The Wealth of Nations
An Inquiry into the Nature and Causes of the Wealth of Nations is the magnum opus of Adam Smith, published in 1776. It is a clearly written account of economics at the dawn of the industrial revolution. The work is broken down into five books between two volumes.
Nations is often mischaracterized and politicized. Many people are confident in their opinions regarding the author, the work, and the subject matter -- yet have never read it. Left-wing writers have characterized it as advocating the status quo, yet the work clearly discusses what Smith sees as the inefficiency, and inappropriateness of tariffs, apprenticeships, immigration control and cartels - arrangements favourable to special interest groups. Right-wing politicians have often used a sleight of hand - erroneously equating "pro-business" with advocacy of free markets, thus using/abusing the Wealth of Nations to support their own protectionist objectives.
Subject Matter
In Book One: Chapters I & III illustrate the growth in division of labor.
Chapter X part ii, motivates an understanding of the sunset of feudalism.
Mercantilism
It has been described as a critique of mercantilism and a synthesis of the emerging economic thinking of his time. The book is usually considered to be the beginning of modern economics. It was written for the average educated individual of the 18th century rather than for other economists. Thus, for today's readers interested in an accessible introduction to economics, this book continues to be much more useful even than many recent books on the subject.
The Invisible Hand
This is an often quoted phrase from the book. Its meaning is that people will unintentionally improve their community through pursuit of their own wants and needs. The Butcher, the Baker, and the Brewer provide goods and services to each other out of self-interest; the unplanned result of this division of labor is a better standard of living for all three. (Book one, chapter II)
". . . 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." (Book four, chapter II)
Meritocracy
A strong theme in the work, meritocracy suggests rewarding merit.
History
The Wealth of Nations came out of the Enlightenment Era. It influenced not only authors and economist, but governments and organizations. For example, Alexander Hamilton was impressed by and influenced by the Wealth of Nations. see American Revolution. It has been said that this work was a response to the French writing on the subjects of good governance, including commerce and regulation. This is partially true. However, the work is a leap forward in economics. Akin to Principia for Physics and modern Mathematics and the Physical Sciences generally.
Many authors were influenced by the work and used it as a starting point in their own work. For example, Jean-Baptiste Say, David Ricardo, and later, Karl Marx.
Anachronisms
Some commentary on the work suffers from anachronism. This is the result of reading the work as though it were written today.
The book is written in modern English, but there are some points to consider:
Publishing History
There were five editions of the Wealth of Nations published during Smith's lifetime; specifically, in the years 1776, 1778, 1784, 1786, and 1789. Numerous editions appear after Smith's death in 1790. Under the direction of Edwin Cannan, the first five editions were compared, and the differences were published along with the an edited fifth edition in 1904 (see An Inquiry into the Nature and Causes of the Wealth of Nations, London: Methuen and Co., Ltd., ed. Edwin Cannan, 1904. Fifth edition.) There were 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 now 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 with the third edition, and Smith himself says in the "Advertisment" at the beginning of the book, "I have made no alterations of any kind." Finally, Cannan notes only trival differences between the fourth and fifth editions—a set of misprints being removed from the fourth, and a different set of misprints being introduced into the fifth.
