15-16] and animatedby selflove, togetherwith commonsense
and a spiritof frugality[324],13 they could presumably,one may infer,
survivein the absence of poor laws, which violated "natural libertyand
justice" by denyingthe poor the rightto migratein search of a better
situation[140-141]. Smith,however,does not charge the poor-lawregime
with stimulatingfertility as Malthus was later to do, perhaps because he
was not seeking to constructan institutionalframeworkconducive to
what Malthus later called "moral restraint."Support of the needy is not
included among the functionsof Smith'sstate. Indeed, he opposed the
mercantilistprotectiveprinciple according to which the state was obli-
gated to protectthe weak in society and its industriesagainst those of
170 ADAM SMITH ON POPULATION AND ECONOMIC DEVELOPMENT

other states.'4 Smith did, however,believe that it would pay were the
state to encourage or insiston the general acquirementof reading,writ-
ing, and arithmeticby establishingparish schools [737-738]. For "the
commonpeople . . . have littletime to spare for education. Their parents
can scarce affordto maintainthem [i.e., the children]even in infancy.As
soon as they are able to work,they must apply to some trade by which
theycan earn theirsubsistence.That trade too is generallyso simple and
uniformas to give littleexerciseto the understanding;while, at the same
time,theirlabour is both so constantand so severe, that it leaves them
littleleisureand less inclinationto apply to, or even to thinkof any thing
else" [737].

DivisionofLabor We may assumethatunder"theobvious and simple

systemof naturalliberty,"two circumstanceswhereondepended the ratio
of a nation'sproduce to its people would tend to be optimal. These cir-
cumstanceswere (1) the quality of the labor force,"the skill, dexterity,
and judgmentwith which its labour is generallyapplied," and (2) the
dependencyratio,or "the proportionbetween the number of those who
are employedin usefullabour,and thatof those who are not so employed.
Whatever be the soil, climate, or extent of territoryof any particular
nation,the abundance or scantinessof its annual supply must, in that
particularsituation,depend upon thesetwo circumstances"[lvii]. Of these
two determinantsof the annual produce and consumptionof a people,
the firstwas the more importantas evidenced by the contrastbetween
"civilizedand thrivingnations"and "savage nationsof huntersand fishers"
[lviii]. Whence Smith stressedthe importanceof division of labor and
usefuleducation [3-22, 716-740], togetherwith "parsimony,"the immedi-
ate sourceof capital stock;foron the extentof thisstockand "the particu-
lar way in which it was employed"depended the "numberof useful and
productivelabourers"thatcould be set to work [lviii,318-322].
Of the two sources of man's technological and cultural progress-
sources that, despite "wretched"political pamphlets and other,less ill-
intentionedreports to the contrary,had been augmenting the annual
produce for several or more centuries [327, 393-395]-division of labor
was more importantthan education though in need of appropriate sup-
plementationby education [3, 733-740], even at public expense [734,
768]. For progressin division of labor was dynamic in that it did not
encountermany persistingconstraints.15"The greatest improvementin
the productivepowers of labour, and the greaterpart of the skill, dex-
terity,and judgmentwithwhichit is any where directed,or applied, seem
to have been the effectsof the divisionof labour" [3]. Not only did spe-
cializationincrease dexterityand save time; it also gave rise to invention
and encouraged self-interest and exploitationof the diversityand variety
of talentsfoundin a people [13-21].
This in turnimproved productiveequipment which, along with "a
JosephJ.Spengler 171

