The sect which had the good fortune to be leagued with the conquering party, necessarily shared in the victory of its ally, by whose favour and protection it was soon enabled in some degree to silence and subdue all its adversaries Their first demand was generally, that he should silence and subdue all their adversaries.--Adam Smith, Wealth of Nations 5.i.g. 7)
The quoted passage reveals that Adam Smith is adamantly opposed to established religion; he treats politically successful religions as lucky and intolerant partisans. Here Smith omits kind words for either the national churches of Scotland or England, which, after the Glorious Revolution of 1688 often appealed to Providential plan in their public justification.
Instead Smith revives interest in the “plan of ecclesiastical government, or more properly of no ecclesiastical government, was what the sect called Independents, a sect no doubt of very wild enthusiasts, proposed to establish in England towards the end of the civil war.” (WN 5.i.g.8; for an excellent analysis, see Muller 1993, Chapter 12). Without an established religion, which would allow “every man to chuse his own priest and his own religion as he thought proper,” and each religion treated equally under the law. Smith expected:
There would in this case, no doubt, have been a great multitude of religious sects...Almost every different congregation might probably have made a little sect by itself, or have entertained some peculiar tenets of its own. (WN 5.i.g.8)
Smith's hope in Wealth of Nations that with near absolute freedom of religion (something neither Locke, Spinoza, nor Hume advocated), competition among religious sects will lead to a “pure and rational religion, free from every mixture of absurdity, imposture, or fanaticism, such as wise men have in all ages of the world wished to see established." (WN 5.i.g.8)
Smith assumes that disestablishment will lead to an extreme proliferation “into two or three hundred, or perhaps into as many thousand small sects,” (WN 5.i.g.8). In context Smith does not offer a detailed explanation of why one would expect such a proliferation, but it seems clear that he thinks the division will promoted by the entrepreneurial “zeal” of individual church leaders who will promote themselves and different “particular” speculative “tenets.” (WN 5.i.g.9)
Smith’s arguments for such disestablishment are a mixture of prudential political considerations and sociological ones. With extreme, adversary competition among lots of sects Smith expects most of the sects to become relative moderate in its tone over time. In fact, he expects that “The teachers of each little sect, finding themselves almost alone, would be obliged to respect those of almost every other sect, and the concessions which they would mutually find it both convenient and agreeable to make to one another, might in time probably reduce the doctrine of the greater part of them to that pure and rational religion.” (WN 5.1.g.8)
Smith does not really explain his grounds for optimism. It is by no means obvious why a free market in religious ideas would have to converge on religious tenets free from absurdity. In fact, it is in order to combat potential ‘market failure(s) in religion’ that Smith suggests two state-sponsored remedies: first, the promotion of “the study of science and philosophy” among the common people, and, second, the “entire liberty” of people to promote “without scandal or indecency, to amuse and divert the people by painting, poetry, musick, dancing; by all sorts of dramatic representations and exhibitions, would easily dissipate, in the greater part of them, that melancholy and gloomy humour which is almost always the nurse of popular superstition and enthusiasm.” (WN 5.1.g.14-15)
Unlike his proposal for a parliamentary union between Great Britain and her American and Irish colonies, Smith does not treat his proposal for religious and cultural freedoms as unreachable given the political situation. There are no clear hints that he considers it utopian. Unlike his proposal for a parliamentary union, his disestablishment proposal was taken up with enthusiasm by the American Founders (Fleischacker 2002; McLean & Peterson 2010).
There are some peculiar aspects about Smith’s proposal: first, Smith makes no reference to the Dutch experiences with religious toleration. (In fact, he only focuses on the likelihood of schism (WN 5.1.g.36). His proposal is remarkably a-factual; it is basically one extended thought experiment (or counterfactual supposition). The only empirical evidence he points to is a single sentence: his plan has already “been established in Pennsylvania, where, though the Quakers happen to be the most numerous, the law in reality favours no one sect more than another, and it is there said to have been productive of this philosophical good temper and moderation.” (WN 5.1.g.8) Smith provides no source or argument for the conclusion.
Smith’s is also not an economic argument; he does not discuss nor evaluate an argument popular in seventeenth century Dutch Republican circles (e.g., Spinoza, the de la Court brothers, and echoed in Mandeville): that religious freedoms are supposed to be good for business by attracting skilled artisans and immigrants. He is not tempted by the Spinozistic argument that cultural freedoms are good for technological development.
Another peculiarity is that in this chapter Smith cites Machiavelli approvingly and heaps praise on Hume; neither is exactly confidence inspiring to Smith’s religious readers. Are these the “wise” who would approve of the pure and rational religion that is the outcome of competitive religion? Smith never explains.
As is well known, Smith was unwilling to get involved in the publication of Hume’s Dialogues. Yet, while he ends up disagreeing with Hume’s proposal of state (financial and political) control over religion; the disagreement is primarily focused on means not ends. Smith thinks his proposal leads to greater political stability for the state—in effect, the idea behind Smith’s proposal is that religions will be so distracted competing with each other and individually so small that they cannot effectively disturb the public peace or wield political power. Of course, that is all compatible with the further idea that keeping religion out of politics is in the interest of religion, too. Smith implies that political ambitions corrupts religion (WN 5.1.g.7). So, in effect, Smith agrees with Spinoza that religions should focus primarily on morals and stay out of politics.
One final peculiarity about Smith’s argument is that he does not connect it with one of his main concerns throughout WN: the freedom of movement and settlement that he promotes. The poor laws of England prevent the poor from leaving their parish. (WN 1.10.c.44ff.) “To remove a man who has committed no misdemeanour from the parish where he chuses to reside, is an evident violation of natural liberty and justice.” (WN 1.10.c.59) Smith disestablishment proposal effectively disconnects territory and religion from each other. Yet, Smith does not spell out this implication. It is hard to imagine he would not have noticed how the freedom of religion and freedom of movement would interact, especially because he discusses urbanization from the countryside, that is, movement between parishes, when he discusses the merits of his disestablishment proposal. Smith’s proposal on religious disestablishment, thus, is remarkably disconnected from factual constraint. His discussion is, thus, very much in the spirit of Hume’s way of proceeding in “Idea of a Perfect Commonwealth:” Hume had drawn the contours of the “most perfect in the kind, that we may be able to bring any real constitution or form of government as near it as possible.”