Adam Smith's Constitutional Theory

Philanthrocapitalism and the Separation of Powers

“…In insisting on the inherent compatibility of for-profit corporations and nonprofit goals, Alito confers legal sanction on a precivil tenet: that belief that private enrichment is fundamentally harmonious with public welfare. As McGoey (2012McGoey ( , 2019 points out, the idea of natural compatibility between personal enrichment and a larger demos is more akin to feudal notions of monarchical divine right and feudal benevolence than to post-Enlightenment governance tenets that recognized the inherent conflict between private enrichment and public welfare (see McGoey 2012, Weingast 2017. Although conflict between personal gain and public welfare has, of course, been acknowledged at least since antiquity (cf Meiksins Wood 2008), it has largely been modern constitutions, including the US Constitution, that have sought to enshrine efforts to mitigate this intractable conflict.…”

“…Although conflict between personal gain and public welfare has, of course, been acknowledged at least since antiquity (cf Meiksins Wood 2008), it has largely been modern constitutions, including the US Constitution, that have sought to enshrine efforts to mitigate this intractable conflict. The establishment of modern notions of rule of law, the subjection of rulers to the same standards and restrictions that a polity must face, is built upon the bedrock of making visible public-private conflicts and finding ways to restrain ruling entities from abusing a public for its own private gain, an imperative that Smith and his peers wrote about extensively (Weingast 2017).…”

“…Later generations of economists either forget or deliberately obscured a key message of Smith, and before him Mandeville, who influenced Smith's thought. As Hirschman (1997, p. 18) writes, although both Mandeville and Smith did hail the economic effects of selfinterest, they also stressed that such interests needed to be tamed through a strong state (Weingast 2017) and through regulatory powers, calling for the "Skilful Management of the Dextrous Politician" (Mandeville's wording) to turn "private vices" into "public benefit." Smith [1997Smith [ (1776] is deeply critical of extending too much power to business merchants, particularly given their tendency to militate against the interest of workers: "Masters are always and every where in a sort of tacit, but constant and uniform combination, not to raise the wages of labor."…”

“…This recognition of conflict between "masters" and "workers" was fundamental to Smith's call, in Wealth of Nations, for different forms of regulation to offset predatory practices, including his demand for governments to set limits on usury (McGoey 2019). Today, any undergraduate economics student learns about Smith's identification of the value of division of labor, but fewer learn about his discussion, inherited from earlier thinkers such as Montesquieu, of the importance of "mutual monitors" to act as checks on power (Boucoyannis 2007, Weingast 2017) and the need to separate judicial decision making from business interests (Harcourt 2011, McGoey 2019.…”

“…A core aspect of their thought is recognition of a fundamental, intractable conflict between private power and public welfare. This belief contributed to the well-known, foundational focus in both jurisprudence and political theory on achieving a balance of power through deliberate checks, divisions, and legislated divisions in authority (Boucoyannis 2007;McGoey 2019;Weingast 1997Weingast , 2017.…”