I started thinking about writing a book in 2023 during tercentenary celebrations of Adam Smith’s birth. The University of Glasgow had organised Adam Smith 300 Academic Workshops that aimed to ‘encourage deep thought as to Adam Smith’s writings and his relevance to contemporary economic and policy debate’. I organised a session there on ‘The Wealth of Nations in the 21^st Century’, which focused specifically on the trade-off between saving the planet and economic growth. I invited some fellow environmental economists to the sessions (Matthew Agarwala opened the session, followed by me, Frans de Vries, and Mirko Moro, with Les Oxley chairing). I wrote up my notes for a post on the Economic Observatory, but I knew there was much more to be said on the subject.

I approached a few publishers and was given advice on when to submit the final manuscript to coincide with the anniversary. Keen observers will notice that I missed the 9 March (the date that the Wealth of Nations was published) by a few months. Mea culpa. I probably could have made the date if I stayed with the original proposal or if I didn’t make too many changes to the manuscript that I submitted in June 2025, but I am a tinkerer and I couldn’t stop myself editing the text after receiving some favourable reader comments last August. Not only did I add new material in the revised manuscript in September, but a new edition of the Penn World Tables was published in October last year and I wanted to incorporate that too…thankfully the copy-editor had the patience of a saint and did not quit on the spot! In the end I had to do as my wife told me: channelling Elsa, I ‘Let It Go’.

What is the Inclusive Wealth of Nations about?

The book is a mixture of economic history, the history of (economic) ideas, and international relations. Adam Smith is widely considered the founder of modern economics, but the world has changed enormously since the time when Smith was writing. Over the past 250 years the global economy has grown substantially. While economic growth has brought prosperity and untold riches, it has also had significant negative side effects for the planet we live on, including climate change, pollution, and species extinction. The idea was to use the anniversary of Smith’s magnum opus to take stock and reevaluate the genuine wealth of nations and rethink how we measure economic progress.

The Inclusive Wealth of Nations aims to shape debates about how to measure the wealth of nations. At its core is an attempt to go ‘beyond GDP’; by this I push for an alternative to the most common way to measure the economy, using Gross Domestic Product. The focus is on inclusive wealth, a measure that includes all assets from which people obtain well-being (human welfare broadly defined) over time and thus measures the value of all forms of capital (produced, natural, human, and social) in a country. There are trade-offs that the wealth (stock) measure might capture that GDP (the flow) measure might miss. For example, a country can destroy natural resources to produce higher income in the short run, but the boost to income will last only as long as the natural resources do. The importance of inclusive wealth comes from the argument that changes in inclusive wealth are indicators of future changes in welfare; if inclusive wealth per capita is increasing then we can say a country is on the path to sustainable development.

I framed the book around existential risk and intergenerational justice. The existential risk component was based on a paper that I co-authored with Matthias Beck where we argued that there are effectively two ways of viewing existential risk, namely Global Catastrophic Risk and Planetary Boundaries, but that there is a lack of communication between them. In our article we argued that inclusive wealth is a better indicator of existential risk than conventional GDP. Taking this existential perspective, I showed how this related to intergenerational justice and the compatibility between Smith and John Rawls views of justice.

The book is divided into 5 parts: Part I History of the Theory of Economic Growth (chapters 2 & 3), Part II History of the Global Economy (chapter 4), Part III History of Measurement (chapters 5 & 6), Part IV History of Economic Growth (chapters 7 & 8), and Part V Alternatives (chapter 9).

Adam Smith’s Wealth of Nations was essentially a book about economic growth, so Part I gives an overview of how economists have thought about economic growth from Smith to the present. First, I give a brief (book-by-book) synopsis of The Wealth of Nations. I draw heavily on Book II, where Smith outlined the importance of capital. Although The Wealth of Nations starts with the division of labour, this was enabled by capital accumulation. Capital for Smith meant machines ‘that abridge labour’, buildings, land improvements, and the skills of people. Later thinkers continued to emphasise capital. In the twentieth century, it became a cornerstone of the growth models of the immediate post-war period, where capital was seen as the secret to growth. The centrality of capital was subsequently displaced by the neoclassical growth model (Solow-Swan), in which technological progress became the driver of long-run growth. But this raised the question of whether technology could really be isolated from capital, particularly when new capital embodies the latest technology. A further unresolved issue is how capital itself should be measured, most famously illustrated by the ‘Cambridge Capital Controversy’.

The issues in Part I are also important for the related ideas of development and sustainability, and in Part II I give an account of how these ideas emerged in the post-WWII era with a focus on the origins of development and environmental thinking. One of my favourite chapters to write was ‘Conflicting futures: Development and Environment in the Twentieth Century’. I was influenced by two of my favourite (academic) books that I’ve read in recent years: Paul Sabin’s 2014 book The Bet: Paul Ehrlich, Julian Simon, and Our Gamble over Earth’s Future and Heinz Arndt’s 1989 book Economic Development: The History of an Idea. What I liked about both of these books is that they contextualise the ideas, rather than saying a study was published in such and such year, it explained what was happening at the time that gave rise to these developments. That’s what I tried to do in this book but particularly in this chapter, where the key things I focused on were Cold War geopolitics and decolonisation. The chapter concluded with one of the early critiques of economic growth – the 1972 Limits to Growth. The response to this report laid the foundation for how economists think about sustainable development today.

Part III is a history of how economists and statisticians have measured the economy over the past 250 years. I purposefully start with a throwaway line from the Wealth of Nations, that Smith had ‘no great faith in political arithmetic’. But Smith did learn the value of data from his time as a customs official, as recounted by his long standing friend and correspondent Sir John Sinclair. It was Sinclair who introduced the word ‘statistic’ into the English language, but changed its interpretation from the Germanic statist view of how to measure the strength of the state to one that ‘an inquiry for the purpose of ascertaining the quantum of happiness enjoyed by its inhabitants, and the means of its future improvement’. The history of measurement in the nineteenth century was one of a lack of agreed terminology and standards, this was resolved in the twentieth century and led to the creation of national accounts and the predominance of GNP (and later GDP). Kenneth Boulding saw the invention of national income accounting as ‘one of the great inventions of the twentieth century’, because it offered governments a way to manage short-term fluctuations in the economy. Crucially, he made a distinction between these short-run benefits and long-run prosperity. In the subsequent chapter of part III I showed how developments in attempts to measure the wealth of countries (as opposed to the income of countries) mirrored the developments to measure income in the nineteenth and twentieth centuries. This was a long standing concern of economists: that wealth is a better indicator of the wellbeing of countries, but that comparisons tend to be based on estimates of income and not wealth. The measurement of wealth has followed a similar trajectory to the issues experienced by statisticians in the nineteenth century, as the economy evolved new concepts emerged and agreeing on what to count and how to count it has not yet been fully resolved.

Part IV applied the ideas of economic growth and economic measurement to the history of the first industrial nation, the United Kingdom. There are essentially two major themes in British economic history: one is the first industrial revolution (which still garners lots of attention, as there are various attempts to try and explain why Britain and not France set the world on the path to industrialisation) and the second theme is Britain’s relative decline. The latter receives less attention, but it is equally important because conventional growth theory implied that countries would converge not that they would be overtaken. I drew heavily on the work of two eminent economic historians, Sidney Pollard and Nick Crafts, particularly Pollard’s Britain’s Prime and Britain’s Decline and The Wasting of the British Economy. Crafts’s excellent 2018 book Forging Ahead, Falling Behind, and Fighting Back: British Economic Growth from the Industrial Revolution to the Financial Crisis recounts the story of Britain’s economic growth. I brought Pollard and Crafts up to present and highlighted the so called ‘productivity puzzle’, Britain’s collapse in productivity since 2008, in historical context. Applying the ideas from inclusive wealth highlighted a neglected part of Britain’s story, the role of the North Sea oil and gas. I show how British policymakers were aware of their relative decline and there were hopes that the North Sea would return Britain to past glories but instead the returns on the North Sea were never reinvested in other forms of capital. I showed how the UK had lower investment rates compared to other countries and it performed worse once account of natural resource depletion was taken into account. The UK simply did not manage its natural resources. The North Sea story is what conventional GDP/growth analysis misses: oil receives little attention in Crafts, but was an important part of the story for Pollard. An inclusive wealth perspective reveals how important oil actually was and how the gains from the North Sea were effectively wasted.

The last part of the book looks at alternatives to inclusive wealth. The ones I focused on were Kate Raworth’s Doughnut Economics and degrowth, paradigms ‘with the nearest approximation to the truth’. I offer a critique of both approaches. My main critique is that they focus too heavily on planetary boundaries as a motivating framework, this would be fine if that was the only existential risk that we are exposed to, but it is not. An excessive focus on planetary boundaries risks overlooking other sources of existential risk. In the final chapter I also offer a critique of inclusive wealth and some limitations of it in its current guise, but I am optimistic that these can be reconciled.

Ultimately, the book argues that the debate should not simply be about whether economies should grow. What matters is what happens to the underlying assets that make future prosperity possible. GDP tells us a great deal about what we produce today, but much less about what we leave to those who come after us. In summary, the wealth of a nation is not what it produces today, but what it leaves behind for tomorrow.

For those interested in reading the book, it is available directly from the Bloomsbury with a 20% discount using the code GLR BD8

We need a new determination to raise living standards of every single person in this land. And we must accept that to do that, to fix the economy and the country, we need to change politics. And we need to do it now.

While it is welcome to see a prospective Labour Prime Minister focusing on growth, we have been here before. Labour was elected only two years ago on a promise to ‘kick-start’ economic growth, yet those plans have already stalled. Nor is this a new pattern: the growth plans of the Labour government elected in 1964 were similarly short-lived. This was a point I made in an article in The Conversation last year, the ‘British Disease’ was never fully cured nor diagnosed and it has reappeared in a more virulent form. Without a full assessment of the disease it will not be possible for politicians to solve it.

Writing in the Financial Times, Daniel Susskind argued that Burnham needs to learn the lessons of where Starmer went wrong on growth: under Starmer Labour focused more on distribution of the proceeds of growth but not growth itself. A similar point was made by Martin Wolf: the ‘Manchesterism’ vision of ‘good growth’ proposed by Burnham (which includes the quasi nationalisation of essentials (water, housing, and transport), reindustrialisation, and a focus on local government) will not address the fundamental problems of the UK.

I came to twentieth-century British economic history through Ireland. For the first half-century after independence, the Irish economy struggled, in part because it remained closely tied to an underperforming British economy. Ireland’s later turn towards Europe coincided with a remarkable economic transformation. But studying Ireland left me increasingly interested in the other side of that relationship: why did Britain, the birthplace of the Industrial Revolution, fall behind its European neighbours and struggle so persistently to regain its economic momentum?

Burnham’s diagnosis is that Britain needs to be ‘rewired’ but the longer history suggests a more fundamental problem. For more than half a century, successive governments have tried to accelerate growth, yet the same pattern of underperformance has persisted across parties and radically different policy regimes. That points towards an institutional problem rather than a simply partisan one.

Past growth performance

In his speech, Burnham said:

After 10 years of political turbulence since Brexit and 20 years of falling living standards since the 2008 financial crash, Westminster hasn’t been working for people and it hasn’t been working for a very long time. In fact, it is broken. And as a result, the country isn’t where it should be. It is stuck in a rut. And clearly, we can’t go on like this. My generation of politicians, including me, must take responsibility. We haven’t been good enough.

This reminded me of a recent assessment of Conservative rule from 2010 to 2024 as ‘14 Wasted Years’ (The Conservative Effect: 14 Wasted Years?). The phrase invites comparison not only with the thirteen years of Labour government under Blair and Brown, but with an earlier period of Conservative dominance: 1951 to 1964, famously denounced by Harold Wilson as ‘thirteen wasted years’.

When set against the record of post-war governments, the years 1951-64 appear economically impressive. They combined strong economic growth with relatively low inflation and unemployment (as shown in Table 1). This lends support to Harold Macmillan’s view that ‘most of our people have never had it so good’. By this he meant:

Go around the country, go to the industrial towns, go to the farms and you will see a state of prosperity such as we have never had in my lifetime - nor indeed in the history of this country.

