ABSTRACT
Why the wars? How to pay for them? This chapter will show that these issues are at the core of Hume’s Political Discourses. The chapter will then make a comparison with Smith’s answers to those issues.
For Hume the cause of the wars is the British “national spirit” (“Of the Balance of Power”), which aims at British hegemony on Europe. I will show how some most famous Humian economic propositions (e.g. the neutrality of money, the so-called price-specie flow mechanism) are used by Hume to demonstrate that it is only the public debt which can pay for the wars, and how, according to him, it is impossible to repay it. However, the public bankruptcy is not the worst consequence, the worst being that the nation will destroy the public credit. The result here is the transformation of the Great Britain in an absolute monarchy.
Twenty-five years later, Smith’s position is quite different. Since the Seven Years’ War (the “first world war”), Great Britain knew that the old British Empire was a colonial empire and that the conflict against France was global. The last chapter of The Wealth of Nations proposes one apparently simple answer to problems related to the question of the public debt deriving from war. If it is not possible to augment the receipts (i.e. by the taxation of colonies), it is necessary to reduce the expenditures by changing the size of the Empire. However, this change requires deep reforms of the Empire.
