On Adam Smith’s The Wealth of Nations

by Emrys Westacott

I just read Adam Smith’s The Wealth of Nations for the first time. Not every word. It’s over a thousand pages, and there are long “Digressions” (Smith’s term) on matters such as the history of the value of silver, or banking in Amsterdam, which I simply passed over. I was mainly interested in what Smith has to say about work, so I also  merely skimmed some other sections that seemed to have little relevance to my research. Time and again, though, I found myself getting sucked into chapters unrelated to my concerns simply because the topics discussed are so interesting, and what Smith has to say is so thought-provoking. Reading the book is also made easier both by Smith’s admirably lucid writing and by the brief summaries of the main claims being made that he inserts throughout at the left-hand margin.

By any measure The Wealth of Nations is one of the most influential books ever written and represents a monumental intellectual achievement, initiating a paradigm shift in political economy. Before its publication in 1776, the dominant view in Britain and many other countries was some form of mercantilism. According to this theory, the path to prosperity and power for a nation lay in its having a positive balance of trade, exporting more than it imported, thereby accumulating wealth at the expense of its rivals. Government policy thus sought to promote the production of goods while ignoring or even suppressing domestic consumption. Against this, Smith argues that the wealth of a nation does not reside in a store of goods or gold, but consists, rather, in the totality of the economic activity that its people and institutions are engaged in. Read more »