This collection of essays provides a comprehensive view of the economic
thought of the Scottish Enlightenment. Organized as a chronological account of
the rise and progress of political economy in eighteenth-century Scotland, each
chapter discusses the way in which the moral and economic improvement of the
Scottish nation became a common concern.
Contributors not only explore the economic discourses of David Hume,
James Steuart and Adam Smith but also consider the neglected economic writ-
ings of Andrew Fletcher, Robert Wallace, Francis Hutcheson, William
Robertson, John Millar and Dugald Stewart. This book addresses the question
of how these economic writings interacted with moral, political and historical
arguments of the time and shows how contemporary issues related to the union
with England, natural jurisprudence, classical republicanism, and manners and
civilization all contained an economic dimension. Key chapters include:
• The ancient–modern controversy in the Scottish Enlightenment
• The ‘Scottish Triangle’ in the shaping of political economy: David Hume,
Sir James Steuart and Adam Smith
• Civilization and history in Lord Kames and William Robertson
• Adam Smith in Japan
This view of the origin of economic science in Britain is markedly different from
traditional accounts and will be of interest to economic, political and social
historians.
Tatsuya Sakamoto is Professor of the History of Social Thought in the
Faculty of Economics at Keio University, Japan. His publications on David
Hume and the Scottish Enlightenment include David Hume’s Civilized Society:
Industry, Knowledge and Liberty, which was awarded the Suntory Prize for Social
Sciences and Humanities (1996) and the Japan Academy Prize (2001).
Hideo Tanaka is Professor of the History of Social Thought in the Faculty of
Economics at Kyoto University, Japan. His numerous books and articles on the
Scottish Enlightenment thinkers include Studies in the Intellectual History of the Scottish
Enlightenment and Transformation in the Science of Society: From Natural Law to Social Science.

Edited by Willem Keizer, Bert Tieben and Rudy van Zijp
13 Ancient Economic Thought
Edited by B.B. Price
14 The Political Economy of Social Credit and Guild Socialism
Frances Hutchinson and Brian Burkitt
15 Economic Careers
Economics and Economists in Britain, 1930–1970
Keith Tribe
16 Understanding ‘Classical’ Economics
Studies in the Long-period Theory
Heinz Kurz and Neri Salvadori
17 History of Environmental Economic Thought
E. Kula
18 Economic Thought in Communist and Post-Communist Europe
Edited by Hans-Jürgen Wagener
19 Studies in the History of French Political Economy
From Bodin to Walras
Edited by Gilbert Faccarello
20 The Economics of John Rae
Edited by O.F. Hamouda, C. Lee and D. Mair
21 Keynes and the Neoclassical Synthesis
Einsteinian versus Newtonian Macroeconomics
Teodoro Dario Togati
22 Historical Perspectives on Macroeconomics
Sixty Years after the ‘General Theory’
Edited by Philippe Fontaine and Albert Jolink
23 The Founding of Institutional Economics
The Leisure Class and Sovereignty
Edited by Warren J. Samuels
24 Evolution of Austrian Economics

36 Economics as the Art of Thought
Essays in Memory of G.L.S. Shackle
Edited by Stephen F. Frowen and Peter Earl
37 The Decline of Ricardian Economics
Politics and Economics in Post-Ricardian theory
Susan Pashkoff
38 Piero Sraffa
His Life, Thought and Cultural Heritage
Alessandro Roncaglia
39 Equilibrium and Disequilibrium in Economic Theory
The Marshall–Walras Divide
Edited by Michel de Vroey
40 The German Historical School
The Historical and Ethical Approach to Economics
Edited by Yuichi Shionoya
41 Reflections on the Classical Canon in Economics
Essays in Honor of Samuel Hollander
Edited by Sandra Peart and Evelyn Forget
42 Piero Sraffa’s Political Economy
A Centenary Estimate
Edited by Terenzio Cozzi and Roberto Marchionatti
43 The Contribution of Joseph Schumpeter to Economics
Economic Development and Institutional Change
Richard Arena and Cecile Dangel
44 On the Development of Long-run Neo-classical Theory
Tom Kompas
45 F.A. Hayek as a Political Economist
Economic Analysis and Values
Edited by Jack Birner, Pierre Garrouste and Thierry Aimar
46 Pareto, Economics and Society

