Luxury and Economic Development: David Hume and Adam Smith

I INTRODUCTION

Hume approved of luxury.1 ‘To imagine that the gratifying of any sense … is ofitself a vice, can never enter into a head that is not disordered by the frenzies ofenthusiasm’ (EMPL, p. 268).2 A growing taste for luxury consumption, togetherwith a growing range of manufactured goods catering to it, played a central roleboth in his explanation of economic development in Britain over the precedingcenturies and in his parallel account of the decline in the power of the feudalnobility and the emergence of a unified, law-governed state.

Adam Smith took over Hume’s claim that the decline in the power of thefeudal nobility had been caused by a growing taste for luxury consumption. He

© Scottish Economic Society 1998 78

*University of Bristol

Scottish Journal of Political Economy, Vol. 45, No. 1, February 1998© Scottish Economic Society 1998. Published by Blackwell Publishers Ltd, 108 Cowley Road, Oxford OX4 1JF, UK and350 Main Street, Malden, MA 02148, USA

L U X U R Y A N D E C O N O M I C D E V E L O P M E N T :D A V I D H U M E A N D A D A M S M I T H

Anthony Brewer*

ABSTRACT

David Hume thought that a taste for luxury was desirable, because it promotedeconomic and political development (it brought down feudalism, among otherthings). Adam Smith’s early works follow a very similar line though, unlikeHume, he saw a taste for luxury as rather contemptible despite its desirableeffects. In the Wealth of Nations , however, saving is the key to growth,suggesting that spending on luxury harms growth, but Smith wanted to hang onto the arguments he had taken from Hume. This may explain a number ofoddities and inconsistencies in the Wealth of Nations.

1 The word ‘luxury’ covers a range of meanings. Smith, for example, sometimes used it tomean anything that was not strictly necessary to life or to minimal social standards of decency,but also used a tripartite division: necessities, conveniencies and luxuries. Both Hume andSmith used other phrases to point to similar ideas – Hume, for example, wrote about‘refinement’ of tastes. For a general discussion of the idea of luxury, see Berry (1994). For awider discussion of the intellectual, moral and political context see Lubbock (1995) andWinch (1996).

2 References to Hume are abbreviated as EMPL, for (1985) and History for (1983).References to Smith are in the standard form established by the Glasgow edition, withabbreviations WN, TMS, LJ and ED for (1976a), (1976b), (1978a) and (1978b) respectively.Emphasis in all quoted extracts is in the original.

presented the case at length in his Lectures on Jurisprudence and in the Wealthof Nations, adapting it to explain a variety of related phenomena such as thedecline in the secular power of the clergy, the increase in the national debt,changes in military organization, and so on.3 By the time he wrote the Wealth ofNations, however, his account of economic growth was quite different fromHume’s. Unlike Hume, he saw saving and capital accumulation as the maincause of economic growth, which cast luxury spending in a quite different light.Hume argued that agriculture would not develop unless attractive manufacturedgoods were available for farmers and landlords to buy, and thus that develop-ment in Britain had been started by imports of luxury goods from the continent.Smith, by contrast, argued that agricultural development should come first, andthat a bias towards urban manufactures had held back development in Europe. Ishall argue that more of Hume remains in Smith’s analysis than appears at firstsight, despite the new emphasis on capital accumulation, and that some of theoddities in the Wealth of Nations, for example in Smith’s treatment ofunproductive labour, arise from his attempt to incorporate ideas taken fromHume in this new and different framework.

Hume’s arguments are straightforward, and can be dealt with quite briefly.4

The main focus here will be on what Smith took from Hume and how he used it.After a brief discussion of the context and of Hume’s account of economicdevelopment, I shall set out the analysis of the impact of luxury consumption onthe medieval political system which Hume developed and which Smith tookover from him. I shall then discuss the problems which Smith faced inreconciling Hume’s account of political change with his own, different, accountof economic development, taking the Lectures on Jurisprudence and the Wealthof Nations separately since Smith’s ideas developed significantly between thetwo. Finally, I shall comment briefly on the light which the argumentsdeveloped here throw on Smith’s treatment of productive and unproductivelabour.

II THE CONTEXT: ECONOMIC AND POLITICAL CHANGE IN EUROPE

Both writers recognized that Northern Europe, and particularly Britain, hadchanged. Europe in, say, 1000 AD had been predominantly rural, agrarian andpoor, with little trade or urban industry and only a few unsophisticated locally-produced manufactures. By the eighteenth century it was a ‘commercial’ societywith a great variety of urban manufactures and widespread trade. Hume andSmith used a variety of effectively synonymous terms to describe what wouldnow be called ‘economic development’.5 Thus Hume talked of a nation that‘abounds in manufactures and mechanic arts’ (EMPL, p. 261), ‘the increase of

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© Scottish Economic Society 1998

3 For Smith, as for Hume, the analysis of the decline of feudalism was part of a widerconcern with the relation between economic and political change. See Winch (1978).

4 For a fuller discussion of Hume’s account of economic development, see Brewer (1997)and Skinner (1993).

5 The word ‘development’ does not occur at all in TMS, WN, or in the (large) sample ofHume’s work which I have in electronically searchable form.

art and industry’ (p. 273), ‘times of industry and refinement’, as opposed to‘rude uncultivated ages’ (p. 291), and Smith wrote of the ‘progress of opulence’(WN Pt. III), of ‘improvement both in arts and commerce.’ (e.g. LJ (B) 47), ofincreasing ‘wealth and luxury’ (e.g. WN I.xi.1.8), and so on. Note that all ofthese refer to a set of changes which have a qualitative as well as a quantitativedimension. There is undoubtedly an implication that the scale of economicactivity had increased and, in particular, that manufacturing and trade hadexpanded, but it is equally clear that what is under discussion is a far reachingchange in the way people earned their living and in the structure of theeconomy.

In the Wealth of Nations, Smith introduced a more narrowly quantitativeconception of economic change, which is not found in the earlier Lectures onJurisprudence or in Hume, repeatedly using the phrase ‘the annual produce ofthe land and labour’ of a country. The annual produce of England, for example‘is certainty much greater than it was, a little more than a century ago, at therestoration of Charles II’ (WN II.iii.33) and so on. This is a much more modernconception, implicitly ignoring changes in the composition of output to focus onchanges in its magnitude.

