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

by Adam Smith, Kathryn Sutherland

This edition contains generous selections from all five volumes of The Wealth of Nations, and places Smith's inquiry into its historical, intellectual, and cultural context.
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Genres: Economics, Nonfiction, Philosophy, Politics, Classics, History, Social Science

689 pages, Kindle Edition

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

[E. G. · Rating 3 out of 5]

Acknowledgements
Introduction
Note on the Text
Select Bibliography
A Chronology of Adam Smith and His Times

--An Inquiry into the Nature and Causes of the Wealth of Nations [Abridged]

Explanatory Notes and Commentary
Index

[Qisheng Xie · Rating 4 out of 5]

“The desire of food is limited in every man by the narrow capacity of the human stomach; but the desire of the conveniences and ornaments of building, dress, equipage, and household furniture, seems to have no limit or certain boundary.”

So goes the most powerful and influential approbation for a liberal economy governed by the laws of human greed. Adam Smith’s Wealth of Nation is not just a justification of an open market model, a concept not unfamiliar to those of us living in a capital driven world. But a break from the traditional humanist view of progress. That the best method of improvement in the human condition is not the august philosophy of Plato and Aristotle, not the fervent preaching of abbots, but the simple, slight and shameless inducement of wanton desire. By freeing those instincts ingrained in each of us, Smith persuasively shows us the steps in which such liberty can lead to the benefit of all.

It is difficult to read the Wealth of Nation without peering over into the passing storm of the recent economic crisis. The Anglo-Saxon model, much of its founding principles are synonymous with those presented in this book, has been the pillar of yesterday’s crumbling economic framework. If in the information driven age of the 21st century, such insatiable hunger of wealth has meant the pretension to richness and the unemployment of so very many people; what would have it meant in the opaque and secluded Georgian and Victorian era? Would Smith have argued for more liberalisation today for his home country in the face of growing competitions from the East, and falling productivity in the West?

I believe the answer is yes. By liberalising the market as Smith has argued, it is only the consumers who shall benefit. For Smith, the failure of today’s crisis would not be with the free-market principle, but with the oversight of the government. It is suggested in the Wealth of Nations that it is the government who should safeguard and intervene in cases of unjust and irregular financial dealings. If in the Wealth of Nations corrupt officials of the East India Company should be sacked, I have no doubt those fraudsters, who beggared the nation with intemperate investments would face equal scorn had Smith returned with another volume.

Finally, Wealth of Nations offers a few consolation for today’s government in Britain and elsewhere. The last book describes the means in which the national debt may be relieved, and the direction such government should take to further the potential of its economic development. A very apt passage in which Smith states that a country should quite literally, not punch above its own weight, almost moonlights the current direction taken by the Conservative-Liberal Democrat coalition. And it is through education and public infrastructure this continuance of wealth creation may be ensured, for me and for my home country, there may be a lesson to be learned.

[Petter Nordal · Rating 4 out of 5]

What surprised me most about Smith's book was that his economic analysis of production, price and value is compatible with Marx's. I had read in so many places that Marx was the Left and Smith was the Right. Turns out, it really IS better to read the original.

[Nodar Baghishvili · Rating 4 out of 5]

One of the book on the must read list, does not matter the opinion still a must read

[Shane Goodyear · Rating 4 out of 5]