moreproperdivisionand distributionof employment,"augmentedoutput

per worker-meanwhilefacilitatingformationof the capital essential to
these improvements[311-327, 347]. In contrast,monopoly,as in colonial
trade, both curbed "revenue" and encouraged luxury,therebychecking
requisitecapital formation[114-116, 576-579].
Smith did not, of course, neglect constraintsupon the extensionof
division of labor. He mentionsthe state of agricultureand natural re-
sources togetherwith what Oblin called transferrelations,'6especially
transportfacilities[18, 147] and the availabilityof relativelycheap water
carriage [18-21, 147], and sufficiency of capital [86, 259]. Most general,
albeit important,was extentof the market.This was conditionedby pop-
ulationgrowthand concentrationin towns [17-18, Bk. 3, chaps. 3-4] and
in areas to which population was attractedby ease of subsistence [173-
174, 319-320], and by the actual or potentialavailabilityof easy transport
[18-21, 147, 393-394]. Of greatimportancealso were sources of increase
in demand [706]: the developmentof colonial markets[573-576] follow-
ing the discoveryof America and of a passage to the East Indies around
the Cape of Good Hope [590].
While Smithdescribed the importanceof towns,he treated agricul-
tural progress as the real prime mover of the economy, though in a
somewhatdifferent mannerthandid the Physiocratsand later on Malthus.
Unlike the Scottish-Frencheconomist Richard Cantillon, and the mer-
cantilisteconomistSir JamesSteuart,Malthus declared it dangerous for
a countryto become dependent on foreignsources for a significantpart
of its food supply since food importsmightnot be available in the long
run.While Smithattachedgreatimportanceto internationaltrade,he did
not deal withrisksassociated with a country'sbecomingdependent upon
importedfood, or with the relation of a country'ssize to its self-suffi-
ciencyor its degree of divisionof labor. Even thoughhe recognizedthat
"a great part" of what men strove for consisted in "superfluities"and
occasionally"vanityand distinction,"'17 he may have been influencedby
his apparentbelief thatmen can live on littleand hence reduce the level
of theirconsumptionif necessary,as when supplies are short [164-172,
665].

Abundance of Food Smithidentifiedabundance of food as the "prin-

ciple part of the riches of the world" and a main source of the value of
"othersortsof riches"[174, 164]. As "men,like all otheranimals,naturally
multiplyin proportionto the means of theirsubsistence,food is always,
more or less, in demand" [146]. "Countriesare populous, not in propor-
tion to the numberof people whom theirproduce can cloath and lodge,
but in proportionto that of those whom it can feed. When food is pro-
vided, it is easy to findthe necessarycloathingand lodging."Among"sav-
age and barbarousnations,"99 partsof theirannual labor "are frequently
no morethanenoughto providethemwithfood" [163]. "But when by the
172 ADAM SMITH ON POPULATION AND ECONOMIC DEVELOPMENT

improvementand cultivationof land the labour of one familycan provide

food fortwo, the labour of half the societybecomes sufficient
to provide
food forthe whole. The otherhalf,therefore,or at least the greaterpart
of them,can be employedin providingotherthings,or in satisfyingother
wantsand fanciesof mankind"[163].
Man's wants were potentiallyquite unlimited."The desire of food is
limitedin everyman by the narrowcapacity of the human stomach; but
the desireof the conveniencesand ornamentsof building,dress,equipage,
and household furniture,seems to have no limit or certain boundary"
[164]. Those with command of surplusfood could in effectexchange it
for otherproducts,among them the "amusement"of desires which "can-
not be satisfied,but seem to be altogetherendless,"thus augmentingthe
demand forlabor as well as for everysortof product [164].
In keepingwiththe importanceoffood,Smithbelieved thatopulence
must progressnaturallyalong a kind of optimal path [359-360], though
takingnote of the fact thaturban commerceand manufactureshad occa-
sioned "the improvementand cultivationof the country"[392].

According to thenaturalcourseof things,therefore, thegreaterpartof the

capitalofeverygrowingsocietyis, first, directedto agriculture,
afterwards
tomanufactures, and lastofall toforeigncommerce. Thisorderof thingsis
so verynatural,thatin everysocietythathad anyterritory, it has always,I
believe,beenin somedegreeobserved.Someoftheirlandsmusthave been
cultivatedbeforeany considerabletownscould be established,and some
sortofcoarseindustry ofthemanufacturing kindmusthavebeen carriedon
in thosetowns,beforetheycould well thinkof employingthemselves in
foreigncommerce.
But thoughthisnaturalorderof thingsmusthave takenplace in some
degreeineverysuchsociety, ithas,in all themodernstatesofEurope,been,
in manyrespects, entirelyinverted.The foreign commerceof someof their
citieshas introducedall theirfinermanufactures, orsuchas werefitfordis-
tantsale; and manufactures and foreigncommercetogether, have given
birthtotheprincipal improvements ofagriculture. The manners and customs
whichthe natureof theiroriginalgovernment introduced, and whichre-
mainedafterthatgovernment was greatlyaltered,necessarily forcedthem
intothisunnatural andretrograde order[360].