Economic change had been matched by political and social change, whichHume and Smith also sought to explain. The medieval world was hierarchical,tied together by ties of personal dependency. The majority of the populationwere unfree, and the administration of justice was in the hands of feudal lordswho could not be expected to act impartially. In the eighteenth century therewas still great inequality but there was a large and growing middle class andthe law was enforced with a reasonable degree of impartiality. Hume calledthis transformation a ‘secret revolution’ (History IV, p. 385), while Smithcalled it a ‘revolution of the greatest importance to the public happiness’ (WNIII.iv.4.17).

III LUXURY AND ECONOMIC DEVELOPMENT: HUME

As noted above, Hume identified ‘luxury’ with the invention and production ofmanufactured goods designed for the ‘gratification of the senses’, and hencewith ‘art and industry’.

In times when industry and the arts flourish, men are kept in perpetualoccupation…. The spirit of the age affects all the arts; and the minds of men,being once roused from their lethargy … carry improvements into every artand science. Profound ignorance is totally banished (EMPL, pp. 270–1).

When luxuries are not available, or not wanted, people produce no more thanenough to live on. ‘A habit of indolence naturally prevails. The greater part ofthe land lies uncultivated’ (p. 261).

Hume’s essays spell out the story, and his History of England applies it. Inearly times, Britain was poor because the ‘mechanic arts’ were little developed,and there were few manufactured goods for people to buy. There was, therefore,no incentive for farmers to produce a surplus to trade. Of the ancient Britons,

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Hume wrote that ‘as they were ignorant of all the refinements of life, their wantsand their possessions were equally scanty and limited’ (History I, p. 5). Underthe Anglo-Saxons, things were much the same. In the middle ages, farmers werecompelled to produce some surplus for their overlords, but they did soinefficiently, because compulsion is an ineffective way of making people work.The feudal lords had little use for a large surplus, anyway, since there wasnothing to buy with it. Instead, they maintained large numbers of idle retainersand other hangers-on.

The key to development was the introduction of attractive consumer goodswhich gave farmers an incentive to produce more and sell the surplus and gavelandowners an incentive to make their lands more productive.

Every thing in the world is purchased by labour; and our passions are the onlycause of labour. When a nation abounds in manufactures and mechanic arts,the proprietors of land, as well as the farmers, study agriculture as a science,and redouble their industry and attention (EMPL, p. 261).

Progress was slow. Even by Tudor times, manufacturing was still very limited,but new demands for things like pocket watches, silk hose, coaches, and the likewere starting to appear (History IV, p. 380). From the seventeenth centuryonwards, the development of new products and general expansion of theeconomy had been almost continuous (e.g. VI, pp. 148, 537–8). In Hume’sstory, then, agriculture had been (and in many places still was) under-perform-ing because of ‘indolence’, caused by a lack of attractive manufactures. A tastefor ‘luxury’, and an opportunity to gratify it, provides the incentives which arethe key to economic development.6

IV�LUXURY AND THE DECLINE OF FEUDAL POWER: HUME AND SMITH

In the absence of attractive manufactured goods, Hume argued, landlords hadno reason to sell the produce of their lands because there was nothing for themto buy. Instead, they maintained large numbers of dependants who becamebeholden to them and who provided them with the nucleus of their militarypower (see History IV, pp. 381–3 for examples). When more ‘refined’ tastesdeveloped, together with the goods to gratify them, landlords moved to thetowns and cut back on ‘hospitality’ in order to buy manufactured goods andother luxuries instead. Their spending now supported independent merchants,artisans, and the like, who could not be relied on in feudal conflicts.

The new methods of expense gave subsistence to mechanics and merchants,who lived in an independent manner on the fruits of their own industry….The landed proprietors … endeavoured to turn their lands to the bestaccount … and either enclosing their fields, or joining many small farms intoa few large ones, dismissed those useless hands which formerly were alwaysat their call in every attempt to subvert the government, or oppose a



6 Steuart told a similar tale – see Brewer (1997).

neighbouring baron. By all these means the cities increased; the middle rankof men began to become rich and powerful. (History IV, p. 384)

This was not a trivial matter since ‘the change of manners was the chief cause ofthe secret revolution of government’ (IV, p. 385), that is, of the transformationof Britain from feudal anarchy into a modern, unified, law-governed state.Smith took this story from Hume, virtually unchanged, and set it out at lengthboth in his Lectures on Jurisprudence and in the Wealth of Nations. In the earlymiddle ages, there were few attractive manufactures but land ownership wasvery heavily concentrated. With little to buy, the great landowners maintainedlarge numbers of dependent retainers (LJ (A) i.116, LJ (B) 51). Feudalism waseventually undermined by the emergence of attractive ways for the feudalpotentates to spend their huge incomes. For example:

The power of the nobles however declined in the feudall governments fromthe same causes as everywhere else, viz, from the introduction of arts,commerce, and luxury. – Their power consisted in the number of theirretainers and tenants. The number of their retainers and even of theirdependants was owing to their plain and hospitable way of living…. [The]Earl of Warwick is said to have maintained every day in his different manorsabout 30000 men…. But when elegance in dress, building, and gardening,cookery, etc. was introduced, it was no difficult matter to spend a fortuneeven as great as that of Warwicks, and by this means he would lose all hisretainers (LJ (A) iv.157–8; see also LJ (A) iv.8–9).

In a country which has neither foreign commerce, nor any of the finermanufactures, a great proprietor, having nothing for which he can exchangethe greater part of the produce of his lands which is over and above themaintenance of the cultivators, consumes the whole in rustic hospitality athome. … He is at all times, therefore, surrounded with a multitude ofretainers and dependants, who, having no equivalent to give in return for theirmaintenance, but being fed entirely by his bounty, must obey him, forthe same reason that soldiers must obey the prince who pays them (WNIII.iv.5)7

After telling the story of Warwick again,8 Smith added that such hospitality‘seems to be common in all nations to whom commerce and manufactures arelittle known’.

But what all the violence of the feudal institutions could never have effected,the silent and insensible operation of foreign commerce and manufacturesgradually brought about. These gradually furnished the great proprietors with

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7 A key term here is ‘rustic hospitality’, referring to the practice of supporting people whoneed not be feudal vassals, or employees in the modern sense, but who depend on the bountyof their ‘host’.

8 In all, Smith told the story of Warwick and his retainers three times in the Lectures (oncewith 40,000 instead of 30,000 retainers) and once in the Wealth of Nations.

something for which they could exchange the whole surplus produce of theirlands, and which they could consume themselves without sharing it eitherwith tenants or retainers … and thus, for the gratification of the most childish,the meanest, and the most sordid of all vanities, they gradually bartered theirwhole power and authority (WN III.iv.10).

