Supplementary Reading
The Wealth of Nations
In the strictest sense, The Wealth of Nations was not an original book but more the synthesis of the ideas of many philosophers who had gone before Smith.He referred to over 100 authors in his work.But what made this worksuperior to the rest was its breadth and depth.He foreshadowed many of the economic issues that are still debated today.He described the workings of the market economy,the distribution of labor in production,the nature of wealth in relation to money,and the inability of governments to manage the economy.It is for these reasons that the book is unquestionably a masterpiece and one of the most influential books about economics ever published.
This large volume of over 900 pages roams the landscape,touching upon all the main aspects of economic life in 18th century England.It is a book born out of the economic and social changes taking place in Britain at the time. The Wealth of Nations is not merely an academic textbook.Smith saw himself as providing a detailed explanation of what he saw occurring around him.To him,it was all very clear and sensible.
The Wealth of Nations was divided into fives books,each one contributing to provide an answer to the central question:What are the causes and effects of economic growth?The book dealt with the following topics:
The role of labor and the market system;
The nature,accumulation and use of capital;
The economic history of Europe;
The principle of free trade;
The role of the government.
Economic Growth and Wealth
Smith was intent on developing a theory of economic growth.He was concerned with promoting the wealth of the entire nation.And wealth,according to Smith,took on a new meaning.
Wealth did not consist of precious metals,treasures or land,but the total amount of all goods and services consumed by the entire society.Placing emphasis on consumption,rather than production,widened the scope of economics.According to Smith,it is the quantity of goods and services made available to consumers that is the ultimate aim of any economic system.
Smith reasoned that in order to sustain an ever-increasing quantity of goods and services,economic growth was essential.To achieve the highest level of economic growth,he advocated policies of free enterprise or the doctrine of laissez-faire.He tried to show how the apparent chaos of the market with its buying and selling resulted in economic cooperation,smith held that people acting out of economic self-interest really worked for the betterment of society as a whole.The best system,he said,was free one where trade was not hampered by government controlling.