The Wealth of Nations

The Wealth of Nations

Overview
An Inquiry into the Nature and Causes of the Wealth of Nations, generally referred to by its shortened title The Wealth of Nations, is the magnum opus
Magnum opus
Magnum opus , from the Latin meaning "great work", refers to the largest, and perhaps the best, greatest, most popular, or most renowned achievement of a writer, artist, or composer.-Related terms:Sometimes the term magnum opus is used to refer to simply "a great work" rather than "the...

of the Scottish
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...

 economist and moral philosopher Adam Smith
Adam Smith
Adam Smith was a Scottish social philosopher and a pioneer of political economy. One of the key figures of the Scottish Enlightenment, Smith is the author of The Theory of Moral Sentiments and An Inquiry into the Nature and Causes of the Wealth of Nations...

. First published in 1776, it is a reflection on economics at the beginning of the Industrial Revolution
Industrial Revolution
The Industrial Revolution was a period from the 18th to the 19th century where major changes in agriculture, manufacturing, mining, transportation, and technology had a profound effect on the social, economic and cultural conditions of the times...

 and argues that free market economies are more productive and beneficial to their societies. The book is a fundamental work in classical economics
Classical economics
Classical economics is widely regarded as the first modern school of economic thought. Its major developers include Adam Smith, Jean-Baptiste Say, David Ricardo, Thomas Malthus and John Stuart Mill....

.

The Wealth of Nations was first published on 9 March 1776, during the British Agricultural Revolution
British Agricultural Revolution
British Agricultural Revolution describes a period of development in Britain between the 17th century and the end of the 19th century, which saw an epoch-making increase in agricultural productivity and net output. This in turn supported unprecedented population growth, freeing up a significant...

.
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Encyclopedia
An Inquiry into the Nature and Causes of the Wealth of Nations, generally referred to by its shortened title The Wealth of Nations, is the magnum opus
Magnum opus
Magnum opus , from the Latin meaning "great work", refers to the largest, and perhaps the best, greatest, most popular, or most renowned achievement of a writer, artist, or composer.-Related terms:Sometimes the term magnum opus is used to refer to simply "a great work" rather than "the...

of the Scottish
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...

 economist and moral philosopher Adam Smith
Adam Smith
Adam Smith was a Scottish social philosopher and a pioneer of political economy. One of the key figures of the Scottish Enlightenment, Smith is the author of The Theory of Moral Sentiments and An Inquiry into the Nature and Causes of the Wealth of Nations...

. First published in 1776, it is a reflection on economics at the beginning of the Industrial Revolution
Industrial Revolution
The Industrial Revolution was a period from the 18th to the 19th century where major changes in agriculture, manufacturing, mining, transportation, and technology had a profound effect on the social, economic and cultural conditions of the times...

 and argues that free market economies are more productive and beneficial to their societies. The book is a fundamental work in classical economics
Classical economics
Classical economics is widely regarded as the first modern school of economic thought. Its major developers include Adam Smith, Jean-Baptiste Say, David Ricardo, Thomas Malthus and John Stuart Mill....

.

History


The Wealth of Nations was first published on 9 March 1776, during the British Agricultural Revolution
British Agricultural Revolution
British Agricultural Revolution describes a period of development in Britain between the 17th century and the end of the 19th century, which saw an epoch-making increase in agricultural productivity and net output. This in turn supported unprecedented population growth, freeing up a significant...

. It influenced a number of authors and economists, as well as governments and organizations. For example, Alexander Hamilton
Alexander Hamilton
Alexander Hamilton was a Founding Father, soldier, economist, political philosopher, one of America's first constitutional lawyers and the first United States Secretary of the Treasury...

 was influenced in part by The Wealth of Nations to write his Report on Manufactures
Report on Manufactures
The Report on Manufactures is the third report, and magnum opus, of American Founding Father and 1st U.S. Treasury Secretary Alexander Hamilton...

, in which he argued against many of Smith's policies. Interestingly, Hamilton based much of this report on the ideas of Jean-Baptiste Colbert
Jean-Baptiste Colbert
Jean-Baptiste Colbert was a French politician who served as the Minister of Finances of France from 1665 to 1683 under the rule of King Louis XIV. His relentless hard work and thrift made him an esteemed minister. He achieved a reputation for his work of improving the state of French manufacturing...

, and it was, in part, to Colbert's ideas that Smith responded to with The Wealth of Nations.

Many other authors were influenced by the book and used it as a starting point in their own work, including Jean-Baptiste Say
Jean-Baptiste Say
Jean-Baptiste Say was a French economist and businessman. He had classically liberal views and argued in favor of competition, free trade, and lifting restraints on business...

, David Ricardo
David Ricardo
David Ricardo was an English political economist, often credited with systematising economics, and was one of the most influential of the classical economists, along with Thomas Malthus, Adam Smith, and John Stuart Mill. He was also a member of Parliament, businessman, financier and speculator,...

, Thomas Malthus
Thomas Malthus
The Reverend Thomas Robert Malthus FRS was an English scholar, influential in political economy and demography. Malthus popularized the economic theory of rent....

 and, later, Ludwig von Mises
Ludwig von Mises
Ludwig Heinrich Edler von Mises was an Austrian economist, philosopher, and classical liberal who had a significant influence on the modern Libertarian movement and the "Austrian School" of economic thought.-Biography:-Early life:...

. The Russian national poet Aleksandr Pushkin
Aleksandr Pushkin
Alexander Sergeyevich Pushkin was a Russian author of the Romantic era who is considered by many to be the greatest Russian poet and the founder of modern Russian literature....

 refers to The Wealth of Nations in his 1833 verse-novel Eugene Onegin
Eugene Onegin
Eugene Onegin is a novel in verse written by Alexander Pushkin.It is a classic of Russian literature, and its eponymous protagonist has served as the model for a number of Russian literary heroes . It was published in serial form between 1825 and 1832...

.

Irrespective of historical influence, however, The Wealth of Nations represented a clear shift in the field of economics, similar to Sir Isaac Newton
Isaac Newton
Sir Isaac Newton PRS was an English physicist, mathematician, astronomer, natural philosopher, alchemist, and theologian, who has been "considered by many to be the greatest and most influential scientist who ever lived."...

's Principia Mathematica
Philosophiae Naturalis Principia Mathematica
Philosophiæ Naturalis Principia Mathematica, Latin for "Mathematical Principles of Natural Philosophy", often referred to as simply the Principia, is a work in three books by Sir Isaac Newton, first published 5 July 1687. Newton also published two further editions, in 1713 and 1726...

for physics
Physics
Physics is a natural science that involves the study of matter and its motion through spacetime, along with related concepts such as energy and force. More broadly, it is the general analysis of nature, conducted in order to understand how the universe behaves.Physics is one of the oldest academic...

, Antoine Lavoisier
Antoine Lavoisier
Antoine-Laurent de Lavoisier , the "father of modern chemistry", was a French nobleman prominent in the histories of chemistry and biology...

's Traité Élémentaire de Chimie
Traité Élémentaire de Chimie
Traité élémentaire de chimie is an influential textbook written by Antoine Lavoisier published in 1789 and translated into English by Robert Kerr in 1790.The book is considered to be the first modern chemical textbook...

for chemistry
Chemistry
Chemistry is the science of matter, especially its chemical reactions, but also its composition, structure and properties. Chemistry is concerned with atoms and their interactions with other atoms, and particularly with the properties of chemical bonds....

, or Charles Darwin
Charles Darwin
Charles Robert Darwin FRS was an English naturalist. He established that all species of life have descended over time from common ancestry, and proposed the scientific theory that this branching pattern of evolution resulted from a process that he called natural selection.He published his theory...

's On the Origin of Species for biology
Biology
Biology is a natural science concerned with the study of life and living organisms, including their structure, function, growth, origin, evolution, distribution, and taxonomy. Biology is a vast subject containing many subdivisions, topics, and disciplines...

.

Publishing history


Five editions of The Wealth of Nations were published during Smith's lifetime: in 1776, 1778, 1784, 1786, and 1789. Numerous editions appeared after Smith's death in 1790. To better understand the evolution of the work under Smith's hand, a team led by Edwin Cannan
Edwin Cannan
Edwin Cannan was a British economist and historian of economic thought. He was a professor at the London School of Economics from 1895 to 1926....

 collated the first five editions. The differences were published along with an edited sixth edition in 1904. They found minor but numerous differences (including the addition of many footnotes) between the first and the second editions, both of which were published in two volumes. The differences between the second and third editions, however, are major: In 1784, Smith annexed these first two editions with the publication of Additions and Corrections to the First and Second Editions of Dr. Adam Smith’s Inquiry into the Nature and Causes of the Wealth of Nations, and he also had published the three-volume third edition of the Wealth of Nations, which incorporated Additions and Corrections and, for the first time, an index. Among other things, the Additions and Corrections included entirely new sections. The fourth edition, published in 1786, had only slight differences from the third edition, and Smith himself says in the Advertisement at the beginning of the book, "I have made no alterations of any kind." Finally, Cannan notes only trivial differences between the fourth and fifth editions — a set of misprints being removed from the fourth and a different set of misprints being introduced.

Anachronisms and terminology


Modern commentary on the work may suffer from anachronism
Anachronism
An anachronism—from the Greek ανά and χρόνος — is an inconsistency in some chronological arrangement, especially a chronological misplacing of persons, events, objects, or customs in regard to each other...