The king, in Britain and most other countries, was so much richer than the restof the feudal nobility that his power survived, leading to a centralized state,though in Germany the nobility (presumably the rulers of the petty states ofGermany) were rich enough and the central power weak enough for feudaldecentralization to survive (LJ (A) iv.163–4).

Smith adapted the same story to explain the decline in the ‘temporal power ofthe clergy’ (WN V.i.g.25) and to explain the more rapid turnover of leadingfamilies in commercial states, where opportunities for spending are plentiful bycomparison with earlier ages.

‘A hospitality in which there is no luxury, and a liberality in which there is noostentation, … are expenses by which people are not very apt to ruinthemselves’ (WN V.ii.1).

He explained the rise of the public debt in similar terms – kings found it easy toaccumulate treasure when ‘hospitality’ was the only alternative use for theirrevenue, but not once luxury and ostentation became the fashion (WN V.iii.2).In times of war they had to borrow, having no accumulated war-chest to fallback on.

Smith did not like idle retainers. Trade was blocked in feudal timesbecause:�

The country was then filled with retainers, a species of idle people whodepended on the lords, whose violence and disorders rendered the going fromone place to another very difficult. (LJ (B).303).

Paris had a much higher murder rate than London, because of the number ofdiscontented and idle retainers and menial servants, ‘a remain of the feudalmanners’ (LJ (B).204; also LJ (A) v.4–5). The inhabitants of towns which arethe residence of courts are idle, while the people of manufacturing towns arenot (WN II.iii.12). Even in the short and businesslike Early Draft of the Wealthof Nations, Smith found time to refer to ‘indolent and frivolous retainers’ (ED4).

Perhaps the most important effect of the rise of luxury spending from aneconomic point of view was the change in agricultural tenancies whichfollowed. Tenants were originally tenants at will, subject to the lord’s whim butwith relatively low rents, and hence in effect retainers, like those fed at the lord’stable. Once luxury became fashionable, landlords cared more about maximizingrent than about maintaining their hold over their tenants, and agreed to moresecure tenancies in return for higher rents (LJ (A) iv.158–9; WN III.iv.13).Agriculture became more productive, while the landlords lost their power butenjoyed greater luxury.



V�LUXURY AND ECONOMIC DEVELOPMENT: SMITH’S LECTURES ONJURISPRUDENCE

Smith’s aim in his Lectures on Jurisprudence was to

shew the foundation of the different systems of government in differentcountries and to shew how far they are founded in reason (LJ (A) 1).

The basic framework was provided by the ‘four stages’ theory of history.9 Smithtold a little story to introduce the idea.10

The four stages of society are hunting, pasturage, farming, and commerce. Ifa number of people were shipwrecked on a desert island their first sustenancewould be from the fruits which the soil naturally produced, and the wildbeasts which they could kill. As these could not at all times be sufficient, they… tame some of the wild beasts…. In process of time even these would notbe sufficient, and … they would think of cultivating [the soil]. … Henceagriculture, which requires a good deal of refinement before it could becomethe prevailing employment of a country. … The age of commerce naturallysucceeds that of agriculture. As men could now confine themselves to onespecies of labour, they would naturally exchange the surplus of their owncommodity for that of another. (Ll (B) 149–l50).

This is no more than a parable, but it is worth noting how Smith made progressfrom one stage to the next seem easy and automatic. The foundation of Smith’s(qualified) support for laissez-faire was a belief that progress needed no specialconditions beyond peace and security. The problem, as he saw it, was not toexplain progress but to explain why it had been so slow. Note also that the ageof commerce is implicitly identified with the division of labour - this is clearer inthe longer version of the story in LJ (A) : ‘As society was further improved, theseveral arts … would be separated; some persons would cultivate one and othersothers, as they severally inclined’ (i.31).

Progress is explained in terms of innate human characteristics. The ‘naturallwants and demands of mankind’ differ from those of all other animals. Man ‘ofa more delicate frame and more feeble constitution, meets with nothing soadapted to his use that it does not stand in need of improvement and prepara-tion to prepare it for his use’ (LJ (A)vi.8–9). ‘Man alone of all animals … isthe only one who regards the differences of things which … give them nosuperior advantage in supplying the wants of nature.’ Humans care about theaesthetic qualities of objects - their colour and form, variety or rarity,similarity to other objects, and so on (vi.12-13; see also LJ (B) 206–9). These‘desires of elegance and refinement’ are ‘the foundation of all the minute, andto more thoughtful persons, frivolous distinctions … to gratify which athousand arts have been invented’ (LJ (A) vi.24, vi.16). ‘The whole industryof human life is employed’ in satisfying ‘the nicety and delicacy of our taste’(LJ (B), 209).

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9 On the four stages theory, see Meek (1976) and Skinner (1982).10 For brevity, I cite the version from LJ (B). For a fuller version see LJ (A) i.27–35.

The similarity with Hume’s defence of luxury, or ‘great refinement in thegratification of the senses’ (p. 268) is unmistakable, but Smith was moredoubtful about the real merits of luxury consumption than Hume was.‘Thoughtful persons’ see refinement as ‘frivolous’. In the Theory of MoralSentiments, he dismissed the luxuries of the rich as ‘baubles and trinkets’. ‘Inwhat constitutes the real happiness of human life, [the poor] are in no respectinferior. … In ease of body and peace of mind, all the different ranks of life arenearly upon a level’ (TMS IV.1.10). But the love of refinement and elegancewas ‘natural’, and it was ‘well’ that nature led men to want ‘to amuse andentertain their most frivolous desires’ (TMS IV.1.9–10), because the rich wereled to employ the poor, who are, in the end, as happy as anyone.

The division of labour, which provides the variety to cater for these endlesshuman wants, is not ’the effect of any human policy, but is the necessaryconsequence of a naturall disposition altogether peculiar to man, viz thedisposition to truck, barter, and exchange’ (LJ (A) vi.44, see also (B) 219,where it is called a ‘direct propensity in human nature’). Smith spelled this outin the Lectures; ‘the principle in the human mind on which this disposition oftrucking is founded [is] the naturall inclination everyone has to persuade’ (LJ(A) vi.56).

Development is the inevitable result of natural human instincts. Why then hasit taken so long? Smith saw the problem.

When one considers the effects of the division of labour, what an immediatetendency it has to improve the arts, it appears somewhat surprising that everynation should continue so long in a poor and indigent state as we find it does.(LJ (B) 285).

