Were all nations to follow the liberal system if free exportation and free importation, the different states into which a great continent was divided would so far resemble the different provinces of a great empire.
(An Inquiry into the Nature and Causes of the Wealth of Nations. IV.v.b)
The quotation above does not directly support the formation of a continent wide ‘European Empire’ based in free trade. It’s not a big jump to infer this though. The biggest ambiguity would be how big the Empire should be? What is now Turkey and the Russian Federation? The whole of Eurasia? The ‘world continent’ of Eurasia and Africa? Since Smith must want ideally to see free trade throughout the world, how about a World Empire? He prefers the word continent, and it’s very likely he saw Europe as a distinct continent, possibly excluding Siberian Russia and the Ottoman lands in Anatolia. He seems to be toying with the idea of a world of continental free trade ‘empires’, which could be unified in a global free free trade. The phrase trade can be seen a covering a range of options with regard to how integrated markets are as a result of which we could talk about a free trade world, in which the removal of barriers is more complete within continental empires, than between continental Empires.
Smith clearly thinks of the emergence if continental empires as desirable. He is thinking in terms of economies which are still very agricultural, so that the issue is one of avoiding famine. This is best achieved by the best possible integration of the largest possible market, so that food can move quickly to areas suffering shortage. In terms of contemporary arguments, the equivalent would be reducing inflation, increasing competition and increasing economic growth. The integration of continent wide markets also depends on the existence of continent wide transport networks. Smith is suggesting that the work of the more advanced individual nations in closing internal barriers to trade and promoting internal communications could be done at the level of a European Empire. The suggestion is evidently of a state, and of a state beyond the bare minimum of an agency to protect life, property and contracts.
Adam Smith prophet of the European Union, and equivalents such as the African Union. Unfortunately the AU is a long way behind Europe in cutting internal trade barriers, sadly, and very sadly for those who starve to death, or survive at a bare minimum of subsistence.