— the imposition of modern context on a 250-year-old work.

The book is written in English
Modern English
Modern English is the form of the English language spoken since the Great Vowel Shift in England, completed in roughly 1550.Despite some differences in vocabulary, texts from the early 17th century, such as the works of William Shakespeare and the King James Bible, are considered to be in Modern...

 of the late 18th century, so there are some points to consider:
  • The term economics was not yet in use.
  • The term capitalism was not yet in use. Smith talks about a "system of perfect liberty" or "system of natural liberty".
  • Feudalism
    Feudalism
    Feudalism was a set of legal and military customs in medieval Europe that flourished between the 9th and 15th centuries, which, broadly defined, was a system for ordering society around relationships derived from the holding of land in exchange for service or labour.Although derived from the...

     was still dominant in parts of Europe.
  • The term corporation, as in feudal corporations
    Corporation (feudal Europe)
    In feudal Europe, a corporation was an aggregation of business interests into a single legal body, entity or compact, usually with an explicit license from city, church, or national leaders...

    , referred to a body that regulated and, in Smith's portrayal, limited participation in a skilled trade.

Book I: Of the Causes of Improvement


Of the Division of Labour
Division of labour
Division of labour is the specialisation of cooperative labour in specific, circumscribed tasks and likeroles. Historically an increasingly complex division of labour is closely associated with the growth of total output and trade, the rise of capitalism, and of the complexity of industrialisation...

:

Division of labour has caused a greater increase in production than any other factor. This diversification is greatest for nations with more industry
Industry
Industry refers to the production of an economic good or service within an economy.-Industrial sectors:There are four key industrial economic sectors: the primary sector, largely raw material extraction industries such as mining and farming; the secondary sector, involving refining, construction,...

 and improvement, and is responsible for "universal opulence" in those countries. Agriculture is less amenable than industry to division of labour; hence, rich nations are not so far ahead of poor nations in agriculture
Agriculture
Agriculture is the cultivation of animals, plants, fungi and other life forms for food, fiber, and other products used to sustain life. Agriculture was the key implement in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that nurtured the...

 as in industry.

Of the Principle which gives Occasion to the Division of Labour:
Division of labor arises not from innate wisdom, but from humans' propensity to barter
Barter
Barter is a method of exchange by which goods or services are directly exchanged for other goods or services without using a medium of exchange, such as money. It is usually bilateral, but may be multilateral, and usually exists parallel to monetary systems in most developed countries, though to a...

. The apparent difference in natural talents between people is a result of specialization, not a cause.

That the Division of Labour is Limited by the Extent of the Market:
Limited opportunity for exchange discourages division of labor. Because "water-carriage" extends the market, division of labor, with its improvements, comes earliest to cities near waterways. Civilization began around the highly navigable Mediterranean Sea
Mediterranean Sea
The Mediterranean Sea is a sea connected to the Atlantic Ocean surrounded by the Mediterranean region and almost completely enclosed by land: on the north by Anatolia and Europe, on the south by North Africa, and on the east by the Levant...

...

Of the Origin and Use of Money
Currency
In economics, currency refers to a generally accepted medium of exchange. These are usually the coins and banknotes of a particular government, which comprise the physical aspects of a nation's money supply...

:

With division of labor, the produce of one's own labor can fill only a small part of one's needs. Different commodities have served as a common medium of exchange, but all nations have finally settled on metals, which are durable and divisible, for this purpose. Before coinage
Coinage
Coinage may refer to:* coins, standardized as currency* neologism, coinage of a new word* COINage, numismatics magazine* Tin coinage, a tax on refined tin* ancestry* Coinage, a board game...

, people had to weigh and assay with each exchange, or risk "the grossest frauds and impositions." Thus nations began stamping metal, on one side only, to ascertain purity, or on all sides, to stipulate purity and amount.
The quantity of real metal in coins has diminished, due to the "avarice and injustice of princes and sovereign states," enabling them to pay their debts in appearance only, and to the defraudment of creditors.

Of the Real and Nominal Price of Commodities, or of their Price in Labour, and their Price in Money:
In the first two passages Smith gives two conflicting definitions of the relative value of a commodity
Commodity
In economics, a commodity is the generic term for any marketable item produced to satisfy wants or needs. Economic commodities comprise goods and services....

. Ricardo
David Ricardo
David Ricardo was an English political economist, often credited with systematising economics, and was one of the most influential of the classical economists, along with Thomas Malthus, Adam Smith, and John Stuart Mill. He was also a member of Parliament, businessman, financier and speculator,...

 responded to one of Smith's inconsistencies in the Preface of his "Principles
On the Principles of Political Economy and Taxation
On the Principles of Political Economy and Taxation is a book by David Ricardo on economics. The book concludes that land rent grows as population increases...

":
The writer, in combating received opinions, has found it necessary to advert more particularly to those passages in the writings of Adam Smith from which he sees reason to differ; but he hopes it will not, on that account, be suspected that he does not, in common with all those who acknowledge the importance of the science of Political Economy, participate in the admiration which the profound work of this celebrated author so justly excites.


Adam Smith defines the value of commodities by the labour
Labour
Labor might refer to:*Labor, an obsolete unit of area*Josef Labor, a composer, pianist, organist, and teacher*Labor, SloveniaLabour or labor might refer to:* Employment of any kind* Manual labour, physical work done by people...

 embedded and also by the labour a good commands. Ricardo agrees with the first definition:

"The real price of every thing," says Adam Smith, "What every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it. What every thing is really worth to the man who has acquired it, and who wants to dispose of it, or exchange it for something else, is the toil and trouble which it can save to himself, and which it can impose upon other people. That this is really the foundation of the exchangeable value of all things, excepting those which cannot be increased by human industry, is a doctrine of the utmost importance in political economy."

For Ricardo, the value of reproducible commodities and services reflects the relative difficulties of production counted in labour units: direct labour plus the dated labour of the past embedded in inputs (capital) and corrected by interests. This differs from Smith's second definition of value:
"The value of any commodity … is equal to the quantity of labour which it enables him to purchase or command. Labour, therefore, is the real measure of the exchangeable value of all commodities."


Ricardo disagrees:
"Adam Smith, who so accurately defined the original source of exchangeable value … speaks of things being more or less valuable, in proportion as they will exchange for more or less of this standard measure. … [N]ot the quantity of labour bestowed on the production of any object, but the quantity which it can command in the market: as if these were two equivalent expressions…"


Smith's second definition pleases neoclassical economists, who determine value by the utility that a commodity provides a person rather than cost of production as do classical economists.

Of the Component Parts of the Price of Commodities: Smith argues that the price of any product reflects wages, rent of land and "...profit of stock," which compensates the capitalist for risking his resources.

Of the Natural and Market Price
Price
-Definition:In ordinary usage, price is the quantity of payment or compensation given by one party to another in return for goods or services.In modern economies, prices are generally expressed in units of some form of currency...

 of Commodities:

To paraphrase Smith, and the first part of this Chapter, when demand exceeds supply, the price goes up. When the supply exceeds demand, the price goes down.

He then goes on to comment on the different avenues that people can take to generate a larger profit than normal. Some of those include: finding a commodity that few others have that allows for a high profit, and being able to keep that secret; Finding a way to produce a unique commodity (The dyer who discovers a unique dye). He also states that the former usually has a short lifespan of high profitability, and the latter has a longer. He also notes that a monopoly is essentially the same as the dyers trade secret, and can thus lead to high profitability for a long time by keeping the supply below the effectual demand.
Of the Wages of Labour: In this section, Smith describes how the wages of labour are dictated primarily by the competition among labourers and masters. When labourers bid against one another for limited opportunities for employment, the wages of labour collectively fall, whereas when employers compete against one another for limited supplies of labour, the wages of labour collectively rise. However, this process of competition is often circumvented by combinations among labourers and among masters
Criticisms of Corporations
The notion of a legally sanctioned corporation remains controversial for several reasons, most of which stem from the granting of corporations both limited liability on the part of its members and the status and rights of a legal person...

. When labourers combine and no longer bid against one another, their wages rise, whereas when masters combine, wages fall. In Smith's day, it should be noted, organized labour was dealt with very harshly by the law.

Smith himself wrote about the "severity" of such laws against worker actions, and made a point to contrast the "clamour" of the "masters" against workers associations, while associations and collusions of the masters "are never heard by the people" though such actions are "always" and "everywhere" taking place:

"We rarely hear, it has been said, of the combinations of masters, though frequently of those of workmen. But whoever imagines, upon this account, that masters rarely combine, is as ignorant of the world as of the subject. Masters are always and everywhere in a sort of tacit, but constant and uniform, combination, not to raise the wages of labour above their actual rate [...] Masters, too, sometimes enter into particular combinations to sink the wages of labour even below this rate. These are always conducted with the utmost silence and secrecy till the moment of execution; and when the workmen yield, as they sometimes do without resistance, though severely felt by them, they are never heard of by other people". In contrast, when workers combine, "the masters [...] never cease to call aloud for the assistance of the civil magistrate, and the rigorous execution of those laws which have been enacted with so much severity against the combination of servants, labourers, and journeymen."