For the early stages of society, the hunting and pastoral periods, theexplanation is simple enough. ‘Before a man can commence farmer he must atleast have laid in a years provision’ (LJ (B) 286), which is difficult. Agriculture,after all, ‘requires a good deal of refinement before it could become theprevailing employment of a country’ (above). Progress from the pastoral to theagricultural stage seemed natural and inevitable to Smith, given good soil and anopportunity to trade (LJ (A) iv.60–61), but one can readily agree that it is likelyto be a slow process. The eighteenth century, of course, had no idea of the reallength of human pre-history.

For the feudal period, the explanation is harder to find. Agriculture was bythen well established, and the preceding classical period had been, in Smith’seyes, a period of refinement and luxury. If the ‘age of commerce naturallysucceeds that of agriculture’ (above), why did it take a thousand years or sobefore commerce and luxury once again predominated?

Smith’s explanation rests heavily on characteristics of feudal societyexplained by the power of the feudal nobility, but the long-lasting dominanceof the feudal regime must itself be explained. Smith’s account of the feudalsystem, like Hume’s, is based on the existence of a class of feudal magnateswho have more revenue than they can spend on luxury. After the fall of



Rome,�

arts were in a very low state. architecture and masonry were almostunknown. … The other arts were all proportionably uncultivated. It wasimpossible for a man in this state, then, to lay out his whole fortune onhimself; the only way [he] had to dispose of it was to give it out to others. (LJ(A) i.118–19).

Note that it is impossible for the feudal magnate to spend all his income on hisown luxury consumption. The implication seems to be that when he can, he will,which allowed Smith to retain his claim that ‘desires of elegance andrefinement’ are natural, but prompts the obvious question: why should apotential market for luxury goods among the feudal potentates remainunsatisfied, given the human propensity to truck and barter and the naturaldesire for self improvement? There is a further difficulty. It is necessary toexplain why the arts of luxury did not appear for so long, but it is also necessaryto explain how they could finally emerge at a time when the social frameworkwas still essentially feudal, since Smith relied on the arrival of new and moreattractive ways of spending to explain the fall of the feudal magnates and theremoval of feudal restraints on development.

Hume had a simple but ultimately unsatisfactory answer. In a society whichlacked the ‘mechanic arts’, he implied, no one wants luxury goods because theydo not know of them and do not know that they would want them if they didexist. With no manufacturing sector beyond local production of basic necessi-ties, no one is in a position to develop anything better. Change must come fromwithout. ‘In most nations, foreign trade has preceded any refinement in homemanufactures. … Thus men become acquainted with the pleasures of luxury andthe profits of commerce’ (EMPL, p. 264). Once a market for luxury imports iscreated, domestic producers can emerge.

This makes some sense for Britain, which had been relatively backward bythe standards of other parts of Europe, but it is a theory of catching up, not anadequate explanation of development as a whole. The claim that if ‘ourneighbours’ had ‘not first instructed us, we should have been at presentbarbarians’ (EMPL, p. 329), depends on the existence of neighbours who canoffer instruction. Even then, it remains to be explained why it took so long tostart learning, and why Britain caught up so fast once the process eventually gotunder way.

Smith wanted to explain the path of development in Europe without appealingto external factors. His answer is a little hard to fit together, because it has to beassembled from various parts of the Lectures on Jurisprudence. After the fall ofRome, the European economy collapsed, because trade was interrupted andurban producers separated from their markets (LJ (A) iv.117). Viking raidsdevastated the coasts and hence water-borne commerce. Agriculture developedslowly, because peasants were unfree and could not expect to keep any gainsthey made, while feudal lords were judge and jury in the courts, so merchantswho dealt with them could not look to the law for protection (Ll (A) i.127–9).Without reproducing all the various relevant parts of the Lectures, one can say

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that Smith described a variety of changes that took place - increasing centralpower, and hence the establishment of uniform royal law, the slow replacementof villeinage by sharecropping and then by tenant farmers in the modern sense,the establishment of towns, and so on. Descriptively all this makes good sense,but it does not amount to a coherent explanation of why things eventuallychanged or why it took so long.11

Both in the Lectures and in the Wealth of Nations, Smith emphasised theextreme inequality of land ownership, but the Lectures contain one interestingargument that was not retained in the later work.

In order that the innequality of property should have the effect abovementiond [the decline of the nobility], there must be a gradual declension andsubordinate degrees of wealth. Thirty thousand pounds may at present bespent on domestick luxury, as [there] are intermediate steps of 25, 20, 15,10000, and 1000, 100£ betwixt this and the lowest class, thru all which theprogress of arts, manufactures, and industry can easily pass. But whenproperty goes on in the progression by great leaps or jumps, the arts,commerce, and luxury cannot creep after them … as nothing fills up theintervals (LJ (A) iv.161).

Extreme inequality in land ownership was maintained by the institutions ofprimogeniture (inheritance by the oldest son) and entails (which prevent theestate being broken up and sold), originally introduced to keep estates togetherin the days when only large estates had the military muscle to survive (LJ (A)i.133–4). If estates had been divided by inheritance, the distribution of wealthwould soon have become smoother. Wealthy merchants, tenant farmers, and soon, eventually filled the gap, once economic development had reached a certainstage. The argument, however, is far from complete — why can luxury not ‘leapover’ large gaps in the income distribution? Because the market for the very richis too small? Because the very rich have no need of ostentatious consumption ifthey have no close rivals, or because refined consumption is a matter of fashionwhich requires a critical mass of rich consumers? Smith did not develop thepoint further, so it is impossible to say.

In sum, Smith’s account of economic development in the Lectures onJurisprudence still had much of Hume in it. The desire for luxury plays anessential motivating role and the rise and fall of feudalism is explained inexactly the same way. The most obvious difference is the stress on the divisionof labour, but even here one should not overstate the difference since there islittle scope for division of labour in agriculture (LJ (A) vi.30–31) and themanufacturing sector depends on agriculture for its food and materials. Humehad argued that the basis of manufacturing and trade was the marketable surplusof food produced by the agricultural sector. Smith did not present this line ofargument explicitly in the Lectures (though, say, LJ (B) 210 and 298 comeclose), but he had set it out in the Theory of Moral Sentiments (IV.i.10) and did



11 The later and rather more coherent version in the Wealth of Nations will be discussed indue course.

so again, even more clearly, in the Wealth of Nations (I.xi.c.7). The productionof a surplus in agriculture depends on the existence of a market for agriculturalproducts, and hence on the existence of a manufacturing sector (LJ (B) 298).Smith emphasized quantitative gains in manufacturing productivity whereHume stressed the increased variety of goods, but the underlying factors whichlead to manufacturing growth are very similar.

