Smith argues that there is one order in society—those who live off the profits of stock—

whose particular interests tend to diverge from the general interest of society. How has this
divergence of interests corrupted European policy in the colonies? What political
mechanisms does Smith envision might correct the problem he has diagnosed?

The analysis of economic principles and societal organization provided by Adam Smith in "The Wealth of
Nations" offers a sophisticated perspective on the ways in which the interests of some social
orders—especially those that derive their income from stock—may differ from the larger interests of
society. The implications become even more serious when considering how this disparity was applied
within the framework of European colonial policy. This leads to the unraveling of a complicated web of
economic exploitation, social injustice, and ecological devastation.

The profit motivation that individuals who live off the earnings of stock possess is the fundamental cause
of the divergence of interests in the colonial environment. Profit-driven incentives, according to critics,
are inherent to economic systems and may even spur economic expansion and innovation. The
difference, though, is how much these goals are pursued at the expense of wider societal ramifications.
Smith argues that the unbridled pursuit of personal gain can result in exploitative tactics and long-term
harm, particularly when combined with colonial policies. Smith mentions that “they (the merchants) say
nothing concerning the bad effects of high profits; they are silent with regard to the pernicious effects of
their own gains; they complain only of those of other people, (Chapt 9 Book I)” where Smith is referring
to how pursuing exuberant profits can be detrimental to employers through higher wages as “raising the
price of commodities, the rise of wages operates in the same manner as simple interest does in the
accumulation of debt. The rise of profit operates like compound interest (Chapt 9 Book I).” In Chapter XI
of Book I “Of the Rent of Land,” Smith talks about the relationships between landowners, tenants, and
the society at large. He notes that while individuals may act in their self-interest, there are cases where
their pursuit of profit can lead to actions that are detrimental to the greater good. Specifically, he
discusses how landowners might neglect the maintenance of their land or engage in activities that
degrade its long-term productivity, through their pursuit of personal gain.

In the past, discriminatory laws, forced labor, and unfair resource distribution have all been features of
European colonial policies. The mercantile system emphasized the accumulation of wealth, particularly
in the form of precious metals like gold and silver. Nations sought to export more than they imported to
amass bullion. Mercantilist nations engaged in colonial expansion to secure sources of raw materials and
establish captive markets for their goods. Colonies were seen as a means to increase exports and,
consequently, wealth. Smith critisizes the mercantalist policies in Europe, going further than just
colonialism, explaining that “in order to prevent exportation, the whole inland commerce of wool is laid
under very burdensome and oppressive restrictions,” and as a result, “when such restrictions are
imposed upon the inland trade, the coasting trade, we may believe, cannot be left very free (Chapt VIII
Book IV).” Here Smith is arguing against the mercantalist policies in Europe and emphasising the
importance of free trade. Smith directly confronts the issue of colonialism as detrimental for the
European powers as he describes “After all the unjust attempts, therefore, of every country in Europe to
engross to itself the whole advantage of the trade of its own colonies, no country has yet been able to
engross to itself any thing but the expense of supporting in time of peace, and of defending in time of
war, the oppressive authority which it assumes over them.” Smith is effectively arguing that the act of
acquiring such a gross amount of land ends up being detrimental for the colonizers in the end. He argues
that “the inconveniencies resulting from the possession of its colonies, every country has engrossed to
itself completely,” and that “the advantages resulting from their trade, it has been obliged to share with
many other countries,” arguing here that the benefits that colonizers in Europe do take from their
colonies end up being diluted as they have to share those rewards with the other powers, and that the
benefits are outweighed by the immense problems of the colonies, especially in the way those issues fall
directly under the responsibility of the mercantile nation.

Individual interests are prioritized over the welfare of both the colonized and the colonizing nations, as
seen by the economic inequities and social discontent brought about by exploitative colonial tactics.
Economic inequality is a given in any society, according to skeptics, who also say that the long-term
advantages of economic growth exceed its short-term drawbacks. However, Smith argues for the
importance of well-thought-out institutions and governance frameworks. According to Smith, these
institutions and frameworks are crucial for harmonizing personal interests with the greater welfare of
society, thereby reducing the discrepancies brought about by exploitative colonial tactics. This
perspective is evident in Chapter V of Book IV, where Smith discusses the impact of drought on
agriculture. The quote, "Even in such countries, however, the drought is, perhaps, scarce ever so
universal as necessarily to occasion a famine, if the government would allow a free trade," suggests that
Smith believed that even severe issues like drought and famine could be mitigated through the
successful implementation of free trade by governments. This example underscores the importance that
Smith places on effective governance as a means to address and alleviate societal challenges. He argues
that “It is the great multiplication of the productions of all the different arts, in consequence of the
division of labour, which occasions, in a well-governed society, that universal opulence which extends
itself to the lowest ranks of the people,” where Smith might appear at first glance that the “division of
labour” and “great multiplication of the productions” are all that is important for supporting the lowest
in society, however, the pre-requisite is a “well-governed society,” and it is easy to miss the importance
he places on it.

Building on Smith's suggestions, one may contend that addressing the global aspects of colonial policy
requires international cooperation. Opponents may argue that nations behave in their own best interests
and that achieving cooperation is fundamentally challenging. Global views on morality and governance,
however, may inspire cooperative initiatives that go beyond the concerns of any one country, promoting
a more just and long-lasting strategy for colonial ties. The conflicting interests of the general public and
those benefiting from stock profits is a complicated problem with a long history that arises when it
comes to European colonial activities. Adam Smith's analysis, which emphasizes the necessity of political
procedures and rules to align individual goals with the larger social interest, offers a foundation for
comprehending the corrupting influence of this difference. To address the intricacies of the globalized
world, a thorough investigation must take into account historical manifestations, counterarguments, and
contemporary extensions of these notions.