What does Adam Smith mean by "good government"? How is it related to his political economy and system of natural liberty? No extensive or specific treatment of these hermeneutical issues has been given in Smith's scholarship. Answering these questions is fundamental to having a new interpretation of the various links between the legal, political, ethical and economic aspects of Smith's view of social order. The great theme of good government, which runs through the whole history of Western political-legal thought, if read in relation to the system of natural liberty, provides a different understanding of the thought of Smith on "Political Economy" as the "science of a statesman or legislator" and the new art of good government. Our reconstruction of Smith's view of good government aims to cast light on and give a new significance to his unfinished project of a new science of society.