56 The Rise of Political Economy in the Scottish Enlightenment
Edited by Tatsuya Sakamoto and Hideo Tanaka
57 Classics and Moderns in Economics, volume 1
Essays on Nineteenth- and Twentieth-century Economic Thought
Peter Groenewegen
58 Classics and Moderns in Economics, volume 2
Essays on Nineteenth- and Twentieth-century Economic Thought
Peter Groenewegen
Edited by Tatsuya Sakamoto
and Hideo Tanaka
The Rise of Political
Economy in the Scottish
Enlightenment
First published 2003
by Routledge
11 New Fetter Lane, London EC4P 4EE
Simultaneously published in the USA and Canada
by Routledge
29 West 35th Street, New York, NY 10001
Routledge is an imprint of the Taylor & Francis Group
© 2003 editorial matter and selection, Tatsuya Sakamoto and Hideo
Tanaka; individual chapters, the authors
All rights reserved. No part of this book may be reprinted or
reproduced or utilised in any form or by any electronic,
mechanical, or other means, now known or hereafter
invented, including photocopying and recording, or in any
information storage or retrieval system, without permission in
writing from the publishers.
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library

4 Robert Wallace and the Irish and Scottish Enlightenment 55
YOSHIO NAGAI
5 The ancient–modern controversy in the Scottish 69
Enlightenment
YASUO AMOH
6 Hume’s political economy as a system of manners 86
TATSUYA SAKAMOTO
Contents
7 The ‘Scottish Triangle’ in the shaping of political economy: 103
David Hume, Sir James Steuart, and Adam Smith
IKUO OMORI
8 Adam Smith’s politics of taxation: reconsideration of the 119
image of ‘Civilized Society’ in the Wealth of Nations
KEIICHI WATANABE
9 The main themes and structure of Moral Philosophy 134
and the formation of Political Economy in Adam Smith
SHOJI TANAKA
10 Civilization and history in Lord Kames and 150
William Robertson
KIMIHIRO KOYANAGI
11 Liberty and Equality: Liberal Democratic Ideas 163
in John Millar
HIDEO TANAKA
12 Dugald Stewart at the final stage of the Scottish 179
Enlightenment: natural jurisprudence, political economy
and the science of politics
HISASHI SHINOHARA
13 Adam Smith in Japan 194
HIROSHI MIZUTA
Index 209

Vice President of the International Society for Utilitarian Studies.
Contributors

On behalf of all the contributors to this volume we warmly thank the Japanese
Society for the History of Economic Thought, and its President Hiroshi
Takemoto, for the moral and financial support that enabled the project to
publish a book on the economic thought of eighteenth-century Scotland to
become a reality. We also appreciate useful advice and encouragement from
Professor Yuichi Shionoya at the outset of the publishing project.
Tatsuya Sakamoto and Hideo Tanaka
July, 2002
Acknowledgments

This book seeks to provide a comprehensive view of the rise and progress of
political economy in eighteenth-century Scotland with a special emphasis
upon its internal connections with the Scottish Enlightenment. Apart from
numerous works written concerning eighteenth-century Scottish economists
or from equally numerous histories of economic thought including accounts
of Scottish thinkers of the same period, only a few works have been written
on the same subject as the present volume’s. A work of distinguished schol-
arly standard which easily comes to mind is Wealth and Virtue: The Shaping of
Political Economy in the Scottish Enlightenment edited by I. Hont and M. Ignatieff
(Cambridge University Press, 1983). The book gave rise to a number of
substantial academic debates, which continue to be live and unresolved
issues. The academic excellence of the book has guaranteed its land-mark
status in the literature which remains unchallenged to this day. However, the
specific subject matter itself, the ambiguous relationships between wealth and
virtue in the shaping of political economy in the Scottish Enlightenment, seems to
have curiously faded away from the centre of Scottish Enlightenment studies
in the West over the past two decades. We venture to assert that the original

