Class conflict
He is at all times surrounded by unknown enemies, whom, though he never provoked, he can never appease, and from whose injustice he can be protected only by the powerful arm of the civil magistrate, continually held up to chastise it.Writing The Wealth of Nations, Smith's concern was the welfare of the ordinary workers who make up society and provide for it:No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, clothe, and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, clothed, and lodged.
Regarding the extravagant consumption of the aristocracy, he remarked that:All for ourselves, and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind.

Violence against commoners by feudal lords: In the third book of The Wealth of Nations, Smith explains that in the medieval period, after the fall of the Roman Empire, governments were unable to protect commoners, and their property, from the "violence of the great lords":In order to understand this, it must be remembered, that, in those days, the sovereign of perhaps no country in Europe was able to protect, through the whole extent of his dominions, the weaker part of his subjects from the oppression of the great lords. Those whom the law could not protect, and who were not strong enough to defend themselves, were obliged either to have recourse to the protection of some great lord, and in order to obtain it, to become either his slaves or vassals; or to enter into a league of mutual defence for the common protection of one another. The inhabitants of cities and burghs, considered as single individuals, had no power to defend themselves; but by entering into a league of mutual defence with their neighbours, they were capable of making no contemptible resistance.Residents of the cities were able to establish their freedom and security of property long before those of the country, which enabled a gradual increase in their prosperity:Order and good government, and along with them the liberty and security of individuals, were in this manner established in cities, at a time when the occupiers of land in the country, were exposed to every sort of violence. But men in this defenceless state naturally content themselves with their necessary subsistence; because, to acquire more, might only tempt the injustice of their oppressors. On the contrary, when they are secure of enjoying the fruits of their industry, they naturally exert it to better their condition, and to acquire not only the necessaries, but the conveniencies and elegancies of life.

Distribution of incomes into wages, profit and rent: In Book I Chapter 6, Smith explained how income is distributed between workers and their employers:The value which the workmen add to the materials, therefore, resolves itself in this case into two parts, of which the one pays their wages, the other the profits of their employer upon the whole stock of materials and wages which he advanced. He could have no interest to employ them, unless he expected from the sale of their work something more than what was sufficient to replace his stock to him; and he could have no interest to employ a great stock rather than a small one, unless his profits were to bear some proportion to the extent of his stock.Smith said that while a worker is paid wages in proportion to their "dexterity and ingenuity", as well as for "superior hardship and superior skill", this is not the case for the profit of their employers: The profits of stock [capital], it may perhaps be thought, are only a different name for the wages of a particular sort of labour, the labour of inspection and direction. They are, however, altogether different, are regulated by quite different principles, and bear no proportion to the quantity, the hardship, or the ingenuity of this supposed labour of inspection and direction.He added that the work of management is often performed by other employees, rather than the business owner themselves:In many great works, almost the whole labour of this kind is committed to some principal clerk. His wages properly express the value of this labour of inspection and direction. Though in settling them some regard is had commonly, not only to his labour and skill, but to the trust which is reposed in him, yet they never bear any regular proportion to the capital of which he oversees the management; and the owner of this capital, though he is thus discharged of almost all labour, still expects that his profit should bear a regular proportion to his capital.In Chapter 9, Smith notes that: "The increase of stock, which raises wages, tends to lower profit. When the stocks of many rich merchants are turned into the same trade, their mutual competition naturally tends to lower its profit". He says that "high profits tend much more to raise the price of work than high wages", because "the rise of wages operates in the same manner as simple interest", while "the rise of profit operates like compound interest". He concludes the chapter:Our merchants and master manufacturers complain much of the bad effects of high wages in raising the price [of commodities], and thereby lessening the sale of their goods, both at home and abroad. They say nothing concerning the bad effects of high profits; they are silent with regard to the pernicious effects of their own gains; they complain only of those of other people.

Wage negotiations and trade unions: Concerning wages, he explained the conflicting class interests between the owners of capital and workers, who he said were often compelled to form trade unions for fear of suffering starvation wages, as follows:What are the common wages of labour, depends everywhere upon the contract usually made between those two parties, whose interests are by no means the same. The workmen desire to get as much, the masters to give as little, as possible. The former are disposed to combine in order to raise, the latter in order to lower, the wages of labour.
It is not, however, difficult to foresee which of the two parties must, upon all ordinary occasions, have the advantage in the dispute, and force the other into a compliance with their terms. The masters, being fewer in number, can combine much more easily: and the law, besides, authorises, or at least does not prohibit, their combinations, while it prohibits those of the workmen. We have no acts of parliament against combining to lower the price of work, but many against combining to raise it.
Smith was aware of the main advantage of employers over workers, in addition to state protection:In all such disputes, the masters can hold out much longer. A landlord, a farmer, a master manufacturer, or merchant, though they did not employ a single workman, could generally live a year or two upon the stocks, which they have already acquired. Many workmen could not subsist a week, few could subsist a month, and scarce any a year, without employment. In the long run, the workman may be as necessary to his master as his master is to him; but the necessity is not so immediate.

Conflict between classes: Smith observed that, outside of colonies where land is cheap and labour expensive, both the masters who subsist by profit and the masters who subsist by rents will work in tandem to subjugate the class of workmen, who subsist by wages. Moreover, he warned against blindly legislating in favour of the class of merchants and manufacturers who subsist by profit, since, as he said, their intention is to gain as large a share of their respective markets as possible, which naturally results in monopoly prices or close to them, a situation harmful to the other social classes.

In the conclusion of the first book of The Wealth of Nations, Smith assessed the knowledge and interests of capitalists in comparison to that of the landed aristocracy:Merchants and master manufacturers are, in this order [those who live by profit], the two classes of people who commonly employ the largest capitals, and who by their wealth draw to themselves the greatest share of the public consideration. As during their whole lives they are engaged in plans and projects, they have frequently more acuteness of understanding than the greater part of country gentlemen. As their thoughts, however, are commonly exercised rather about the interest of their own particular branch of business than about that of the society, their judgment, even when given with the greatest candour (which it has not been upon every occasion), is much more to be depended upon with regard to the former of those two objects, than with regard to the latter. Their superiority over the country gentleman is, not so much in their knowledge of the public interest, as in their having a better knowledge of their own interest than he has of his. It is by this superior knowledge of their own interest that they have frequently imposed upon his generosity, and persuaded him to give up both his own interest and that of the public, from a very simple but honest conviction, that their interest, and not his, was the interest of the public.In the final words of the first book, he suggested how the public should consider the political agenda of this class:The proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.