The Wealth of Nations, Books 4-5

by Adam Smith, Andrew Skinner (Editor)

It is in Books IV and V of The Wealth of Nations that Adam Smith offers his considered response to the French Physiocrats, perhaps the first great school of economic theorists, and assesses the nature of the mercantile system, particularly the coloniaL relationship with America, whose achievements could have been even more spectacular if conditions of free trade and economic union had existed. Even on the eve of the Declaration of Independence, Smith famously predicted that America "will be one of the foremost nations of the world." It is also here that he develops the case for a limited state role in economic planning, notably to combat market failure and induce efficiency in areas such as education, public works, justice, and defense. His pioneering analysis still provides many subtle and penetrating insights into one of today's most vital and controversial policy debates.

Genres: Economics, Classics, Politics, Philosophy, Nonfiction, Public Policy, Business

672 pages, Paperback

First published January 1, 1776

About the author

For other authors of this name, see Adam Smith.

Adam Smith FRSA FRS FRSE was a Scottish philosopher and economist who was a pioneer in thinking on political economy and a key figure during the Scottish Enlightenment. He wrote two classic works, The Theory of Moral Sentiments (1759) and An Inquiry into the Nature and Causes of the Wealth of Nations (1776). The latter, often abbreviated as The Wealth of Nations , is considered his magnum opus and the first modern work that treats economics as a comprehensive system and as an academic discipline.

Authorities recorded his baptism on 16 June 1723 at Kirkcaldy.

https://en.wikipedia.org/wiki/Adam_Smith

Reviews

[Reza Fajar Raynaldi · Rating 4 out of 5]

This second volume of The Wealth of Nations contain Smith's acute critics about the mercantile economic system which focus on balance of trade between country as a factor that determine the wealth if nation. Smith think that the balance of trade is not proper things to determine the wealth state of nation. The critique serve as a pillar for Smith's advocate to the free market between country. This section clearly describe the Smith's position as the advocater of free market economic system.

Then, Smith continue the volume with discussing the source and expense of government fund. Although Smith often seen as a supporter of free market economy, he still consider the government role to provide service that market can't provide. He think things as a defence and elementary education must be provide by government with full contribution of society. Other things like justice, infrastructure, and higher education can subsist itself with contribution from people that using their service.

4 of 5 stars for his argument and critics with mercantile economic system, and his comprehensive description about government fund. Little deficiency with this volume is Smith often digress to the other topic field when he discussing particular thing.

[Gavin · Rating 3 out of 5]

Throughout, I was perplexed by one thing: he describes "uncivilized" nations as being egalitarian, healthy for the majority of people, happy, having fewer worries, having greater freedoms, having a greater abundance of wealth both in food and in metals, and yet concludes that "the progress of civilization" should be admired. I was not perplexed that peoples not counted among the civilized should be more prosperous or happy that the civilized. I have read and seen proofs of this in abundance. But I don't understand why one should strive blindly toward "progress and civilization", which invariably today means classism, capitalism, the concentraion of power, the inequality of the agency civilization allots to people based on such things as heredity and social status. It seems foolish to discount other ways of living as it hinders one's ability to adapt.

[Darinda · Rating 3 out of 5]

Interesting history of economics. Informative.

[Pedro Jacob · Rating 5 out of 5]

A masterful work, unrivaled in the field.

The Wealth of Nations is the most important work in economics ever produced. It is a masterpiece of history, psychology, finance, sociology, and a plethora of other subjects.

The melding of subjects, awesomely orchestrated by the author, gives the reader a deep and almost complete view of both the history of production and the most sensible guidelines on how to foment it. The author displays an incredible (and sometimes overwhelming) amount of information and data to support conclusions that are unbelievably current.

The most impressive aspect of this work is that it gives the reader a better understanding of economics than most university courses do. Although it lacks the statistical part of the subject, which can be helpful (and sometimes misleading), the theory exposed in it is almost complete, even containing well formulated arguments against theories that would be published hundreds of years later.

If you want to read one economics book in your life, this is it. The amount of data can sometimes be dull, but it is worth going through. Summaries and critiques do not do it justice, reducing the arguments so much that they become straw men versions of themselves, which gives my theory, that almost no one reads the original work, a lot of credence.