development. Viewed in this light, the series of influential works directed to this
very stage by Terence Hutchison, Andrew Skinner and Donald Winch ever
since the 1960s and in particular in the 1980s naturally emerge as rather excep-
tional achievements quite apart from how distinguished and indispensable they
are. It is true that the recent upsurge since the late 1990s in the sheer amount
and quality of English-language studies on James Steuart, David Hume and
Adam Smith is genuinely impressive, and almost overwhelming in the case of
the last. Nevertheless very few of them are seriously concerned with the ques-
tion of the rise and progress of political economy in the Scottish Enlightenment.
It is likely that the implicitly assumed scientific autonomy of economics has
prevented it from being included within the more general issues of morals and
politics of the Scottish Enlightenment.
Be that as it may, it is certainly difficult to avoid the impression that very little
more than a scattered and occasional attention has been paid by historians of
economic thought in the West to our subject; the interaction between the
general historical forces that formed the Scottish Enlightenment and the disci-
plinary development of political economy as a science. The present volume is
intended to fill this curious gap in the Western literature by collecting papers
written entirely by historians of economic and social thought. We define the
main objective of the book as a chronological examination of the way in which
economic discourses were manifesting themselves in a variety of forms and
styles in eighteenth-century Scotland. The term ‘economic’ here used will cover
the widest possible areas bordering upon history, morals and politics. Our efforts
to make the choice of thinkers as extensive as possible are realized in the
contents starting from Andrew Fletcher and ending with Dugald Stewart. Past
books of similar kind were restricted in their historical scope because they rested
upon the traditional notion that the history of economics ought naturally to be
divided by the change of perspective from pre-Smithian mercantilism to the
emergence of the Wealth of Nations.
By contrast we present detailed discussions of as many as twelve thinkers

cause a corruption of manners and conflicts among nations, he proposed a
national economy based on agriculture and a federal government on republican
principles.
Gentaro Seki in chapter 2 traces the aftermath of the Union debate as a
consistent series of arguments geared to propose a most realistic policy prescrip-
tion for Scotland’s economic prosperity. Twenty-three years after the Union, Sir
John Clerk was disappointed to see that the Scottish economy was still underde-
veloped because of an economic inequality between Scotland and England. P.
Lindsay’s work of 1733 tried to explain these particular ‘circumstances of busi-
ness’ theoretically. T. Melvill criticized Lindsay for dismissing the possibility of
improving woollen manufacturing, which was seen as the English staple. In 1744
D. Forbes argued that Scottish landlords ought to take the lead in transforming
their people’s manners and customs. Though the debates remained unsolved
even in 1740s, Seki holds that the policy debate’s substantial contribution
toward Scottish economic development is clear.
Toshiaki Ogose in chapter 3 examines Francis Hutcheson’s status as the
‘father’ of the Scottish Enlightenment chiefly, but not exclusively, from an
economic point of view. Hutcheson accepted Shaftesbury’s view that human
beings were naturally endowed with the ‘moral sense’ to establish that human
Editor’s Introduction 3
beings and the universe are made to harmonize with each other as divine crea-
tures. The same view characterizes his jurisprudence in the sense that human
right is to be construed as part of man’s duty of promoting the public good. For
instance, Hutcheson argued for the quasi-absolute nature of private property by
making it ultimately subject to limitation by the standard of public interest. In
the same vein, he showed favour for the agrarian law and severely criticized the
Scottish entail. Hutcheson’s philosophy is based on his clear awareness of the
vital importance of virtuous citizens’ morality for economic development and of
its practical decline in his own times. His urgent demand for the central role of
government to promote morals in society was one with his desperate hope for