By the standards of what came later, Wilson’s ‘thirteen wasted years’ look remarkably successful!

Table 1 GDP and GDP per capita growth, 1945-2024

_{Source: Bank of England, A Millenium of macroeconomic data and ONS (2024). Output per hour, UK.}

The longer view is more uncomfortable: growth has been steadily declining over the past 80 years. Figure 1 shows why the productivity story matters, GDP per capita growth fluctuates with the business cycle and major shocks, but the underlying path of total factor productivity is more troubling. TFP growth was relatively strong in the early post-war decades, weakened from the 1970s onwards, and has hovered around zero for much of the twenty-first century.

Figure 1 Trend UK growth and productivity by governing party

_{Source: Bank of England, A Millenium of macroeconomic data and ONS (2024). Output per hour, UK.}

The bigger problem, however, was Britain’s relative decline. Despite these robust growth rates in the 1950s, the British economy grew slower than its European peers during the ‘Golden age’, causing it to fall further behind. Standard growth theory predicts that, other things equal, initially poorer economies should grow faster as they catch up with the technological frontier. Yet the UK consistently lies below the fitted convergence relationship in each period shown in Figure 2. Despite its relatively high initial income in 1950, Britain grew more slowly than would be expected given its starting position, with this underperformance persisting from the Golden Age through to 2022. Moreover, while conventional convergence theory predicts that poorer economies should catch up with richer ones, it does not, by itself, predict that former leaders will be overtaken. Yet that is precisely what happened to Britain: a country at the technological frontier became a relative laggard. The British growth problem therefore appears not as the inevitable consequence of having been a rich, mature economy, but as sustained underperformance relative to comparable economies.

Figure 2 Economic Growth in Western Europe and Western offshoots, 1950-2022

_{Source: Maddison Project database}

Britain’s poor growth performance was mirrored by persistently weak productivity growth, measured by TFP, and the UK consistently lagged behind much of Western Europe and several western offshoots – see Figure 3. This was noted in the 1960s when a team of economists from the Brookings Iinstitute wrote a report (Britain’s Economic Prospects) on the UK economy and emphasised the low rate of TFP growth compared to the US and European countries. The contrast is particularly striking during the post-war Golden Age: between 1950 and 1972, British TFP growth was among the weakest in the sample, far behind the rapid productivity gains recorded across continental Europe. Nor does the picture fundamentally change as the time horizon is extended. Through 1989, 2006 and ultimately 2022, Britain remains clustered among the weaker TFP performers. Britain did not just grow slowly; it was unusually poor at generating the efficiency gains that sustain long-run improvements in living standards.

Figure 3 GDP per capita growth and TFP growth

_{Sources: Maddison Project database and Penn World Table}

The British Disease

By this point, blaming individual governments becomes difficult. Labour and Conservative administrations tried different combinations of demand management, industrial policy, privatisation, deregulation, and austerity; yet Britain repeatedly returned to the same problem.

George C. Allen offered one explanation nearly half a century ago: the disease was institutional. Allen argued that there were deep structural problems with the British economy, problems that went beyond ‘rewiring’. Allen was highly critical of the then fashionable Keynesian demand management approach to the UK economy that emerged in the immediate post-war era. With a swipe at the venerable economists of the day:

A reader of this book may be left wondering whether there’s not more than a grain of truth in the gibe that a country’s economic progress is in inverse proportion to the distinction of its economists.

Allen’s critique of British industrial policy was that successive British governments had been bad at ‘picking winners’. The most infamous is of course Concorde, but there were other notable failures, such as British Leyland. Successive governments have highlighted the need for investment but without considering the productivity of these investments. Burnham’s call for social housing illustrates the distinction. There may be strong social arguments for it, but its contribution to productivity cannot simply be assumed. In my own country, the late T. K. Whitaker in his 1958 Economic Development, called on the Irish government to overhaul economic policy; one aspect of this was to make a distinction between social investment and productive investment. It seems that a similar assessment is needed in Britain.

Allen’s argument was subtler than the familiar complaint that Britain simply failed to invest enough. He regarded inadequate capital as something of a red herring. More investment did not automatically produce higher productivity if capital was badly allocated, directed towards declining industries, or used to protect existing structures from competition, all of which could weaken TFP growth. Indeed, Allen questioned the direction of causality itself: successful growth could generate high investment rather than being the result of it. The problem was therefore not simply how much Britain invested, but whether its institutions were capable of directing resources towards their most productive uses.

Allen’s warning also applies to Burnham’s call for reindustrialisation. Britain had a long history of using industrial policy to defend the industries it already had, often keeping declining sectors alive rather than allowing new ones to emerge. Reindustrialisation is not much of a growth strategy if it simply means recreating yesterday’s economy. The harder question is whether Britain can shift resources towards new and more productive activities.

Allen’s broader point was an institutional failure. Many of the institutions Allen criticised proved remarkably durable, and some features of Britain’s governing culture appear even more entrenched today. In a short note, I compared the educational background of the British Prime Ministers in my lifetime (conveniently after the publication of Allen’s pamphlet!); I also did a brief comparison of the educational background of the permanent secretaries of the civil service. What makes this interesting is how it compares internationally. Dan Wang argues that China has historically been governed by engineers, while the United States has been governed by lawyers. The UK appears closer to the American model, although perhaps with an even stronger emphasis on humanities and social science degrees than legal training.

Allen was not making the crude argument that Britain would grow faster if only more politicians had engineering degrees, his concern was more about where status and talent flowed. British industry struggled to attract what he called ‘first-rate ability’, while the professions, universities and civil service competed successfully for elite graduates. The degree tables prove nothing by themselves, but the persistence of the pattern is striking.

Table 2 UK Prime Ministers and University Degrees

Table 3 UK Permanent Secretaries and University Degrees

Allen’s most provocative argument was historical. Britain had avoided the ruptures that transformed many of its competitors. There had been no revolution and, unlike Germany or Japan, no defeat in 1945 followed by wholesale reconstruction. Britain won the war and largely kept its governing and economic elites. Institutions formed in an earlier age survived into the post-war economy. In Allen’s telling, political stability came at an economic price: the institutions that had helped drive Britain towards modernity had themselves failed to modernise.

Was the British Disease cured?

The ‘British Disease’ seemed to have been tamed but there is no consensus as to why this happened. Nick Crafts argued competition ‘cured the British Disease’, this was driven somewhat by the supply side reforms of the Thatcher era. This increased competition came after membership of the European Economic Community and British proposals to improve the single market; post-Brexit this treatment has partly been reversed. Another view by Henry Phelps Brown was that Britain struck black gold and it became a net energy exporter, but this was only a temporary fix and Britain returned to being a net importer after 2005. George Allen argued for a complete overhaul of British institutions, particularly universities where there should be greater emphasis on business education.

The view that I put forward in the Inclusive Wealth of Nations is that Britain benefitted enormously from a resource boom after the discovery from North Sea Oil. In fact, oil is never mentioned in Nick Crafts’s otherwise excellent book Forging Ahead, Falling behind and Fighting Back. In the nadir of the British Disease, Britain needed an IMF bailout to support sterling. After North Sea came on stream it was able to repay the IMF loan. The Financial Times even ran with a headline ‘From the IMF to the North Sea’.

My more fundamental point is that Britain failed to manage its inclusive wealth. The proceeds of North Sea oil, which accounted for around a quarter of economic growth in the early 1980s, were not converted into other forms of capital. Educational attainment continued to lag behind comparator countries and, unlike Norway, Britain never established a sovereign wealth fund to preserve part of the windfall for future generations.

This raises an awkward possibility: perhaps the British Disease was never cured at all. Thatcher’s reforms mattered, but they coincided with an extraordinary resource windfall. North Sea oil eased the external constraint, strengthened the public finances and contributed substantially to growth. Britain then spent the proceeds rather than converting a temporary depletion of natural wealth into lasting financial, produced or human capital. The symptoms improved, but the underlying disease remained.

Is Burnham right, ‘Will it be different this time’?

Burnham said that, ‘It is time for Whitehall to accept that growth cannot be ordered from the top down. Instead, it can only be nurtured from the bottom up.’ Burnham may be right that growth cannot be ordered from Whitehall but that is only part of the problem. For more than half a century, governments of both parties have promised to restore growth and they have tried radically different policies, but they repeatedly run into the same constraints. Before prescribing another cure, Britain needs to understand why the disease keeps returning.

The irony is that the smaller economy I originally studied partly escaped Britain’s orbit by changing its economic institutions and looking towards Europe. Irish policymakers increasingly recognised the limitations of the British growth model and looked to see what they could learn from more successful European economies. Britain, meanwhile, has spent much of the same period debating how to restore a growth model that was already in decline.

Perhaps every generation creates the Adam Smith it needs. Around the bicentenary of The Wealth of Nations in 1976, Smith was widely presented as the champion of markets and self-interest. Today’s Smith is more likely to be read as a moral philosopher, a theorist of institutions and justice, and a student of human behaviour. His economics has not disappeared, but it is increasingly understood as part of a much larger and broader intellectual project.

An Inquiry into the Nature and Causes of the Wealth of Nations is considered a classic in academic and financial circuits, but as William Barber wryly surmised, it ‘has suffered the fate accorded to most classics: it is more talked about than read.’[i] Outside universities, Smith is still widely caricatured as the apostle of greed and laissez-faire. Yet among Smith scholars, the ‘two-book’ Smith is the norm. The Theory of Moral Sentiments is no longer treated as a prelude to The Wealth of Nations, but seen as the key to understanding it.

I was fortunate to spend the past three weeks at different conferences in Edinburgh and Glasgow commemorating the 250th anniversary of the publication of the Wealth of Nations. Other colleagues have reflected on these conferences (see posts by Robbie Mochrie and Lesley Niezynski), my contribution is limited to the observation on the importance of the ‘two-book’ Smith and how the Theory of Moral Sentiments featured as much, if not more so, than the Wealth of Nations in these celebrations.

The first conference I attended was hosted by Panmure House and was entitled ‘The New Enlightenment Conference’. Panmure House keen Smithian scholars will observe was his former residence in the city of Edinburgh, close to where he was buried. The second was held at the University of Glasgow, The World in 1776/2026, where Smith wrote his famous treatise, The Theory of Moral Sentiments, first published in 1759. He resigned his professorship from Glasgow in 1763 to take on the tutorage of the young Duke of Buccleuch, and in his new role he toured Europe and met with the leading French philosophers of his day.[ii] The final conference was on the Legacy of Adam Smith and was held at the Library of Mistakes in Edinburgh.

Man for All Disciplines

Smith did not write The Wealth of Nations in isolation, he drafted much of The Wealth of Nations while travelling in France before returning to Kirkcaldy to finish it. The book grew out of the wider European Enlightenment rather than a purely Scottish intellectual tradition.

The Smith discussed in Edinburgh and Glasgow was a moral philosopher, a historian, a student of institutions and justice, whose economics cannot easily be separated from his ethics. Smith was an interdisciplinarian because when he was writing disciplines had not yet formed. Ironically, it was specialism from the division of labour that has forced academics to narrow their attention over time. At the academic conferences I was struck by the range of academic disciplines represented from philosophy to political science, with some linguistics thrown in, not to mention economists; although economists were in the minority.

What struck me most was not simply how often The Theory of Moral Sentiments was mentioned, but how little this surprised the audience (well a few libertarians aside!) and perhaps there would have been greater surprise if it was omitted. Among Smith scholars, the ‘two-book Smith’ is now almost taken for granted. That is a remarkable change because at the bicentenary of The Wealth of Nations in 1976, much of the debate still revolved around Smith as the champion of self-interest and free markets. Modern scholarship increasingly rejects what Amartya Sen called the ‘one-idea capsule summary’ of Smith and instead sees The Wealth of Nations and The Theory of Moral Sentiments as parts of a single intellectual project.

