The Role of the State in Smith
Far from the laissez-faire caricature, Smith supported extensive government action in defense, justice, infrastructure, education, and the regulation of banking.
Beyond Laissez-Faire
The popular image of Adam Smith as the prophet of unregulated markets is one of the great distortions in the history of ideas. Smith never used the phrase 'laissez-faire' and would have rejected a dogmatic opposition to all government intervention. His actual position was nuanced: markets work well in many domains, but they also fail in predictable ways that require government action.
A careful reading of The Wealth of Nations reveals Smith endorsing government provision of public education, regulation of the banking system, maximum interest rate ceilings, public infrastructure, mandatory fire walls between buildings, health standards for workers, and even restrictions on how bankers could issue notes. This is not the program of a libertarian ideologue.