Abstract: Adam Smith’s theory of “unnatural and retrograde order” is often viewed as an important paradigm for explaining the birth of modern capitalism. It is generally believed that central to this theory is the notion that distant trade and commercialization acted as the “invisible hand” that guided the European economy spontaneously towards modernity. However， in Smith’s historiography， distant trade did not always lead to economic modernization， and many non-Western European regions that were also involved in foreign trade did not develop a self-reinforcing positive cycle of economic development. In fact， Smith clearly distinguished between economic forms that develop naturally in accordance with the “four-stages” progress and modern European societies that develop on the basis of an “unnatural and retrograde order”. To better understand the nature and history of modern European economic development in Smith’s theory， this article suggests that the role of foreign trade in promoting the modern economy needs to be understood within specific socio-political relations. For Smith， capital had to be anchored in the land in order to break through economic stagnation， and a stable and balanced modern economy required continuous agricultural investment. Therefore， the collapse of feudal land relations induced by the rise of trade economy and political struggles becomes the key institutional prerequisite for achieving rapid economic development in Western Europe. It is in this sense that modern European economic development manifests itself as “unnatural and retrograde”， that is， the early development of distant trade led to the disintegration of feudalism in some areas， which in turn led to the formation of a resilient agrarian economy and increasingly vibrant commerce and manufacturing industries. Based on this historical lesson， Smith supported the implementation of strong reforms of feudalism in Scotland within the framework of the British Imperial Union in order to achieve the transformation of Scottish Highland economy.

Key words: Adam Smith, natural progress of opulence, unnatural and retrograde order, feudalism, economic transformation