He argued that judiciaries are one of the four main “duties of the sovereign” (alongside military, education (and limited public works) and funds for the dignity of the sovereign). These duties would in turn vary in intensity and character depending on the four stages of civilization (Smith, 1776).
While the mechanisms of judicial supremacy are similar to his earlier accounts based on authority and utility,[i] the concrete barriers to the attainment of justice (especially Barriers 2, 3 and 4 from Figure 1) are given more detail. In medieval times, for instance, the courts were unable to administer justice, because these were essentially a way for the sovereign (who himself could not be sued) to make money through obtaining side payments from litigants (Smith, 1776, at V.1.56-1.58). With growing complexities of disputes and case backloads, the king outsources justice to his deputies, who take over the side payments. With growing complexities of public finance, the head of state has to establish a stable system of revenue. Wars, for instance, are no longer financed by the king directly, but through tax collection. (Smith, 1776, at V.1.67) For some reason that Smith leaves vague, states also simultaneously move to end the practice of side payments to the judge’s deputies. Smith does not appear to consider that this court financing shift is strictly necessary, only that it does not appear to be capable of being “effectually regulated and ascertained.” Therefore, the payments are banned altogether.
He goes on to distinguish judging from the rent-seeking activities of lawyers per se,
“Fixed salaries were appointed to the judges, which were supposed to compensate to them the loss of whatever might have been their share of the ancient emoluments of justice, as the taxes more than compensated to the sovereign the loss of his. Justice was then said to be administered gratis. Justice, however, never was in reality administered gratis in any country. Lawyers and attorneys, at least, must always be paid by the parties; and, if they were not, they would perform their duty still worse than they actually perform it. The fees annually paid to lawyers and attorneys amount, in every court, to a much greater sum than the salaries of the judges. The circumstance of those salaries being paid by the crown can no-where much diminish the necessary expence of a law-suit. But it was not so much to diminish the expence, as to prevent the corruption of justice, that the judges were prohibited from receiving any present or fee from the parties.” (Smith, 1776, at V.1.60-V.1.61)
Judges are easy to regulate (unlike the sovereigns), and take the jobs for the prestige. Their compensation should come by the hour, so that they are not rewarded for being idle. Efficiency in adjudication is produced by intra-jurisdictional competition for cases (Smith, 1776, at V.1.62-V.1.64). Smith ends this section with an appeal for the strict independence of the judiciary from the executive (Smith, 1776, at V.1.68).
Smith does not provide any theory of the law as automatically tending towards some efficient or socially optimal level. Instead, he simply says that justice should protect “as far as possible, every member of the society from the injustice or oppression of every other member of it” (Smith, 1776, at V.1.44).
[i] In primitive societies, some individuals’ superiority of qualifications, age, fortune and birth (especially the last two) lead them to dominance over others. At the same time, above a de minimis level of property (at the pasturage stage), inequality in property would begin to emerge, and along with it class envy. Government was therefore needed to protect property (Smith, 1776, at V.1.45, V.1.54).