Two-book man

Adam Smith’s An Inquiry into the Nature and Causes of the Wealth of Nations is the landmark text in economics and one of the most influential books written in the past 250 years. While the book is seen as kick starting an intellectual revolution, the evolution of economic thinking and writing since the time of Smith has lost many of his messages and the nuances inherent in his thinking. The Wealth of Nations was part of his broader intellectual project and this was demonstrated clearly in the preface of the sixth (and final) edition of his Theory of Moral Sentiments (the final work that Smith choose to revisit before his death), where an elderly Smith reflected on how he had set out to write on the principles of law and government, the ‘different revolutions’ that society had undergone in terms of justice, and ‘what concerns police, revenue and arms, and whatever else is the object of the law’. Smith said he had ‘partially executed his promise’ in the Wealth of Nations and had hoped to continue it, but he was already at an advanced age at that point.

In fact, one of the biggest changes in the twentieth century has been the re-appreciation of Adam Smith the moral philosopher. Writing at the 150th anniversary of the Wealth of Nations, James Bonar completely disregarded The Theory of Moral Sentiments, arguing that the ‘memory [of it] was kept alive’ because of the success of the Wealth of Nations. Similarly, William Barber dismissed The Theory of Moral Sentiments as having had, ‘little distinction as a contribution to philosophy’. Whereas in the twenty-first century both Roger Backhouse and Robbie Mochrie see the arguments that were developed in The Theory of Moral Sentiments as being pivotal in Smith’s understanding of capital formation amongst many other things. The dismissal of the Theory of Moral Sentiments by Bonar and Barber is not surprising as many economists have seen the two as unrelated works with criticism of the Wealth of Nations overlooking The Theory of Moral Sentiments. For example, at the bicentennial of the Wealth of Nations, it had been argued that Smith had a ‘pernicious legacy’, but here it is clear that this criticism was based on a narrow reading of Smith from the Wealth of Nations and not what is elaborated in the Theory of Moral Sentiments.[iii]

Even the language tells the story. The Wealth of Nations revolves around labour, markets, prices and capital (see word cloud in an earlier post) while The Theory of Moral Sentiments revolves around sympathy, justice, virtue and conscience. They look like different books because they ask different questions but together they ask a larger one: how do prosperous societies emerge from human beings who are simultaneously economic and moral creatures?

_{Note: The word clouds are based on cleaned frequency counts rather than raw text. Common function words (such as “the” and “and”), OCR artefacts, and duplicate word forms were removed or merged so that the visualisations highlight Smith’s substantive concepts rather than the mechanics of eighteenth-century English}

It is the Theory of Moral Sentiments where Smith first invoked the concept of ‘an invisible hand’ as the mechanism that ‘advance the interest of the society’. Smith saw this as a way that society had ordered itself through the actions of the poor to emulate the rich as this had led to:

It is this deception [that the poor can emulate the rich in achieving convenience] which rouses and keeps in continual motion the industry of mankind. It is this which first prompted them to cultivate the ground, to build houses, to found cities and commonwealths, and to invent and improve all the sciences and arts, which ennoble and embellish human life; which have entirely changed the whole face of the globe, have turned the rude forests of nature into agreeable and fertile plains, and made the trackless and barren ocean a new fund of subsistence, and the great high road of communication to the different nations of the earth. The earth by these labours of mankind has been obliged to redouble her natural fertility, and to maintain a greater multitude of inhabitants.[iv]

In sum, it was ‘an invisible hand’ that Smith envisaged was what drove economic growth and overcame limits. Significantly, Smith referred to ‘an’ invisible hand rather than ‘the’ invisible hand. The metaphor was not presented as a universal law of markets, but as one way in which unintended consequences could advance the interests of society.

Finding Smith

My own work started as an attempt to see where the wealth of nations was today (see an early piece I wrote for the tercentenary conferences back in 2023). Kenneth Boulding, one of the founding figures in Sustainability Science, was a huge fan of Adam Smith and argued that one can glean new insights from Smith by reading him afresh and that we should study the classics ‘from the point of view of what they have to say to us today, rather than from the point of view of what their place is in the historical record’.

Looking back, perhaps I should not have been surprised that The Theory of Moral Sentiments dominated the anniversary celebrations. That was precisely the journey I found myself making; I began by asking where the wealth of nations comes from. I ended by realising that Smith himself thought that question could never be separated from a more fundamental one: what kind of society do we wish to become?

One of my favourite passages from the Wealth of Nations reads almost like an echo of the impartial spectator from the Theory of Moral Sentiments:

No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, clothe, and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, clothed, and lodged.[v]

Equity, I would argue, lies at the heart of the Wealth of Nations.

[i] W. J. Barber (1967). A History of Economic Thought. Middlesex: Penguin, p. 23.

[ii] Adam Smith (1776), An inquiry into the Nature and Causes of the Wealth of Nations. A select edition. Ed. Kathryn Sutherland (1998). Oxford: Oxford University Press.

[iii] R. S. Franklin (1976). Smithian economics and its pernicious legacy. Review of Social Economy, 34 (3): 379-389

[iv] TMS, part iv, chapter i.

[v] Smith, WON, book I, c viii.

This is an old debate, fifty-four years ago, the authors of The Limits to Growth asked whether an economic system organised around continuous material expansion could persist indefinitely on a finite planet. Their answer was controversial enough to provoke decades of criticism. The debate has changed over time and the question is no longer whether there are limits to growth, but what those limits mean, how they should be understood, and whether Meadows and colleagues were asking the right question in the first place.

The most glaring inconsistency of the LTG model (World3) is that if it is run from 1600 or 1800 it predicts collapse roughly a century later, a point first highlighted by Kevin Kelly. The world did not collapse in 1700 or 1900. This is a simple test of forecasting a model’s internal consistency, yet neither the original research team nor later updates subjected World3 to it. The model would also fail to generate the Industrial Revolution and, as Dana Meadows acknowledged, could not ‘take the world from the Industrial Revolution to whatever follows next beyond that’.

The World3 model was intended to show how an economic system might overshoot ecological limits and collapse. Yet, despite its weaknesses, the model continues to shape contemporary debates about degrowth, doughnut economics, and planetary boundaries. The reason LTG survives despite decades of criticism is that it stopped being judged primarily as a forecasting model and instead came to be valued as a moral narrative. Its influence rests less on the accuracy of its predictions than on the worldview it offered: a world of limits, overshoots, and ecological constraint.

The Club of Rome’s Limits to Growth (LTG, published in March 1972), and its 1974 follow-up volume responding to various critics, have had an extraordinary intellectual influence. Its ideas continue to shape contemporary environmental thought, most notably through the Planetary Boundaries framework, which explicitly ‘builds on and extends approaches based on limits-to-growth’. The LTG continues to be cited within academic scholarship. For example, a recent degrowth article published in the Lancet Planetary Health includes the scenarios of the Limits to Growth without any commentary on the external and internal validity of the underlying computer model.

The influence of the Limits to Growth

The LTG argued that there were limits to economic growth and that the world needed to change tack or risk ‘overshoot and collapse’. As the Club of Rome marked the 50^th anniversary of the publication of the Limits to Growth in 2023, it hosted a webinar (The Limits to Growth + 50) with Dennis Meadows, lead author of the LTG, Johan Rockström, the lead author of the Planetary Boundaries reports, and Jayati Ghosh, a development economist and a commissioner associated with the Club of Rome’s Earth4all. After Meadows presented on the LTG, Rockström lauded the prescience of Dennis Meadows and the LTG project:

Dennis meadows you are absolutely one of my top heroes in the world and you’ve influenced me and so many of my peers in the world. I would say you’re the father behind system dynamics modelling, what has become modern earth system modelling and you’re so humble when you always emphasize that you were not doing any predictions but you were sitting there with your team in the in the early 1970s... So it has really guided science and our understanding of human relations with your system for this whole time...We still follow a pathway to disaster

The LTG utilised the system dynamics framework developed by MIT management professor Jay Forrester. The model (World2) was outlined in his 1971 book World Dynamics. The LTG was the result of an MIT based project which updated and applied a version of Forrester’s model (World3) to the global economy. The intellectual underpinnings of World Dynamics were Malthusian as Forrester outlined:

Ever since Malthus stated his propositions relating population and food some 150 years ago, the validity of his assumption that food imposes an ultimate limit on population has been debated. The continued growth of population and the rise in the productivity of agriculture are often cited to refute Malthus. But it is undeniable that Malthus stated one ultimate barrier to unending population expansion. His assertion is not erroneous; it is merely incomplete.

The incompletion, as far as Forrester was concerned, was that Malthus had not specified other constraints on population growth. The World3 model was based on a series of equations that linked population, capital investment, natural resources, pollution, and food production. Effectively it is an attempt to model the interrelation between each component. The starting point was that growth in each of the variables had been exponential up to that point and that exponential growth could not be expected to continue, Forrester sought to determine what would bring the fall in growth and what will be the ‘barriers when growth goes too far’. Forrester’s model effectively predicted a collapse in world population in the early twentieth-first century.

The work of the LTG was undertaken by an interdisciplinary research team but with a core expertise in system dynamics. The report was provocative with a central message which identified an ‘overshoot and collapse’ of the global economy. LTG was a non-technical summary of a computer model of the global economy, the report focused on an assumed exponential growth in population, industrialisation, and pollution, and its impact on food production, and consequential resource depletion more generally. In conclusion, it warned of a collapse of the global economic system within 100 years (see Figure 1). The LTG concluded that:

1. If the present growth trends in world population, industrialization, pollution, food production, and resource depletion continue unchanged, the limits to growth on this planet will be reached sometime within the next one hundred years. The most probable result will be a rather sudden and uncontrollable decline in both population and industrial capacity.

2. It is possible to alter these growth trends and to establish a condition of ecological and economic stability that is sustainable far into the future. The state of global equilibrium could be designed so that the basic material needs of each person on earth are satisfied and each person has an equal opportunity to realize his individual human potential.

3. If the world’s people decide to strive for this second outcome rather than the first, the sooner they begin working to attain it, the greater will be their chances of success.

Figure 1: World model standard run

A central focus of LTG was on depletion of non-renewable resources (such as aluminium, chromium, coal, cobalt, iron, lead, manganese and mercury), which would precipitate this global collapse. In one scenario, available global resources were assumed to double but even this did not prevent a collapse (see Figure 2).

Figure 2: World model Resources Doubled

The LTG was so widely read that a contemporary cover of Newsweek ran with the headline ‘Running out of everything’ next to a picture of Uncle Sam looking into an empty cornucopia. The report also coincided with the oil crisis of October 1973 to March 1974, which saw oil prices quadruple (see Figure 3). This seemed to support the gloomy prediction that humanity was running out of resources.

Figure 3: Index of crude oil prices in 2000 dollars (1990-2000 = 100)

Models of Doom

While the modern legacy of the LTG has been an uncritical acceptance of the warnings, contemporaries were less convinced. One of the most stinging rebuttals of the entire approach of the Limits to Growth came from the Models of Doom, a book written by an interdisciplinary research team that looked at various components of the LTG.1

Some of the main criticisms related to the data, or rather the lack of data. Many of the model parameters were inferred based on guesswork. The old aphorism ‘garbage in, garbage out’ was quite applicable in the case of the LTG; given the Malthusian preferences of the team, it is perhaps best described as ‘Malthus in, Malthus out’.

The mathematical physicist Sam Cole critically evaluated the structure of the World2 and World3 models, the main distinction between the models was that there were three times as many equations in World3 but that the quality of data underpinning these equations had not improved. In World2, Forrester had only used 2 data points, as Cole explained, ‘the only real data which appear to have been used in Forrester’s model are the world population figures for 1900 and 1970. For the most part the model is based on his vision of how the real world operates.’ In World3 there were numerous assumptions used such as inferring time series data (data measured over time) from cross-sections (data measured at one point in time across countries).

When it came to sensitivity analysis, Cole and the mathematician Robert Curnow found that the model was highly sensitive to the parameters chosen and that the model specifications were the ones that showed collapse: the assumptions drove the results. There was nothing in the model to prevent collapse, there were no adaptive feedback processes embedded. The model made pessimistic assumptions. If the model was run backwards then ‘Forrester’s guesswork’ led to unrealistic predictions about the past. If the model started in 1850 instead of 1900, then the model would show collapse in 1970. Clearly, the world had not collapsed in 1970, and this would invalidate the internal consistency of the model and its results. The model also led to inconsistent results if there was a split between developing and developed countries.

