The Wealth of Nations

The Wealth of Nations

by Adam Smith

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Product Details

ISBN-13: 9783736801523
Publisher: BookRix
Publication date: 01/09/2019
Sold by: Bookwire
Format: NOOK Book
Pages: 1513
Sales rank: 537,729
File size: 1 MB

About the Author


A Scottish professor of moral philosophy, Adam Smith (1723–90) combined economics, history, political theory, and philosophy to create this treatise on what has come to be known as laissez-faire economics.

Read an Excerpt

Adam Smith's ideas fit perfectly with this new democratic, individualistic idea. To him, the "wealth" of a nation wasn't determined by the size of its monarch's treasure or the amount of gold and silver in its vaults, nor by the spiritual worthiness of its people in the eyes of the Church. A nation's wealth was to be judged by the total value of all the goods its people produced for all its people to consume. To a reader at the start of the twenty-first century, this assertion may seem obvious. At the time he argued it, it was a revolutionary democratic vision.

Smith was born in 1723, in the small Scottish port of Kirkcaldy, which sits across the Firth of Forth from Edinburgh. His father was a collector of customs--a job that literally embodied the old mercantilist philosophy that Smith would later argue against. He was educated at the University of Glasgow, whose professors passionately debated the new concepts of individualism and ethics (one of his teachers, Francis Hutcheson, was prosecuted by the Scottish Presbyterian church for spreading the "false and dangerous" doctrines that moral goodness could be obtained by promoting happiness in others and that it was possible to know good and evil without knowing God), and then at Oxford, whose professors didn't debate or teach much of anything. In fact, the lassitude of Oxford's dons prompted Smith to suggest, in The Wealth of Nations, that professors be paid according to the number of students they attract, thereby motivating them to take a more lively interest in teaching--one of Smith's few suggestions with which today's tenured professors of economics generally disagree.

In 1748 Smith returned to the University ofGlasgow, first as a professor of logic and then of moral philosophy, filling Francis Hutcheson's chair. There he published The Theory of Moral Sentiments in 1759, which brought him instant fame. In it, Smith asked how a normal self-interested person is capable of making moral judgments, when the essence of morality is selflessness. It was a question that troubled many of the new thinkers of the eighteenth century, who had liberated themselves from both theology and codes of aristocratic or chilvaric virtue. Smith's answer foreshadowed Sigmund Freud's superego: People possess within themselves an "impartial spectator" who advises them about moral behavior.

Smith resigned his professorship in 1764 to become tutor to the son of the late Duke of Buccleuch. The boy's mother, Countess of Dalkeith, had just remarried Charles Townshend, one of Smith's many admirers, who later became Britain's chancellor of the exchequer, and was responsible for imposing the taxes on the American colonies that prompted some Bostonians to throw large quantities of tea into Boston Harbor. For the next two years, Smith traveled throughout the Continent, beginning work on the book that was to become The Wealth of Nations. He visited Voltaire in Geneva, and in Paris met François Quesnay, a physician in the court of Louis XV who had devised a chart of the economy--a "tableau economique" he called it--showing the circulation of products and money in an economy analogous to the flow of blood through a body. Quesnay and his fellow Physiocrats believed that wealth came from a nation's production that enlarged the flow rather than from its accumulation of gold and silver, as the prevailing mercantilists believed, and that governments should therefore remove all impediments to the flow of money and goods in order to increase production.
Smith took these notions to heart, although he didn't agree with everything the Physiocrats propounded (such as their view that agricultural production was the only true source of wealth). Returning to Glasgow in 1766, he spent the better part of the following decade working out his theories. Occasionally he'd travel to London to discuss them with luminaries such as the philosopher Edmund Burke, historian Edward Gibbon, Benjamin Franklin (visiting from America), and the remarkable personalities Samuel Johnson and James Boswell. Smith's book finally appeared on March 9, 1776, in two volumes, and went through several subsequent editions. It was well received, although not an immediate sensation. Smith spent his remaining years back in Edinburgh as commissioner of customs, the same kind of mercantilist sinecure his father had held, and died in July 1790, at the age of sixty-seven.

