In the fourth and final chapter of Book III of The Wealth of Nations (Bk. III, Ch. 4, available here), Adam Smith explains how commerce and trade in urban areas ended up planting the seeds of feudalism’s destruction. According to Smith, the rise of free and prosperous cities and towns in Europe contributed to the demise of feudalism in three ways:

1. New markets. First off, cities and towns provided “a great and ready market” for “the two greatest and most important articles of land produce, bread and butcher’s meat.” (WN, III.iv.2 & 20) In other words, feudal lords now had a powerful economic incentive to manage and improve their lands in a more productive and efficient manner instead of allowing their lands to remain uncultivated.
2. New landlords. Next, as towns and cities became more prosperous, many urban merchants decided to become landowners themselves and put their lands to productive use: “the wealth acquired by the inhabitants of cities was frequently employed in purchasing such lands as were to be sold, of which a great part would frequently be uncultivated. Merchants are commonly ambitious of becoming country gentlemen, and when they do, they are generally the best of all improvers.” (WN, III.iv.3)
3. Liberty and security. Lastly and — for Smith — most importantly, towns and cities were safe spaces that were free:

“Thirdly, commerce and manufactures gradually introduced order and good government, and with them, the liberty and security of individuals, among the inhabitants of the country, who had before lived almost in a continual state of war with their neighbours and of servile dependency upon their superiors. This, though it has been the least observed, is by far the most important of all their effects.” (WN, III.iv.4)

But most ironic of all, Smith tells us, it was the great feudal lords themselves who committed collective suicide, so to speak! According to Smith, these men were so vain, so selfish, and so short-sighted that they readily and cheerfully pissed away their power and privilege in exchange for expensive and exclusive luxury goods. Smith’s stinging analysis is worth quoting in full:

“But what all the violence of the feudal institutions could never have effected, the silent and insensible operation of foreign commerce and manufactures gradually brought about. These gradually furnished the great proprietors with something for which they could exchange the whole surplus produce of their lands, and which they could consume themselves without sharing it either with tenants or retainers. All for ourselves and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind. As soon, therefore, as they could find a method of consuming the whole value of their rents themselves, they had no disposition to share them with any other persons. For a pair of diamond buckles, perhaps, or for something as frivolous and useless, they exchanged the maintenance, or what is the same thing, the price of the maintenance of a thousand men for a year, and with it the whole weight and authority which it could give them. The buckles, however, were to be all their own, and no other human creature was to have any share of them; whereas in the more ancient method of expense they must have shared with at least a thousand people. With the judges that were to determine the preference this difference was perfectly decisive; and thus, for the gratification of the most childish, the meanest, and the most sordid of all vanities, they gradually bartered their whole power and authority.” (WN, III.iv.10; my emphasis)

Smith then closes the circle: the vanity of the feudal lords, combined with shrewd self-interest of city merchants and manufacturers, ended up igniting a fortuitous “revolution” — the self-destruction of feudalism and the expansion of order and good government as well as liberty and security — an unexpected but socially beneficial coup du système (if I may be permitted to say) that no one intended or planned on ahead of time:

“A revolution of the greatest importance to the public happiness was in this manner brought about by two different orders of people who had not the least intention to serve the public. To gratify the most childish vanity was the sole motive of the great proprietors. The merchants and artificers, much less ridiculous, acted merely from a view to their own interest, and in pursuit of their own pedlar principle of turning a penny wherever a penny was to be got. Neither of them had either knowledge or foresight of that great revolution which the folly of the one, and the industry of the other, was gradually bringing about.

“It is thus that through the greater part of Europe the commerce and manufactures of cities, instead of being the effect, have been the cause and occasion of the improvement and cultivation of the country.” (WN, III.iv.17-18)

Nota bene: I will proceed to Books IV and V of Smith’s Wealth of Nations on Monday, Feb. 9.