Subsequent analysis by Cole and Curnow, published in Nature, showed that the World2 and World3 models were highly sensitive if run backwards and led to some unrealistic conclusions about the past. The main implication was that the parameters of the model were unstable and that this was driven by the assumptions. These criticisms of the model are reflective of wider criticisms, such as other critiques published in the journal Nature, that also highlighted the sensitivity of the models to the assumptions and that it was ‘too early for policy conclusions’ based on the World2 and World3 models.

Economists on the Limits to Growth

LTG did not go unnoticed within the world of economics, especially those who had studied economic growth. Jay Forrester, an MIT professor in the Sloan School of Management, saw economists as the biggest critics of both his World Dynamics and the LTG. Given that the LTG was essentially an MIT affiliated study and also that the leading authorities on economic growth were either based at MIT (Robert Solow) or had studied there (William Nordhaus and Martin Weitzman), it effectively became an MIT internal dispute; or more accurately, an internal dispute of MIT’s Sloan School of Management. Robert Solow later recalled that: ‘I thought that its message was mostly hot air. I have not changed my mind about them’. Although he later felt that the situation may have changed given the resource intensive economic growth experienced by India and China.

The opening line of Solow’s initial views on the LTG were that his MIT colleague was ‘either the Christopher Columbus or the Dr. Strangelove of this business.’ Solow quoted an interview that Forrester had given where he had defined the composition of his ‘problem-solving group,’ they were to be made up of successful professors but it should purposefully exclude social scientists because they ‘always want to get to the bottom of a particular problem. What we want to look at are the problems caused by interactions.’ In this view, Forrester did not wish for accuracy on particular problems but wanted to get the interactions right.

Given this disdain for social sciences, it is then perhaps unsurprising that World Dynamics, effectively a book on economic growth, contains only 13 references and none of which are to any work by economists but instead were primarily self-citations of Forrester’s own work. It is somewhat curious though, given the renowned expertise in MIT at the time, that Forrester would not consult his colleagues in the economics department or even to use his work to chastise their efforts. Perhaps greater cross-campus dialogue could have helped inform the World2 and World3 models.

The main argument that Solow presented in his 1973 article were that the assumptions Forrester made drove his results, change the assumptions and the conclusions would change too. For example, Solow highlighted the assumption that population growth was positively correlated with income, something which went against the lived experiences of countries undergoing demographic transition. The model was seen as parameterised to show collapse.

Economists continued to engage with the various iterations of the LTG. One of the most vocal critics was William Nordhaus who highlighted how the underlying LTG model overlooked existing economic theory, invented concepts de nouveau, and set model parameters so that it only showed collapse. An initial critique by Nordhaus published in the Economic Journal in 1973 argued that changing some key assumptions in Forrester’s World Dynamics model changed the outcome dramatically; Nordhaus similarly dismissed updates to the LTG as ‘Lethal Model 2’.

Countering some of the claims was evidently still on Solow’s minds when he gave an address to the American Economic Association in December 1973, acknowledging that he, ‘like everyone else, [had] been suckered into reading the Limits to Growth’. This led to a series of studies that incorporated exhaustible (non-renewable) resources more explicitly in models of economic growth. It also led to the foundations of the economic approach to sustainable development and inclusive wealth. These focused on achieving intergenerational equity via the reinvestment of rents from exhaustible resources into reproducible capital (such as buildings, machine and tools).

Limits to Growth may have been partly right

In the various critiques of the LTG, the focus predominantly was on non-exhaustible resources as the LTG had placed greatest emphasis on this aspect. Nordhaus was sanguine about the pollution aspect of the LTG model stressing that growth need not result in increases in pollution (in terms of toxic gases) but placed less stress on global warming/climate change prognosis of the LTG, noting how ‘the cost of greenhouse warming in the middle of the next century (or of policies to slow greenhouse warming) would be in the range of 0 to 2 percent of world income.’ Similarly, Martin Weitzman focused exclusively on the exhaustible resource constraint set by the standard model of the LTG. Weitzman assessed the likelihood that the world was running out of resources and came to the optiistic conclusion that resource scarcity was not binding given that technological change was ‘maybe 40 times larger than the required adjustment for depletion of exhaustible resources.’

This narrative that economists had won the debate with LTG also overlooks a contemporary response to Nordhaus from Forrester and colleagues.2 In their response, Forrester and colleagues argued it was Nordhaus who was wrong, and it was he who had misinterpreted the model. For Forrester, the systems model should be analysed as a whole and not broken into subcomponents, as was done by Nordhaus; because this was how the system interacts, and it is the interactions that drive the results. While Nordhaus had portrayed Forrester as a neo-Malthusian peddling a disproven theory; Forrester embraced this identity and instead accused Nordhaus of misunderstanding Malthus.

Figure 4 Atmospheric Concentrations of CO₂ (parts per million), 0-2023

_{Note: Horizontal dashed line at 280 ppm indicate the pre-industrial average atmospheric CO2 concentration. Horizontal dashed line at 350 ppm indicates the safe level of CO2 in the atmosphere (crossed in 1989).}

What these critiques and responses to the LTG overlooked, however, was one key aspect in the second scenario which emphasised pollution as a constraint on growth, primarily CO₂ emissions. The LTG predicated that if CO₂ emissions continued to grow at 0.2% per annum and if fossil fuel consumption continued unabated, then atmospheric CO₂ concentration would reach 380 parts per million (ppm) by 2000 ; remarkably the recorded figure in 2000 was not far off this, reaching 370 ppm; as shown in Figure 4.

This rise in CO₂ concentrations was not a foregone conclusion as the LTG noted, ‘if man’s energy needs are someday supplied by nuclear power instead of fossil fuels’. However, the LTG warned of global warming ‘by the laws of thermodynamics’ and that ‘thermal pollution may have serious climate effects, worldwide, when it reaches some appreciable fraction of the energy normally absorbed by the Earth from the sun.’

Degrowth and Limits to Growth

The LTGs enduring appeal comes from offering a coherent story that links environmental degradation, resource use, inequality and economic growth into a single framework. Even if the forecasts are disputed, the narrative remains powerful. In his 2025 book Slow Down or Die, Timothée Parrique structures his chapters around the ecological, social, and political ‘Limits to Growth’. Ultimately, he sees LTG as prophetic concluding that though it was ‘extremely controversial at the time, its ideas find almost universal agreement today.’ Other degrowth studies draws inspiration from LTG, or rather an ‘advanced reincarnation’ of LTG as Giorgos Kallis and Hug March see it. Recent degrowth literature reviews show that there is limited engagement with the concepts within mainstream economics. Perhaps the reason why there has been limited engagement within economics is because the LTG predictions were heavily criticised by economists and other scientists. From the perspective of economists, the predictions of the World3 model were not born out and thus are not worthy of debate.

The main issue appears to be different perspectives on the LTG debate. For economists, the debate was won and there is therefore no need for further engagement with proponents of LTG (degrowthers). For systems thinkers, they too have been vindicated. Some found that the LTG model fitted data 30 years on or even became more relevant over time, and there have been studies updating the LTG models. The most recent update to the World3 model shows a similar overshoot and collapse outcome to the original model. Effectively, this is an unsettled scientific controversy where recourse to facts or theory cannot resolve the controversy as both sides see the world in different ways.3

There are lessons from another recent scientific controversy, that over ‘zero-Covid’ during the 2020 Covid pandemic. The Covid-19 response was influenced by epidemiological modelling of the pandemic and the original models assumed no mitigation. Once such forecasts become public they can change behaviour, making the original forecast a moving target. Economists know this problem as the Lucas critique: predictions can alter the very system they seek to predict. There are direct parallels here to the LTG as a model was built, with various assumptions, and it revealed a systemic danger and this danger was not visible in conventional thinking, therefore policymakers must change course.

One of the most influential Covid-era studies argued that elimination rather than mitigation would produce the best outcomes for both health and the economy. The study became a touchstone for advocates of Zero-Covid, yet the policy was never sustainably achieved and later assessments of the evidence proved more mixed than many advocates initially claimed.4 A subsequent BMJ review found evidence of advocacy bias in parts of the Covid literature, with researchers often emphasising the benefits of preferred policies while paying less attention to trade-offs and uncertainty.

Both the Covid-19 and degrowth debates exhibit a common pattern in which model-based warnings become advocacy movements and once participants become advocates, evidence is often selected asymmetrically. For example, in The Guardian op-ed cited above the conclusion that we are entering ‘hothouse earth’ territory was based on a commentary that uses the SSP5-8.5 scenario which is no longer regarded by many researchers as the most plausible business-as-usual pathway. In fact, many climate researchers now regard SSP5-8.5 as ‘implausible based on trends in the costs of renewables, the emergence of climate policy and recent emission trends’. The issue is not that SSP5-8.5 was impossible, but that an extreme scenario gradually acquired the status of a baseline forecast and once a model becomes an advocacy tool, there is a natural tendency to focus on the most alarming trajectories rather than the most probable ones. Further the argument that growth has not alleviated poverty has also ignored the fact that economic growth in China and India has lifted more people out of poverty than conventional redistributionist policies as advocated by degrowth.

Fifty-four years after LTG, prominent economists and degrowth advocates once again tell us that growth is a doomed strategy. The remarkable thing is not that these arguments persist, but that they continue to rely on the same intellectual architecture: computer models, systemic risks, warnings of overshoot, and calls for urgent transformation. The question is not whether there are limits to growth but whether we can discuss those limits without allowing models to become articles of faith.

None of this is to say that growth is a perfect solution. The challenge is not to choose between growth and degrowth, but to think more carefully about what we mean by prosperity and how it should be measured. We need less advocacy bias and more scientific rigour in public discourse if we are to solve the genuine challenges that societies face today. I explore these questions further in my forthcoming book on Adam Smith and inclusive wealth.

I have written a fair few papers on this, here’s one looking at the social movement that put pressure on the state to introduce land reform, here’s another one explaining the mechanics of the land settlement, and one looking explicitly at the financial instruments used to fund the land transfers). Problem solved and the rest is history. Well, not quite.

At the end of last year (in my pre-substacking days!) I noticed something unusual in the Irish eviction statistics: they were at levels I had not seen since I looked at figures of evictions in the 19^th century. The number 5,000 is something ingrained in my mind because of work I had done on the Land War – back then it was around 5,000 evictions annually. In 2025 there were reports of 5,000 evictions per quarter, so approximately 20,000 a year!

I posted a figure of annual eviction rates from my PhD thesis on Linkedin and, surprisingly, had a lot of engagement – helped in no small part by being noticed by Ireland’s leading housing economist. One very insightful comment was that Irish evictions appeared to be higher than other OECD countries – more on this below.

That led me to write a short piece with a former colleague of mine Richard Mc Mahon (a historian based at MIC, Limerick). Which we published on the RTE Brainstorm (the original article came out on 5 February). In the piece we made a comparison of modern day evictions with the experience in the nineteenth century. The number of notices of termination was higher than eviction data we had for the nineteenth century, although the number of people affected was less given the fall in household size. Again, we were surprised with the reaction to the piece, this time amplified by an article appearing in the Irish Times.

Unbeknownst to ourselves, the comparison with the famine had hit a nerve. It was mentioned a few times in the Dáil (the Irish parliament). So we updated our analysis. Below is an expanded version of the draft we sent into the Irish Times (published on Wednesday), and a few other thoughts (some personal reflections on being evicted and also a radical solution).

The ‘Plain Stupid’ Debate Over Ireland’s Eviction Crisis

[this is an extended draft of an article co-authored with Richard McMahon that appeared in the print edition of the Irish Times]

Ireland is currently experiencing a crisis in the rental market with eviction figures not seen on this island since the mid-19^th century. The most recent daft.ie Rental Report also shows that rents have risen and that housing availability remains low, adding to the pressures felt by renter households.

In February this year, we wrote an article for RTE Brainstorm about the rise in eviction notices highlighting how Ireland has likely not seen evictions of this magnitude ‘since the 1850s’.

The article was based on data from the Residential Tenancy Board (RTB) that showed notices of termination up to the third quarter of 2025. We did not know what the total figure would be like for 2025, but we speculated that it would be as high, if not higher, than 2023 when eviction notices reached 19,011. This turned out to be the case.

