The Wealth of Nations: An Inquiry into the Nature and Causes of the Wealth of Nations

Adam Smith

Beginner

Reading this book is like watching economic thinking being born. Because this is not just another book on economics but an intellectual revolution, after which the world could no longer explain prosperity by the king's treasury, the mercy of the government, or the accident of history. Adam Smith writes about things that seem obvious today but were too bold and progressive in his time: that the wealth of a nation is created not by orders from above but by the labour of millions of people; that the division of labour multiplies productivity; that exchange based on mutual benefit is a source of growth; that freedom of economic action is not a whim but a condition for development. He shows the economy not as a game of numbers, but as a living order of human cooperation, where people's interests, even without being coordinated, can form a complex but effective system.

This is a book that changed the world forever. When Scottish philosopher Adam Smith published his research in 1776, he did not simply write an economic treatise – he laid the foundation for modern economic science and formulated principles that still define the lives of billions of people today. This book was an intellectual revolution comparable to Newton's discoveries in physics. The central idea of the book is as revolutionary as it is simple: social welfare does not come from government decrees or mercantilist restrictions, but from the freedom of each person to pursue their own interests. The invisible hand of the market coordinates millions of individual decisions, turning selfishness into public good. We get our dinner not because of the benevolence of the butcher or baker, but because of their own interest — this idea of Smith's has become a classic of economic literature. It is important to understand that Smith was not a naive apologist for the free market. He warned against monopolies, criticised merchants who colluded against consumers, and insisted on the importance of education and public investment. His view of the economy is much more balanced and nuanced than is often thought. Smith understood that the market is not a panacea but a tool that needs smart regulation and moral foundations. This book is a must-read for anyone who wants to understand how the economy works. Adam Smith will teach you to see economic order where others see only chaos, to understand the logic of the market, and to value freedom as a necessary condition for prosperity.

Publisher: Modern LibraryISBN:978-067-9641-92-6Number of pages: 1184Year of publication: 2000

Reviews

A good way to start off with analyzing any situation is to ask cui bono – who benefits? Or more felicitously “follow the money”. Smith’s Wealth of Nations has most of economics nailed.

John Van Reenen, Professor of Economics and Director of the Centre for Economic Performance LSE

The Wealth of Nations is a hymn to the possibility of ‘universal opulence’—that is, material advancement for all sections of society.

Mark Skousen, American economist and writer

The basic principles that we believe in are going to stay the same for the next thousand years. That aspect of it will never go out of date. What goes out of date are the particular applications. We still find Adam Smith’s book, Wealth of Nations well worth reading even though it’s published in 1776.

Milton Friedman, American economist, economist Nobel laureates

Adam Smith was the most original and fundamental of all economists. The father of economics.

Tyler Cowen, professor at George Mason University

In this most Catholic of books, traces of all possible doctrines can be found, and an economist who cannot quote The Wealth of Nations to support his particular aims must indeed have peculiar theories.

Jacob Viner, Canadian economist

Quotes from

famous Adam Smith's book “The Wealth of Nations: An Inquiry into the Nature and Causes of the Wealth of Nations"

Science is the great antidote to the poison of enthusiasm and superstition.

The man whose whole life is spent in performing a few simple operations, of which the effects are perhaps always the same, or very nearly the same, has no occasion to exert his understanding or to exercise his invention in finding out expedients for removing difficulties which never occur. He naturally loses, therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is possible for a human creature to become.

In regards to the price of commodities, the rise of wages operates as simple interest does, the rise of profit operates like compound interest.

Our merchants and masters complain much of the bad effects of high wages in raising the price and lessening the sale of goods. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people.

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.

Wherever there is great property there is great inequality. For one very rich man there must be at least five hundred poor, and the affluence of the few supposes the indigence of the many. The affluence of the rich excites the indignation of the poor, who are often both driven by want, and prompted by envy, to invade his possessions.

Man is an animal that makes bargains: no other animal does this - no dog exchanges bones with another.

Nobody ever saw a dog make a fair and deliberate exchange of one bone for another with another dog. Nobody ever saw one animal by its gestures and natural cries signify to another, this is mine, that yours; I am willing to give this for that....But man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in his favour, and show them that it is for their own advantage to do for him what he requires of them. Whoever offers to another a bargain of any kind, proposes to do this. Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of.

The value of any commodity, therefore, to the person who possesses it, and who means not to use or consume it himself, but to exchange it for other commodities, 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. The real price of everything, what everything really costs to the man who wants to acquire it, is the toil and trouble of acquiring it.

The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities.

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