INTRODUCTION

In his “Introduction and Plan of the Work,” Smith describes Book V as covering:

1. • the “necessary expences of the sovereign, or commonwealth” (WN, 12) and who should pay each of these expenses;

2. • “the different methods in which the whole society may be made to contribute towards defraying the expences incumbent on the whole society, and what are the principal advantages and inconveniencies of each of those methods” (WN, 12); and

3. • why “almost all modern governments … contract debts, and what have been the effects of those debts” (WN, 12) on the wealth of nations.

But this is more than a book about revenue. As Smith examines the optimal methods for financing the roles of government that he laid out at the close of Book IV, he develops the content of those roles and explores how their optimal implementation evolves as society evolves.

CHAPTER 1: “OF THE EXPENCES OF THE SOVEREIGN OR COMMONWEALTH”

Part I: “Of the Expence of Defence”

Again, Smith's four stages theory of progress frames his analysis. In the first, rude state of hunting “as we find it among the native tribes on North America” (WN, 690), the sovereign incurs no expense for defense because “there is properly neither sovereign nor commonwealth” (WN, 690). Every man is a hunter. The skills he masters as a hunter prepare him for the defense of the tribe and provide his maintenance in peace and in war.