The total number of notices of termination received by the RTB was 20,033 in 2025, a 21 percent annual increase from 2024. While the number of notices of termination had actually fallen in the last quarter of 2025, this appears to have been a stay of execution. The first quarter of 2026 witnessed a rapid increase in eviction rates, up 36 percent from the previous quarter and 50 percent higher than the numbers seen in the first quarter of 2025.

In Figure 2 the raw number of eviction notices from the RTB are presented alongside an eviction rate. The latter is constructed using the total number of private tenancies registered with the RTB as the denominator. This is done to compare like with like. A rough back-of-the envelope calculation suggests that there are roughly 100,000 rental properties not registered with the RTB (that is comparing the RTB private rentals with the number of rental properties reported in the 2022 Census). If this is the case, then the RTB data may understate both the total number of tenancies and the number of eviction notices. That caveat notwithstanding, the figure points to a substantial increase in evictions.

The immediate culprit for the rise in notices of termination was the anticipation of new legislation coming into force for new tenancies in March 2026. The new regulations, while well intentioned, had inadvertently caused eviction notices to spike. The new regulations placed caps on rent increases at either 2% a year or in line with the rate of inflation, alongside athe introduction of a 6-year minimum duration tenancy. It also introduced restrictions on the sale of rental properties depending on landlord size, distinguishing between corporate landlords and smaller landlords with fewer than three properties. Importantly, these regulations applied only to tenancies agreed after the legislation came into force.

The main stated reason for notices of termination was landlord intention to sell their property, effectively exiting the rental market. This is clear in RTB data where the number of landlords intending to sell their property rose from 3226 in the final quarter of 2025 to 4259 in the first quarter of 2026.

Looking solely at the figures provided by the RTB, this level of ejectment notices does not appear to compare favourably to that seen in Ireland in the mid-nineteenth century. For instance, in the pre-Famine years of the early 1840s, there were an average of 5,000 civil bill ejectments brought against circa 14,000 defenfants annually in a country with a much larger population of over eight million people.

Another comparison is more revealing: the rate of evictions relative to the number of households. Between 1855 and 1877, the eviction rate was 0.14 per 100 holdings, rising to 0.48 per 100 during the Land War. Again, using the 2022 census figure of 1.95 million households, the rate implied by the 2025 RTB data is roughly one eviction notice per 100 households (and higher if we only consider rented households). Most of these notices do not lead to formal evictions but they often likely have the effect of causing tenants to vacate the property. It is not unreasonable to suggest that the rates of people leaving properties on the foot of termination notices are by no means out of line with those found, at times, in the 19^th century.

‘Plain Stupid’?

Our post highlighting the comparison between eviction notices in the present and those in the nineteenth century has become a talking point for opposition parties in Ireland. Labour were the first to highlight this in March, with Deputy Conor Sheehan noting that Ireland was living through the ‘highest rate of evictions since the Famine’. This particular claim was fact checked by The Journal, who concluded that ‘this was mostly true’, albeit their fact checking was based on a haphazard re-reading of the underlying sources of the RTE Brainstorm article.

The Famine reference resurfaced last week, this time from Sinn Fein’s Mary Lou McDonald. The Taoiseach’s response was that it was ‘just plain stupid to go on about the greatest evictions since the famine’. For Micheál Martin, a former history teacher and history graduate from UCC, to so easily dismiss this historical comparison is surprising.

In our original article we were careful to state that Ireland in 2026 is very different from the Ireland of the nineteenth century, but it is important also to stress that comparisons of this kind, while complex, are standard practice among economic and social science historians seeking to identify long-term trends and patterns. The Taoiseach did not elaborate on his comment other than to claim that to raise these findings is ‘not being serious about our housing problems’.

Historical research can illuminate our present circumstance by highlighting not only remarkable changes and transformations in our economic, social and political life, but also enduring features – in particular, how, despite extraordinary changes in Irish society and changes in land ownership and control, inequalities and imbalances of power in the relationships between landlord and tenants are again marked features of Irish life.

This is the case nearly 150 years after Irish farmers and labourers combined to challenge the overweening power of landlords during the Land War. The contemporary solution to this was tenant-proprietorship and tenurial security. Security of tenure became central to Irish political identity, and this was only achieved through agitation on the ground, culminating in state-funded mortgages that transferred assets (land and homes thereon) from landlords to tenants.

It is not unreasonable to suggest that tenants today are in a weaker position in their relationship with landlords than they were at the foundation of the state. This is most obviously reflected in the high rate of eviction in Ireland in the present day. For the Taoiseach to dismiss drawing attention to historical parallels suggests that they are irrelevant to government thinking and that the heavy policy emphasis, on the part of the Taoiseach, on the idea that ‘supply’ alone can solve the housing crisis is largely divorced from wider considerations of fairness and social justice that motivated some major Irish political leaders in the past.

In fact, while the Taoiseach was right to highlight the ‘continued growth’ in the housing supply, RTB data show that the increase in private tenancies was only 40% of the number of eviction notices issued in the first quarter of the year (see figure 3). There is clearly a fundamental problem in Ireland’s housing market.

The RTB data suggest that growth in Ireland’s rental sector is increasingly concentrated among larger landlords. While the total number of landlords and smaller landlords has remained relatively flat since 2024, the number of landlords with very large portfolios has grown rapidly. In particular, landlords with more than 100 tenancies increased by almost 70 per cent between Q2 2023 and Q1 2026. This points towards an increasing concentration of ownership within the rental market, even as overall growth in the sector appears to have slowed. The increasing concentration of rental property ownership raises uncomfortable historical parallels with earlier systems of concentrated landownership in Ireland.

Missing the real issue

Societies tend to reach for historical analogies in times of crisis. While the historical comparison was revealing, the more pertinent point that we originally made is that Ireland has one of the highest eviction rates in the OECD. Only an estimated 1% or less of renters appear subject to eviction orders annually in much of Western Europe, but the rate in Ireland based on census rental household figures for 2022 is now 3.89%. If we only use RTB data on evictions and private tenancies, and exclude non-registered rental properties, this rate is even higher at over 8.22% - that is higher than the United States, which has very high rates by international standards and, as a result, high levels of homelessness; a dynamic that is increasingly visible in Ireland.

Despite the vast wealth generated in Ireland in the past two decades, why does Ireland have such trouble housing its people? Perhaps the more important comparison is not with Ireland’s past, but with Ireland’s peers in the present. The uncomfortable truth is that many renters in contemporary Ireland now experience levels of insecurity that would seem extraordinary elsewhere in the OECD. This is something that should be a great cause of concern to policymakers in Dublin and should be subjected to further analysis rather than the ‘supply will solve everything’ approach evident in the Taoiseach’s contributions to last week’s Dáil debate. These facts are plain and there is nothing stupid about acknowledging them.

Some lived experience

I have rented in both Ireland and Scotland and have experienced eviction in both countries.

My Scottish experience was understandable. When I first moved to Scotland I had rented an apartment and there were repeated issues with the central heating. After a series of attempts to repair it, the owner was told they would be required to replace the entire system. This must have been more than the owner had intended to invest in the property, so shortly after they decided to sell the property and let the next person deal with it. Fair enough. I was given notice of eviction and I had to find a new place to live. This was back in the early 2010s, so there were no supply constraints. I also was a household of one, so nothing to worry about. I found a new apartment within two weeks and I moved on with my life. The key insight, evictions are part and parcel of being a renter: when the owner’s interests no longer align with that of the tenant’s.

My second experience was in Ireland, this I was renting a house in the 2020s and I was no longer a household of one. This experience was much more stressful. The owner again decided to “sell”, although this time the circumstances were more ambiguous (and the rental was not registered with the RTB). The owner was accommodating (given we had a child in school) and gave us a fair amount of time to find somewhere to go, but an eviction it certainly was. Business is business, but it was one of the most stressful experiences of my life. Why? Because Ireland’s housing market is chaotic. There were simply no houses available to rent. When properties become available people were queueing to see them. Landlords expected would-be tenants to arrive prepared with bank statements, payslips, employer references, and references from previous landlords. Rents were high (and higher now) and landlords wanted equivalent of 2 to 3 months’ rent in advance (a small fortune!). In the end the rental house was put up for sale as promised, but within 6 months it was off the market and back up for rent at a higher rate.

So, two very different experiences of eviction. The main lesson is that when eviction interact with scarcity, the situation is much more precarious leading to knock on effects for people and families security, mental health, and well being.

Radical Georgist reforms?

If eviction becomes dangerous mainly because housing is scarce, then the deeper issue is land and the ownership of scarce urban space. This links back to the ideas of Henry George, the American political economist best known for the influential nineteenth-century text Progress and Poverty.

Henry George was one of the more interesting figures during the Irish Land War. He is also associated with one of the least known of the 19^th century ‘isms’. Leo Tolstoy believed that, ‘People do not argue with the teaching of George, they simply do not know it… for he who becomes acquainted with it cannot but agree’.

Niall Whelehan and I wrote a piece for the RTE Brainstorm arguing for a Georgist interpretation of Ireland’s housing crisis. George became fascinated by Ireland during the Land War because he saw landlordism as one of the clearest examples of how concentrated ownership of land distorted society and politics. His ideas would go on to influence Michael Davitt and sections of the Land League movement.

George’s main argument was simple enough. Land is different from other assets because its supply is fixed. As economies grow and populations increase, rising land values generate enormous gains for landowners while increasing costs for tenants and workers. In other words, housing crises are often really land crises. George believed the solution was radical land reform and a universal land tax.

Independent Ireland believed it had largely solved this “Land Question” through land reform and tenant proprietorship. Security of tenure became central to Irish political identity. The image of the landlord extracting rents from insecure tenants supposedly belonged to the past.

Yet many of these tensions have now reappeared in urban form. The issue is no longer agricultural land but housing and rental property. Scarcity has created substantial gains for property owners while increasing insecurity for renters. The rise in eviction notices and homelessness reflects not simply a shortage of buildings but a deeper imbalance in the relationship between property ownership and housing need.

This is also why an exclusive focus on “supply” can sometimes miss the point. George was not anti-market, but he did believe that owners of scarce land could extract gains created by wider social and economic development. The uncomfortable possibility is that independent Ireland did not fully solve the land question so much as displace it into the modern housing market.

These arguments remain relevant far beyond Ireland. Although these proposals are unlikely to garner support when property interests are embedded within political institutions.[i] Or, as the former Taoiseach of Ireland put it, ‘one person’s rent is another person’s income’.

Smithian Conclusion

Given I started substacking to largely to write about Adam Smith, it is only fitting to end with him. There is, after all, a Smith quote for almost every occasion:

No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, clothe, and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, clothed, and lodged.

I use this quote at the end of my recent book, but it seems particularly relevant here. Ireland is now one of the wealthiest countries in the world. Yet homelessness is at record levels and housing insecurity has become a defining feature of life for a growing share of the population. Recent work by colleagues at Heriot-Watt University for Crisis has documented similar trends elsewhere, particularly in countries where housing markets have become increasingly financialised.

What strikes me about the Irish case is that this is not primarily a story about poverty. Ireland performs relatively well on many conventional measures of income inequality. Yet it performs much less well when it comes to wealth inequality. Housing sits at the centre of this divide. For homeowners, rising property values have generated substantial wealth. For renters, rising rents and increasing insecurity have made it more difficult to accumulate assets and plan for the future.

[i] A number of representatives in Ireland are landlords and a number had unregistered rental properties who are more represented in the legislatures.

I initially approached the Suez crisis from the perspective of Irish macro-economic history. The 1950s was a period of periodic balance of payments crises in Ireland (and the UK) and one of the worst recessions in modern Irish history following a monetary experiment where Irish officials refused to follow British monetary policy.[ii] Ireland’s economic problems started with a weakened sterling that was a drag on the Irish economy. What Irish officials did not realise was that sterling itself was under sustained speculative attack from 1955 onward, before, during, and after Suez. The back story to the Irish experiment was the travails of sterling as an international reserve currency, what the economic historian Maylis Avaro calls a ‘zombie reserve currency’.[iii]

The Suez crisis is usually told as a story of diplomacy and imperial decline. But it was also a story about money, and about another defining feature of twentieth-century British history: relative economic decline. The Suez crisis exposed that decline and was shaped by it. Britain fought two wars in 1956: one in Egypt and one in the foreign exchange markets.

