James Lawson: As the ‘Wealth of Nations’ turns 250, it’s time for the Tories to reclaim their inheritance

James Lawson, is chairman of the Adam Smith Institute.

Traditionally, the Conservative Party is the party of sound money and free enterprise.

From Pitt the Younger to Thatcher, its best leaders understood that prosperity stems not from state direction but from free individuals operating under the rule of law. When the party strays by embracing the mixed economy, accepting soft socialism, or losing the confidence to champion markets, the country suffers and the party loses.

The 250th anniversary of Adam Smith’s An Inquiry into the Nature and Causes of the Wealth of Nations, published on the 9th of March 1776, is the perfect moment to remember where these principles originated, and to ask if the party is ready to champion them again.

The Wealth of Nations was the first systematic work of economics. Smith showed specialisation is the engine of prosperity: ten workers in a pin factory, dividing tasks, produce forty-eight thousand pins a day; one alone barely manages a single pin. He demonstrated that self-interest serves the public better than government diktats: “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.” Competition harnesses this motivation to deliver better, cheaper goods. Prices carry information no bureaucrat possesses; markets allocate resources more efficiently than any civil service committee.

The implications remain as relevant today as in 1776. Shun protectionism: a country refusing to buy from efficient foreign producers taxes its citizens for worse goods. Reject industrial planning: the enterprise of millions, not the wisdom of ministers, creates growth. And do not mistake money for wealth: what matters is what a nation produces, not what it hoards.

Conservatives grasped this first. Edmund Burke praised the book as “an excellent digest… with many valuable corrective observations.” In 1792, Pitt the Younger told the Commons that Smith’s research would “furnish the best solution to every question connected with the history of commerce” and proceeded to cut tariffs. Peel repealed the Corn Laws, quoting Smith’s observation that farmers are “of all people the least subject to the wretched spirit of monopoly.” Thatcher rolled back the frontier of the state and joked, when accused of ideological novelty: “You are totally wrong. I learned it from Adam Smith and he was a long time before me!”

But Smith did not just argue for free markets in theory. A recurring theme of The Wealth of Nations is his assault on entrenched interest groups: merchants lobbying for tariffs and guilds restricting entry to inflate prices. His warning is famous: “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”

Here, the modern Conservative Party is weakest. Believing in free markets as a slogan is insufficient. You must confront the vested interests that distort them, even when they are your own voters.

Britain’s planning system, the developed world’s most restrictive, is a machine protecting incumbent homeowners’ property values at the direct expense of the young. The pension triple lock acts as a state-mandated wealth transfer from working-age taxpayers enduring stagnant wages to a largely insulated pensioner class. The net zero lobby has rebuilt mercantilism in green clothing. Billions in subsidies flow to politically connected firms, saddling consumers with Europe’s highest electricity prices, while we could instead have abundant nuclear power, revived North Sea oil, and American-style fracking. Smith would recognise every one of these as a conspiracy against the public.

The economic consequences are dire. In the eighteen years since the financial crisis, Britain’s real per capita income grew by roughly 2 per cent in total. In the eighteen years prior, it grew by nearly 50 per cent. Adjusted for purchasing power, average British living standards have slipped behind Mississippi, America’s poorest state. Strip out London’s outsized output, and our comparative decline is even starker.

The electoral consequences are predictably bleak. At the 2024 election, just 8 per cent of 18-to-24-year-olds voted Conservative. The median Tory voter is now 63. How can we expect younger generations to become conservatives without a stake in capitalism? Priced out of homeownership, unable to build, taxed to subsidise wealthier retirees, and squeezed by high energy bills, why would they vote for the party that presided over this settlement?

Yet there are reasons for optimism. As the then Trade Secretary, now Leader of the opposition, Kemi Badenoch spoke against “hosing industries down with subsidies or slapping tariffs on products from abroad.” That is the authentic voice of the Smithian tradition. But the wider party must follow.

The Wealth of Nations turns 250 today. For most of that time, the Conservative Party was its most effective champion. It can be again, but only if it challenges its own coalition’s vested interests with the same vigour Smith challenged the mercantilists. The party can either reclaim its free-market inheritance or continue managing the decline it recently presided over. Smith told us what works. The question is whether the party still has the courage to do it. Anything less is just nostalgia.