In societies where the amount of labour exceeds the amount of revenue available for waged labour, competition among workers is greater than the competition among employers, and wages fall. Inversely, where revenue is abundant, labour wages rise. Smith argues that, therefore, labour wages only rise as a result of greater revenue disposed to pay for labour. Smith thought labour the same as any other commodity in this respect:
However, the amount of revenue must increase constantly in proportion to the amount of labour for wages to remain high. Smith illustrates this by juxtaposing England with the North American colonies. In England, there is more revenue than in the colonies, but wages are lower, because more workers flock to new employment opportunities caused by the large amount of revenue— so workers eventually compete against each other as much as they did before. By contrast, as capital continues to flow to the colonial economies at least at the same rate that population increases to "fill out" this excess capital, wages there stay higher than in England.

Smith was highly concerned about the problems of poverty. He writes:
The only way to determine whether a man is rich or poor is to examine the amount of labour he can afford to purchase.
"Labour is the real exchange for commodities".

Smith also describes the relation of cheap years and the production of manufactures versus the production in dear years. He argues that while some examples, such as the linen production in France, show a correlation, another example in Scotland shows the opposite. He concludes that there are too many variables to make any statement about this.

Of the Profits of Stock: In this chapter, Smith uses interest rates as an indicator of the profits of stock
Capital (economics)
In economics, capital, capital goods, or real capital refers to already-produced durable goods used in production of goods or services. The capital goods are not significantly consumed, though they may depreciate in the production process...

. This is because interest can only be paid with the profits of stock, and so creditors will be able to raise rates in proportion to the increase or decrease of the profits of their debtors.

Smith argues that the profits of stock are inversely proportional to the wages of labor, because as more money is spent compensating labor, there is less remaining for personal profit. It follows that, in societies where competition among laborers is greatest relative to competition among employers, profits will be much higher. Smith illustrates this by comparing interest rates in England and Scotland. In England, government laws against usury
Usury
Usury Originally, when the charging of interest was still banned by Christian churches, usury simply meant the charging of interest at any rate . In countries where the charging of interest became acceptable, the term came to be used for interest above the rate allowed by law...

 had kept maximum interest rates very low, but even the maximum rate was believed to be higher than the rate at which money was usually loaned. In Scotland, however, interest rates are much higher. This is the result of a greater proportion of capitalists in England, which offsets some competition among laborers and raises wages.

However, Smith notes that, curiously, interest rates in the colonies are also remarkably high (recall that, in the previous chapter, Smith described how wages in the colonies are higher than in England). Smith attributes this to the fact that, when an empire takes control of a colony, prices for a huge abundance of land and resources are extremely cheap. This allows capitalists to increase his profit, but simultaneously draws many capitalists to the colonies, increasing the wages of labor. As this is done, however, the profits of stock in the mother country rise (or at least cease to fall), as much of it has already flocked offshore.

Of Wages and Profit in the Different Employments of Labour and Stock: Smith repeatedly attacks groups of politically aligned individuals who attempt to use their collective influence to manipulate the government into doing their bidding. At the time, these were referred to as "factions," but are now more commonly called "special interests," a term that can comprise international bankers, corporate conglomerations, outright oligopolies, trade unions and other groups. Indeed, Smith had a particular distrust of the tradesman class. He felt that the members of this class, especially acting together within the guild
Guild
A guild is an association of craftsmen in a particular trade. The earliest types of guild were formed as confraternities of workers. They were organized in a manner something between a trade union, a cartel, and a secret society...

s they want to form, could constitute a power block and manipulate the state into regulating for special interests against the general interest:
Smith also argues against government subsidies of certain trades, because this will draw many more people to the trade than what would otherwise be normal, collectively lowering their wages.

Chapter 10, part ii, motivates an understanding of the idea of feudalism
Feudalism
Feudalism was a set of legal and military customs in medieval Europe that flourished between the 9th and 15th centuries, which, broadly defined, was a system for ordering society around relationships derived from the holding of land in exchange for service or labour.Although derived from the...

.

Of the Rent of the Land: Rent, considered as the price paid for the use of land, is naturally the highest the tenant can afford in the actual circumstances of the land. In adjusting lease terms, the landlord endeavours to leave him no greater share of the produce than what is sufficient to keep up the stock from which he furnishes the seed, pays the labour, and purchases and maintains the cattle and other instruments of husbandry, together with the ordinary profits of farming stock in the neighbourhood. This is evidently the smallest share with which the tenant can content himself without being a loser, and the landlord seldom means to leave him any more. Whatever part of the produce, or, what is the same thing, whatever part of its price, is over and above this share, he naturally endeavours to reserve to himself as the rent of his land, which is evidently the highest the tenant can afford to pay in the actual circumstances of the land. Sometimes, indeed, the liberality, more frequently the ignorance, of the landlord, makes him accept of somewhat less than this portion; and sometimes too, though more rarely, the ignorance of the tenant makes him undertake to pay somewhat more, or to content himself with somewhat less, than the ordinary profits of farming stock in the neighbourhood. This portion, however, may still be considered as the natural rent of land, or the rent for which it is naturally meant that land should for the most part be let.

Book II: Of the Nature, Accumulation, and Employment of Stock


Of the Division of Stock:
"When the stock which a man possesses is no more than sufficient to maintain him for a few days or a few weeks, he seldom thinks of deriving any revenue from it. He consumes it as sparingly as he can, and endeavours by his labour to acquire something which may supply its place before it be consumed altogether. His revenue is, in this case, derived from his labour only. This is the state of the greater part of the labouring poor in all countries."


II.1.1
"But when he possesses stock sufficient to maintain him for months or years, he naturally endeavours to derive a revenue from the greater part of it; reserving only so much for his immediate consumption as may maintain him till this revenue begins to come in. His whole stock, therefore, is distinguished into two parts. That part which, he expects, is to afford him this revenue, is called his capital."


Of Money Considered as a particular Branch of the General Stock of the Society:
"From references of the first book, that the price of the greater part of commodities resolves itself into three parts, of which one pays the wages of the labour, another the profits of the stock, and a third the rent of the land which had been employed in producing and bringing them to market: that there are, indeed, some commodities of which the price is made up of two of those parts only, the wages of labour, and the profits of stock: and a very few in which it consists altogether in one, the wages of labour: but that the price of every commodity necessarily resolves itself into some one, or other, or all of these three parts; every part of it which goes neither to rent nor to wages, being necessarily profit to somebody."


Of the Accumulation of Capital
Capital accumulation
The accumulation of capital refers to the gathering or amassing of objects of value; the increase in wealth through concentration; or the creation of wealth. Capital is money or a financial asset invested for the purpose of making more money...

, or of Productive and Unproductive Labour:
"One sort of labour adds to the value of the subject upon which it is bestowed: there is another which has no such effect. The former, as it produces a value, may be called productive; the latter, unproductive labour. Thus the labour of a manufacturer adds, generally, to the value of the materials which he works upon, that of his own maintenance, and of his master's profit. The labour of a menial servant, on the contrary, adds to the value of nothing."


Of Stock Lent at Interest:
"The stock which is lent at interest is always considered as a capital by the lender. He expects that in due time it is to be restored to him, and that in the meantime the borrower is to pay him a certain annual rent for the use of it. The borrower may use it either as a capital, or as a stock reserved for immediate consumption. If he uses it as a capital, he employs it in the maintenance of productive labourers, who reproduce the value with a profit. He can, in this case, both restore the capital and pay the interest without alienating or encroaching upon any other source of revenue. If he uses it as a stock reserved for immediate consumption, he acts the part of a prodigal, and dissipates in the maintenance of the idle what was destined for the support of the industrious. He can, in this case, neither restore the capital nor pay the interest without either alienating or encroaching upon some other source of revenue, such as the property or the rent of land."
The stock which is lent at interest is, no doubt, occasionally employed in both these ways, but in the former much more frequently than in the latter."

Book III: Of the different Progress of Opulence in different Nations


Of the Natural Progress of Opulence:
"The great commerce of every civilized society is that carried on between the inhabitants of the town and those of the country. It consists in the exchange of crude for manufactured produce, either immediately, or by the intervention of money, or of some sort of paper which represents money. The country supplies the town with the means of subsistence and the materials of manufacture. The town repays this supply by sending back a part of the manufactured produce to the inhabitants of the country. The town, in which there neither is nor can be any reproduction of substances, may very properly be said to gain its whole wealth and subsistence from the country. We must not, however, upon this account, imagine that the gain of the town is the loss of the country. The gains of both are mutual and reciprocal, and the division of labour is in this, as in all other cases, advantageous to all the different persons employed in the various occupations into which it is subdivided."


Of the Discouragement of Agriculture: Chapter 2's long title is "Of the Discouragement of Agriculture in the Ancient State of Europe after the Fall of the Roman Empire".
"When the German and Scythian nations overran the western provinces of the Roman empire, the confusions which followed so great a revolution lasted for several centuries. The rapine and violence which the barbarians exercised against the ancient inhabitants interrupted the commerce between the towns and the country. The towns were deserted, and the country was left uncultivated, and the western provinces of Europe, which had enjoyed a considerable degree of opulence under the Roman empire, sunk into the lowest state of poverty and barbarism. During the continuance of those confusions, the chiefs and principal leaders of those nations acquired or usurped to themselves the greater part of the lands of those countries. A great part of them was uncultivated; but no part of them, whether cultivated or uncultivated, was left without a proprietor. All of them were engrossed, and the greater part by a few great proprietors.
This original engrossing of uncultivated lands, though a great, might have been but a transitory evil. They might soon have been divided again, and broke into small parcels either by succession or by alienation. The law of primogeniture
Primogeniture
Primogeniture is the right, by law or custom, of the firstborn to inherit the entire estate, to the exclusion of younger siblings . Historically, the term implied male primogeniture, to the exclusion of females...

 hindered them from being divided by succession: the introduction of entails prevented their being broke into small parcels by alienation."


