Money, Banks and Finance in Economic Thought

Adam Smith on the Economy and Psychology of War

Berdell john, DePaul U

Adam Smith on the Economy and Psychology of War John Berdell, DePaul University, jberdell@depaul.edu Adam Smith’s opposition to Britain’s colonial policies and practices is justly well known. Indeed the Wealth of Nations is constructed so that every part of the book adds an important element in its culminating attack on Britain’s “project” of empire. Yet it is only as Smith delivers this conclusion, with nearly apocalyptic language, that his reader grasps that the whole book been relentlessly driving towards this point. In the sixth edition of his first great book, The Theory of Moral Sentiments, Smith considerably enlarges and expands his discussion of the baleful moral consequences of Britain’s colonial policies. Smith added an entirely new part to the sixth edition, devoted to the “Character of Virtue”. The closing passages of this now penultimate Part VI of TMS provide a conclusion that should, I will argue, be read as his intended complement to the WN’s concluding argument against British colonialism. Here Smith warns of a dangerous imbalance in the development of Britain’s moral sentiments that correspond to the distorted pattern of economic growth engendered by Britain’s colonial system and its delusions of imperial grandeur.

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Keywords: Adam Smith Economic Psychology War