The difference between them, at this stage in the development of Smith’sideas, was perhaps more in attitude than substance. Hume thought of ‘the greatadvantage of ENGLAND above any nation at present in the world, or that appearsin the records of any story’ (EMPL, p. 265) as something special and surprising,in need of explanation. Smith thought of growth as natural and inevitable, sowhat he had to explain was why it had been so slow and why it was notuniversal.

VI�FROM THE LECTURES ON JURISPRUDENCE TO THE WEALTH OF NATIONS

Many of the themes of the Lectures on Jurisprudence, of course, survive in theWealth of Nations, but they are transformed by the new stress on the role ofcapital and capital accumulation. In this new view, increased output bothrequires and (almost) automatically follows from an increased stock of capital.Saving is always invested, so saving is the primary cause of economic growth(WN II.iii.32, 13, 14–15).

Human ‘desires of elegance and refinement’, which stand at the centre of themotivational, and hence the causal, apparatus of the Lectures are replaced by thedesire to ‘better’ oneself by saving, which is the causal pivot of the Wealth ofNations.

But the principle which prompts to save is the desire of bettering ourcondition, a desire which, though generally calm and dispassionate, comeswith us from the womb, and never leaves us till we go into the grave. In thewhole interval which separates those two moments, there is scarce perhaps asingle instant in which any man is so perfectly and completely satisfied withhis situation as to be without any wish of alteration or improvement of anykind. An augmentation of fortune is the means by which the greater part ofmen propose and wish to better their condition. It is the means the mostvulgar and the most obvious; and the most likely way of augmenting theirfortune is to save and accumulate some part of what they acquire, eitherregularly and annually, or upon some extraordinary occasions. (WNII.iii.28).l2

Mobility of capital is crucial to the new system. Returns are equalized (afterallowing for risk and the like), creating a uniform return on capital as a thirddistinct type of income alongside wages and rent. Saving adds to a pool ofcapital which is distributed between different sectors in response to differences

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12 Note, incidentally, how one’s ‘condition’, the thing one aims to better, is identified withwealth, not current consumption.

in returns. Growth, now conceived in quantitative terms as a growth in the stockof capital and a corresponding growth in the ‘annual produce of the land andlabour’, is still the result of an unchanging principle of human nature, but themechanism has changed.l3

How different is the approach of the Wealth of Nations from that of theLectures? Capital and investment do play some role in the arguments of theLectures. In his discussion of the ‘slow progress of opulence’, discussed above,Smith argued that hunters or shepherds cannot easily accumulate the stockneeded to become farmers, that peasants in a feudal system are deterred fromsaving by lack of security, and so on (LJ (B) 282, 286–8). Arguing the case forlaissez faire, he argued that:

The number of hands employed in business … depends on the stored stock ofthe employers. … A certain number can therefore be employed in eachbranch. When therefore you increase the number in one branch you neces-sarily diminish those in others. (LJ (A) vi.93–5).

This foreshadows one of the main lines of argument in Book IV of the Wealth ofNations. Even so, these are isolated examples which Smith introduced in an ad-hoc fashion to deal with specific questions. Capital and investment do not playan important role in the architecture of the Lectures.

As noted above, Smith found it hard to explain the ‘slow progress ofopulence’ in the Lectures. He also left it quite unclear whether growth could beexpected to continue into the future.l4 The need for capital accumulation,introduced as a systematic determinant of growth in the Wealth of Nations,transforms the story. Every man may want to better his condition, but therequirements of subsistence and the temptations of luxury ensure that thefraction of income saved and the growth rate are normally quite low. Savingwill continue, so growth will continue, at least for a very long time.

VII�PROGRESS IN EUROPE

Book III of the Wealth of Nations starts with an account of the ‘natural progressof opulence’, clearly modelled on the rapid development of the North Americancolonies. The three chapters which follow are an attempt to show why Europehad not done so well. Smith quoted with approval an estimate that the popula-tion of Europe (taken as an index of overall economic growth) doubled in fivehundred years while that of the North American colonies doubled in a meretwenty to twenty five years. His explanation of the pattern of growth in Europeowes more to Hume than is generally recognized, but the way it is presentedconceals the fact.

The three relevant chapters are set out as follows: ‘Of the discouragement ofagriculture in the ancient state of Europe …’ explains why feudal institutions



13 Turgot had set out many of the key ideas summarized here in 1766, after Smith’s Lecturesbut before Smith started to write the Wealth of Nations (see Brewer 1987, 1995a).

14 The future prospects for growth are equally unclear in Hume (Brewer, 1995a, 1997).

retarded agricultural progress; ‘Of the rise and progress of cities and towns …’explains how the finer manufactures came to be introduced; and ‘How thecommerce of the towns contributed to the improvement of the country’describes how the availability of manufactures brings down feudalism. The lastof these, on the fall of feudalism, is really the heart of the argument. Here,Smith explicitly credited Hume.

[C]ommerce and manufactures gradually introduced order and goodgovernment, and with them, the liberty and security of individuals, among theinhabitants of the country. … This, though it has been the least observed, isby far the most important of all their effects. Mr. Hume is the only writerwho, so far as I know, has hitherto taken notice of it. … A revolution of thegreatest importance to the publick happiness was in this manner broughtabout by two different orders of people who had not the least intention toserve the public. To gratify the most childish vanity was the sole motive ofthe great proprietors. The merchants and artificers, much less ridiculous,acted merely from a view to their own interest. … Neither of them had eitherknowledge or foresight of that great revolution which the folly of the one, andthe industry of the other, was gradually bringing about. (WN III.iv.4, 17)

In Smith’s chosen order of presentation, however, the chapter on thediscouragement of agriculture comes first. Taken on its own it seems weak,because the behaviour of feudal landlords, which is the key to the argument,cannot be fully explained until two chapters later. As in the Lectures, Smithemphasised the persistence of large estates as a result of primogeniture andentails. A single paragraph, arguing that large landlords are not ‘greatimprovers’l5 carries the burden of the argument and is worth quoting at length.