Of the Rise and Progress of Cities and Towns, after the Fall of the Roman Empire:
"The inhabitants of cities and towns were, after the fall of the Roman empire, not more favoured than those of the country. They consisted, indeed, of a very different order of people from the first inhabitants of the ancient republics of Greece and Italy. These last were composed chiefly of the proprietors of lands, among whom the public territory was originally divided, and who found it convenient to build their houses in the neighbourhood of one another, and to surround them with a wall, for the sake of common defence. After the fall of the Roman empire, on the contrary, the proprietors of land seem generally to have lived in fortified castles on their own estates, and in the midst of their own tenants and dependants. The towns were chiefly inhabited by tradesmen and mechanics, who seem in those days to have been of servile, or very nearly of servile condition. The privileges which we find granted by ancient charters to the inhabitants of some of the principal towns in Europe sufficiently show what they were before those grants. The people to whom it is granted as a privilege that they might give away their own daughters in marriage without the consent of their lord, that upon their death their own children, and not their lord, should succeed to their goods, and that they might dispose of their own effects by will, must, before those grants, have been either altogether or very nearly in the same state of villanage with the occupiers of land in the country."


How the Commerce of the Towns Contributed to the Improvement of the Country: Smith often harshly criticised those who act purely out of self-interest and greed, and warns that,
"...[a]ll for ourselves, and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind." (Book 3, Chapter 4)

Book IV: Of Systems of political Economy


Smith vigorously attacked the antiquated government restrictions he thought hinder
Hinder
Hinder is an American rock band from Oklahoma that was formed in 2001 by drummer Cody Hanson, guitarist Joe Garvey, and singer Austin Winkler. The band was inducted into the Oklahoma Music Hall of Fame in 2007.-Formation and early history:...

ed industrial expansion. In fact, he attacked most forms of government interference in the economic process, including tariff
Tariff
A tariff may be either tax on imports or exports , or a list or schedule of prices for such things as rail service, bus routes, and electrical usage ....

s, arguing that this creates inefficiency and high prices in the long run. It is believed that this theory influenced government legislation in later years, especially during the 19th century.

However, this was not an anarchistic
Anarchism
Anarchism is generally defined as the political philosophy which holds the state to be undesirable, unnecessary, and harmful, or alternatively as opposing authority in the conduct of human relations...

 opposition to government. Smith advocated a Government that was active in sectors other than the economy. He advocated public education for poor adults, a judiciary, and a standing army—institutional systems not directly profitable for private industries.

Of the Principle of the Commercial or Mercantile System
Mercantilism
Mercantilism is the economic doctrine in which government control of foreign trade is of paramount importance for ensuring the prosperity and security of the state. In particular, it demands a positive balance of trade. Mercantilism dominated Western European economic policy and discourse from...

:
The book has sometimes been described as a critique of mercantilism
Mercantilism
Mercantilism is the economic doctrine in which government control of foreign trade is of paramount importance for ensuring the prosperity and security of the state. In particular, it demands a positive balance of trade. Mercantilism dominated Western European economic policy and discourse from...

 and a synthesis of the emerging economic thinking of Smith's time. Specifically, The Wealth of Nations attacks, inter alia, two major tenets of mercantilism:
  1. The idea that protectionist
    Protectionism
    Protectionism is the economic policy of restraining trade between states through methods such as tariffs on imported goods, restrictive quotas, and a variety of other government regulations designed to allow "fair competition" between imports and goods and services produced domestically.This...

     tariff
    Tariff
    A tariff may be either tax on imports or exports , or a list or schedule of prices for such things as rail service, bus routes, and electrical usage ....

    s serve the economic interests of a nation (or indeed any purpose whatsoever) and
  2. The idea that large reserves of gold bullion
    Gold
    Gold is a chemical element with the symbol Au and an atomic number of 79. Gold is a dense, soft, shiny, malleable and ductile metal. Pure gold has a bright yellow color and luster traditionally considered attractive, which it maintains without oxidizing in air or water. Chemically, gold is a...

     or other precious metals are necessary for a country's economic success. This critique of mercantilism was later used by David Ricardo
    David Ricardo
    David Ricardo was an English political economist, often credited with systematising economics, and was one of the most influential of the classical economists, along with Thomas Malthus, Adam Smith, and John Stuart Mill. He was also a member of Parliament, businessman, financier and speculator,...

     when he laid out his Theory of Comparative Advantage
    Comparative advantage
    In economics, the law of comparative advantage says that two countries will both gain from trade if, in the absence of trade, they have different relative costs for producing the same goods...

    .


Of Restraints upon the Importation
Tariff
A tariff may be either tax on imports or exports , or a list or schedule of prices for such things as rail service, bus routes, and electrical usage ....

:
Chapter 2's full title is "Of Restraints upon the Importation from Foreign Countries of such Goods as can be Produced at Home". The "Invisible Hand
Invisible hand
In economics, invisible hand or invisible hand of the market is the term economists use to describe the self-regulating nature of the marketplace. This is a metaphor first coined by the economist Adam Smith...

" is a frequently referenced theme from the book, although it is specifically mentioned only once.
Of the extraordinary Restraints: Chapter 3's long title is "Of the extraordinary Restraints upon the Importation of Goods of almost all Kinds, from those Countries with which the Balance is supposed to be Disadvantageous".

Of Drawbacks: Merchants and manufacturers are not contented with the monopoly of the home market, but desire likewise the most extensive foreign sale for their goods. Their country has no jurisdiction in foreign nations, and therefore can seldom procure them any monopoly there. They are generally obliged, therefore, to content themselves with petitioning for certain encouragements to exportation.

Of these encouragements what are called Drawbacks seem to be the most reasonable. To allow the merchant to draw back upon exportation, either the whole or a part of whatever excise or inland duty is imposed upon domestic industry, can never occasion the exportation of a greater quantity of goods than what would have been exported had no duty been imposed. Such encouragements do not tend to turn towards any particular employment a greater share of the capital of the country than what would go to that employment of its own accord, but only to hinder the duty from driving away any part of that shares to other employments.

Of Bounties: Bounties upon exportation are, in Great Britain, frequently petitioned for, and sometimes granted to the produce of particular branches of domestic industry. By means of them our merchants and manufacturers, it is pretended, will be enabled to sell their goods as cheap, or cheaper than their rivals in the foreign market. A greater quantity, it is said, will thus be exported, and the balance of trade consequently turned more in favour of our own country. We cannot give our workmen a monopoly in the foreign as we have done in the home market. We cannot force foreigners to buy their goods as we have done our own countrymen. The next best expedient, it has been thought, therefore, is to pay them for buying. It is in this manner that the mercantile system proposes to enrich the whole country, and to put money into all our pockets by means of the balance of trade

Of Treaties of Commerce:
"When a nation binds itself by treaty either to permit the entry of certain goods from one foreign country which it prohibits from all others, or to exempt the goods of one country from duties to which it subjects those of all others, the country, or at least the merchants and manufacturers of the country, whose commerce is so favoured, must necessarily derive great advantage from the treaty. Those merchants and manufacturers enjoy a sort of monopoly in the country which is so indulgent to them. That country becomes a market both more extensive and more advantageous for their goods: more extensive, because the goods of other nations being either excluded or subjected to heavier duties, it takes off a greater quantity of theirs: more advantageous, because the merchants of the favoured country, enjoying a sort of monopoly there, will often sell their goods for a better price than if exposed to the free competition of all other nations."
Such treaties, however, though they may be advantageous to the merchants and manufacturers of the favoured, are necessarily disadvantageous to those of the favouring country. A monopoly is thus granted against them to a foreign nation; and they must frequently buy the foreign goods they have occasion for dearer than if the free competition of other nations was admitted.


Of Colonies:

Of the Motives for establishing new Colonies:
"The interest which occasioned the first settlement of the different European colonies in America and the West Indies was not altogether so plain and distinct as that which directed the establishment of those of ancient Greece and Rome.
All the different states of ancient Greece possessed, each of them, but a very small territory, and when the people in any one of them multiplied beyond what that territory could easily maintain, a part of them were sent in quest of a new habitation in some remote and distant part of the world; warlike neighbours surrounded them on all sides, rendering it difficult for any of them to enlarge their territory at home. The colonies of the Dorians resorted chiefly to Italy and Sicily, which, in the times preceding the foundation of Rome, were inhabited by barbarous and uncivilised nations: those of the Ionians and Eolians, the two other great tribes of the Greeks, to Asia Minor and the islands of the Egean Sea, of which the inhabitants seem at that time to have been pretty much in the same state as those of Sicily and Italy. The mother city, though she considered the colony as a child, at all times entitled to great favour and assistance, and owing in return much gratitude and respect, yet considered it as an emancipated child over whom she pretended to claim no direct authority or jurisdiction. The colony settled its own form of government, enacted its own laws, elected its own magistrates, and made peace or war with its neighbours as an independent state, which had no occasion to wait for the approbation or consent of the mother city. Nothing can be more plain and distinct than the interest which directed every such establishment."


