He is less absolute in his doctrine of Governmental noninterference when he comes to consider in his fifth book the"expenses of the sovereign or the commonwealth."He recognises as coming within the functions of the state the erectionand maintenance of those public institutions and public works which,though advantageous to the society,could not repay,and therefore must not be thrown upon,individuals or small groups of individuals.He remarks in a just historical spirit thatthe performance of these functions requires very different degrees of expense in the different periods of society.Besides theinstitutions and works intended for public defence and the administration of justice,and those required for facilitating thecommerce of the society,he considers those necessary for promoting the instruction of the people.He thinks the public atlarge may with propriety not only facilitate and encourage,but even impose upon almost the whole body of the people,theacquisition in youth of the most essential elements of education.
He suggests as the mode of enforcing this obligation therequirement of submission to a test examination "before any one could obtain the ******* in any corporation,or be allowedto set up a trade in any village or town corporate."Similarly,he is of opinion that some probation,even in the higher andmore difficult sciences,might be enforced as a condition of exercising any liberal profession,or becoming a candidate forany honourable office.
The expense of the institutions for religious instruction as well as for general education,he holds,may without injustice be defrayed out of the funds of the whole society,though he would apparently prefer that it should bemet by ihe voluntary contributions of those who think they have occasion for such education or instruction.There is muchthat is sound,as well as interesting and suggestive,in this fifth book,in which he shows a political instinct and a breadth ofview by which he is favourably contrasted with the Manchester school.But,if we may say so without disrespect to so greata man,there are traces in it of what is now called Philistinism --a low view of the ends of art and poetry --which aroseperhaps in part from personal defect;and a certain deadness to the high aims and perennial importance of religion,whichwas no doubt chiefly due to the influences of an age when the critical spirit was doing an indispensable work,in theperformance of which thr transitory was apt to be confounded with the permanent.
For the sake of considering as a whole Smith's view of the functions of government,we have postponed noticing histreatment of the physiocratic system,which occupies a part of his fourth book.He had formed the acquaintance of Quesnay,Turgot,and other members of their group during his sojourn in France in 1765,and would,as he told Dugald Stewart,hadthe patriarch of the school lived long enough,have dedicated to him the Wealth of Nations .He declares that,with all itsimperfections,the system of Quesnay is "perhaps the nearest approximation to the truth that had yet appeared on the subjectof political economy."Yet he seems not to be adequately conscious of the degree of coincidence between his own doctrinesand those of the physiocrats.Dupont de Nemours complained that he did not do Quesnay the justice of recognising him ashis spiritual father.it is,however,alleged,on the other side,that already in 1753Smith had been teaching as professor abody of economic doctrine the same in its broad features with that contained in his great work.This is indeed said byStewart;and,though he gives no evidence of it,it is possibly quite true;if so,Smith's doctrinal descent must be traced ratherfrom Hume than from the French school.The principal error of this school,that,namely,of representing agricultural labouras alone productive,he refutes in the fourth book,though in a manner which has not always been considered effective.
Traces of the influence of their mistaken view appear to remain in his own work,as,for example,his assertion that inagriculture nature labours along with man,whilst in manufactures nature does nothing,man does all;and his distinctionbetween productive and unproductive labour,which was doubtless suggested by their use of those epithets,and which isscarcely consistent with his recognition of what is now called "personal capital."To the same source M'Culloch and othersrefer the origin of Smith's view,which they represent as an obvious error,that "individual advantage is not always a true testof the public advantageousness of different employments."But that view is really quite correct,as Professor Nicholson hasclearly shown.(30)That the form taken by the use of capital,profits being given,is not indifferent to the working class as awhole even Ricardo admitted;and Cairnes,as we shall see,built or this consideration some of the most far-reachingconclusions in his Leading Principles .
On Smiths theory of taxation in his fifth book it is not necessary for us to dwell.The well-known canons which he laysdown as prescribing the essentials of a good system have been generally accepted.They have lately been severely criticisedby Professor Walker--of whose objections,however,there is only one which appears to be well founded.Smith seems tofavour the view that the contribution of the individual to public expenses may be regarded as payment for the servicesrendered to him by the state,and ought to be proportional to the extent of those services.If he held this opinion,whichsome of his expressions imply,he was certainly so far wrong in principle.