The Wealth of Nations is resolutely about human beings--their capacities and incentives to be productive, their overall well-being, and the connection between productivity and well-being. In the very first sentence of his Introduction, Smith takes aim at the mercantilists and declares, "The annual labour of every nation is the fund which originally supplies it with all the necessaries and conveniences of life. . . ." And two paragraphs later he states that a nation's wealth grows because of "the skill, dexterity, and judgment with which its labour is generally applied. . . ." Smith's concern about all of a nation's working people is evident. In a wealthy nation "a workman, even of the lowest and poorest order, if he is frugal and industrious, may enjoy a greater share of the necessaries and conveniences of life than it is possible for any savage to acquire." In the rest of the book he explains why this is so.
While The Theory of Moral Sentiments showed how normal, self-interested people could make moral judgments by consulting an internal "impartial spectator," in The Wealth of Nations Smith explains how such people will automatically contribute to the well-being of others even absent such consultations, simply by pursuing their own ends. "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner," writes Smith, in one of the most frequently cited passages in the history of economic thought, "but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love. . . ." With several strokes of his pen, Smith thereby provided a moral justification for motives that had been morally suspect in Western thought for thousands of years.

How can self-interested behavior--the "private interests and passions" of men Smith calls them--lead to the good of the whole? By means, he says, of an "invisible hand"--perhaps the most famous, or infamous, bodily metaphor in all of social science. By an "invisible hand" Smith does not mean a mystical force; he is referring to an unfettered market propelled both by competition among self-interested sellers and by buyers seeking the best possible deals for themselves. If sellers produce too little of something to meet buyers' demands, for example, the price of the product will rise until other sellers step in to fill the gap. If some sellers charge too high a price to begin with, others will step in and charge a lower one.

Unimpeded, the invisible hand will allocate goods efficiently. But the key to wealth creation, for Smith, comes in the division of labor--by which individuals specialize in doing or producing a particular thing. Smith famously illustrates this principle by reference to the making of pins within the kind of small factory that characterized the early years of the Industrial Revolution. "One man draws out the wire, another straights it, a third cuts it, a fourth points it, a fifth grinds it at the top for receiving the head; to make the head requires two or three distinct operations . . . ," he explains. "I have seen a small manufactory of this kind where ten men only were employed . . . [who] could make among them upwards of forty-eight thousand pins a day." He contrasts this with the likely output of individuals who tried to make the entire pins themselves. "[I]f they had all wrought separately and independently . . . they certainly could not each of them have made twenty, perhaps not one pin in a
day. . . ."

Specialization improves productivity because it allows workers to become more skilled in their specific tasks, motivates them to discover more efficient means of doing them, and saves them the time of changing over to different tasks. Here, Smith noticed something that modern managers often overlook: Innovation often begins with the workers closest to the things being worked upon. "A great part of the machines made use of in those manufactures in which labour is most subdivided, were originally the inventions of common workmen, who, being each of them employed in some simple operation, naturally turned their thoughts towards finding out easier and readier methods of performing it."

In order to reap the full benefits of specialization, the market must be sufficiently large. After all, there's little point in creating forty-eight thousand pins if there aren't enough people to buy them. The larger the market, the greater the opportunities for specialization. It follows that barriers to trade, within a nation or between nations--regulations, licenses, tariffs, quotas, and other market protections--reduce potential wealth. At the extreme, the necessity of self-sufficiency causes hardship, as in "the lone houses and very small villages which are scattered about in so desert a country as the Highlands of Scotland, [where] every farmer must be butcher, baker, and brewer for his own family."

Table of Contents


Contents

Preface
Editor's Introduction
Introduction and Plan of the Work

Book I Of the Causes and Improvement in the productive Powers of Labour, and of the Order according to which its Produce is naturally distributed among the different Ranks of the People
Chapter I Of the Division of Labour
Chapter II Of the Principle which gives Occasion to the Division of Labour
Chapter III That the Division of Labour is limited by the Extent of the Market
Chapter IV Of the Origin and Use of Money
Chapter V Of the real and nominal Price of Commodities, or of their Price in Labour, and their Price in Money
Chapter VI Of the component Parts of the Price of Commodities
Chapter VII Of the natural and market Price of Commodities
Chapter VIII Of the Wages of Labour
Chapter IX Of the Profits of Stock
Chapter X Of Wages and Profits in the different Employments of Labour and Stock
Chapter XI Of the Rent of Land

Book II Of the Nature, Accumulation, and Employment of Stock
Introduction
Chapter I Of the Division of Stock
Chapter II Of Money considered as a particular Branch of the general Stock of the Society, or of the Expence of maintaining the National Capital
Chapter III Of the Accumulation of Capital, or of productive and unproductive Labour
Chapter IV Of Stock lent at Interest
Chapter V Of the different Employment of Capitals