Suez in the new world order

The Suez crisis began with Colonel Gamal Abdel Nasser’s nationalisation of the Suez Canal in July 1956 and ended with a forced ceasefire and a run on sterling only months later. Militarily, the Anglo-French-Israeli invasion was not a defeat; however, politically and financially, it was disastrous.

The canal mattered because it was the artery of oil and imperial trade between the Middle East and Western Europe. Britain had already been shaken by the nationalisation of the Anglo-Iranian Oil Company in 1951. Losing control of the Canal so soon after losing influence over Iranian oil made Suez feel like part of a wider imperial retreat.[iv]

For Israel, the canal itself was never the central issue. The deeper concern was Egyptian power and access through the Straits of Tiran after Nasser’s growing military strength and the Soviet-backed arms deal of 1955. Suez was presented publicly as a dispute over navigation and international law, but it was also a preventative war shaped by fears of a changing regional balance of power.

To Anthony Eden and Harold Macmillan, Nasser was not merely an Egyptian nationalist but another Mussolini: an aggressor who had to be stopped early, before appeasement made the problem worse. The memoirs of Eden and Macmillan are full of comparisons to the 1930s. Delay, in their minds, meant Munich. [v]

Washington saw things differently. The Eisenhower administration had little interest in defending old European imperial privileges. The United States wanted Arab nationalism kept away from Soviet influence and did not want to appear to support imperial intervention while condemning Soviet repression in Hungary.

The immediate trigger of the crisis was Washington’s abrupt withdrawal of support for the Aswan Dam project, a major prestige project for Nasser’s regime.[vi] Washington’s volte face was driven by an arms deal that Egypt negotiated with the Soviets.[vii] The Egyptian response was to nationalise the canal, presenting it as a way to finance the dam itself.

Britain and France chose to respond with force. In secret coordination with France and Israel, Britain backed a plan in which Israel would attack Egypt first, allowing Britain and France to intervene as supposed neutral peacekeepers to ‘protect’ the canal. The military operation was limited and ‘hopelessly ill prepared’.[viii] The decisive problem was that Britain had launched the operation without American support.

Eisenhower refused to back the invasion. Worse, Washington refused financial support as sterling came under pressure. Suez was the moment Britain discovered that military ambition without economic and financial independence was dependence disguised as strength.

Relative Economic Decline

Britain was the first industrial nation and for much of the nineteenth century the richest and most powerful country in the world. By the mid-twentieth century, that position had changed. Britain was still wealthy, but it was no longer dominant – as shown in figure 1. The United States had overtaken it.[ix]

Source: Bolt & Van Zanden (2024).

Suez is often remembered as a diplomatic humiliation or the last act of empire, but it was also a test of Britain’s underlying economic strength. The economic historian Sidney Pollard argued that Suez should not be seen as an external shock to Britain’s postwar economy but as something ‘symbolic’. It revealed how little economic room Britain actually had for imperial adventures although politicians still imagined Britain as a great power; the balance sheet suggested otherwise.[x]

Some historians have pushed back against the language of ‘decline’, arguing that Britain remained prosperous and that too much emphasis is placed on GDP rankings.[xi] This is true to a point, Britain in 1956 was not a poor country but sterling told a different story.[xii] The pound had already been devalued in 1949 and remained vulnerable. Confidence in sterling mattered because Britain still depended on it as both a domestic currency and an international reserve currency.

When Suez escalated, pressure on the pound intensified rapidly – see figure 2. Reserves decreased by $57 million in September 1956 and $84 million in October but then fell sharply by $279 million in the first few days of November. Macmillan turned to Washington and the IMF but was rebuffed. That refusal mattered more than the fighting in Egypt.

Macmillan realised before Eden that Britain could not continue the war. ‘A minor colonial conflict had’, as Andrew Shonfield put it, ‘rocked the pound sterling to its foundations.’ [xiii] Suez did not bankrupt Britain, and the domestic economic effects were manageable (see figure 3).[xiv] But that misses the point. The lesson was political: Britain could no longer wage even a limited war without American financial consent.

The “Special Relationship”

Suez did not end Britain’s ambitions but it ended the illusion that those ambitions could be pursued independently of the United States. Since 1956, every British prime minister has governed in the shadow of that lesson: military power without financial power is dependence disguised as strength.

The Suez crisis becomes most pertinent whenever a Western power intervenes in the Middle East. However, the political scientist Scott Lucas warned readers of looking at events in the Middle East through a ‘Western prism’ and ‘of superficial parallels between the Suez and current events’.[xv]

The Suez episode matters because Western powers keep repeating versions of it. A great power, convinced of its own strategic necessity, launches a secretive intervention in the Middle East, dismisses the United Nations, underestimates regional consequences, and discovers that military superiority does not guarantee political control. In 1956 it was Cold War rivalry and the defence of empire. In 2026 it is strategic competition between great powers, the shadow of American retrenchment, and the same illusion that force can substitute for political settlement.

That is why Suez still matters beyond diplomatic history. It speaks directly to current arguments about Europe’s power in a world shaped by American retrenchment and renewed great-power rivalry. Europe is not poor in the ordinary sense. It is wealthy, productive, and still among the richest regions in the world. Paul Krugman is right to reject the lazy declinism that treats slower growth as civilisational collapse. But Suez reminds us that strategic power is not measured only in GDP per head. Britain in 1956 was still a rich country. It retained global military reach, prestige, and nuclear ambitions. What it lacked was the financial independence to sustain action once Washington said no. The question was never simply wealth, it was dependence.

[i] H. Macmillan (1971). Riding the storm, 1956-1959. London: Macmillan.

[ii] D. McLaughlin, E. McLaughlin, and S. Kenny (2025). Taking a Punt: Monetary Experimentation and the Irish Macroeconomic Crisis of 1955-56. QUCEH WP 25-02.

[iii] M. Avaro (2024). Zombie International Currency: The Pound Sterling 1945–1971. Journal of Economic History. 84(3): 917-952.

[iv] R. Crockatt (1995). The Fifty Years War: The United States and the Soviet Union in World Politics, 1941-1991. London: Routledge.

[v] A. Eden (1960). Full Circle; Macmillan, H. (1971). Riding the storm, 1956-1959.

[vi] A. Eden (1960). Full Circle: The Diaries of Anthony Eden. Riverside Press: Cambridge; Macmillan, H. (1971). Riding the storm, 1956-1959. London: Macmillan.

[vii] A. Hewedy (1991). Nasser and the crisis of 1956. In Wm Roger Louis and Roger Owen (ed). Suez 1956: The Crisis and its Consequences. Oxford: Oxford University Press.

[viii] E. Heath (1998). The Autobiography of Edward Heath: The Course of My Life. London: Hodder and Stoughton.

[ix] N. Crafts (1998). Forging Ahead and Falling Behind: The Rise and Relative Decline of the First Industrial Nation. Journal of Economic Perspectives. 12 (2): 193–210; N. Crafts (2018). Forging Ahead, Falling Behind and Fighting Back. Cambridge: Cambridge University Press.

[x] S. Pollard (1982). The Wasting of the British Economy.

[xi] B. Supple (1994). Fear of Failing: Economic History and the Decline of Britain. The Economic History Review, 47 (3), pp. 441-458; J. Tomlinson (1991). Inventing ‘Decline’: The Falling behind of the British Economy in the Postwar Years. Economic History Review, 49 (4), pp. 731-757; J. Tomlinson (2023). Imagining Economic Growth in Post-War Britain. Modern British History, 34(4): 754-779.

[xii] A. Klug & G. W. Smith (1999). Suez and sterling, 1956. Explorations in Economic History, 36(3), 181-203.

[xiii]A. Shonfield (1958). British Economic Policy Since the War. London: Penguin.

[xiv] J. Dow (1964). The Management of the British Economy 1945-60. Cambridge: Cambridge University Press, p. 94.

[xv]W. S. Lucas (1991). Divided We Stand: Britain, the US, and the Suez Crisis. London: Hodder & Stoughton.

In developing this argument, I draw on Kenneth Boulding (1971), one of the pioneering thinkers in Sustainability Science, who described the Wealth of Nations as economic ‘scripture’. For Boulding, modern economics had largely ‘clarified, expounded, expanded, mathematized, and translated into modern language’ ideas that were already implicit in Smith’s work. Smith remained seminal not only because of his originality, but because each rereading revealed new insights (Boulding 1971), a view echoed by others who argue that Smith still has much to teach economists (Bordo & Rockoff 2023).

Justice before Wealth

The Wealth of Nations was underpinned by a framework of justice and justice was seen as one of the essential roles of the state in Book V (Backhouse 2002). One of the most famous quotations from the Wealth of Nations relates to ‘natural liberty’, but what is equally important is the adherence to the ‘laws of justice’:

All systems, either of preference or of restraint, therefore, being thus completely taken away, the obvious and simple system of natural liberty establishes itself of its own accord. Every man, as long as he does not violate the laws of justice, is left perfectly free to pursue his own interest his own way, and to bring both his industry and capital into competition with those of any other man, or order of men.

Justice was a central function of economic institutions. Smith saw it was as essential not only for commerce and economic activity, but also for the credibility required to sustain a national debt:

Commerce and manufactures can seldom flourish long in any state which does not enjoy a regular administration of justice; in which the people do not feel themselves secure in the possession of their property; in which the faith of contracts is not supported by law; and in which the authority of the state is not supposed to be regularly employed in enforcing the payment of debts from all those who are able to pay.

What exactly Smith meant by ‘justice’ is most clearly outlined in his other masterpiece, The Theory of Moral Sentiments. Justice is central to Smith’s vision as it is ‘the main pillar that upholds the whole edifice [of society]. If it is removed…[society] must in a moment crumble to atoms’.

Because society does not reward good behaviour, Smith saw justice as a negative virtue: it only punishes infractions on liberty. Positive virtues can be fulfilled without a requirement to take action. While Smith was an advocate for liberty, this was not to come at the expense of wider society, noting that, ‘though his own happiness may be of more importance to him than that of all the world besides, to every other person it is of no more consequence than that of any other man.’

Smith outlined a framework for judging one’s actions based on the perception of an ‘impartial spectator’, and that to ‘disturb the happiness’ of others because it stands it the way of our own would be intolerable to the impartial spectator. Smith had a clear hierarchical structure to justice, with the greater the crime the worse the punishment. Murder ‘is the most atrocious of crimes’, followed by theft and breach of property, which were considered greater crimes than breach of contract. It is through the application of justice ‘that man, who can subsist only in society, was fitted by nature to that situation for which he was made.’ Here Smith’s view was that human beings can only flourish in society because they depend on one another for assistance and are equally vulnerable to injury from one another. If people offer help willingly, and without force, then society prospers through reciprocity.

Justice was of great importance to society, and injustice could potentially destabilise and even ‘destroy’ it. For Smith, justice was not only a matter of individual perspective but also concerned the broader social implications of an action. Negligence, stemming from an absence of care regarding all possible outcomes of an individual’s action, was a key concern:

a person [who] happens to occasion some damage to another, he is often by the law obliged to compensated it…[As] nothing, we think, can be more just than that one man should not suffer by the carelessness of another; and that the damage occasioned by blamable negligence should be made up by the person who was guilty of it.

In modern economic terminology, Smith is describing a negative externality: a private gain that imposes a public cost. This line of thinking was evident in the Wealth of Nations when Smith noted that:

But those exertions of the natural liberty of a few individuals, which might endanger the security of the whole society, are, and ought to be, restrained by the laws of all governments; of the most free, as well as or the most despotical.

Here Smith was referring to private bank notes but also to the public walls to prevent fire. In other examples, Smith referred to quarantine during contagion as a way to prevent the spread of a ‘public evil’.

