The Common Law and Adam Smith's Wealth of Nations

Abstract

Adam Smith developed a theory of the ‘four-stage’ advancement of society as England was entering the Industrial Revolution (the fourth stage) and becoming the leading commercial centre in the world. That transition was raising new and novel legal issues that required legal solutions more complex than the earlier three stages in human advancement, as innovation gave rise to new technologies and ways of working. He and other juridical thinkers saw the debate about whether legislation could effectively drive that transition as the central question of their time, the answer to which would, in the long run, affect the fate of nations and Empire. They had a clear view on this, informed by the study of thousands of years of human history. For them, the common law was vastly superior.

This article examines the debate that took place on these issues, the Benthamite revolution that followed and the modern basket of rights that obfuscate the key question that policy-makers should be asking in our generation: if the common law was so successful in driving the Industrial Revolution, what confidence can we have in a legislated approach as we move into the fifth stage, the Technology Revolution? This is one of the most important issues facing the world as societies decide what legal framework(s) will regulate humanity’s move into a digital society and the efforts to discover and invent the technologies that will support us on that journey.