Book III Of the different Progress of Opulence in different Nations
Chapter I Of the Natural Progress of Opulence
Chapter II Of the Discouragement of Agriculture in the ancient State of Europe after the Fall of the Roman Empire
Chapter III Of the Rise and Progress of Cities and Towns, after the Fall of the Roman Empire
Chapter IV How the Commerce of the Towns contributed to the Improvement of the Country

Book IV Of Systems of political Economy
Introduction
Chapter I Of the Principle of the commercial, or mercantile System
Chapter II Of Restraints upon the Importation from foreign Countries of such Goods as can be produced at Home
Chapter III Of the extraordinary Restraints upon the Importation of Goods almost all Kinds, from those countries with which the Balance is supposed to be disadvantageous
Chapter IV Of Drawbacks
Chapter V Of Bounties
Chapter VI Of Treaties of Commerce
Chapter VII Of Colonies
Chapter VIII Conclusion of the Mercantile System
Chapter IX Of the Agricultural Systems, or of those Systems of Political Economy, which represent the Produce of Land, as either the sole or the principal Source of the Revenue and Wealth of every Country

Book V Of the Revenue of the Sovereign or Commonwealth
Chapter I Of the Expences of the Sovereign or Commonwealth
Chapter II Of the Sources of the general or public Revenue of the Society
Chapter III Of public Debts

Appendix on the Herring Bounty
Index I. Subjects
Index II. Authorities

What People are Saying About This

From the Publisher

"Adam Smith's enormous authority resides, in the end, in the same property that we discover in Marx: not in any ideology, but in an effort to see to the bottom of things." —-Robert L. Heilbroner

Reading Group Guide

The Wealth of Nations
by Adam Smith

It is symbolic that Adam Smith’s masterpiece of economic analysis, The Wealth of Nations, was first published in 1776, the same year as the Declaration of Independence.

In his book, Smith fervently extolled the simple yet enlightened notion that individuals are fully capable of setting and regulating prices for their own goods and services. He argued passionately in favor of free trade, yet stood up for the little guy. The Wealth of Nations provided the first--and still the most eloquent--integrated description of the workings of a market economy.

The result of Smith’s efforts is a witty, highly readable work of genius filled with prescient theories that form the basis of a thriving capitalist system. This unabridged edition offers the modern reader a fresh look at a timeless and seminal work that revolutionized the way governments and individuals view the creation and dispersion of wealth--and that continues to influence our economy right up to the present day.|

1. Many of the concepts developed by Adam Smith in The Wealth of Nations-the nature of free trade, laissez-faire, the division of labor-were revolutionary notions in 1776, and remain central to contemporary liberal economic thought. Discuss contemporary economics in light of some of the key notions elaborated by Smith.

2. Smith famously writes: “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love. . . .” What does Smith mean by “self-love” or “self-interest”?

3. As R. H. Campbell and A. S. Skinner write, The Wealth of Nations “was not only an intellectual achievement . . . embracing as it does the explanation of complex social relations on the basis of a few principles, but also a work which provided practical prescriptions for the problems of the day.” Discuss these aspects of Smith’s work-analytical and prescriptive or historical; what is their relation? Is the one necessary for an appreciation of the other?

4. In his Introduction to this volume, Robert Reich notes that “The Wealth of Nations is resolutely about human beings-their capacities and incentives to be productive, their overall well-being, and the connection between productivity and well-being.” How does this statement, taken as a point of departure, shed light on Smith’s book and its significance?

5. Although he is considered the founder of political economy (or modern economic thought more generally), Adam Smith considered himself a moral philosopher. How does looking at him in this way-as someone fundamentally concerned with questions of ethics-change your understanding or appreciation of his work?

