As with Adam Smith’s tradesmen, we don’t want a fully cartelized economy. We want to cartelize our part of the economy
Adam Smith ordered his papers burnt at his death. Though not an avid letter writer, his papers might have offered an answer to a question that keeps cropping up: Was Smith religious? There is probably no definitive answer but what is not in question is that Smith had a “speculative” (his word) interest in the sacred foundations of common life. Likely, Smith shaped his thinking on the social role of the sacred during his teaching of natural theology, one of his duties as chair of Moral Philosophy at the University of Glasgow from 1752 to 1764.
The Aristotelian tradition makes a distinction between commutative and distributive justice. Commutative justice concerns contracts and the fair exchange of goods and services. It concerns how we should evaluate mutual dealings between individuals. Aristotelians argue that contracts cannot be successfully made unless prior trust exists. This trust or social cohesion is distributive justice. They argue that business requires both types of justice. As an economist, one expects Smith to talk about contracts, but in an earlier piece, I showed that a collective concern of the Scottish Enlightenment was to articulate a vision of distributive justice and not just the fostering of opulence.
In Smith’s thinking, the sacred is a principal source of distributive justice. His theoretical use of the idea can be found in The Theory of Moral Sentiments and prominently in his Lectures on Jurisprudence. In a highly original way, Smith identifies the sacred with primal, almost unconscious, legal sensibilities. In this, he anticipates the work of the French School of anthropology in the twentieth century.
Trials “in early times”
The centrality of social cohesion to justice is evidenced by attitudes to murder “in early times.” Trials were before the entire people and the point was to find grounds for reconciliation, not punishment. The most elementary natural rights are those of life and bodily integrity and thus the oldest part of law is criminal not civil. Punishment is a delicate matter because sympathy is split: it is hard “to make the spectator thoroughly sympathise with our revenge” when the aggressor pleads provocation or appeals for clemency. To plumb the true bearings of the spectator, therefore, trials involved the whole community.
The need for a trial stems from the idea of a sacred balance or harmony. In The Theory of Moral Sentiments, Smith writes:
The violator of the more sacred laws of justice can never reflect on the sentiments which mankind must entertain with regard to him, without feeling all the agonies of shame, and horror, and consternation…. The thought of this perpetually haunts him, and fills him with terror and amazement. He dares no longer look society in the face, but imagines himself as it were rejected . . . . Every thing seems hostile, and he would be glad to fly to some inhospitable desert, where he might never more behold the face of a human creature . . . . But solitude is still more dreadful than society.
This point is perfectly on display in Fyodor Dostoyevsky’s Crime & Punishment through his portrait of the inner life of the murderer Raskolnikov. Like Dostoyevsky, Smith is keen to demonstrate how the sacred binds community (religion is derived from the Latin religare meaning “to bind”) and explores how rituals fostered the emergence of business contracts.
To this day, Scotland has a different legal tradition to England. Unsurprisingly, Smith frequently cites Scots law but he spends most of his time on English law and for an interesting reason. He tells us that English law was largely fixed before Justinian’s Digest started to shape European civil law and before canon law took hold. On account of this, English law is “more deserving of the attention of a speculative man than any other, as being more formed on the natural sentiments of mankind.” In Smith’s hands, English law acts something like a phenomenological reduction: isolating the essential contents of legal and moral life from the accretions of history and fashion.
Origins of Contract Law
Contracts are one of these accretions. Liberty is our original condition, posits Smith:
The same tenderness for the liberty of individuals which made action on contracts so late of taking place, as all such obligations are a restraint on this liberty, inclined them to free those who were under such obligations, on a very slight ground.
Smith gives a long analysis of contracts and starts by noting how slow the law was to recognize contracts. Unsurprisingly, he cites Aristotle’s observation that during his lifetime, in many Greek states did not recognize contracts at law as “one who enters into a contract trusts to the fidelity of the person and is supposed to have trust in him.” Canon law was also resistant to extending recognition to them because it aimed at “proceeding altogether on the principles of honour and virtue.” Smith notes that as late as the twelfth century in Britain, contracts were thought mostly unworthy of attention at the King’s Court. Moral sentiments explain the secondary nature of contracts:
To be deprived of that which we are possessed of, is a greater evil than to be disappointed of what we only have the expectation. Breach of property, therefore, theft and robbery, which take from us what we are possessed of, are greater crimes than breach of contract, which only disappoints us of what we expected. The most sacred laws of justice, therefore, those whose violation seems to call loudest for vengeance and punishment, are the laws which guard the life and person of our neighbour.
Contracts were first secured through solemnities and in Scotland the guarantor was the Church, with penalty for breach being excommunication.
When the civil courts came at length to allow action on contracts, it was only on such as were entered into in the form of a recognizance or a solemn deed done in presence of the court and recorded in their books.
Smith reviews a number of these solemnities that, in ancient times, typically involved blood rituals. An example he gives of these “horrid ceremonies” is the Armenian practice of parties to the contract cutting thumbs and sucking blood from the wounds of one another.