Causes of Prosperity of new Colonies:
"The colony of a civilised nation which takes possession either of a waste country, or of one so thinly inhabited that the natives easily give place to the new settlers, advances more rapidly to wealth and greatness than any other human society.
The colonists carry out with them a knowledge of agriculture and of other useful arts superior to what can grow up of its own accord in the course of many centuries among savage and barbarous nations. They carry out with them, too, the habit of subordination, some notion of the regular government which takes place in their own country, of the system of laws which supports it, and of a regular administration of justice; and they naturally establish something of the same kind in the new settlement."


Of the Advantages which Europe has derived from the Discovery of America, and from that of a Passage to the East Indies by the Cape of Good Hope:
"Such are the advantages which the colonies of America have derived from the policy of Europe. What are those which Europe has derived from the discovery and colonization of America? Those advantages may be divided, first, into the general advantages which Europe, considered as one great country, has derived from those great events; and, secondly, into the particular advantages which each colonizing country has derived from the colonies which particularly belong to it, in consequence of the authority or dominion which it exercises over them.:
The general advantages which Europe, considered as one great country, has derived from the discovery and colonization of America, consist, first, in the increase of its enjoyments; and, secondly, in the augmentation of its industry.
The surplus produce of America, imported into Europe, furnishes the inhabitants of this great continent with a variety of commodities which they could not otherwise have possessed; some for conveniency and use, some for pleasure, and some for ornament, and thereby contributes to increase their enjoyments."


Conclusion of the Mercantile System: Smith's argument about the international political economy
International political economy
International political economy , also known as global political economy, is an academic discipline within the social sciences that analyzes international relations in combination with political economy. As an interdisciplinary field it draws on many distinct academic schools, most notably ...

 opposed the idea of Mercantilism
Mercantilism
Mercantilism is the economic doctrine in which government control of foreign trade is of paramount importance for ensuring the prosperity and security of the state. In particular, it demands a positive balance of trade. Mercantilism dominated Western European economic policy and discourse from...

. While the Mercantile System encouraged each country to hoard gold, while trying to grasp hegemony, Smith argued that free trade eventually makes all actors better off. This argument is the modern 'Free Trade' argument.

Of the Agricultural Systems: Chapter 9's long title is "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".
"That system which represents the produce of land as the sole source of the revenue and wealth of every country has, so far as by that time, never been adopted by any nation, and it at present exists only in the speculations of a few men of great learning and ingenuity in France. It would not, surely, be worthwhile to examine at great length the errors of a system which never has done, and probably never will do, any harm in any part of the world."

Book V: Of the Revenue of the Sovereign or Commonwealth


Smith postulated four "maxims" of taxation: proportionality, transparency, convenience, and efficiency. Some economists interpret Smith's opposition to taxes on transfers of money, such as the Stamp Act
Stamp Act
A stamp act is any legislation that requires a tax to be paid on the transfer of certain documents. Those that pay the tax receive an official stamp on their documents, making them legal documents. The taxes raised under a stamp act are called stamp duty. This system of taxation was first devised...

, as opposition to capital gains taxes, which did not exist in the 18th century. Other economists credit Smith as one of the first to advocate a progressive tax
Progressive tax
A progressive tax is a tax by which the tax rate increases as the taxable base amount increases. "Progressive" describes a distribution effect on income or expenditure, referring to the way the rate progresses from low to high, where the average tax rate is less than the marginal tax rate...

. Smith wrote, "It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more in proportion."

Of the Expenses of the Sovereign or Commonwealth: Smith uses this chapter to comment on the concept of taxation and expenditure by the state. On taxation Smith wrote,
Smith advocates a tax naturally attached to the "abilities" and habits of each echelon of society.

For the lower echelon, Smith recognized the intellectually erosive effect that the otherwise beneficial division of labour can have on workers, what Marx, though he mainly opposes Smith, later named "alienation,"; therefore, Smith warns of the consequence of government failing to fulfill its proper role, which is to preserve against the innate tendency of human society to fall apart.
Under Smith's model, government involvement in any area other than those stated above negatively impacts economic growth. This is because economic growth is determined by the needs of a free market and the entrepreneurial nature of private persons. A shortage of a product makes its price rise, and so stimulates producers to produce more and attracts new people to that line of production. An excess supply of a product (more of the product than people are willing to buy) drives prices down, and producers refocus energy and money to other areas where there is a need.

Of the Sources of the General or Public Revenue of the Society: In his discussion of taxes in Book Five, Smith wrote:
Proponents of progressive taxation cite Smith to justify the modern implementation of this idea, the disproportionate taxation of income.


Of War and Public Debts:
Smith then goes on to say that even if money was set aside from future revenues to pay for the debts of war, it seldom actually gets used to pay down the debt. Politicians are inclined to spend the money on some other scheme that will win the favor of their constituents. Hence, interest payments rise and war debts continue to grow larger, well beyond the end of the war.

Summing up, if governments can borrow without check, then they are more likely to wage war without check, and the costs of the war spending will burden future generations, since war debts are almost never repaid by the generations that incurred them.

Reception and impact


The first edition of the book sold out in six months. The printer William Strahan
William Strahan
William Strahan was a Scottish printer and publisher, and a Member of Parliament.Born in Edinburgh as William Strachan, and educated at the Royal High School, Strahan was originally apprenticed to an Edinburgh printer but became a Master Printer in London...

 wrote on 12 April 1776 that David Hume
David Hume
David Hume was a Scottish philosopher, historian, economist, and essayist, known especially for his philosophical empiricism and skepticism. He was one of the most important figures in the history of Western philosophy and the Scottish Enlightenment...

 had said that The Wealth of Nations required too much thought to be as popular as Edward Gibbon
Edward Gibbon
Edward Gibbon was an English historian and Member of Parliament...

's The History of the Decline and Fall of the Roman Empire
The History of the Decline and Fall of the Roman Empire
The History of the Decline and Fall of the Roman Empire is a non-fiction history book written by English historian Edward Gibbon and published in six volumes. Volume I was published in 1776, and went through six printings. Volumes II and III were published in 1781; volumes IV, V, VI in 1788–89...

. Strahan also wrote: "What you say of Mr. Gibbon's and Dr. Smith's book is exactly just. The former is the most popular work; but the sale of the latter, though not near so rapid, has been more than I could have expected from a work that requires much thought and reflection (qualities that do not abound among modern readers) to peruse to any purpose". Gibbon wrote to Adam Ferguson
Adam Ferguson
Adam Ferguson FRSE, also known as Ferguson of Raith was a Scottish philosopher, social scientist and historian of the Scottish Enlightenment...

 on 1 April: "What an excellent work is that with which our common friend Mr. Adam Smith has enriched the public! An extensive science in a single book, and the most profound ideas expressed in the most perspicuous language". The review of the book in the Annual Register
Annual Register
The Annual Register is a long-established reference work, written and published each year, which records and analyses the year’s major events, developments and trends throughout the world...

was probably written by Whig MP Edmund Burke
Edmund Burke
Edmund Burke PC was an Irish statesman, author, orator, political theorist and philosopher who, after moving to England, served for many years in the House of Commons of Great Britain as a member of the Whig party....

.

Smith's biographer John Rae
John Rae (biographer)
John Rae was a Scottish journalist and biographer. The long-time editor of The Contemporary Review, and contributor to The British Quarterly Review, he became famous for his 1895 biography of Adam Smith, Life of Adam Smith, which replaced the Biographical Memoir of Adam Smith of 1811, by Dugald...

 contends that The Wealth of Nations shaped government policy soon after it was published. In 1777 the Prime Minister, Lord North
Frederick North, Lord North
Frederick North, 2nd Earl of Guilford, KG, PC , more often known by his courtesy title, Lord North, which he used from 1752 until 1790, was Prime Minister of Great Britain from 1770 to 1782. He led Great Britain through most of the American War of Independence...

, in the first budget after the book was published, got the idea for two new taxes from the book: one on man-servants and the other on property sold at auction. The budget of 1778 introduced the inhabited house duty and the malt tax, both recommended by Smith. In 1779 Smith was consulted by politicians Henry Dundas
Henry Dundas, 1st Viscount Melville
Henry Dundas, 1st Viscount Melville PC and Baron Dunira was a Scottish lawyer and politician. He was the first Secretary of State for War and the last person to be impeached in the United Kingdom....

 and Lord Carlisle
Frederick Howard, 5th Earl of Carlisle
Frederick Howard, 5th Earl of Carlisle, KG, KT, PC was a British diplomat and the son of Henry Howard, 4th Earl of Carlisle and his second wife Isabella Byron....

 on the subject of giving Ireland free trade.

The Wealth of Nations was first mentioned in Parliament by the Whig leader Charles James Fox
Charles James Fox
Charles James Fox PC , styled The Honourable from 1762, was a prominent British Whig statesman whose parliamentary career spanned thirty-eight years of the late 18th and early 19th centuries and who was particularly noted for being the arch-rival of William Pitt the Younger...

 on 11 November 1783: "There was a maxim laid down in an excellent book upon the Wealth of Nations which had been ridiculed for its simplicity, but which was indisputable as to its truth. In that book it was stated that the only way to become rich was to manage matters so as to make one's income exceed one's expenses. This maxim applied equally to an individual and to a nation. The proper line of conduct therefore was by a well-directed economy to retrench every current expense, and to make as large a saving during the peace as possible". However Fox once told Charles Butler sometime after 1785 that he had never read the book and that "There is something in all these subjects which passes my comprehension; something so wide that I could never embrace them myself nor find any one who did". In 1796 when Fox was dining with Lord Lauderdale
James Maitland, 8th Earl of Lauderdale
James Maitland, 8th Earl of Lauderdale KT PC was Keeper of the Great Seal of Scotland, and a representative peer for Scotland in the House of Lords.-Early years:...

