Thursday, January 25, 2018
A best-selling Scottish economist foretold
Australia's formidable success
Judging from the polls this week, the Australia Day abolitionists have misjudged the mood of the people. Our friends at the Institute of Public Affairs performed a great service by commissioning research to find out what people think, as opposed to the noisy opinionists who usually dominate the debate. It is not just the popular mood they have to read, but their history. There are plenty of examples of brutal colonial settlement - but Australia is not one of them.
Australia was a post-Enlightenment settlement and a brave experiment in liberal economic principles. Modern economics was 12 years old in 1788; Adam Smith’s Wealth of Nations, the founding text of economics, was published in 1776. By the time the First Fleet set sail from Portsmouth, Smith’s work had become the best-selling non-fiction work in Britain since Edward Gibbon’s Decline and Fall and was beginning to change the way people thought about the world.
Among its insights were the benefits of free trade, competition and the division of labour. Smith also articulated the central principle of liberalism, that individuals freely pursuing their own economic interests are the motive power of economic progress.
Smith accurately forecast that the settlement of a new continent like Australia would be a success, if free exchange was allowed to operate. He wrote:
"A civilised nation which takes possession either of a waste country, or of one so thinly inhabited that the natives easily give place to the new settlers, advances more rapidly to wealth and greatness than any other human society. The colonists carry out with them a knowledge of agriculture and of other useful arts superior to what can grow up of its own accord in the course of many centuries among savage and barbarous nations. They carry out with them, too, the habit of subordination, some notion of the regular government which takes place in their own country, of the system of laws which supports it, and of a regular administration of justice; and they naturally establish something of the same kind in the new settlement."
As we raise a glass to Captain Arthur Phillip tomorrow, let’s also toast Adam Smith, the father of economics who helped inspire this great nation.