The Wealth of Nations. The Theory of Moral Sentiments

Smith states:

The first duty of the sovereign, that of protecting the society from the violence and invasion of other independent societies, can be performed only by means of a military force. But the expense both of preparing this military force in time of peace, and of employing it in time of war is very different in the different states of society, in the different periods of improvement (221).

Therefore, Smith believes the primary expenditure of government is that of military defense. Smith explains that in the manufacturing age, standing armies must be maintained so workers and capitalists can conduct their trades and ensure the nation’s continual economic prosperity. Such standing armies produce no economic value and therefore must be maintained by the state through taxation.

Smith states that the second duty of the sovereign is to protect its citizens from each other and from oppression, and to administer justice. Smith explains that as the state has a duty to protect its inhabitants from foreign enemies, it also has a duty to protect them from domestic enemies. Smith believes the cost of justice can frequently be paid by court fees, but cautions against structuring court fees in a manner that leaves judges susceptible to bribery.