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The Wealth of Nations 4.1 out of 5 based on 0 ratings. 31 reviews.
Uchtraeda More than 1 year ago
To sell an abridged edition without stating that is in fact abridged is, simply, fraud. I would like to read, and make up my own mind about as well as learn from, ALL of what Adam Smith wrote.
Anonymous More than 1 year ago
ABRIDGED
Guest More than 1 year ago
Nobody seriously involved in economics can do without this exhaustive work, originally published in five volumes as An Inquiry into the Nature and Causes of the Wealth of Nations. This classic is a pragmatic and accessible milestone in the history of economics. Its author, Adam Smith, is woven into every economics textbook. However, Smith¿s theories, which today often are recounted mostly in fragments, frequently incorrectly, reveal their entire social and economic innovative power only in context. Smith burst onto the scene at a time when absolutist national states monopolized the world's precious metal reserves and tried to increase their own wealth through stringent export policies. These states were motivated by an entirely new concept about national wealth: that it stemmed from the work of the country's people, not from gold. Based on that idea, economic markets should balance themselves as if guided by an 'invisible hand,' impelled by each individual's self-interest. The state has to provide only an orderly framework and specific public goods and services. Even though Smith's image of idealized economic and social harmony may have developed a few cracks over the course of time, his ideas have inspired many well-known economists during the past 250 years, including David Ricardo, Vilfredo Pareto, Friedrich August von Hayek and Milton Friedman. We highly recommend this seminal work.
Guest More than 1 year ago
Written by Adam Smith who was the founding father of capitalism. This book was the the historical book that changed the views of many people. This book is highly regarded in the economics community. I reccomend it for anyone who is interested in econ or capitalism. A must read for any thinkers.
beau.p.laurence on LibraryThing 10 months ago
mine is hardcover 1937 Random House edition; don't talk about economics if you haven't read this -- know thy enemy!
jpsnow on LibraryThing 10 months ago
Actually, the full title is An Inquiry into the Nature and Causes of the Wealth of Nations -- perhaps the longest reading everyone should finish. Every basic economic concept is directly addressed or at least touched upon by this work. However, most of the text involves an endless series of examples using commodities, prices, and laws from the 18th century. Adam Smith covers division of labor early on (it's worth noting that his famous pin factory is brought up within the first 20 pages) and moves through international trade, taxation, public goods, and politics of that time. As this was published in 1776, it is most interesting to note his discussion of the recent "disturbances" in the colonies. Towards the end of the 900 pages he further encourages that the Irish and American people should be willing to pay more in taxes. In discussing wage prices, his discourse about the payment of soldiers and sailors was quite interesting. Both take the position for the non-pecuniary benefit of a slight chance for a large payback in glory, with the soldier getting a greater chance but not facing the competition a sailor's place has in light of the large merchant trade. Smith's discussion of laws and business special interest groups shows that not that much has changed. For example, the wool lobby had such laws prohibiting export of unprocessed wool, prohibiting transport within certain miles of certain coasts, prohibiting transport in darkness, and requiring containment only in leather or cloth bags with "WOOL" written on the outside in letters at least 3 inches wide. Other concepts covered: money, rent, profits, economic efficiency (the invisible hand), education, roads, efficient taxation, examples involving trade restrictions, special interest groups, and factors affecting price supply, and demand.
DaedelusPrime More than 1 year ago
All you need to know.
reACTIONary More than 1 year ago
This is reprint's Edwin Cannan's extensively annotated 1904 scholarly edition. This is the edition reprinted by the University of Chicago Press in 1976 for the 200th anniversary of its original publication. You can be assured that this is the most widely accepted, standard academic edition. It does not contain Cannan's Introduction or Index. It does contain his Notes and Marginal Summary. Obviously it does not have the George J. Stigler's Preface from the UofC edition, but it contains an introduction by Robert Reich, commentary by R. H. Campbell and A. S. Skinner and a Modern Library "Reading Group Guide". Having looked over all of the edition's on the B&N site, I recommend this one as superior to the others, even if more expensive.
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RolfDobelli More than 1 year ago
getAbstract believes that no serious economist can do without this exhaustive work, originally published in five volumes as An Inquiry into the Nature and Causes of the Wealth of Nations. This classic is a pragmatic and accessible milestone in the history of economics. Its author, Adam Smith, is woven into every economics textbook. However, Smith's theories, which today often are recounted mostly in fragments, frequently incorrectly, reveal their entire social and economic innovative power only in context. Smith burst onto the scene at a time when absolutist national states monopolized the world's precious metal reserves and tried to increase their own wealth through stringent export policies. These states were motivated by an entirely new concept about national wealth: that it stemmed from the work of the country's people, not from gold. Based on that idea, economic markets should balance themselves as if guided by an "invisible hand," impelled by each individual's self-interest. The state has to provide only an orderly framework and specific public goods and services. Even though Smith's image of idealized economic and social harmony may have developed a few cracks over the course of time, his ideas have inspired many well-known economists during the past 250 years, including David Ricardo, Vilfredo Pareto and Milton Friedman.
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Regent More than 1 year ago
Very Informative. Insights proved to be accurate over time. This book helped me to form better conclusions and analysis of cultures for one of my books.
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Extremely tedious, laborious reading with somewhat outdated vernacular, but a must-read for those interested in the history of economic theory.
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