“The third and last duty of the sovereign or commonwealth is that of erecting and maintaining those public institutions and those public works, which, though they may be in the highest degree advantageous to a great society, are, however, of such a nature that the profit could never repay the expence to any individual or small number of individuals, and which it therefore cannot be expected that any individual or small number of individuals should erect or maintain.” (WN, V.i.c.1)

Adam Smith surveys the third and last major duty of government in Part 3 of Chapter 1 of Book V of The Wealth of Nations (available here or here): the provision of public goods. More specifically, Smith identifies two major types of public goods and public institutions:

A. Public works “facilitating the commerce of the society” (V.i.c.2), and

B. Education or public institutions “promoting the instruction of the people” (ibid.).

The Scottish philosopher further subdivides these two major categories — public works and education — into four distinct subcategories: transportation infrastructure (e.g. roads, bridges, street lamps, etc.), overseas military bases (e.g. forts and garrisons) to protect the property of British companies doing business overseas, education of youth (school age and college age), and adult education. As a result, Part 3 of this chapter has the following structure:

1. Article 1 is devoted to transportation infrastructure (V.i.d) and overseas military bases (V.i.e);
2. Article 2 is devoted to the education of school-age children and college-age youth (V.i.f); and
3. Article 3 is devoted to adult education or to “institutions for the instruction of people of all ages” (V.i.g).

Before proceeding any further, however, it is worth asking, If Adam Smith were alive today, what else would he add to his laundry list of public goods? Smith would no doubt add such essential public works as clean drinking water, sewage systems, and traffic signals, but what about “public art” or “affordable housing” or “universal health care” or a “universal basic income”? Do those more ambitious public programs count as public goods? With this key question in mind, I will proceed to Article 1 of Part 3 of Chapter 1 of Book V of Smith’s magnum opus in my next few posts.