Intergenerational Justice

John Rawls (1971, 1999) expanded on the idea of justice and made it explicitly intergenerational by establishing a ‘just savings principle’. This condition is based on the idea that each generation contributes towards future generations and that each subsequent generation receives a bequest from their predecessors. When Rawls (1999) revised his work, he explicitly focused on the ‘just savings’ in an attempt to clarify the concept. The essence of his explanation of intergenerational justice remains the same:

Each generation must not only preserve the gains of culture and civilization, and maintain intact those just institutions that have been established, but it must also put aside in each period of time a suitable amount of real capital accumulation. This saving may take various forms from net investment in machinery and other means of production to investment in learning and education.

There are no guidelines for how this intergenerational accumulation and distribution of real wealth should be allocated, but Rawls does provide some ethical constraints.

Rawls contrasts a utilitarian view with his own view of contracts. In the utilitarian view, future generations may have higher wellbeing if capital accumulation and technological improvements lead to improved conditions in the future (and an ability to support a larger population). Therefore, higher savings in the poorer generations could disadvantage them.[i] Rawls then compares the utilitarian approach to the contract approach, or the ‘veil of ignorance’, where people do not know what generation they belong too. In that context it is better to develop a consistent savings rule as every generation, apart from the first, would gain if a ‘reasonable rate of saving is maintained.’

The Rawlsian approach to intergenerational justice influenced how economists have approached the issued since the 1970s. Both Ken Arrow (1973) and Robert Solow (1974) - two key figures in how economists have thought about the idea of sustainability - were explicitly drawing on a Rawlsian approach in early studies analysing the intergenerational allocation of resources. Rawls provided the ethics; Arrow and Solow converted it into economics. Solow in particular expanded the definition of capital to also include finite natural resources. He operationalised the Rawlsian approach as maintaining constant consumption per capita across generations.

The application of the Rawlsian ethical approach adds greatest nuance when the role of non-renewable natural resources are considered as this creates a challenge when trying to balance constant consumption per capita in perpetuity when resources are finite. Ultimately, in the case of non-renewable natural resources, technological progress is the saviour, because, as Solow notes, ‘unlimited technological progress may be unlikely, but it is not, like unlimited population growth on a finite planet, absurd’. This proves to be key to Solow’s application of Rawlsian intergeneration justice, but one of the problems is that it is maintained by the assumption of perfect substitution between produced and natural capital (i.e., that produced capital can act as a substitute for non-renewable natural resources). A conceptualiusation of wealth as envisaged by Solow is illustrated in Figure 1.

Following Solow, the economist John Hartwick (1977) showed how intergenerational equity could be achieved by a savings/investment rule, ‘invest[ing] all net returns from exhaustible resources in reproducible capital’. This is what Solow (1986) later referred to as a the ‘Hartwick Rule’.

The Rawlsian interpretation of justice is the bedrock of one of the most influential descriptions of sustainable development, the 1987 Brundtland Commission, which stated that, ‘sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.’

Within the Brundtland (1987) definition there were two key concepts; the first was ‘needs’, where the emphasis was on the ‘the essential needs of the world’s poor, to which overriding priority should be given’, and second was environmental limits to present and future needs that were, ‘imposed by the state of technology and social organization’. While Rawls is not cited in the report, the Brundtland definition of sustainable development in terms of intergenerational justice has a clear Rawlsian fingerprint.

Reconciliation of Smithian and Rawlsian Justice

In setting out his theory of justice, Rawls sought to distinguish his views from the utilitarian tradition that had come before him. Rawls grouped Adam Smith (and David Hume (1711-1776)) in with utilitarians such as Jeremy Bentham (1748-1832) and John Stuart Mill (1806-1873). While Smith places weight on utility this was not the primary basis for action and, in this sense, Smith is closer in thinking to earlier classical thinkers (Gill 1976 ), or, as the economic historian Deirdre McCloskey (2008) argues, Smith was a virtue ethicist. Smith’s work on moral theory is often analysed in isolation from his canonical text on political economy, but when read together the two inform the other and help to reconcile Smithian and Rawlsian approaches to justice (Cowen 2021).

While Adam Smith’s views of justice have been criticised as being too thin (as they do not consider broader welfare), others see Smith’s views as having wider applicability (Otteson 2017). Amartya Sen, who sees his own work in the tradition of Smith and other enlightenment thinkers, argues that Smith was aware that there are ‘several different meanings’ of justice. Sen (2009) draws on traditions of Indian jurisprudence to make a distinction between niti and Nyaya: niti is the ‘organisational propriety and behavioural correctness’ of justice, while nyaya refers to ‘realised justice’. Sen used the motto of the Holy Roman Emperor Ferdinand I (1503-1564) as an extreme example to illustrate the distinction: ‘Fiat justitia, et pereat mundus [let justice be done, and let the world perish]’. There is clear niti but the consequences in terms of applied justice are catastrophic. In terms of applicability of niti and nyaya, Sen sees Rawlsian justice as a form of niti, while Smith and other enlightenment thinkers are more in the nyaya approach.

In discussions of sustainability Sen defers to Solow, particularly praising his work on intergenerational equity. Sen believed that Solow had applied the Brundtland Commission’s concept of sustainable development to economics. This is not entirely correct; Solow’s work predated the Brundtland Commission and was directly influenced by Rawls’s idea of ‘just saving’. Regardless of this intellectual lineage, Sen broadened the Rawls-Solow-Brundtland framework, proposing that sustainable development should be understood as preserving (and if possible expanding) the capabilities and freedoms of the current generation ‘without compromising the capability of future generations’ (emphasis added). This brings us back to the idea of ‘just saving’: it is through the maintenance of capital (broadly defined) that we can preserve the capabilities of future generations. This is in essence the argument that Smith was making.

Public Debt and Justice Across Generations

A final thought on Smith and justice relates to his thinking on the national debt. The national debt is something that is inherently intergenerational as debt accumulated in the past must be paid by future generations of taxpayers. Smith disparaged the frivolous accumulation of debt as he argued that debt had ‘gradually enfeebled every state which has adopted it.’

Smith saw debt as intergenerational: ‘To relieve the present exigency, is always the object which principally interests those immediately concerned in the administration of public affairs. The future liberation of the public revenue they leave to the care of posterity.’ Public debt allowed present voters to enjoy the political and military benefits of war while shifting the tax burden onto posterity. For Smith, this was not prudent finance but moral evasion.

Smith’s critique of public debt is, in effect, a pre-Rawlsian argument about unjust dissaving. The main issue was the lack of parsimony in normal times, regardless of political form of government, and that this lack of parsimony led to an accumulation of debt in war time. Smith’s issue was not with the accumulation of debt per se, but with the effect of the increase in taxes on the productive capacity of the state.

Smith’s thinking on debt has been revisited in light of controversies over the rise in public debt. Most notably Nicholson (1920) drew on Smith’s thinking in light of the spectacular rise in UK debt after the First World War – as shown in figure 2.

A useful illustration of debt and fairness can also be seen in the Irish default on debt obligations to the British state in the 1930s. Éamon de Valera regarded these obligations as unjust, arguing that ‘in view of all the historical circumstances, it is not equitable that the Irish people should be obliged to pay away these moneys’. The debts in question were land annuities owed by Irish tenant farmers, originally created to compensate landlords under the earlier land settlement system (Foley-Fisher and McLaughlin 2016). The dispute was not simply economic but moral: should an independent Irish state be bound by obligations created under a previous political settlement?

Smith did not use the language of sustainability, planetary boundaries, or intergenerational justice. But he did understand the underlying problem: a nation becomes wealthy not by consuming its inheritance, but by preserving and enlarging the capital (institutional, productive, social, and natural) on which future prosperity depends.

References

Arrow, K. J. (1973). Rawls’s principle of just saving. The Swedish Journal of Economics, 75(4), 323-335

Backhouse, R. E. (2002). The Penguin History of Economics. London: Penguin.

Boulding, K. (1971). After Samuelson, Who Needs Adam Smith? History of Political Economy. 3 (2): 225–237.

Bordo, M., & Rockoff, H. (2023). Adam Smith as a Model for the Modern Monetary-Policy Economist. National Institute Economic Review, 265, 61-69.

Cowen, N. (2021). Basic economic liberties: John Rawls and Adam Smith reconciled. The Independent Review, 26 (2): 263–285.

Foley-Fisher, N. and McLaughlin, E. (2016). Sovereign debt guarantees and default: Lessons from the UK and Ireland, 1920–1938. European Economic Review, 87: 272-286.

Gill, E. R. (1976). Justice in Adam Smith: The right and the good. Review of Social Economy, 34(3): 275-294; Deirdre McCloskey (2007). Adam Smith, the Last of the Former Virtue Ethicists. History of Political Economy 40(1).

Hartwick. J. (1977). Intergenerational Equity and the Investing of Rents from Exhaustible Resources. The American Economic Review, 67 (5): 972-974.

McLaughlin, E., Ducoing, C., Oxley, L. (2025). Tracing Sustainability in the Long Run: Genuine Savings Estimates, 1850–2018. Nicholas Z. Muller, Eli Fenichel & Mary Bohman (eds). Measuring and Accounting for Environmental Public Goods: A National Accounts Perspective . Chicago: University of Chicago Press.

McLaughlin, E. (2026). The Inclusive Wealth of Nations. Prosperity, Sustainability, and the Future of Economic Progress. Bloomsbury: London.

Nicholson, J. S. (1920). Adam Smith on Public Debts. The Economic Journal, 30 (117), 1-12

Nordhaus, W. D. (1991). To slow or not to slow: The economics of the greenhouse effect. Economic Journal, 101: 920-937

Rawls, J. (1971). A Theory of Justice. Cambridge, MA: Harvard University Press

Rawls, J. (1999). A Theory of Justice, revised edition. Cambridge, MA: Harvard University Press

Rockström, J., Gupota, D. Qin, et al. (2023). Safe and just Earth system boundaries. Nature 619, 102–111.

Sen, A. (2009). The Idea of Justice. Cambridge MA: Havard University Press; TMS, Part IV, Section II, chapter I.

Solow, R. M. (1974). Intergenerational Equity and Exhaustible Resources. The Review of Economic Studies, 41: 29-45.

Solow, R. M. (1986). On the Intergenerational Allocation of Natural Resources. The Scandinavian Journal of Economics, 88 (1): pp. 141-149

The World Commission on Environment and Development (1987). [Brundtland Commission]. Our Common Future: The World Commission on Environment and Development. Oxford: Oxford University Press.

[i] This is a line of argument that bears a similarity to that used as a rationale for economic actions in the case of climate change; for example, see: Nordhaus (1991).

That line from Adam Smith gets to the heart of The Wealth of Nations. It’s also a useful place to start.

I am heading to a roundtable at the Adam Smith Heritage Centre in his hometown of Kirkcaldy to discuss a simple topic: why does this book still matter?

Part of the answer is that how we define wealth shapes how we think about risk, including the kinds of risks that could undermine or even end modern economic life.

But there is something more basic in Smith’s work that’s worth revisiting: what actually counts as the “wealth” of a nation.

An Inquiry into the Nature and Cause of the Wealth of Nations is made up of five books, but most people stop at Book I. That’s where Smith introduces the Division of Labour (a concept that was heavily influenced by Francis Hutcheson, Smith’s predecessor as chair of Moral Philosophy at the University of Glasgow). Specialisation is the engine of productivity. It’s the idea that underpins modern economic life.

Chapter 3 of Book I sets out the key constraint: the division of labour is limited by the extent of the market.

“When the market is very small, no person can have any encouragement to dedicate himself entirely to one employment, for want of the power to exchange all that surplus part of the produce of his own labour, which is over and above his own consumption, for such parts of the produce of other men’s labour as he has occasion for.”

In the 18^th century, markets were constrained by distance: sail ships, horse travel, slow communication. Today, digital markets stretch to something close to global scale. The constraint hasn’t disappeared, but it has shifted.

Where is the Wealth of Nations?

Smith wasn’t just interested in how economies grow. He was arguing against a deeper mistake: confusing money with wealth. He pushes back against the mercantilist view that gold and silver define national prosperity. Instead, wealth lies in the real assets of a society, its land, buildings, and the goods it produces.