, Lauderdale remarked that we knew nothing of political economy before Adam Smith wrote. "Pooh," replied Fox, "your Adam Smiths are nothing, but" (he added, turning to the company) "that is his love; we must spare him there". Lauderdale replied: "I think he is everything", to which Fox rejoined: "That is a great proof of your affection". Fox also found Adam Smith "tedious" and believed that one half of The Wealth of Nations could be "omitted with much benefit to the subject".

In an editorial of The Times
The Times
The Times is a British daily national newspaper, first published in London in 1785 under the title The Daily Universal Register . The Times and its sister paper The Sunday Times are published by Times Newspapers Limited, a subsidiary since 1981 of News International...

on 3 August 1787, it was stated: "It is astonishing to consider, how few merchants are acquainted with Smith's Wealth of Nations, or Anderson's History of Commerce, which are certainly books that should be perused by every man who makes trade his pursuit".

The Wealth of Nations was next mentioned in Parliament by Robert Thornton MP in 1787 to support the Commercial Treaty with France
Eden Agreement
The Eden Treaty was a treaty signed between Great Britain and France in 1786, named after the British negotiator William Eden, 1st Baron Auckland . It effectively ended, for a brief time, the economic war between France and the British and set up a system to reduce tariffs on goods from either...

. In the same year George Dempster
George Dempster (lawyer)
George Dempster was a Scottish lawyer who was elected member of Parliament for the Perth Burghs.Dempster was educated at Dundee Grammar School and possibly also at the small parish school at Leuchars, Fife...

 MP referenced it in the debate on the proposal to farm the post-horse duties and in 1788 by a Mr. Hussy on the Wool Exportation Bill. In 1791 the English radical Thomas Paine
Thomas Paine
Thomas "Tom" Paine was an English author, pamphleteer, radical, inventor, intellectual, revolutionary, and one of the Founding Fathers of the United States...

 wrote in his Rights of Man
Rights of Man
Rights of Man , a book by Thomas Paine, posits that popular political revolution is permissible when a government does not safeguard its people, their natural rights, and their national interests. Using these points as a base it defends the French Revolution against Edmund Burke's attack in...

that "Had Mr. Burke possessed talents similar to the author ‘On the Wealth of Nations,’ he would have comprehended all the parts which enter into, and, by assemblage, form a constitution". The Prime Minister, William Pitt
William Pitt the Younger
William Pitt the Younger was a British politician of the late 18th and early 19th centuries. He became the youngest Prime Minister in 1783 at the age of 24 . He left office in 1801, but was Prime Minister again from 1804 until his death in 1806...

, praised Smith in the House of Commons on 17 February 1792: "...an author of our own times now unfortunately no more (I mean the author of a celebrated treatise on the Wealth of Nations), whose extensive knowledge of detail, and depth of philosophical research will, I believe, furnish the best solution to every question connected with the history of commerce, or with the systems of political economy". In the same year it was quoted by Samuel Whitbread MP and Fox (on the division of labour) in the debate on the armament against Russia and also by William Wilberforce
William Wilberforce
William Wilberforce was a British politician, a philanthropist and a leader of the movement to abolish the slave trade. A native of Kingston upon Hull, Yorkshire, he began his political career in 1780, eventually becoming the independent Member of Parliament for Yorkshire...

 in introducing his Bill against the slave trade. It was not mentioned in the House of Lords until 1793, by Lord Lansdowne
William Petty, 2nd Earl of Shelburne
William Petty-FitzMaurice, 1st Marquess of Lansdowne, KG, PC , known as The Earl of Shelburne between 1761 and 1784, by which title he is generally known to history, was an Irish-born British Whig statesman who was the first Home Secretary in 1782 and then Prime Minister 1782–1783 during the final...

 and Lord Loughbourough
Alexander Wedderburn, 1st Earl of Rosslyn
Alexander Wedderburn, 1st Earl of Rosslyn was Lord Chancellor of Great Britain from 1793 to 1801.-Life:He was the eldest son of Peter Wedderburn , and was born in East Lothian....

. Lansdowne said: "With respect to French principles, as they had been denominated, those principles had been exported from us to France, and could not be said to have originated among the population of the latter country. The new principles of government founded on the abolition of the old feudal system were originally propagated among us by the Dean of Gloucester, Mr. Tucker
Josiah Tucker
Josiah Tucker , also known as Dean Tucker, was a Welsh churchman, known as an economist and political writer. He was concerned in his works with free trade, Jewish emancipation and American independence...

, and had since been more generally inculcated by Dr. Smith in his work on the Wealth of Nations, which had been recommended as a book necessary for the information of youth by Mr. Dugald Stewart
Dugald Stewart
Dugald Stewart was a Scottish Enlightenment philosopher and mathematician. His father, Matthew Stewart , was professor of mathematics in the University of Edinburgh .-Life and works:...

 in his Elements of the Philosophy of the Human Mind". Loughborough replied that "in the works of Dean Tucker, Adam Smith, and Mr. Stewart, to which allusion had been made, no doctrines inimical to the principles of civil government, the morals or religion of mankind, were contained, and therefore to trace the errors of the French to these causes was manifestly fallacious". On 16 May 1797 Pitt said in the debate on the suspension of cash payments by the Bank of England
Bank of England
The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based. Established in 1694, it is the second oldest central bank in the world...

 that Smith was "that great author" but his arguments "though always ingenious" were "sometimes injudicious".

Sir John Mitford
John Freeman-Mitford, 1st Baron Redesdale
John Freeman-Mitford, 1st Baron Redesdale PC, KC, FRS , known as Sir John Mitford between 1793 and 1802, was a British lawyer and politician. He was Speaker of the House of Commons between 1801 and 1802 and Lord Chancellor of Ireland between 1802 and 1806.-Background:Born in London, Mitford was the...

, the Solicitor-General
Solicitor General for England and Wales
Her Majesty's Solicitor General for England and Wales, often known as the Solicitor General, is one of the Law Officers of the Crown, and the deputy of the Attorney General, whose duty is to advise the Crown and Cabinet on the law...

, said on 22 December 1798 in speaking on cross-bills (a bill of exchange given in consideration of another bill) that Smith "in his Wealth of Nations, explains the nature and pernicious consequences of this practice with his usual perspicuity and philosophical accuracy". On 5 December 1800 Lord Warwick
George Greville, 2nd Earl of Warwick
George Greville, 2nd Earl of Warwick, FRS, FSA , styled Lord Greville until 1773, was a British nobleman and politician....

 said in a debate on the price of corn that:

There was hardly any kind of property on which the law did not impose some restraints and regulations with regard to the sale of them, except that of provisions. This was probably done on the principles laid down by a celebrated and able writer, Doctor Adam Smith, who had maintained that every thing ought to be left to its own level. He knew something of that Gentleman, whose heart he knew was as sound as his head; and he was sure that had he lived to this day and beheld the novel state of wretchedness to which the country was now reduced—a state, which as the like had never occurred before, could never have entered into his mind; that Great Man would have reason to blush for some of the doctrines he had laid down. He would now have abundant opportunities of observing that all those artificial means of enhancing the price of provisions, which he had considered as no way mischievous, were practised at this time to a most alarming extent. He would see the Farmer keeping up his produce while the poor were labouring under all the miseries of want, and he would see Forestallers, Regraters, and all kinds of Middle-men making large profits upon it.


Lord Grenville replied that "he must remind him, that so far from there having been any difference in the state of the Country when that great man lived, and the present times, his book was first published at a period, previous to which there had been two or three seasons of great dearth and distress; and during those seasons there were speculators without number, who raised an unfounded and unjust clamour against Forestallers and Regraters, and who proposed that a certain price should be fixed on every article: but all their plans were wisely rejected, and the Treatise on the Wealth of Nations, which came forward soon after, pointed out in the clearest light how absurd and futile they must have been".

In 1800 the Anti-Jacobin Review
Anti-Jacobin Review
The Anti-Jacobin Review and Magazine, or, Monthly Political and Literary Censor , a conservative British political periodical, was founded by John Gifford [pseud. of John Richards Green] after the demise of William Gifford's The Anti-Jacobin, or, Weekly Examiner...

criticised The Wealth of Nations and Robert Southey
Robert Southey
Robert Southey was an English poet of the Romantic school, one of the so-called "Lake Poets", and Poet Laureate for 30 years from 1813 to his death in 1843...

 in 1812 in the Quarterly Review condemned The Wealth of Nations as a "tedious and hard-hearted book".

In 1803 The Times argued against war with Spain: "She is our best customer; and by the gentle and peaceable stream of commerce, the treasures of the new world flow with greater certainty into English reservoirs, than it could do by the most successful warfare. They come in this way to support our manufactures, to encourage industry, to feed our poor, to pay taxes, to reward ingenuity, to diffuse riches among all classes of people. But for the full understanding of this beneficial circulation of wealth, we must refer to Dr. Adam Smith's incomparable Treatise on the Wealth of Nations". In 1810 a correspondent writing under the pseudonym of Publicola included at the head of his letter Smith's line that "Exclusive Companies are nuisances in every respect" and called him "that learned writer". In 1821 The Times quoted Smith's opinion that the interests of corn dealers and the people were the same.

