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Quotations of the Day…

… are from the 1987 Liberty Fund edition of the Correspondence of Adam Smith.  The first (on page 286) is from a letter that Smith wrote on November 1, 1785 to François Alexandre Frédéric, le duc de La Rochefoucauld:

In a Country where Clamour always intimidates and faction often oppresses the Government, the regulations of Commerce are commonly dictated by those who are most interested to deceive and impose upon the Public.

The second (on pages 271-272) is from a letter that Smith wrote on December 15, 1783 to Lord Auckland, William Eden:

I shall only say at present that every extraordinary either encouragement or discouragement that is given to the trade of any country more than to that of another, may, I think, be demonstrated to be in every case a complete piece of dupery, by which the interest of the State and the nation is constantly sacrificed to that of some particular class of traders.

I am not expert enough in the history of intellectual thought to state conclusively that Adam Smith was the first great opponent of crony capitalism – but I know enough of Smith to state conclusively that he was indeed a great and eloquent enemy of such cronyism.

I believe that history shows that Smith was somewhat mistaken in this second quotation.  In a world in which the greed of interest groups and politicians combine with economic ignorance and the dangerous passions of nationalism to prevent governments from adopting policies of unilateral free trade, bilateral and (especially) multilateral trade agreements – such as under today’s WTO – often work to make trade freer than it would otherwise be.  That said, Smith understood well that commercial regulations – and especially those involving foreign trade – always in the end are instituted for narrow, venal reasons and never because they will make the domestic economy more competitive and oblige producers to be more attentive to the wishes of consumers.