Smiththus anticipatedthe findingof modern economiststhat an under-

developed economyis unlikelyto continueto grow if its agriculturalbase
stagnates,and the relatedbeliefthatagriculturalexpansionis prerequisite
to economicexpansiongenerally.

Population Growth

Smith'stheoryof populationis corollaryto his theoryof wage determina-

tion and the mannerin which the circumstancesthat naturallydetermine
JosephJ.Spengler 173

the rate of wages are affectedby "the richesor poverty,by the advancing,
stationary,or declining state of society" [63]. Under the influenceof
Cantillon, Smith reasoned that, since only about two of four children
survive to manhood, "in order to bring up a family,the labour of the
husband and wife togethermust,even in the lowest species of common
labour, be able to earn somethingmore than what is preciselynecessary
for theirown maintenance;but in what proportion,"whetherhusbands
must earn "at least double their own maintenance"or otherwise,Smith
refusedto determine[68], perhapsbecause his faithin politicalarithmetic
was limited.However, should the revenue of potentialemployersexceed
what theyjudge sufficient for the maintenanceof theirfamilies,this sur-
plus, consistingas it does in funds destined for the payment of wages,
augments the demand for labor and pushes wages above the family
maintenancelevel [68-70, 83-85] and thisconduces to populationgrowth.
It was the thrivingstate of a country,its rate of economic develop-
mentand growth,not its richness,thatconduced to "multiplicationof the
species." "In Great Britain,and most other European countries,they are
not supposed to double in less than five hundred years. In the British
colonies in NorthAmerica,it has been found,that theydouble in twenty
or five-and-twenty years. Nor in the presenttimes is this increase prin-
cipally owing to the continualimportationof new inhabitants,but to the
great multiplicationof the species." There it was to the economic advan-
tage of parentsto have "a numerousfamilyof children"since, "instead of
being a burthen,"a large family"is a source of opulence and prosperity
to the parents.The labour of each child, before it can leave theirhouse,
is computedto be wortha hundred pounds clear gain to them. A young
widow with four or five children,who, among the middling or inferior
ranks of people in Europe, would have so little chance for a second
husband, is there frequentlycourted as a sort of fortune.The value of
children is the greatest of all encouragementsto marriage" in North
America,as well as in colonies generally.Yet there was "continualcom-
plaint of the scarcityof hands in North America" because "the funds
destinedformaintainingthemincrease,it seems,stillfasterthan theycan
findlabourersto employ" [70-71; also 532-533].
Smith divided countriesinto those that were stationary,those that
were progressive,and those that were declining. His criterion was
whetherthe fundsforthe paymentof wages were stationary,increasing,
or decreasing.If thesefundswere stationary,as in China, the competition
of laborers would reduce theirwages to "the lowest rate which is con-
sistentwith common humanity"[71]. Whence "marriageis encouraged
in China, not by the profitablenessof children,but by the liberty of
destroyingthem" [72]. Whereas funds destined for the maintenance of
labor just sufficedto maintainChina's population,in a decliningcountry
such as Bengal or the East Indies shortageof funds,by contributingto
"want,famine,and mortality,"reduced the lowest class as well as elimi-
174 ADAM SMITH ON POPULATION AND ECONOMIC DEVELOPMENT

nated some formermembersof higher classes who had descended into

the lowest class [72-73]. While poverty did not prevent births it was
unfavorableto the rearingof children:thus,forexample,among children
in the ScottishHighlands, few survived,or about a barrack of soldiers,
"veryfew" arrivedat the age of thirteen.In some places half died before
the age of fourand if not so early then no later than the age of nine or
ten [79]. "In civilized societyit is only among the inferiorranksof people
that the scantinessof subsistencecan set limitsto the furthermultiplica-
tion of the human species; and it can do so in no otherway than by de-
stroyinga great part of the childrenwhich theirfruitfulmarriagespro-
duce" [79]. While "luxuryin the fair sex" could weaken or destroy"the
powers of generation,"it was mainly great infant and child mortality,
especiallyamongthe poor, thatcounterbalancedfertility in excess of that
supportableby the fundsdestinedfor the paymentof labor [79]. While
overworkcould increase adult mortality[81-82], this effectwas operative
mainly in a progressivestate that was otherwise favorable to natural
increase.
Man was advised to avoid the "dull" stationarystate and the "melan-
choly" decliningstate and striveafter"the cheerfuland hearty"progres-
sive state."It is in the progressivestate,while the societyis advancing to
the furtheracquisition,ratherthan when it has acquired its full comple-
mentof riches,thatthe conditionof the labouringpoor, of the great body
of the people, seems to be the happiest and the most comfortable"[81].
It is in this state that "the liberal reward of labour, as it encourages
propagation,so it increasesthe industryof the commonpeople" [81]. So
it was in England and above all in NorthAmericathoughnot in Scotland
[81, 163, 533]. Even in England, however,as noted earlier,"the common
people" as "parentscan scarce affordto maintain"theirchildren"even in
infancy"[737].