of specific analyses in his economic discourse. In particular, it will be demon-
strated that the long-debated ambiguity or tension between Hume’s so-called
quantity theory of money and his inflationist view can be resolved by an inter-
pretative strategy focusing upon the ‘manners’.
Ikuo Omori in chapter 7 provides a comprehensive picture of the so - called
4 Tatsuya Sakamoto and Hideo Tanaka
‘Scottish Triangle’ of political economy comprised by Hume, Steuart and Smith.
Steuart proposed a new science of political economy in order to digest and over-
come Hume’s idea of free economic society. Smith wrote the Wealth of Nations
with a strong but carefully covered intention of attacking Steuart’s political
economy. The three did, nevertheless, face the common unsettled issue
concerning the conflict between Scottish economic development and their
perception of its resulting moral corruption of the people, which was a target of
fierce criticism by civic humanists. In conclusion, the author situates Steuart and
Smith not as a relationship of theoretical progress, but as constituting the same
camp of modified economic liberalism that was inspired by largely similar histor-
ical views but entailing sharply differing policy proposals.
Chapter 8 by Keiichi Watanabe re-examines Adam Smith’s view of the
economic structure of civilized society as seen in his theory of taxation. Smith
developed a critical analysis of the taxation system under English mercantilism
and suggested his original proposals for reform. His view of excise as being
imposed for reducing land tax but ultimately resulting in a tax on the rent of land,
was unique and sensational in the historical context of his days. Smith proposed a
reform plan for the fixed-rate land-tax introduced after the Glorious Revolution
(1688) and demanded a higher land-tax be paid by the landed classes. Watanabe
draws from this Smith’s affirmative view of social and economic hegemony of the
land-owning classes and seeks to revise the common view of Smith as a champion
of industrial capitalism. By so doing he attempts to grasp the idea of Smith as a
major proponent of ‘agrarian capitalism’, which was closely similar to but not
necessarily the same as the classical republican version of agrarianism.

Scotland in 1707.
Differently from Robertson, John Millar has been recognized less as a historian
per se than as a historically minded theoretician. This might have stemmed from
the fact that his Origin of the Distinction of Ranks, rather than the posthumously
completed Historical View of the English Government, has long been considered his
seminal work. Hideo Tanaka, in chapter 11, seeks to redress the imbalance by a
close reading of the latter book. Tanaka reveals an original character of Millar’s
constitutional history by examining Millar’s arguments of the growth of English
liberty extending from the Anglo-Saxon era to the Revolution of 1688. While
Millar placed a particular emphasis upon the vital role of commerce in realizing
the principle of equality, Tanaka points out that in this Humean exercise Millar
revived the Hutchesonian legacy of political radicalism in a way suggesting an
intellectual development from the Scottish Enlightenment to Utilitarian radi-
calism.
Hisashi Shinohara in chapter 12 treats Dugald Stewart as a so-far neglected
but infinitely significant figure at the close of the Scottish Enlightenment. This
chapter attempts to sketch the overall character and content of his economic
system by investigating the Dissertation published in 1816. Stewart systematized
Thomas Reid’s abstruse philosophy in a way more approachable for the
succeeding generation. At the same time he succeeded Adam Smith’s political
economy. Stewart had an ambition to search for the universal principles of justice
and expediency, and this meant an indirect criticism of Smith’s system of natural
justice that Smith assumed to be logically separable from the principles of politics.
Stewart believed in the need for the full realization of the moral and intellectual
powers of the human mind attainable only through the improvement and accom-
plishment of political society. Shinohara suggests not only that this belief was
firmly rooted in the Scottish tradition of moral philosophy but also that as such it
pointed toward a possible utilitarian reconstruction of Smith’s system.
The book closes by a chapter by Hiroshi Mizuta. He explains the reason, both
historical and rational, why Japanese scholars have devoted such tremendous