Great tracts of uncultivated land were, in this manner, not only engrossed byparticular families, but the possibility of their being divided again was asmuch as possible precluded for ever. It seldom happens, however, that a greatproprietor is a great improver. In the disorderly times which gave birth tothose barbarous institutions, the great proprietor was sufficiently employed indefending his own territories, or in extending his jurisdiction and authorityover those of his neighbours. He had no leisure to attend to the cultivation andimprovement of land. When the establishment of law and order afforded himthis leisure, he often wanted the inclination, and almost always the requisiteabilities. If the expense of his house and person either equalled or exceededhis revenue, as it did very frequently, he had no stock to employ in thismanner. If he was an economist, he generally found it more profitable toemploy his annual savings in new purchases than in the improvement of his

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15 The ‘improvement’ of land, that is to say, investment in durable changes like enclosure,drainage, and the like, plays a particularly important role in Smith’s discussion of agriculture(Brewer, 1995b). It is perhaps worth noting here that Smith’s hostility to large landlords didnot extend to small proprietors, who are better improvers than even rich farmers (WN III.ii.20,III.iv.19). Rich merchants are just the same as large landlords in their taste for luxury (WNII.ii.7). Smith did not think, as some of his successors did, that landowners were profligatesimply because they were landowners.

old estate. To improve land with profit, like all other commercial projects,requires an exact attention to small savings and small gains, of which a manborn to a great fortune, even though naturally frugal, is very seldom capable.The situation of such a person naturally disposes him to attend rather toornament which pleases his fancy than to profit for which he has so littleoccasion. The elegance of his dress, of his equipage, of his house, andhousehold furniture, are objects which from his infancy he has beenaccustomed to have some anxiety about. (WN III.ii.7)

The context does not make it at all clear what period is under discussion. Thechapter is about the ‘antient State of Europe’, that is, the middle ages, but onlythe first few lines of the paragraph refer to the ‘disorderly times which gave birthto those barbarous institutions’. The rest refers to a time after the ‘establishmentof law and order’, which must surely be read as a code phrase for the end offeudalism. As far as the thousand years or so from the fall of Rome to the fall offeudalism are concerned, the only argument Smith presented for expectinglandlords to neglect their estates was that they were too busy fighting. Thearguments of the second part of the paragraph, relating to Smith’s own time, arenot very convincing either, since the argument that a landlord’s incomefrequently falls short of his spending is hard to square with the dismissal ofprofit ‘for which he has so little occasion’.

The discussion of improvement by tenants, which occupies much of the restof the chapter, is more straightforward. It is easy to see that they had littleincentive to invest as long as they were bound in servitude. The problem here isto explain why servile tenures persisted for so long if they were so inefficientwhile still leaving the door open to an explanation of their eventual replacement.Smith explained the persistence of servile tenure by what he saw as a fact ofhuman nature. ‘The pride of man makes him love to domineer’, so he prefers toemploy slaves rather than free men. ‘The late resolution of the Quakers inPennsylvania to set at liberty all their negro slaves, may satisfy us that theirnumber cannot be very great’ (WN III.ii.10). The feudal landlords’ preferencefor unfree tenants did not, however, last for ever, since the following paragraphreports that villeinage was replaced by sharecropping, partly because it wasmore efficient, and partly because the king supported it to weaken the feudallords. Later again came ‘farmers properly so called, who cultivated the landwith their own stock’ (WN III.ii.14). This all makes much more sense once theeffect of luxury on the preferences of landlords is explained.

The chapter on the rise of the towns starts with an account of the way townsslowly established their freedom. ‘Order and good government’ were estab-lished (WN III.iii.12). Towns were able to develop slowly, despite thebackwardness of the countryside, by trading with distant places.

Hume had argued that the import of manufactures from more developed areaswas necessary to start the process of development. Smith clearly had difficultieswith this argument, presumably because it explains a process of catching uprather than development in general, and because it threatens his picture ofdevelopment as natural and inevitable. He tried to have it both ways. First he



told what is essentially Hume’s story.

The inhabitants of trading cities, by importing the improved manufacturesand expensive luxuries of richer countries, afforded some food to the vanityof the great proprietors, who eagerly purchased them with great quantities ofthe rude produce of their own lands. A taste for the finer and more improvedmanufactures was in this manner introduced by foreign commerce intocountries where no such works were carried on. But when this taste becameso general as to occasion a considerable demand, the merchants, in order tosave the expense of carriage, naturally endeavoured to establish somemanufactures of the same kind in their own country. Hence the origin of thefirst manufactures for distant sale that seem to have been established in thewestern provinces of Europe after the fall of the Roman empire (WNIII.iii.15, 16).

But he then argued that an external stimulus was not necessary.

At other times, manufactures for distant sale grow up naturally, and as it wereof their own accord, by the gradual refinement of those household and coarsermanufactures which must at all times be carried on even in the poorest andrudest countries (WN III.iii.20).

This, of course, must be right, if only because there must be somewhere in theworld where refined manufactures first emerged, but it does little to diluteSmith’s admission that a ‘taste for the finer and more improved manufactures’was in fact introduced by foreign commerce, just as Hume had argued.

Returning now to agriculture, recall the landlords neglected their estatesbecause they were busy fighting, and maintained inefficient feudal tenuresbecause of a love of domination. This can only make sense in the context of atime when there was no incentive to maximize rents because there were norefined manufactures to buy. Feudal landlords had more revenue than they knewwhat to do with (Smith was very explicit about that). What Smith did notexplicitly add, but must have intended, was that they could have invested inimprovement, but in feudal times a landlord ‘bettered his condition’ by havingarmed retainers, not by improving his estate. Once luxuries came onto themarket the landlord had an incentive to maximize returns, but (Smith claimed)the incentive to save and invest was swamped by the temptation to spend.Changes in tenure arrangements can, of course, be explained on the same lines.

The argument, then, is much closer to Hume’s than it seems at first sight. Slowgrowth in the feudal period is explained by the lack of attractive manufactures andthe resulting lack of any incentive. Luxuries were, in fact, first introduced fromoutside, as Hume had said, and it was indeed growth in manufacturing and luxuryconsumption that precipitated fundamental changes in the countryside.

VIII�THE NATURAL PROGRESS OF OPULENCE

The story of the ‘natural progress of opulence’, which Smith presented as acounterpart to the sorry story of lagging growth in Europe, was clearly based on

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the experience of the North American colonies and cannot be regarded as‘natural’ for two reasons.

First, it is an account of growth in an open economy surrounded by moreadvanced centres. It is, of course, true that subsistence must come before luxury(WN III.i.2) but once subsistence is assured the motive for increasingagricultural production must be to consume manufactures, as Smith recognized,so a country can only concentrate investment in agriculture if it can importluxuries.

The rich man consumes no more food than his poor neighbour. … What isover and above satisfying the limited desire is given for the amusement ofthose desires which cannot be satisfied, but seem to be altogether endless.(WN I.xi.c.7)

It has been the principal cause of the rapid progress of our American coloniestowards wealth and greatness that almost their whole capitals have hithertobeen employed in agriculture. … Were the Americans … to stop theimportation of European manufactures, and … divert any considerable part oftheir capital into this employment, they would retard instead of acceleratingthe further increase in the value of their annual produce, and would obstructinstead of promoting the progress of their country towards real wealth andgreatness. (WN ll.v.21).