Development

What could take place in what we would call developing countries,

Smith's line of argumentsuggests,turned on the degree to which the
systemof naturallibertyand free competitionwas enabled to flourishin
these countriesand superiorEuropean methods of productioncould be
imported compatibly with their resource structures.Under favorable
conditions,the funds destinedfor the employmentand supportof labor
could increase and with themboth average output and income.

Europe's Contributionto Colonies Smithheld that the colonial pol-

icy of no European countrywas in fullkeeping withthe systemof natural
libertyand free competition.These policies differedin degree, however,
JosephJ.Spengler 175

with Great Britain'spolicies least deviant. "Though the policy of Great

Britainwithregardto the trade of her colonies has been dictated by the
same mercantilespiritas that of othernations,it has, however,upon the
whole, been less illiberal and oppressive than that of any of them. In
everything,excepttheirforeigntrade,the libertyof the English colonists
to manage theirown affairstheirown way is complete" [551]. Although
this was not true of the Spanish, French, and Portuguese colonies, they
had managed to progress[534-540, 552-555]. However, while "the policy
of Europe" had contributedverylittleto the governmentand prosperity
of the colonies,Europe had made one contributionto the "firstestablish-
ment"and the "presentgrandeurof the colonies of America." Indeed, it
had "contributeda good deal. Magna virumMater! It bred and formed
the men who were capable of achievingsuch great actions,and of laying
the foundationof so greatan empire;and thereis no otherquarter of the
worldof which the policy is capable of forming,or has ever actually and
in fact formedsuch men. The colonies owe to . .. Europe the education
and great views of their active and enterprisingfounders;and some of
the greatestand most importantof them,so far as concernsthe internal
government,owe to it scarce anythingelse" [556].
Because mostof the Europeans who had moved to Europe's colonies
had settled in America the benefitsof Europe's contributionhad been
reaped almost entirelyby "the islands and continentof America." Only
there had "thrivingcolonies" been established. The "many considerable
settlementsboth upon the coast of Africa and in the East Indies" had
not become "thrivingcolonies."18 Furthermore,prior to colonization,
Africaand the East Indies were "much more populous" and not "so weak
and defencelessas the miserable and helpless Americans"who were dis-
placed by the European colonists [599]. The closest approximationin
Africaand the East Indies to the colonies in America consisted in "the
Dutch settlementsat the Cape of Good Hope and at Batavia." Not only
was the Cape of Good Hope inhabited by "a race of people almost as
barbarous and quite as incapable of defendingthemselvesas the natives
of America";it was also "the half-wayhouse . . . between Europe and the
East Indies," a supply center to all ships. Batavia, situated midway be-
tween Indostan and China and Japan,togetherwith nearbylands, played
a similarsupply as well as tradingrole. Because of their advantageous
situations,these two colonies had been able "to surmountall the obstacles
which the oppressive genius of an exclusive company may have occa-
sionallyopposed to theirgrowth.They have enabled Batavia to surmount
the additional disadvantage of perhaps the most unwholesomeclimate in
the world" [599-600]. The evils of monopoly thus proved less burden-
some than in Dutch settlementsin America [537, 596, 600]. In short,the
extremelyfavorablelocation of some colonies had enabled themto flour-
ish despite the constraintsto which theywere subject.
176 ADAM SMITH ON POPULATION AND ECONOMIC DEVELOPMENT