modern Japanese and eighteenth-century Scottish intellectuals’ profound
concerns are found to converge on the same issues and concerns in this unex-
pected manner. This might explain the aforementioned fact that, differently from
the West, Japan is a country where issues related to the Wealth and Virtue and
ensuing debates in their various aspects have most seriously been studied by histo-
rians of economic thought. The editors and contributors are all active members
of the Japanese Society for the History of Economic Thought at the time of
writing. In one profound sense, they represent the country’s long and unique
tradition of the unparalleled seriousness with which study in the history of the
western economic thought in general has been consistently pursued.
Tatsuya Sakamoto and Hideo Tanaka
Editor’s Introduction 7
Andrew Fletcher (1653–1716) published several discourses over a period of
seven years from 1697 to 1704. Those discourses whose authorship is securely
attributed to him at present are A Discourse of Government with Relation to Militias
(1697, the revised edition in 1698a Militias hereafter), Two Discourses Concerning the
Affairs of Scotland (1698b Two Discourses), A Discourse Concerning the Affairs of Spain
(1698c Spain), and An Account of a Conversation for the Common Good of Mankind
(1704; Account), excepting his several speeches and letters (Robertson 1997: xxxv).
John Robertson suggests that all of Fletcher’s writings had ‘a definite intellectual
identity’ on civic principles. But, even so, it seems that a comparison of his writ-
ings in the 1690s and the Account shows some development in his understanding
of commercial civilization and trade. Certainly, in the Militias, Fletcher argued
about the negative effects of commercial civilization such as the replacement of
the frugal and military way of living with a luxurious one and the introduction of
a standing army and tyranny. Despite this, all he proposed was the establishment
of a new militia system in Scotland and England. The aims of the Two Discourses
were to seek government support for Scotland’s Darien scheme, and to propose
some social reforms in Scotland. His proposals were, however, based on his
understanding of Scotland’s ‘backwardness’ in trade and agriculture, not on his

England’s political arithmetic. His critical study of it gave him a deeper under-
standing of commercial civilization and the theory of the concentration. But it
did not mean that he jettisoned such issues as ‘the freedom of government and
militia’, ‘social reforms for Scotland’s economic development’, ‘limitations’, and
‘reason of state’, as argued in his writings and speeches preceding the Account.
Rather, the deeper understanding made it possible for him to reorganize those
issues and give them each a place in his plan for peace among nations.
In this chapter, through examining how Fletcher could obtain a deeper
understanding of commercial civilization and what place the above-mentioned
issues were given in his plan, I will attempt to shed a light on the characteristic
features of his criticism of the civilization and his plan for a European constitu-
tion. In doing so, I shall begin with a brief discussion of the militia issue.
The Freedom of government and the militia system
Since the union of crowns of 1603 the Parliament of Scotland had always been
subordinated to the interests of England. Some of those who thought that the
subordination created Scotland’s economic crisis at the turn of the eighteenth
century emphasized Scotland’s long history of ‘freedom and independence’, and
attempted to put limitations on the crown and win the Parliament’s indepen-
dence from England. Even so, they disagreed on how the ‘freedom of
government’ of Scotland had been preserved in the past, or should be so in the
future. George Ridpath (1660?–1726) defended the ‘freedom’ in the ancient
constitution with a Fergus myth and a political maxim. According to Ridpath,
the Fergus myth proved that Scotland’s monarchy had been elective. The maxim
was as follows, by which he claimed that dominion ought to follow property:
the Estates of Scotland … being the hereditary proprietors of the
country before
ever we had anything like a King, it followed by necessary consequence,
that your ancestors were our hereditary sovereigns and legislators, and our
Kings had their power and authority from them, as an office of trust, but
not of property.

elective or hereditary, it was of no importance to him. Whoever the prince or
king might be, whether a protestant or a catholic, wise or not, if he could get
control of a standing army, the ‘freedom of government’ would be lost. Fletcher
always represented the prince or king as the personification of the ‘reason of
state’ aspiring to increase his rule. As John Robertson suggests, the concept of
‘reason of state’ played a crucial role in Fletcher’s argument (Robertson 1997:
xxiii–xxvi). The nature itself of the ‘reason of state’ defined his line of argument
to defend the freedom of government against it. According to Fletcher, ‘reason
of state’ could take any action or measure, without regard for rights such as
property rights or the right of succession, if it were necessary for the increase of
its power. He described this nature of the ‘reason of state’ in the Spain. He,
therefore, did not think any argument based on right effective against the ‘reason
of state’. Sir George Mackenzie(1636–91) argued in his Institutions of the Law of
Scotland (1684) that the location of sovereignty depended on who the original
proprietors of the land were (Mackenzie 1722: 281). Ridpath also developed the
same argument, though his conclusion was the opposite of Mackenzie’s.
According to Fletcher, the argument should be left ‘to the Doctor of laws’
(Fletcher 1698c: 99). As ‘the State’s first Law of Motion’ was based on necessity,
rather than on right, Fletcher gave preference to the argument based on neces-
10 Shigemi Muramatsu