This leads to Book II, which is where his argument becomes more interesting. Wealth, for Smith, sits in what he calls “stock” (and what we would now call capital). It is capital that makes the division of labour possible. Without accumulated stock, there is no specialisation, no scaling up of production, no sustained growth.

“As the accumulation of stock must, in the nature of things, be previous to the division of labour, so labour can be more and more subdivided in proportion only as stock is previously more and more accumulated…The quantity of industry, therefore, not only increases in every country with the increase of the stock which employs it, but, in consequence of that increase, the same quantity of industry produces a much greater quantity of work.”

This is the core of Smithian economics: accumulation comes first. Everything else follows.

What is the “Stock”?

Smith breaks capital down into different forms (see figure 1). Some of it is fixed (machines, buildings, infrastructure), some of it circulates (inputs, wages, working capital), but the key point is that capital feeds on itself. Apply capital to land, mines, and fisheries and you get more output, which in turn becomes new capital.

Even in Smith’s time, this interaction mattered. Coal mining, for example, depended on capital-intensive technologies like steam engines just to reach deeper seams. And crucially, capital isn’t self-sustaining. It has to be replenished. The ultimate source of that replenishment, in Smith’s framework, is what we would now call natural capital: the “produce of land, of mines, and of fisheries.”

Later economists tried to formalise this idea, though not always cleanly. Irving Fisher gave a more structured definition of wealth, dividing it into humans, commodities, and real estate, measured in both physical quantities and value terms.

In the mid-20th century, Anthony Scott pushed the idea further by treating natural resources explicitly as part of the capital stock, inputs that must be combined with labour and other inputs to produce goods and services. This was followed up by a steady stream of contributions from some heavyweights of 20^th century economics (Martin Weitzman, Robert Solow (and part 2), Partha Dasgupta, Joseph Stiglitz, John Hartwick). Although these contributions were inspired the 1970s oil crisis, their central message was the importance of capital, broadly defined.

That line of thinking leads directly to the modern view. Wealth is no longer just produced capital. It includes human capital and natural capital as well. Frameworks like the World Bank’s wealth accounting (see CWON 2024) and the UN’s Inclusive Wealth reports (see IWR 2023) build on this. The shift is simple but important: wealth is a portfolio, not a single number. I explore this idea in more detail in my recent book on inclusive wealth.

So why does any of this matter now?

Because how we define wealth shapes how we think about risk.

There is a growing literature on existential risk. These risks that could seriously damage or even end human civilisation (see Global Catastrophic Risks and The Precipice). This work splits broadly into two camps: one focused on Planetary Boundaries and another on Global Catastrophic Risk. They often talk past each other, but both are concerned with long-run human well-being.

Some risks are external – asteroids, solar flares, super volcanoes. Others are endogenous: they emerge from economic activity itself. Some risks fall squarely within global catastrophic risk, while others overlap with Planetary Boundaries (see figure 3).

This brings us back to Smith’s question. If wealth is capital, broadly defined, then managing risk means protecting that capital stock.

In recent work (with Matthias Beck), we argue that inclusive wealth provides a better way to think about these risks. It forces attention onto the underlying assets that sustain well-being, especially natural capital, which is often degraded or ignored (the general idea is outlined in Figure 4).

Smith also offers a useful behavioural insight here: ‘the chance of gain is by every man more or less overvalued, and the chance of loss by most men undervalued’.

That feels uncomfortably current. When it comes to large-scale risks, especially slow-moving ones like environmental degradation, we tend to underweight the downside.

Revisiting The Wealth of Nations isn’t about returning to 18th-century economics or 18^th-century politics. It’s about recovering a way of thinking that puts real assets, not just financial ones, at the centre of the analysis.

And once you do that, the problem of risk looks very different.

Why?

I co-wrote a paper on this boom with Rowena Pecchenino. The answer turns out to be less about charity and more about incentives.

A Country Under Pressure

In the early nineteenth century, much of rural Ireland was de-industrialising. Cottage industries were being wiped out by cheaper British imports. Whatever protection had existed faded away when Ireland joined the Union and rural households were exposed to full-blown industrial competition.

The result was striking inequality. Wealth accumulated in the hands of merchants and large landowners, while much of the rural population lived in extreme poverty, often in mud cabins (a replica is shown in Figure 1).

At the same time, the British state was preparing to introduce something Ireland had never had before: a poor law, funded by a new tax on property. While ‘an old tax is a good tax’, a new one is never popular.

Social Enterprise – Irish style

Before the 1830s, Ireland did not have a formal welfare system. Responsibility for poverty was diffuse and was handled by through charity and ad hoc schemes.

Some of these were surprisingly innovative. Jonathan Swift, the Dean of St. Patrick’s and author of Gulliver’s Travels, was a pioneer in the use of microcredit to help alleviate poverty. This was followed up by the Dublin Musical Society, it famously used proceeds from performances (including the first ever public performance of Handel’s Messiah) to finance a small loan fund to make loans to the ‘industrious poor’.

These were early forms of what we’d now call social enterprise.

But in the 1830s, something changed. The threat of a new poor law meant landowners would soon face a direct tax burden tied to poverty in their area. Loan funds suddenly became more appealing, they were no longer seen as charitable they were useful to property owners. Local property owners came together and utilised the loan fund system to try and avoid the new property taxes. Cheap credit could help the industrious poor, avoid the workhouse and reduce pressure on the poor rates (so contemporary pamphleteers argued).

Why there and why then?

A lot of recent work tries to explain this using modern econometric techniques. One approach uses the geography of modern musical societies as an instrument (pun unintended!) for eighteenth-century institutions (i.e. the future influenced the past). This raises two problems. First, it assumes a continuity that isn’t established, there’s little reason to think modern societies map cleanly onto their eighteenth-century predecessors. Second, at least in some cases, these societies were still active into the nineteenth century. They weren’t historic relics and so the instrument is not excluded from the outcome and it may be capturing a direct effect rather than a historical one.

Once you see that, the identification starts to unravel.

A simpler explanation

Instead of forcing a modern causal design onto the problem, we took a more direct approach and simply looked at the timing.

Loan funds appeared exactly when the poor law is introduced and where the incentives are strongest. The key variable was simple, how many people were exempt from the tax versus how many had to pay for it. We used the fact that the loan funds appeared at the same time as various efforts to introduce the poor law to explain why loan funds were established when they were and where they were located.

A central feature of the poor law was an exemption for poor rates for holders of land valued under £4, so places with more people exempt from the poor law meant a greater incidence of taxation fell on landowners instead (this is shown in Figure 2).

What we found then was that inequality influenced the uptake of loan funds as a way to try and mitigate the impact of the poor law.

Lessons for today?

The usual story is that social enterprise emerges where the state is absent. Ireland suggests something more complicated. Here social enterprise expanded because the state attempted to establish a welfare system funded by a local tax. Faced with this new burden, the local elites didn’t just resist, they adapted. They built institutions that both addressed the social burden and reduced their own exposure.

And it raises a broader question. When new forms of taxation and welfare emerge, whether driven by technological change or something else, how will people respond?

The anniversary has prompted the usual mix of reactions – some dismissing the originality of Smith (in The Economist, of all places), others have treated him a kind of secular saint of free markets. As a Guardian editorial reminded us, Smith was far more than his caricature.

What most of these reflections share is a tendency to reduce Smith to a slogan: the “invisible hand” (although Smith referred to “an invisible hand”). But if you actually read Smith, or even just look at the words he uses most often, you get a very different picture. What stands out isn’t just “market” or “trade”, but labour, land, price, value, rent, nations. Smith’s project was not to defend markets in isolation but to understand how whole societies generate prosperity, and under what conditions that prosperity can be sustained.

And that takes you, inevitably, to Book V.

The part of Smith people forget

The last book of The Wealth of Nations is not an afterthought. It is where Smith turns from how wealth is created to what the state must do. His answer is simple. The sovereign has three duties: defence, justice, and the provision of public works and institutions.

These are not minor exceptions to an otherwise self-sufficient market system. They are the conditions that make a commercial society possible in the first place. As Smith puts it, commerce and manufactures cannot flourish without a functioning system of justice: without secure property rights, enforceable contracts, and confidence in the state. But even more fundamental than justice is defence.

Smith is explicit:

“The first duty of the sovereign… is that of protecting the society from the violence and invasion of other independent societies.”

This is a necessity and not framed as a choice (of course, here the influence of the Jacobite uprisings in his own lifetime are hard to ignore). What is more interesting, though, is why this duty changes as societies develop. In what Smith calls “rude” societies, defence is relatively cheap. Individuals can fight; militias can be raised; the costs are limited. But as societies become wealthier, more commercial, and more specialised, this breaks down. The division of labour, the central mechanism in Smith’s account of growth, also produces dependence. Workers become highly specialised. They cannot simply drop their tools and become soldiers. Warfare itself becomes more complex, more technical, and more capital-intensive. The result is that defence must also become specialised. A standing army replaces the militia. Military capability becomes a permanent, organised, and expensive function of the state.

Prosperity creates vulnerability

This is the part of Smith that sits uneasily with the standard “free market” reading. The same process that generates wealth also creates new forms of vulnerability. A commercial society is richer, but it is also less self-sufficient. It depends on long supply chains, complex institutions, and the continuous functioning of markets. Disruption, whether from war or external threat, is therefore more costly. And so, as Smith observes, the expense of defence tends to rise with the progress of society.

This structural aspect of economic growth has largely been forgotten. For much of the post-Cold War period, advanced economies behaved as if defence were a declining necessity, a legacy cost that could be gradually reduced. In the first quarter of the 21^st century, defence spending in Europe was roughly half of that in the United States.

Smith would have seen things differently. In his framework, the development of a commercial society does not reduce the need for defence but instead intensifies it. Specialisation increases dependence and the technology of warfare evolves alongside the economy, making conflict more prolonged, complex, and expensive. The idea that mature market economies can treat defence as peripheral is hard to square with Smith’s analysis.

Rethinking Smith

All of this points to a broader issue in how Smith is read. He was not writing a manifesto for minimal government. He was trying to identify the functions that markets cannot perform, but which are necessary for a market society to exist. Defence is the clearest case. It is not a distortion of the system. It is part of its foundation. Smith understood that the success of commercial society rests on institutions (legal, political, and military) that lie outside the market. At the end of the day, the invisible hand doesn’t defend itself.

What has received much less attention is that this pattern is not new (see this classic paper). Figure 2 shows the same pattern after the First World War: GDP per capita never returns to its pre-war trajectory. According to recent work, the 1919-21 recession was the deepest in modern British history. Britain also experienced a larger annual fall in exports in 1921 (30 per cent) than in any year during the Great Depression.

The First World War was a dramatic shock to the global economy and marked the end of Pax Britannica. Policymakers had little recent experience of large-scale warfare (the Napoleonic wars were a century before) or how to finance it, and relied heavily on borrowing. The result was sharp rise in inflation and a substantial increase in public debt. In the aftermath of the war, debt serving took up a larger share of government revenue (and expenditure), see figure 3. The War Loan alone made up 14% of government revenue in 1932.

The First World War ushered in a period of structural change as Britain’s traditional staple industries entered terminal decline as they struggled to adapt to an era of intensified competition and shrinking export markets. During the war, many of the traditional export markets were cut off and began to develop their own domestic industries. While some more optimisitic assessments of the interwar period emphasise the emergence of new industries and a shift in the UK’s economic geography, the overall picture of the interwar period is one of persistently high unemployment, particularly in the depressed industrial north.

There were of course important developments that helped life Britain out of its malaise. Leaving the Gold Standard in 1931, the 1932 conversion of the War Loan (a partial default on the war debt), and re-armament all contributed to the recovery.

The parallels with today are hard to ignore. Just as after WWI, the British economy has struggled to return to its pre-war trend. As in the interwar period, policy choices have likely exacerbated these dynamics: returning to gold at parity after WWI (effectively locking in an overvalued exchange rate) to Brexit reducing competitive pressures in the modern economy.

The post-2008 period may not be so different. The question is not just why growth has been weak, but whether we should expect it to return at all (especially given current policies and ongoing shocks from the global economy). The British experience suggests that sometimes economies do not bounce back, they can settle onto persistently lower growth trajectories.