By analyzing the political-economic theory of Adam Smith, this paper particularly investigates Smith's understanding of the emergence of modern society. In doing so, the paper explores a certain void in Croatian academic literature on this topic, and aims to present Smith's cause-and-effect mechanism that led to the collapse of feudalism and the creation of modern commercial society as an exception in European history. Based on an interpretative analysis of Smith's works, especially The Wealth of Nations, the paper first considers the basic determinants of Smith's approach to historical research, with a particular focus on Smith's stadial theory of history. After that, the paper presents Smith's perception of ancient orders, namely Athens and Rome, as the first commercial societies in European history. Additionally, in this part, the reasons for the collapse of ancient commercial societies, according to Smith's understanding, are explored. Then, in the central part of the paper, a series of causes outlined in the third book of The Wealth of Nations, which led to the disintegration of feudal society and the emergence of a modern commercial society, are followed in detail. The paper then turns to the constitutive principles and mechanisms that enabled the emergence of modern society. Lastly, the paper considers the role of the sovereign, or the state, in the creation and functioning of the early modern commercial society. The interpretative analysis points to the important role of the modern state in Smith's theory, where the state emerges as a guarantor of the protection of constitutive principles that enable the functioning of modern society.