Colonies' Contributionsto Europe Europe had, of course, derived

variousadvantagesfromthe discoveryof Americaand fromthe discovery
of a passage to the East Indies by the Cape of Good Hope [557], among
them extensionof markets,importsfromthe colonies, stimulusto indus-
try; but the extent of these advantages was greatly restrictedby the
exclusivenessand monopolisticcharacterof Britishand European colonial
policy and the misdirectionof capital and trade. For these and other
reasons gains fromthe colonies were limited and costs to governments
exceeded the revenue derived fromthe colonies [Bk. 4, chap. 7]. Smith
in effectsumsup his criticismof the costs of the mercantilesystemby say-
ing thatit rejectedconsumptionas the end of industryand commerceand
made productionthe end, that is, productionto the especial advantage
of particularinterestsand the disadvantage of consumers as a group
[625-626]. The English and Dutch tradingcompaniesestablishedmonop-
olies and curtailed the supply of colonial products, buying cheap and
selling dear and sometimeseven reducing the native population, always
in search of short-term profitsat the expense of the permanentrevenue
of theirsovereigns[600-605].
These ill effectswere not the product of the characterof company
servantsbut of the "systemof government,"the situationin which they
were placed. "Exclusive companies" were "nuisances in every respect,"
"inconvenientto the countriesin which theyare established,and destruc-
tive to those which have the misfortuneto fall under theirgovernment"
[605-606].
Development of less advanced lands, eitheras colonies or indepen-
dent countries,was mostlikelyifmercantileconstraints, whetherof origin
in company or government,were avoided. Presumably Smith believed
that private entrepreneursin advanced countrieswould find opportuni-
ties in less developed lands promisingenough profitto warrant their
exploitationunder conditionsof adequate securityof their capital and
person. Smith would have required the beneficiariesof this securityto
reimbursethe metropoleforsupplyingit.19

EconomicPolicyand PopulationGrowth

Smithdid not put forwardan explicitpopulationpolicy as did Malthus or

economists describable as essentially disciples of Smith (e.g., David
Ricardo and J.S. Mill, among others). What Smithhad writtendid, how-
ever,help to shape the demographicideas of later economists.Moreover,
as we indicate below, Smith was concerned to show that uneconomic
practices and interferenceswith the systemof natural libertyand com-
petitiontended to restrictboth population and the level of living.
JosephJ.Spengler 177

SmithanticipatedRicardo and J. S. Mill in pointingto an eventual

stationary(if not declining) state. "In a countryfully peopled in pro-
portionto what eitherits territory could maintainor its stockemploy,the
competitionfor employmentwould necessarilybe so great as to redlice
the wages of labour to what was barely sufficient to keep up the number
of labourers,and, the countrybeing already fullypeopled, that number
could never be augmented" [94-95]. Smith did not, however, conceive
of this state as compatible with a comfortablestandard of living on the
part of the workingclasses.20He did not warn of the possibilityof over-
population,perhaps because he believed that the prudence and frugality
thatanimatedmany,if not most,individuals [324] would be operativein
the area of reproductionas well2' and that,in a societyof many ranks,
many would also be motivatedby fear of decline fromhigher to lower
levels at which discomfortand relatively high mortalitywere more
common[79-81].22
While agriculturalland, source of the produce whence came funds
destinedfor the supportof labor, was the ultimatelimitationalfactorin
Smith'ssystemas in those of Malthus and Ricardo, Smithfoundin a com-
binationof factorsthe operatinglimitin contemporarystationarystates.
These factors were largely man-made constraints-inthe form of un-
economic practices-to full development of a country'spotential. He
pointed to China which became stationarythough it had not "acquired
that full complementof riches which the nature of its soil and climate,
and its situationwith respect to other countries,allowed it to acquire"
[94]. China's laws and institutionshad checked its growth before its
"complementofriches"and its populationhad grownto "what,with other
laws and institutions, the nature of its soil, climate, and situationmight
admit of" [95]. Constraintson freedomof trade and insecurityof capital
were among the sources of prematurestationarity[95, 321-324], as were
obstructionsto the mobilityof labor, also found in Europe [Bk. I, chap.
10, 431], and obstacles to increase in the divisionof labor. Smithpointed
also to Bengal as a decliningcountrywhose growthhad been checked by
uneconomicpolicies [20, 73, 94, 97, 493-494], and he warned that corn
bountiesrestrainedpopulationgrowthin Europe [475].
Concerningagriculturalpolicy, Smithwas aware of the limitedpos-
sibilitiesfor division of labor in agriculture[6], of the importanceof
knowledge,experience,and capital in cultivation[127, 355], and of the
stabilityof investmentin agriculture[395-396]. He was alert also to the
likelyincrease in Europe's population capacity owing to the introduction
of the potato fromthe New World.23The potato produced threetimes as
much "solid nourishment"per acre as did wheat. Should the potato be-
come "the commonand favouritevegetable food of the people" compara-
ble to wheat and rice, "the same quantityof cultivatedland would main-
tain a much greaternumberof people, and the labourersbeing generally
178 ADAM SMITH ON POPULATION AND ECONOMIC DEVELOPMENT