Smith’s ‘natural progress of opulence’, like Hume’s account of the stimulatingeffect of imported luxuries in a backward country, is an account of catching-up.

Second, Smith’s ‘natural progress’ assumes fully modern institutions, with noaccount of how they come into being. In the North American colonies, ofcourse, modern institutions were imported from Europe, where they were, asshown above, the result of a (much slower) process of development based onthat described by Hume. As Smith himself said:

The colonists carry out with them a knowledge of agriculture and of otheruseful arts superior to what can grow up of its own accord in the course ofmany centuries among savage and barbarous nations. They carry out withthem, too, the habit of subordination, some notion of the regular governmentwhich takes place in their own country, of the system of laws which supportit, and of a regular administration of justice; and they naturally establishsomething of the same kind in the new settlement. But among savage andbarbarous nations, the natural progress of law and government is still slowerthan the natural progress of arts. (WN IV.vii.b.2).

In sum, Book Three of the Wealth of Nations is a bit of a fraud. In the realhistory of Europe, in Smith’s own account, the process of development had beendriven by the advance of towns and of manufacturing, as Hume had argued.l6



16 Europe was the only region whose history Smith analysed seriously. Smith treated Indiaand China as, in some ways at least, more developed than Europe, but he did not provide anyserious analysis of how they had reached that state. It clearly was not by following a path akinto the ‘natural progress of opulence’.

The ‘natural progress of opulence’ is not natural at all, but is an artificialconstruct in which modern technology and institutions, the fruits of the longhistory of development in Europe, are arbitrarily assumed to be present from thestart.

IX�PRODUCTIVE AND UNPRODUCTIVE LABOUR

This is not an appropriate place for a full discussion of Smith’s notion ofunproductive labour.l7 My purpose here is simply to point to some difficulties inreconciling Smith’s treatment of unproductive labour with his treatment ofluxury consumption, and to suggest that some of the odder features of Smith’sdiscussion arise from an attempt to combine Hume’s ideas with those ofQuesnay.

Quesnay is clearly the source of the idea that productive labour reproducesitself with a surplus while unproductive labour does not. In Quesnay’s version,only agriculture counts as productive because Quesnay only recognized rent as asurplus over costs. Smith recognized profit as a distinct form of income in bothagriculture and industry so in Smith’s version manufacturing is also productive.So far, so good, but it has always been hard to see why Smith should haveinsisted so vehemently that only labour which produces tangible objects countsas productive, thus excluding services, however useful and necessary (WNII.iii.2), while including the production of the most trivial manufacturedluxuries.

Consciously or unconsciously, Smith seems to have linked Quesnay’sessentially ahistorical notion of labour which reproduces itself with a surpluswith Hume’s historical account of economic development and of the decline offeudalism, built around the opposition between spending on manufacturedluxuries and spending on ‘hospitality’. Smith’s definition has the effect ofcounting the production of luxuries as productive, even those which he haddismissed as ‘baubles and trinkets’. At the same time, he clearly saw ‘menialservants’, the prototypical unproductive labourers, as lineal descendants of theunproductive retainers of feudal times. In the lectures, for example, he referredto idle retainers and menial servants (together) as ‘a remain of the feudalmanners’ (LJ (B) 204), and in the Wealth of Nations he claimed that what ‘arich man annually spends is in most cases consumed by idle guests and menialservants’, an obvious reference to the rustic hospitality of feudal times (WNII.iii.18, cited at greater length below). Hence his frequently moralistic tone,identifying unproductive labour with idleness.l8 ‘We are more industrious thanour forefathers; because in the present times the funds destined for themaintenance of industry, are much greater in proportion to those which are

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17 For more on productive and unproductive labour, see Boss (1990), Myint (1948), andBladen (1960).

18 In Smith’s time, the word ‘menial’ did not necessarily have the pejorative overtones itnow has – any employee was a ‘servant’, and a ‘menial’ servant simply meant a domesticservant or one who was part of the employer’s household staff (Oxford English Dictionary) –but Smith’s attitude to menial servants was often distinctly hostile and moralistic.

likely to be employed in the maintenance of idleness, than they were two orthree centuries ago’ (WN II.iii.12). Compare Hume: ‘in times when industryand the arts flourish, men are kept in perpetual occupation,’ but when luxuriesare not available, or not wanted, ‘a habit of indolence naturally prevails’(EMPL, pp. 270–1, 261; quoted more fully above).l9

There is, however, a major problem in reconciling Smith’s treatment ofproductive and unproductive labour with his treatment of the decline offeudalism. Hume did not pay any attention to the need for capital investment inproduction, so he was able to argue that a switch of spending from hospitality toluxuries would lead to a decline in the number of retainers and an increase inmanufacturing and commercial employment. Smith’s account of the decline offeudalism followed Hume’s lead, but in Smith’s framework a switch of spendingis not enough. Manufacturing employers need capital, and a switch of spendingdoes nothing in itself to provide the necessary saving.

The key point is that a rich man (or anyone with an income above subsist-ence) faces a three-way choice, between (a) spending on luxuries (b)employing domestic servants, and (c) employing additional productive workers,that is, saving and investing (or lending to someone who will invest). Smithsimply ignored this complication. In his discussion of the decline of feudalism,as we have seen, he considered only the two-way choice between luxury andhospitality. In his discussions of productive and unproductive labour heconsidered only the two-way choice between employing one sort of worker orthe other. Consider one of his best known statements.

What is annually saved is as regularly consumed as what is annually spent,and nearly in the same time too; but it is consumed by a different set ofpeople. That portion of his revenue which a rich man annually spends is inmost cases consumed by idle guests and menial servants, who leave nothingbehind them in return for their consumption. That portion which he annuallysaves, as for the sake of the profit it is immediately employed as a capital, isconsumed in the same manner, and nearly in the same time too, but by adifferent set of people, by labourers, manufacturers, and artificers, whoreproduce with a profit the value of their annual consumption (WNII.iii.18).�

The reference to ‘idle guests’ has already been noted as an obvious crossreference to ‘rustic hospitality’, but spending on luxury manufactures hasvanished from the picture altogether.