The moral sentiments explain not only the lateness of contracts to communal life but their scope, too. Contracts are tied to utility but utility does not exhaust the moral sphere. Lord Kames was Smith’s patron and Smith was more drawn to his position—that utility is not basic to moral adjudication—than to Hume’s. Smith gives the harsh example of a sleeping solider on guard duty. Utility demands the solider be executed for threatening the common good but our sentiments recoil from this requirement of utility. By contrast, our resentment bays for blood in the case of someone who outrages a widow or child, despite the low utility. Smith’s formulation of the difference in these examples is crucial to appreciate:
The very different sentiments with which the spectator views those different punishments, is a proof that his approbation of the one is far from being founded upon the same principles with that of the other . . . . For it well deserves to be taken notice of, that we are so far from imagining that injustice ought to be punished in this life, merely on account of the order of society . . . . Our sense of its ill desert pursues it, if I may say so, even beyond the grave . . . . The justice of God, however, we think, still requires, that he should hereafter avenge the injuries of the widow. . . .
Utility is one source of moral valuation but another is the sacred. In three different works, Smith talks about the phenomenon of the deodand. It is common practice, Smith observes, to hold inanimate objects responsible for evil. You stub your toe and in revenge you kick the offending object. Delving into legal history, Smith finds amongst numerous examples the trial of an axe in Ancient Athens, which, found guilty, was carried to the sea with great ceremony and tossed into the waves. This is a case of deodand—things malign given into the care of God: “which signifies not only consecrated but what was to be held as unhallowed.” It remains common practice: houses of serial killers are routinely bulldozed, as are school buildings where mass shootings have happened.
This phenomenon restricts the scope and primacy of contracts in our moral lives significantly because it unhinges an important element in contracts, the particular responsibility of the contracting parties. It is typical to think that you and I are responsible for the actions we consent to or make a pointed, intentional part of our lives. The operation of deodand illustrates that consent does not exhaust our natural sentiments over the matter of responsibility.
In a long series of examples, Smith shows that our sentiments, or natural equity, also acknowledge the “empire of Fortune”: moral judgement attaches to our acts once pushed out into a capricious world, where consequences oftentimes outrun our design. A ready example is the differing punishments for murder and attempted murder. In cases where fortune deserts us catastrophically, we become “piacular.”
The concept originates in Roman law. Even one who unbeknownst—for example, a visitor to Rome—trod on lands “consecrated to some god” became the object of the vengeance of the god. Atonement was necessary before the stain of the piacular could be removed. Smith gives as an analogue a horseman who knocks over and kills a child through no fault of his own. Through good offices and expressions of sorrow he seeks to atone and “to propitiate, as much as possible, their, perhaps natural, though no doubt most unjust resentment, for the great, though involuntary, offence which he has given them.”
Fortune’s capacity to suddenly render us piacular teaches us to reverence one another:
By the wisdom of Nature, the happiness of every innocent man is, in the same manner, rendered holy, not to be wantonly trod upon, not even to be, in any respect, ignorantly and involuntarily violated, without requiring some expiation, some atonement in proportion to the greatness of such undersigned violation.
Whether Smith thought God arranged “the wisdom of Nature” is difficult to know: what is significant to see is that Smith discerns a sacred anthropology supporting law and distributive justice. For Smith, commerce is not foundationally about consenting to contracts but individuals surfing waters highly charged with solemnities of ritual, trust, reverence, and expiation.
To my knowledge, Smith is unique among the thinkers of the Scottish Enlightenment in this reflection. Its analytical use for comprehending civilization is fully on display in twentieth century French anthropology and in an age of corporate activism it would be well for firms to be mindful that potent primal bonds have the force of law and through these bonds, corporations are made and unmade.
 Smith did not publish his lectures on law. Lectures on Jurisprudence consists of two sets of notes from students at the University of Glasgow. These date to 1762 and 1766.
 Marcel Mauss, Georges Bataille, Roger Caillois, and René Girard, and even Jacques Lacan, are some representatives. See the fascinating essays gathered in The College of Sociology (1937-39), ed. D. Hollier (Minnesota University Press, 1988). See also this interesting video where Peter Thiel explains the use he makes of Girard’s work in management.
 On our links to the land, see the An Inquiry into the Nature and Causes of the Wealth of Nations, Vol. 1, p. 378; on musicality, see Theory of Moral Sentiments, p. 37, and on the role of music in Smith’s thinking, please also see my “The Place of Language in Adam Smith’s Economics”; on uniformity and solemnity, see “The History of Astronomy,” pp. 66-67, 48-49 in Essays on Philosophical Subjects.
 This influences property law. Smith tells us that in English law an alien cannot purchase or inherit land, nor make a will: “He cannot make a will because it is the greatest extension of property and is founded on piety and affection to the dead, which an alien can have but few opportunities of deserving” (LJ, p. 432).
 It is likely that Smith’s interest in this fateful extension of moral responsibility was influenced by the controversy surrounding Lord Kames’s argument that we are justly held responsible for our actions though they deterministically happen through us. See the useful summary of the controversy in the introduction to Kames’s Essays on the Principles of Morality and Natural Religion.