Adam Smith’s Warning on Power and National Strength, By James Reed
Adam Smith is often invoked as the patron saint of markets, but that shorthand misses something essential. He was not writing a hymn to greed or empire. He was issuing a warning. When a nation shifts its focus from the "liberal plan of equality, liberty, and justice" toward the accumulation of power and commercial empire, it does not become stronger in any deep sense. It becomes hollowed out — richer in appearances, poorer in substance.
To see why, it helps to remember the context in which Adam Smith was writing. In The Wealth of Nations, he was not merely analysing trade; he was critiquing the mercantilist system that dominated European policy. That system treated wealth as something to be hoarded — measured in bullion, monopolies, and colonial possessions. Power and commerce were fused into a single project: acquire territory, control trade routes, privilege-chartered companies, and exclude rivals. It looked like strength. Smith saw something closer to organised distortion.
His alternative, the "liberal plan," was not utopian. It was grounded in a simple but radical idea: that prosperity emerges when individuals are free to pursue their own ends within a framework of justice. Markets, in this view, are not engines of domination but systems of coordination. They work best when governments refrain from granting special privileges, when laws are applied evenly, and when the burdens of policy are not shifted onto the many for the benefit of the few.
Empire disrupts that balance. It requires standing armies, distant administration, and constant expenditure to maintain control over territories that rarely pay their way. Smith was blunt about this. Colonies, he argued, often enriched specific interests — merchants, monopolists, political elites — while imposing diffuse costs on the broader population. The illusion of national gain masked a transfer of wealth from the public to connected insiders.
This is the first part of his warning: empire distorts incentives. Instead of productive investment at home, resources are diverted into maintaining power abroad. Instead of open competition, markets are shaped by privilege and protection. Instead of broad-based prosperity, gains are concentrated. A country may look formidable on a map while quietly eroding the foundations of its own wealth.
The second part is subtler but more corrosive. A focus on power changes the character of domestic institutions. Laws begin to reflect strategic interests rather than general justice. Exceptions multiply. The rhetoric of necessity — security, influence, prestige — becomes a standing justification for bending rules that were meant to be universal. Over time, the "liberal plan" is not formally abolished; it is selectively suspended. And selective suspension, repeated often enough, becomes the norm.
Smith's insight here anticipates a pattern seen repeatedly in history. Nations that extend themselves in pursuit of influence often find that the costs are not only fiscal but institutional. Bureaucracies expand, debt accumulates, and political energy is consumed by managing commitments rather than cultivating productivity. Meanwhile, the everyday conditions that support prosperity, secure property rights, predictable law, social trust, receive less attention. The machinery of power crowds out the quiet work of maintenance.
There is also a moral dimension that Smith, the author of The Theory of Moral Sentiments, would not have ignored. A society organised around liberty and justice asks its citizens to respect one another as equals under the law. A society organised around empire implicitly ranks peoples and interests, elevating some while subordinating others. That hierarchy abroad has a way of echoing at home. It becomes easier to justify privilege, to tolerate inequality before the law, to accept that some rules are flexible when power is at stake.
None of this requires a romantic view of the past or a denial that trade and influence can bring benefits. Smith was not arguing for isolation. He was arguing for proportion and principle. Commerce, when it is free and fair, enriches both sides. Power, when it is limited and accountable, can protect the conditions of liberty. The danger lies in allowing the pursuit of power to dominate, to turn commerce into a tool of control and law into an instrument of advantage.
Seen in this light, the "liberal plan" is not a soft alternative to strength. It is the foundation of sustainable strength. A nation that invests in its own institutions, fair courts, open markets, equal laws, builds wealth that does not depend on coercion or constant expansion. It creates conditions in which individuals can produce, exchange, and innovate without needing patronage or protection. That kind of wealth is slower, less dramatic, and far more durable.
The temptation, of course, is always to chase the visible gains: new markets secured, rivals outmanoeuvred, influence extended. These can be measured and celebrated. The costs are harder to see. They show up as higher taxes, as debt pushed into the future, as opportunities foregone at home, as institutions bent slightly out of shape. None of it looks decisive in the moment. Over time, it accumulates.
Smith's warning is therefore less about any particular policy than about a direction of travel. When a country begins to organise its economic life around power, who controls what, who gains advantage, who can be excluded, it departs from the liberal plan even if it keeps the language. And once that departure becomes entrenched, reversing it is not straightforward. Interests form around the new arrangements. Privileges defend themselves.
To defend Smith's sentiment today is not to reject engagement with the world, but to insist on a distinction that is easy to blur: between commerce that arises from voluntary exchange and commerce that is engineered to serve power. The first tends to spread benefits and discipline excess. The second tends to concentrate gains and obscure costs. One builds wealth. The other can mimic it, for a time.
In the end, the argument is almost austere. Equality before the law, liberty in economic life, and justice in institutions are not ornaments of prosperity; they are its preconditions. A nation that keeps faith with them may grow more slowly, may appear less dominant, may forego certain strategic advantages. But it preserves the conditions under which wealth can renew itself. A nation that trades them away for the sake of power may gain the world in appearance and lose its foundations in fact.