fed withpotatoes,a greatersurpluswould remain,"the landlordwould be

advantaged,and "populationwould increase" [160]. The perishabilityof
potatoesremained"the chiefobstacle to theirever becomingin any great
country... the principalvegetable food of all the different ranks of the
people" [161].
While Smithdid not fullyappreciate the significanceof innovations
underwayin technologyand businessorganization,24 he did make it clear
that the economic futureof countries-and their capacity for additional
population-would long turn,at least until limits set by agricultureand
complementarynatural resourcesbecame effective,on whetherthey re-
moved all man-made constraintson the output of goods and services.25
For then the systemof natural liberty,togetherwith free competition,
would give fullpower to man's self-loveand desire to betterhis condition
and thusresultin as high a rate of growthof criticalagriculturalproduce
as was likelyin the currentstate of knowledge. Given these conditions
Smithexpected prudence respectingage at marriage and familyforma-
tion would increase,as would parsimonyand capital formation,and the
resultantincrease in fundsfor labor would, in turn,cause population to
grow.Once a stationarystate was achieved unencumberedby man-made
constraints,it may be that Smith expected prudence respectingage at
marriageand familyformationto increase. In any event,he did not call
forstatepolicy on population as such.
Despite his general optimism,Smithforesawthat even given favor-
able conditions,thesewere not likelyto prove permanent.For all empires
had proved "mortal"and England had been prosperoussince the reign
of Elizabeth, a period of 200 years,"as long as the course of human pros-
perityusually endures" [394, 781-782].

Notes

This paper is a byproductof a studyof 8. I cite the reprint,with notes by James

stationarypopulationsupportedby the Bonar (London: Macmillan & Company,
Ford and RockefellerFoundations. 1926). Smith is referred to also on pp.
282-284 in connection with saving and
1. William Letwin, The Originsof in chapter 16 in a critique of Smith's
ScientificEconomics(London: Methuen, "representingevery increase of the reve-
1963), p. 221; S. Hollander,The Eco- nue or stock of a society as an increase in
nomicsofAdamSmith(Toronto:Univer- the funds for the maintenance of labour"
sityofTorontoPress,1973); Haim Barkai, in view of the fact that England had "in-
"A formaloutlineof a Smithiangrowth creased in riches without a proportional
model,"QuarterlyJournalof Economics, increase in the funds for the maintenance
83 (August1969): 396-414. of labour" (p. 303).
2. T. R. Malthus,An Essay on the 3. Preface to Essay. 2d ed., 1803. See
Principleof Population,London,1798,p. An Essay on the Principleof Population,
JosephJ.Spengler 179

