Just four months before The Declaration of Independence was adopted on July 4, 1776, Adam Smith published The Wealth of Nations. “If the American Founding Fathers articulated in The Declaration of Independence the political case for individual freedom,” one scholar noted, “Adam Smith presented the complementary argument for economic freedom and free enterprise.”
Smith’s insights from nearly 250 years ago resonate in today’s public policy debates, including debates about energy.
The main theme of Smith’s masterwork? The natural order of liberty made heavy-handed government unnecessary and counterproductive. National wealth rises not from accumulating bullion, as the Mercantilists believed; it came from an international division of labor enabled by free trade. Progress did not emerge from commercial edicts and planning bureaucrats; it came from enterprising individuals pursuing their self-interest within the constraints of laws against force or fraud.
Globalization
Free and open global trade was central to Adam Smith. Economic national autarky was vastly inefficient and disruptive to international harmony. The economic maxim “Sell what you produce cheaply and buy what others produce cheaply,” later formalized as the law of comparative advantage, was explained by Smith:
It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy.…What is prudence in the conduct of every private family can scarce be folly in that of a great kingdom. If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better to buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage. (WoN, IV, 2)
Enter the global pacemaker in international energy flows. The U.S., hampered by government, was a net importer of oil and gas, violating the law of comparative advantage. With greater freedom, these following gains have benefited foreign buyers, not only the domestic sellers:
- Legalized oil exports in 2015 and became a net exporter in 2020 for the first time in 70 years. Around 175 countries receive U.S. crude oil and petroleum products, as well as American Samoa, Puerto Rico, and the U.S. Virgin Islands.
- Became a net natural gas exporter in 2016, and the world’s leading exporter of liquified natural gas (LNG) in 2023. Volumes have tripled in the last decade to 7.7 trillion cubic feet last year, mainly to Europe and Asia.
- Is the fourth leading exporter of coal, with 62 countries as destinations. Coal exports have increased to offset part of the decline in domestic consumption.
The main threat to global energy trade is a carbon tariff (“border adjustment’) program, as proposed in the Foreign Pollution Fee Act of 2025, introduced earlier this year by Senators Bill Cassidy (R-LA) and Lindsey Graham (R-SC). Folly, Adam Smith would say.
Harmonics
Smith recognized the wisdom embedded in self-interested action, which in our day can be applied to adaptation as the best weather/climate policy, not futile government mitigation policies that make energy less affordable and less reliable.
Three passages from The Wealth of Nations point to freedom of action as opposed to government planning.
As every individual, therefore, endeavors as much as he can both to employ capital in support of domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labors to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. (WoN, IV. 2)
What is the species of domestic industry which his capital can employ, and of which the produce is likely to be of the greatest value, every individual, it is evident, can, in his own situation, judge much better than any statesman or lawgiver can do for him. (WoN, IV, 2)
The statesman, who should attempt to direct private people in what manner they ought to employ their capitals, would not only load himself with a most unnecessary attention, but assume an authority which can safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it. (WoN, IV, 2)
Forced energy transformation substitutes political elites for the commoner. It replaces the individual’s self-interest with collective command-and-control. This is evident today when centrally planned wholesale electricity markets (the Regional Transmission Organization model) try to determine prices for consumers and business.
Do Gooders
Business enterprises that boost their goodness in political matters (decarbonization in particular) have watched their fortunes fall. “Go woke, go broke” applies to companies such as Enron and Sunnova. Consider the misfortunes of “beyond petroleum” BP in light of what Adam Smith warned against in the eighteenth century:
By pursuing his own interest [the individual] frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good . . .
Beware of the perils of greenwashing companies, large and small.
Conclusion
July 4th is a celebration of our nation’s breakaway from tyranny. Today, another yoke of oppression is climate alarmism and forced energy transformation. Paul Driessen and Ann Bridges have offered a Declaration of Mineral Independence in this regard:
We solemnly declare that these United States ought to be free and independent again; that we are absolved from the dictates and bullying of Environmentalist NGOs, their representatives and their funders; and that political obligations to them should be dissolved.
Until recently, energy policy had shifted away from Adam Smith’s vision, moving instead toward centralized government control. This transition led to a top-down energy transition driven more by political agendas than by individual choice. Subsidies, regulations, and taxes now increasingly shape personal decision-making in the name of collective goals. Yet, experience has shown that expert-driven plans often result not in broad prosperity, but in cronyism, stagnation, and economic dysfunction.
Independence Day is an annual reminder of the enduring value of liberty—and the cautionary tale of trading individual freedom for centralized authority.
