Literature Study GuidesThe Wealth Of NationsVolume 1 Book 3 Chapter 3 Summary

The Wealth of Nations | Study Guide

Adam Smith

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The Wealth of Nations | Volume 1, Book 3, Chapter 3 : Of the Rise and Progress of Cities and Towns after the Fall of the Roman Empire | Summary



Smith now examines the flip side of the coin: Why did cities become such economic powerhouses during the Middle Ages? The main reason, he argues, is the extensive privileges city-dwellers were granted compared to their rural counterparts. Medieval kings, Smith claims, lived in fear of their great noblemen, and sought to cultivate allies from among the common people. Town-dwellers likewise feared the nobles, who were often violent and oppressive. Thus, the king and the "burghers" of a country became natural allies. He granted them a great deal of legal and economic autonomy, while they paid him taxes and offered reliable political and military support.

As a result of these privileges, towns prospered, and many of them became more or less independent republics with their own courts and militias. Serfs would even flee to towns if they had the means to do so, bringing with them additional capital and labor. Eventually, towns came to derive a large part of their revenue from specialty goods, which they either manufactured or imported. This opened the doors to both extensive foreign trade and a diverse manufacturing industry.


Typical of Smith's overall view of history, there are no heroes in this narrative of urban growth and progress—but there are a few villains. The king, whose interest is to avoid being deposed or even assassinated, is a figure of pity, not grandeur. This fits with Smith's general policy of treating kings as good and bad managers of the realm, rather than as awe-inspiring rulers. In Book 5, Chapter 1, while discussing the various forms of public expense, Smith will somewhat grudgingly concede that a king needs fine homes and fancy utensils to convey a sense of "dignity." Thus the majesty of monarchs becomes a line item in the national budget.

The townsmen, in their struggle against the oppressive barons, are acting in accordance with Smith's natural-rights views, but they will then proceed to infringe on the natural rights of others by forming exclusionary craft guilds and trade organizations. Still, it is the barons who are cast as the true evildoers in this story, since they care neither for the rights of others, nor for the rule of law. Thus, they ride roughshod over the basic institutions required for the free market to operate. In Smith's view, their decline is a victory for society at large.

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