reprintedfromthe last edition,with in- Liberalism,1770-1817," Journal of the

troductionby G. T. Bettany (London: HistoryofIdeas 34 (1973): 116.
Ward,Lock, 1890), p. xxxv. 13. See also JamesBonar,Philosophy
4. Page, chapter,and book numbers and Political Economy (London: Allen
in brackets are used to identifyThe and Unwin,1927), pp. 162-163.
Wealth of Nations (1776) in the text; 14. Bland, cited in footnote12, pp.
references are to theModernLibraryEdi- 114-115.
tion,editedbyEdwin Cannan(New York:
RandomHouse, 1937). 15. A dynamicconditionremarked
by AllynA. Young a centuryand a half
5. See Malthus,cited in footnote2,
later.See A. A. Young,"Increasingreturns
p. 33n.
and economicprogress,"EconomicJour-
6. See theprefaceto the secondedi- nal, 38 (1929): 527-542; C. Clark,The
tionof theEssay,citedin footnote3; also Conditionsof EconomicProgress,3rd ed.
JamesBonar'snotesappended to the re- (London: Macmillan,1967), pp. ix,343-
printof the firsteditioncited in footnote 351. That alienationmightlimitdivision
2 above,p. xiv.Later,whenMalthuswas of laboris suggestedby F. J. Jones,"The
writingon economicas well as demogra- divisionof labor is limitedby the extent
phic issues,he had moreoccasionto deal of worker alienation," The American
withSmithas economistas well as writer Economist,19 (Fall 1975): 18-20.
on population.
and Inter-
16. B. Ohlin,International
7. Essay, Bettany,ed., cited in foot- regionalTrade (Cambridge,Mass.: Har-
note3, p. 539. vardUniversityPress,1933), p. 147.
8. I have toucheduponsomeofthese 17. MoralSentiments,
pp. 70-83. See
in "Adam Smithon population,"Popula-
also pp. 275-277.
tion Studies24 (November1970): 327-
388; "Adam Smith'stheoryof economic 18. That the East India Company,
growth,"SouthernEconomic Journal25 unfit"evento sharein thegovernment ofa
(April 1959): 397-415, and 26 (July greatempire,"was destinedto be stripped
1959): 1-12; and "AdamSmithon human of this power could not have surprised
capital,"to appear in the AmericanEco- Smith[709-712,771]. He did notattempt
nomic Review, Proceedingsof the 1976 to forecastthefutureof India undercom-
annualmeeting. pany or Britishrule as did J. B. Say (see
J.J.Spengler,"India'sprospectsaccording
9. AdamSmith,The TheoryofMoral
to Jean-BaptisteSay, 1924," Journalof
Sentiments(1759), Bohn Standard Li-
Asian Studies 28 [1969]: 595-600). He
braryEdition (London: HenryG. Bohn,
did, however, anticipate that Britain's
1853), p. 126; see also p. 110.
North Americancolonies, an expensive
10. Moral Sentiments, pp. 264-265. burdento Britain,mightbecomefreeand
JosephGlanvill(1636- providea situationin whichthesystemof
The anti-scholastic
80) pointedout that"Natureworksby an natural liberty presumablycould and
InvisibleHand in all things,"and Fon- would enterintonearlyfull flowerwhen
thisin termsof hidden freeof such constraints
tenelleillustrated as were stillim-
stage machineryin his Pluralite'des posed by Britain[898-900, also 538-549,
Mondes (1686). See Basil Willey, The 625-626].
Seventeenth CenturyBackground(Garden
19. Had Smithbeen a consultantto
City: Doubleday, 1953), pp. 188-189.
in his the World Bank,he would have favored
Smith had book
Fontenelle's library.
incentivesat the "people level" rather
11. The Theoryof MoralSentiments, than aid at the macro-economic level to
p. 119. See also pp. 117, 120, 125-126, state bureaucracieswhence stimulisup-
195, 249-250, 501. posedlymighttrickledown to the small
12. D. E. Bland, "Population and undertaker, as is stronglyargued in The
180 ADAM SMITH ON POPULATION AND ECONOMIC DEVELOPMENT
Assault on World Poverty:Problemsof
Rural Development, Education, and
Health, published for the World Bank
(Baltimore:JohnsHopkinsPress,1975).
20. For example,see LionelRobbins,
"On a certainambiguity in theconception
ofstationaryequilibrium," EconomicJour-
nal 40 (1930): 196-200.
21. See also Moral Sentiments, pp.
310-320.
22. Thisidea is morefullydeveloped
in MoralSentiments (e.g., pp. 70-90,112-
118,334, 348). The importance offearof
loss of rank had also been stressedby
Cantillon. See my "Richard Cantillon:
Firstof themodems,"Journalof Political
Economy62 (1954): 187-188.
23. On maizeand potatoes,see W. L.
Langer, "Americanfoods and Europe's
populationgrowth," Journalof Social His-
tory8 (Winter1974): 51-66.
24. As has been demonstrated by R.
Kobner,"Adam Smithand the Industrial
Revolution,"EconomicHistoryReview11
(1959): 381-391.
25. Barkai,citedin footnote
1,p. 412,
infersthat Smith believed "that capital
accumulationcould ensureeternal'prog-
ress'" despite limitationsof agricultural
origin.