In his book, "A Farewell to Alms", Gregory Clark claims that Adam Smith’s views about good government made little sense in the world in which they were composed (p35).
The basis of Clark’s argument is that in a Malthusian world in which higher wages lead to increased population, the adoption of policies to increase incomes is pointless. It results in further population growth without any improvement in living standards in the longer term.
Clark implies that Smith, along with other classical economists, did not understand that good government could only make countries richer in the short run , before population growth restored equilibrium between food production and population (p34).
It seems to me that in writing “Wealth of Nations” Adam Smith was very much aware of the link between economic growth and population growth in a Malthusian economy (see: I.viii 35-44). The policies he advocated were intended to foster economic growth. He observed that it is in the “progressive state, while the society is advancing to the further acquisition” of wealth that “the condition of the labouring poor, of the great body of the people, seems to be the happiest and the most comfortable. It is hard in the stationary, and miserable in the declining state” (I viii 43).
In the same passage Smith refers to the possibility of a society acquiring “its full complement of riches” - words that suggest that he did not necessarily envisage that economic growth would be a never-ending process. But that did not make it any less desirable to oppose policies that would hinder growth.
Jerry Muller argues that economic growth “was hampered in Smith’s eyes, by some of the protectionist restrictions to which his countrymen attributed their growing riches, and it could be speeded up by expanding the greater market freedom already visible in parts of the economy” (“The mind and the market, p 56). The greater market freedom that Muller refers to involved abandonment of the systems under which prices were set by guilds and wages were set by justices of the peace. The regulation of foreign trade was actually increasing, for example, with increased protection against corn imports introduced in 1791.
Clark may be broadly correct in his view that markets for goods, services, capital and land were generally free by around 1300, but Adam Smith’s views nevertheless made a great deal of sense in the world in which they were composed. His views still make a great deal of sense today.