In 1826 the English radical William Cobbett
William Cobbett
William Cobbett was an English pamphleteer, farmer and journalist, who was born in Farnham, Surrey. He believed that reforming Parliament and abolishing the rotten boroughs would help to end the poverty of farm labourers, and he attacked the borough-mongers, sinecurists and "tax-eaters" relentlessly...

 criticised in his Rural Rides
Rural Rides
Rural Rides is the book for which the English journalist, agriculturist and political reformer William Cobbett is best known.At the time of writing in the early 1820s, Cobbett was a radical anti-Corn Law campaigner, newly returned to England from a spell of self-imposed political exile in the...

the political economists' hostility to the Poor Law: "Well, amidst all this suffering, there is one good thing; the Scotch political economy is blown to the devil, and the Edinburgh Review and Adam Smith along with it".

The Radical MP Richard Cobden
Richard Cobden
Richard Cobden was a British manufacturer and Radical and Liberal statesman, associated with John Bright in the formation of the Anti-Corn Law League as well as with the Cobden-Chevalier Treaty...

 as a young man studied The Wealth of Nations; his copy is still in the library of his home at Dunford House and there are lively marginal notes on the places where Smith condemns British colonial policy. There are none on the passage about the invisible hand. Cobden campaigned for free trade in his agitation against the Corn Laws
Corn Laws
The Corn Laws were trade barriers designed to protect cereal producers in the United Kingdom of Great Britain and Ireland against competition from less expensive foreign imports between 1815 and 1846. The barriers were introduced by the Importation Act 1815 and repealed by the Importation Act 1846...

. On 13 October 1843 Cobden quoted (accurately) Smith's protest against the "plain violation of the most sacred property" of every man derived from his labour. On 8 May 1844 he cited Smith's opposition to slave labour and on 3 July 1844 claimed that Smith had been misrepresentated by protectionists as a monopolist. On 8 October 1849 Cobden claimed that he had "gone through the length and breadth of this country, with Adam Smith in my hand, to advocate the principles of Free Trade." He also said he had tried "to popularise to the people of this country, and of the Continent, those arguments with which Adam Smith, David Hume, Ricardo, and every man who has written on this subject, have demonstrated the funding system to be injurious to mankind, and unjust in principle". Cobden believed it to be morally wrong to lend money to be spent on war. When The Times claimed the political economists were against Cobden on this, Cobden wrote on 16 October 1849: "I can quote Adam Smith whose authority is without appeal now in intellectual circles, it gives one the basis of science upon which to raise appeals to the moral feelings". When in 1850 the Russian government attempted to raise a loan, ostensibly for the construction of a railway from St. Petersburg to Moscow, but actually to cover the deficit brought about by its war against Hungary, Cobden said on 18 January: "I take my stand on one of the strongest grounds in stating that Adam Smith and other great authorities on political economy are opposed to the very principle of such loans". In 1863, during Cobden's dispute with The Times over its claims that his fellow Radical John Bright
John Bright
John Bright , Quaker, was a British Radical and Liberal statesman, associated with Richard Cobden in the formation of the Anti-Corn Law League. He was one of the greatest orators of his generation, and a strong critic of British foreign policy...

 wanted to divide the land of the rich amongst the poor, Cobden read to a friend the passage in the Wealth of Nations which criticised primogeniture and entail. Cobden said that if Bright had been as plain-speaking as Smith, "how he would have been branded as an incendiary and Socialist". On 23 November 1864 Cobden proclaimed: "If I were five-and-twenty or thirty, instead of, unhappily, twice that number of years, I would take Adam Smith in hand—I would not go beyond him, I would have no politics in it—I would take Adam Smith in hand, and I would have a League for free trade in Land just as we had a League for free trade in Corn. You will find just the same authority in Adam Smith for the one as for the other; and if it were only taken up as it must be taken up to succeed, not as a political, revolutionary, Radical, Chartist notion, but taken up on politico-economic grounds, the agitation would be certain to succeed".

The Liberal statesman William Ewart Gladstone
William Ewart Gladstone
William Ewart Gladstone FRS FSS was a British Liberal statesman. In a career lasting over sixty years, he served as Prime Minister four separate times , more than any other person. Gladstone was also Britain's oldest Prime Minister, 84 years old when he resigned for the last time...

 chaired the meeting of the Political Economy Club
Political Economy Club
The Political Economy Club was founded by James Mill and a circle of friends in 1821 in London, for the purpose of coming to an agreement on the fundamental principles of political economy...

 to celebrate the centenary of the publication of The Wealth of Nations.

The Liberal historian Lord Acton
John Dalberg-Acton, 1st Baron Acton
John Emerich Edward Dalberg-Acton, 1st Baron Acton, KCVO, DL , known as Sir John Dalberg-Acton, 8th Bt from 1837 to 1869 and usually referred to simply as Lord Acton, was an English Catholic historian, politician, and writer...

 believed that The Wealth of Nations gave a "scientific backbone to liberal sentiment" and that it was the "classic English philosophy of history".

United States


James Madison
James Madison
James Madison, Jr. was an American statesman and political theorist. He was the fourth President of the United States and is hailed as the “Father of the Constitution” for being the primary author of the United States Constitution and at first an opponent of, and then a key author of the United...

, in a speech given in Congress
United States Congress
The United States Congress is the bicameral legislature of the federal government of the United States, consisting of the Senate and the House of Representatives. The Congress meets in the United States Capitol in Washington, D.C....

 on 2 February 1791, cited The Wealth of Nations in opposing a national bank: "The principal disadvantages consisted in, 1st. banishing the precious metals, by substituting another medium to perform their office: This effect was inevitable. It was admitted by the most enlightened patrons of banks, particularly by Smith on the Wealth of Nations". Thomas Jefferson
Thomas Jefferson
Thomas Jefferson was the principal author of the United States Declaration of Independence and the Statute of Virginia for Religious Freedom , the third President of the United States and founder of the University of Virginia...

, writing to John Norvell
John Norvell
John Norvell was a newspaper editor and one of the first U.S. Senators from Michigan.-History:Norvell was born in Danville, Kentucky, then still a part of Virginia, where he attended the common schools....

 on 14 June 1807, claimed that on "the subjects of money & commerce, Smith's Wealth of Nations is the best book to be read, unless Say's Political Economy
Say's Political Economy
Traité d'économie politique or in English "A Treatise on Political Economy; or The Production, Distribution, and Consumption of Wealth" or more commonly, "Say's Political Economy" was written by Jean-Baptiste Say. It was partly a source for Adam Smith's Wealth of Nations published in 1776...

 can be had, which treats the same subject on the same principles, but in a shorter compass & more lucid manner".

Two views of the "Wealth of Nations"


In the Preface to his edition, Cannan
Edwin Cannan
Edwin Cannan was a British economist and historian of economic thought. He was a professor at the London School of Economics from 1895 to 1926....

 shows that the major part of the "Wealth of Nations" follows Adam Smith’s earlier lectures, but that there are important additions due to his visit to France. These additions were so important for Smith that he puts them at the beginning of his work. For Cannan as a neoclassic economist they are superfluous and not the real Adam Smith: "These changes do not make so much real difference to Smith’s own work as might be supposed; the theory of distribution, though it appears in the title of Book I., is no essential part of the work and could easily be excised … But to subsequent [classical] economics they were of fundamental importance. They settled the form of economic treatises for a century at least."

The "Wealth of Nations" is therefore inhomogeneous and consists of the earlier elements of an individualistic strain in the tradition of Aristotle
Aristotle
Aristotle was a Greek philosopher and polymath, a student of Plato and teacher of Alexander the Great. His writings cover many subjects, including physics, metaphysics, poetry, theater, music, logic, rhetoric, linguistics, politics, government, ethics, biology, and zoology...

, Puffendorf
Samuel von Pufendorf
Baron Samuel von Pufendorf was a German jurist, political philosopher, economist, statesman, and historian. His name was just Samuel Pufendorf until he was ennobled in 1684; he was made a Freiherr a few months before his death in 1694...

 and Hutcheson
Francis Hutcheson (philosopher)
Francis Hutcheson was a philosopher born in Ireland to a family of Scottish Presbyterians who became one of the founding fathers of the Scottish Enlightenment....

, Smith’s teacher, – elements compatible with a neoclassical theory – and the classical theory Smith learned in France.

Smith’s classical message is what he states at the very beginning: the two ways to create the “Wealth of Nations”. First, make productive labour even more productive by enhancing markets to deepen the division of labour (moving the neoclassical production curve to the right); and second, use more labour productively instead of unproductively, i.e., produce more goods and services that are inputs to the next economic reproduction circle, as opposed to goods used up in final consumption. In the words of Adam Smith:
"The annual labour of every nation is the fund which originally supplies it with all the necessaries and conveniences of life which it annually consumes … . [T]his produce … bears a greater or smaller proportion to the number of those who are to consume it … .[B]ut this proportion must in every nation be regulated by two different circumstances;
  • first, by the skill, dexterity, and judgment with which its labour is generally applied; and,
  • secondly, by the proportion between the number of those who are employed in useful labour, and that of those who are not so employed [emphasis added]."


Ricardo repeats this in identical terms. Smith’s and the classical macro-economical distinction between productive and unproductive
Unproductive labour in economic theory
Unproductive labour is labour which does not further the end of the system. Therefore this concept has sense only with reference to a determined system. In classical economics the end is growth and development, in Marxian economics the end is capitalistic profit and in business the end is to place...

 labour gives no sense within neoclassical micro-economics as any labour or idleness of a Homo oeconomicus
Homo Oeconomicus
Homo Oeconomicus is an interdisciplinary peer reviewed academic journal publishing studies in classical and neoclassical economics, public choice and social choice theory, law and economics, and philosophy of economics....

 maximises his micro-economic “utility” and is therefore productive.