[Susan Steed · Rating 4 out of 5]

Adam Smith has hijacked by the free market right. And that's a shame. Because his views don't fit into the simple left/right narrative that people often feel the need to pull people into.

He was writing in the 18th Century. In the hayday of the British Empire. When slavery was legal. When vast monopolies trading from the City of London screwed over other countries (and other parts of the UK). You can't really read this book and be in any doubt where the wealth of the UK has come from.

And although it's hard to read his views on slavery (he was anti-slavery but he wasn't a very progressive voice on this) he was progressive on issues such as regulation of the financial sector, and the mercantile class. He really slags off the East India Company, the British Empire, and said the interests of the City of London were in conflict with the long term economic future of the UK.

It's a shame that so much of what he said is still so relevant today. This is what he said about banking regulation, just as our government reduces regulation to pander to the needs of HSBC:

‘though the principles of the banking trade may appear somewhat abstruse, the practice is capable of being reduced to strict rules. To depart upon any occasion from those rules, in consequence of some flattering speculation of extraordinary gain, is almost always extremely dangerous, and frequently fatal, to the banking company which attempts it.'

He is also pretty good on equality
‘No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable."

And has interesting stuff to say about labour value, land taxes (which he was in favour of), role of the state, the dangers of boards of directors looking after other people's money, and loads of other stuff.

I couldn't recommend reading this because it is such a slog but I absolutely cannot recommend reading the edited version the think tank the 'Adam Smith' Institute produced. They cut out a lot of key content, and where they have to include something put comments in afterwards like this:
"At best his words are misleading, at worst they are mistaken". So, that's the Adam Smith Institute there saying how they feel that, um, Adam Smith is mistaken.

[Scotty · Rating 2 out of 5]

The book whilst well written is devoid of economic theory and only holds value as a way of understanding market history and Smith's views. Extremely overrated.

He starts off making the case for international trade and explaining the historical barriers. Then he moves on to how colonialism mainly by the British changed the market, especially due to the influx of gold and how the standard limits the amount of currency in circulation. Then he makes some ridiculous arguments for privatising the roads, bridges, canals, and schools and like the rest of his opinions doesn't back it up with evidence and then moans about tax for a bit.

I did however find it funny when he called the Capitalists and landlords "the unproductive class" even if he did make excuses for them, adding that "It can never be the interest of the proprietors and cultivators to restrain or to discourage in any respect the industry of merchants, artificers, and manufacturers. The greater the liberty which this unproductive class enjoys, the greater will be the competition in all the different trades which compose it, and the cheaper will the other two classes be supplied, both with foreign goods and with the manufactured produce of their own country.".

I also liked the honesty about the actual function of the government when he said that "Civil government, so far as it is instituted for the security of property, is in reality instituted for the defence of the rich against the poor, or of those who have some property against those who have none at all".

[Seemy · Rating 5 out of 5]

Amazingly in front and informative is one way of putting it - so much I could add but I don't know where to begin...

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[Steve Hadfield · Rating 3 out of 5]

I finally completed all 5 books of this collection. I have to say, so much of it was difficult to really apply since I think this was more about pointing out the economic principles that would benefit the times of Adam Smith. There are of course many principles that can and should be applied today, but one would need to dissect much of what was written and modernized for applying to today. Still, a book for anyone wanting to better understand economics by looking back into the past - what worked, what didn't. It is well worth anyone's time and effort to complete, unless you're a socialist. In your case, economic principles aren't really guiding you anyway; since your goal is to steal from those you deem rich, to give to those you deem poor.

[Andrew · Rating 5 out of 5]

It is by no accident that this book has become a cornerstone of human history.
This collection of books is so much more than simply an outline of economic activity, I view it as a thorough analysis of human behaviour itself.
Within the final two instalments of this collection, Adam Smith expands upon his analysis of economic activity based on an understanding of human nature by exploring the origins & role government plays within society & its potential implications.
Once again providing a well deduced logical depiction of what the construct of government is, how it may behave & the implications of its behaviour.

[Ben Kearvell · Rating 3 out of 5]

A fairly quaint addendum to volume one. Smith's attention to detail is mind numbing and oddly endearing. From the price of seigniorage (which is not as majestic as it sounds), to the benefits of a general tax on malt, books IV-V are less capitalist credo, more politico-historical navel gazing; but not by much.