There are a very few places where Smith came close to recognizing the three-way choice faced by the rich, but they are few, casual, and not directly linked tothe distinction between productive and unproductive labour. Thus, familiesdecline and kings get into debt (i.e. fail to save) because of excessive spendingon luxury goods, in a commercial society, but not in earlier periods whenhospitality was the alternative to saving (V.iii.l–4) – this is really a pair of pair-



19 Boss (1990, p. 49) suggests that Smith associated economic calculation and efficiencywith work for sale on the market, as opposed to domestic service.

wise choices rather than a three-way choice. Great landlords do not improvetheir land because they prefer spending on luxury (though here servants are notexplicitly mentioned). It is better to spend on durable consumer goods than onmenial servants because something remains, and the ‘houses, the furniture, thecloathing of the rich’ trickle down to the ‘inferior and middling ranks’ when therich have done with them (II.iii.38–9). This again is a pair-wise choice -durables or non-durables - and says nothing about the other option of employingproductive workers. It seems that Smith was only able to handle pair-wisechoices in this sort of context.

This is not just a quirk of Smith’s presentation. It affects some of the keyarguments of the Wealth of Nations. Consider the following.

As in a civilised country there are but few commodities of which theexchangeable value arises from labour only, rent and profit contributinglargely to that of the far greater part of them, so the annual produce of itslabour will always be sufficient to purchase or command a much greaterquantity of labour than what was employed in raising, preparing, and bringingthat produce to market. If the society was annually to employ all the labourwhich it can annually purchase, as the quantity of labour would increasegreatly every year, so the produce of every succeeding year would be ofvastly greater value than that of the foregoing. But there is no country inwhich the whole annual produce is employed in maintaining the industrious.The idle everywhere consume a great part of it; and according to the differentproportions in which it is annually divided between those two different ordersof people, its ordinary or average value must either annually increase, ordiminish, or continue the same from one year to another. (WN I.vi.24; seealso II.iii.18).

The sentence describing maximal growth (‘If the society were annually toemploy …’) ignores investment in fixed capital and materials, but otherwisemakes sense. If all surplus over the wage bill is ploughed back, then output offinal consumer goods consists only of wage goods consumed by workersdirectly or indirectly engaged in producing more wage goods. Once luxuryconsumption is brought into the picture, however, the final sentence (‘The idle…’) is nonsense. If profits and rents are all spent on luxuries it is perfectlypossible for net saving to be zero without there being any unproductive workersin Smith’s sense at all. Output could even be declining if luxury spendingdisplaced replacement investment, without a single soldier or menial servant.20

Indeed, Smith’s treatment of ‘great landlords’ (discussed above) points directlyto the problem identified here – landlords did not invest in production becausethey preferred spending on luxuries.

Hume was able to argue that luxury is only a vice when it ‘engrosses all aman’s expence, and leaves no ability for such acts of duty and generosity as arerequired by his situation and fortune’ (EMPL, p. 279). There is no mention of

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20 As Eltis (1984, p. 78) has pointed out, what matters is whether output can be can be usedas capital or not. Luxuries, like services, cannot.

saving because he saw no essential role for accumulation. In Smith’s system, bycontrast, luxury spending is double edged. In so far as it drives out feudal‘hospitality’ it can have all the desirable incentive and political effects thatHume described, but in so far as it displaces saving, it slows growth. ‘Capitalsare increased by parsimony, and diminished by prodigality and misconduct’(WN II.iii.14). Srnith was unable or unwilling to tackle this dilemma head-on.

X�CONCLUSION

Smith’s lectures are firmly in the tradition of Hume, albeit much more fullyworked out than anything in Hume’s elegant but concise essays. The Wealth ofNations is a different story, including elements inspired by the physiocratsalongside the radically new idea of continuing long run growth driven by capitalaccumulation. Only Turgot substantially shared this vision. Hume’s ideas,however, continued to play a more important role in Smith’s thinking than isobvious at first sight, and help to explain why Smith’s account of the ‘naturalprogress of opulence’, with its stress on the priority of agriculture, and hisdistinction between productive and unproductive labour, should raise so manyproblems of interpretation. Both must have been in part inspired by thephysiocrats, but both clashed with the Humean elements in Smith’s story.

ACKNOWLEDGEMENTS

The author would like to thank Walter Eltis, Jules Lubbock, and Donald Winchfor helpful comments. The errors, however, are mine.

REFERENCES

BERRY, C. (1994). The Idea of Luxury: A Conceptual and Historical Investigation.Cambridge University Press.

BLADEN, V. (1960). Adam Smith on productive and unproductive labour: a theory of fulldevelopment. Canadian Journal of Economics and Political Science, 24, pp.625–30.

BOSS, H. (1990). Theories of Surplus and Transfer: Parasites and Producers inEconomic Thought. Boston: Unwin Hyman.

BREWER, A. (1987). Turgot, founder of classical economics. Economica 54, pp.417–28.

BREWER, A. (1995a). Concepts of growth in eighteenth century economics. History ofPolitical Economy, 27, pp. 609–38).

BREWER, A. (1995b). Rent and profit in the Wealth of Nations. Scottish Journal ofPolitical Economy, 42, pp. 183–200.

BREWER, A. (1997). An eighteenth century view of economic development: Hume andSteuart. European Journal of the History of Economic Thought, 4, pp. 1–22.

ELTIS, W. (1984). The Classical Theory of Economic growth. London: Macmillan.HUME, D. (1985). Essays Moral, Political, and Literary. E. Miller (ed.). Indianapolis:

LibertyClassics (referred to as EMPL).HUME, D. (1983). History of England. Indianapolis: Liberty Fund (referred to as

History).LUBBOCK, J. (1995). The Tyranny of Taste. New Haven and London: Yale University

Press.MEEK, R. (1976). Social Science and the Ignoble Savage. Cambridge University Press.MYINT, H. (1940). Theories of Welfare Economics. London: Longmans.



SKINNER, A. (1982). A Scottish contribution to Marxist sociology? In I. Bradley and M.Howard (eds.), Classical and Marxian Political Economy. London: Macmillan.

SKINNER, A. (1993). David Hume: principles of political economy. In D. Norton (ed.),The Cambridge Companion to Hume. Cambridge University Press.

SMITH, A. (1976a). An Inquiry into the Nature and Causes of the Wealth of Nations. R.Campbell, A. Skinner and W. Todd (eds.). Oxford University Press (referred to asWN).

SMITH, A. (1976b). The Theory of Moral Sentiments. D. Raphael and A. Macfie (eds.).Oxford University Press (referred to as TMS).

SMITH, A. (1978a). Lectures on Jurisprudence. R. Meek, D. Raphael and P. Stein (eds.).Oxford: Clarendon Press (referred to as LJ).

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Date of receipt of final manuscript: 6 May 1997.

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Luxury and Economic Development: David Hume and Adam Smith

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