For neoclassical economists Smith’s central message is the Invisible hand
Invisible hand
In economics, invisible hand or invisible hand of the market is the term economists use to describe the self-regulating nature of the marketplace. This is a metaphor first coined by the economist Adam Smith...

 mentioned deep in the books and seen as a proto-neoclassical statement of the neoclassical General equilibrium theory:
"[E]very individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain; and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.”


This often quoted passage describes the unintentional consequences that come from individuals' pursuit of their "own gain" and security. Smith argued people prefer local industry and are biased against international trade. Ideally, he saw economics as characterized by small local economies interacting with each other and guided by the enlightened self-interest of individuals. This was a reaction against the practices of early transnational corporations (for example: the British East India Company
British East India Company
The East India Company was an early English joint-stock company that was formed initially for pursuing trade with the East Indies, but that ended up trading mainly with the Indian subcontinent and China...

 and Muscovy Company
Muscovy Company
The Muscovy Company , was a trading company chartered in 1555. It was the first major chartered joint stock company, the precursor of the type of business that would soon flourish in England, and became closely associated with such famous names as Henry Hudson and William Baffin...

), which were mostly unresponsive to local affairs and stewardship of resources. Though the argument is frequently, and incorrectly, used to justify free-trade policies, The Wealth of Nations was a rebuttal to the scale and effects of chartered monopoly. By positing—now famously—that "self-interest" promotes more just societies, he was prescribing to economies already heavily tilted against individual human agency. For instance, American colonists were permitted to grow cotton but not to manufacture with it. They had to sell cotton to England for processing, then buy it back as clothing. Smith felt opposing large multinational corporations (and the governments that support them), allowed individuals to direct industry "in such a manner as its produce may be of the greatest value." This value comes from the individual's self-interest and leads to a result that is "no part of his intention."

Modern evaluations


Murray Rothbard
Murray Rothbard
Murray Newton Rothbard was an American author and economist of the Austrian School who helped define capitalist libertarianism and popularized a form of free-market anarchism he termed "anarcho-capitalism." Rothbard wrote over twenty books and is considered a centrally important figure in the...

 wrote:


[I]t is not just that Smith's Wealth of Nations has had a terribly overblown reputation from his day to ours. The problem is that the Wealth of Nations was somehow able to blind all men, economists and laymen alike, to the very knowledge that other economists, let alone better ones, had existed and written before 1776. The Wealth of Nations exerted such a colossal impact on the world that all knowledge of previous economists was blotted out, hence Smith's reputation as Founding Father. The historical problem is this: how could this phenomenon have taken place with a book so derivative, so deeply flawed, so much less worthy than its predecessors?

The answer is surely not any lucidity or clarity of style or thought. For the much-revered Wealth of Nations is a huge, sprawling, inchoate, confused tome, rife with vagueness, ambiguity and deep inner contradictions. There is of course an advantage, in the history of social thought, to a work being huge, sprawling, ambivalent and confused. There is sociological advantage to vagueness and obscurity. The bemused German Smithian, Christian J. Kraus, once referred to the Wealth of Nations as the 'Bible' of political economy. In a sense, Professor Kraus spoke wiser than he knew. For, in one way, the Wealth of Nations is like the Bible; it is possible to derive varying and contradictory interpretations from various – or even the same – parts of the book.


George Stigler
George Stigler
George Joseph Stigler was a U.S. economist. He won the Nobel Memorial Prize in Economic Sciences in 1982, and was a key leader of the Chicago School of Economics, along with his close friend Milton Friedman....

 attributes to Smith "the most important substantive proposition in all of economics" and foundation of resource-allocation theory. It is that, under competition, owners of resources (labor, land, and capital) will use them most profitably, resulting in an equal rate of return in equilibrium
Economic equilibrium
In economics, economic equilibrium is a state of the world where economic forces are balanced and in the absence of external influences the values of economic variables will not change. It is the point at which quantity demanded and quantity supplied are equal...

 for all uses (adjusted for apparent differences arising from such factors as training, trust, hardship, and unemployment). He also describes Smith's theorem that "the division of labor is limited by the extent of the market" as the "core of a theory of the functions of firm
Theory of the firm
The theory of the firm consists of a number of economic theories that describe the nature of the firm, company, or corporation, including its existence, behavior, structure, and relationship to the market.-Overview:...

 and industry" and a "fundamental principle of economic organization."

Paul Samuelson
Paul Samuelson
Paul Anthony Samuelson was an American economist, and the first American to win the Nobel Memorial Prize in Economic Sciences. The Swedish Royal Academies stated, when awarding the prize, that he "has done more than any other contemporary economist to raise the level of scientific analysis in...

 finds in Smith's pluralist use of supply and demand
Supply and demand
Supply and demand is an economic model of price determination in a market. It concludes that in a competitive market, the unit price for a particular good will vary until it settles at a point where the quantity demanded by consumers will equal the quantity supplied by producers , resulting in an...

—as applied to wages, rents, and profit—a valid and valuable anticipation of the general equilibrium
General equilibrium
General equilibrium theory is a branch of theoretical economics. It seeks to explain the behavior of supply, demand and prices in a whole economy with several or many interacting markets, by seeking to prove that a set of prices exists that will result in an overall equilibrium, hence general...

 modeling of Walras
Léon Walras
Marie-Esprit-Léon Walras was a French mathematical economist associated with the creation of the general equilibrium theory.-Life and career:...

 a century later. Moreover, Smith's allowance for wage increases in the short and intermediate term from capital accumulation and invention added a realism missed later by Malthus, Ricardo, and Marx in their propounding a rigid subsistence-wage theory of labour supply.

Mark Blaug
Mark Blaug
Mark Blaug , was a British economist , who has covered a broad range of topics over his long career. In 1955 he received his PhD from Columbia University in New York under the supervision of George Stigler...

 argues that it was Smith's achievement to shift the burden of proof against those maintaining that the pursuit of self-interest does not achieve social good. But he notes Smith's relevant attention to definite institutional arrangements and process as disciplining self-interest to widen the scope of the market, accumulate capital, and grow income.

Further reading

  • An Inquiry into the Nature and Causes of the Wealth of Nations: A Selected Edition Adam Smith (Author), Kathryn Sutherland (Editor), 2008, Oxford Paperbacks, Oxford, UK; ISBN 978-0-19-953592-7
  • Adam Smith's The Wealth of Nations: A modern-day interpretation of an economic classic. Karen McCreadie, 2009, Infinite Ideas, Oxford, UK; ISBN 978-1-906821-03-6

See also

  • Free Trade
    Free trade
    Under a free trade policy, prices emerge from supply and demand, and are the sole determinant of resource allocation. 'Free' trade differs from other forms of trade policy where the allocation of goods and services among trading countries are determined by price strategies that may differ from...

  • American School
    American School (economics)
    The American School, also known as "National System", represents three different yet related constructs in politics, policy and philosophy. It was the American policy for the 1860s to the 1940s, waxing and waning in actual degrees and details of implementation...

     of Economics
  • Austrian School
    Austrian School
    The Austrian School of economics is a heterodox school of economic thought. It advocates methodological individualism in interpreting economic developments , the theory that money is non-neutral, the theory that the capital structure of economies consists of heterogeneous goods that have...

     of Economics Free Trade and Capitalism
  • Classical economics
    Classical economics
    Classical economics is widely regarded as the first modern school of economic thought. Its major developers include Adam Smith, Jean-Baptiste Say, David Ricardo, Thomas Malthus and John Stuart Mill....

  • Marginalism
    Marginalism
    Marginalism refers to the use of marginal concepts in economic theory. Marginalism is associated with arguments concerning changes in the quantity used of a good or service, as opposed to some notion of the over-all significance of that class of good or service, or of some total quantity...

  • Neoclassical economics
    Neoclassical economics
    Neoclassical economics is a term variously used for approaches to economics focusing on the determination of prices, outputs, and income distributions in markets through supply and demand, often mediated through a hypothesized maximization of utility by income-constrained individuals and of profits...

  • Political economy
    Political economy
    Political economy originally was the term for studying production, buying, and selling, and their relations with law, custom, and government, as well as with the distribution of national income and wealth, including through the budget process. Political economy originated in moral philosophy...

  • The Theory of Moral Sentiments
    The Theory of Moral Sentiments
    The Theory of Moral Sentiments was written by Adam Smith in 1759. It provided the ethical, philosophical, psychological, and methodological underpinnings to Smith's later works, including The Wealth of Nations , A Treatise on Public Opulence , Essays on Philosophical Subjects , and Lectures on...

     (1759), Adam Smith's other classic
  • Wealth (economics)
  • The Invisible Hand
    Invisible hand
    In economics, invisible hand or invisible hand of the market is the term economists use to describe the self-regulating nature of the marketplace. This is a metaphor first coined by the economist Adam Smith...

  • Mercantilism
    Mercantilism
    Mercantilism is the economic doctrine in which government control of foreign trade is of paramount importance for ensuring the prosperity and security of the state. In particular, it demands a positive balance of trade. Mercantilism dominated Western European economic policy and discourse from...


External links