* A complex book I somewhat hot it though
* 3 modes of making money wage, profit, stock
* Defence of nation, education and the facilitation of institutions for the benefit of manufacturing and trade. Is what the government should do
* Does not like the mercantile system, a nation makes its wealth through the manufacturing system which blessing and benefits the whole society
* Land has a large part to play in a nations revenue and stock
* A person looks after his own interests but benefits the rest of society by doing that. Creating jobs etc manufacturing
*
* Mercantilism held that wealth was fixed and finite. The only way to prosper was to hoard gold and place tariffs on products from abroad. According to this theory, nations should sell their goods to other countries while buying nothing in return. Predictably, countries fell into rounds of retaliatory tariffs that choked off international trade.
*
* The central thesis of Smith's The Wealth of Nations is that our individual need to fulfill self-interest results in societal benefit.
* He called the force behind this fulfillment the invisible hand.
* Self-interest and the division of labor in an economy result in mutual interdependencies that promote stability and prosperity through the market mechanism.
* Smith rejected government interference in market activities.
* He believed that a government's three functions should be to protect national borders, enforce civil law, and engage in public works (e.g., education).
*
* if you specialize as a baker and produce only bread, you must rely on somebody else for your clothes, your meat, and your beer. Meanwhile, the people that specialize in clothes must rely on you for their bread, and so on. Prosperity emanates from the market that develops when people need goods and services that they can't create themselves.
*
* The invisible hand is not an actual, distinguishable entity. Instead, it is the sum of many phenomena that occur naturally when consumers and producers engage in commerce.

[Neil · Rating 5 out of 5]

+10 intelligence.

[Alaation · Rating 5 out of 5]

A must-read for anyone interested in business, economics history or philosophy.

I finally picked up a book that had been sitting on my shelf, patiently waiting for its moment.

→ Wealth of Nations by Adam Smith.

↳ This masterpiece appealed to my newfound interest in economics, paired with my natural curiosity for history and philosophy. What stood out most was Smith’s clarity in explaining the fundamentals often overlooked today-like why we use coinage and what it truly represents.

↳Key Takeaways:

→ The Invisible Hand: Smith's most famous concept emphasizes that individual self-interest, guided by competition, often results in societal benefits, driving efficiency and innovation in markets.

→ Division of Labor: Specialization enhances productivity and wealth creation by allowing workers to focus on tasks aligned with their expertise.

→ Value of Coinage: Smith explains the origins and necessity of money, highlighting how it represents labor and simplifies trade.

→ Critique of Mercantilism: He opposes mercantilist policies, advocating for free trade and minimal government interference in markets.

→ Productive vs. Unproductive Labor: Smith differentiates between labor that generates tangible goods and services that don’t directly contribute to economic growth—a distinction still debated today.

→ Role of the State: Governments should focus on infrastructure, justice, and defense, but avoid unnecessary market intervention.

[Matt · Rating 4 out of 5]

I'm finally done with this, cover to cover, I won't say how long it took. Adam Smith was not the only person to write about "free market" but he seems to be the most famous. It really is a brilliant compilation, considering the time and context he wrote it. An even mixture of insight into what has become the fundamental model for "free market" and opinion on the state of affairs of his day. A lot of diversion from his theory into what he considers relevant examples. Also, Smith spends some time discussing the demerits of other systems and measures that counter his ideas of Free Market. While reading, I would try to gain insight into how Adam Smith might view today's system. Its an interesting thought exercise and I don't know enough about modern economics to expand.

I wrote down a few notes while reading:

Currency is necessary to facilitate exchange of goods, this is an obvious point now but nice to see it presented in the context he does. Not practical to deal in terms of swapping whole cows for the equivalent amount of goods. Also, he mentions that there needs to be a central administration (government) to issue currency.

Labor is an accurate assessment of the value of something ie: the labor necessary to procure. Specialization of labor necessary in large settings, generalization necessary in small settings is usually greater than the expense of the materials. I think this is true in most settings, some exceptions where human life has less value and the commodity produced has extremely high value...

Seems to imply that any govt intervention into the actions of stock, labor and commerce is bad, (comment about business meetings turning towards maximizing their profits at the expense of the general public (..conspiracy against the people…) must be taken in proper context. He also states that governments should not take measures against such meetings. (No discussion about worker unions/organizations, I don't think he would be for worker unions, though.)

Implication that there are some professions that may be publicly funded, ie: public officials and teachers. Highly suspicious of the notion of publicly-funded education. Frequently describes "indignant" people in the context of "men of letters" studies funded by the public. Generally seems to think that pay-for-education would be superior due to the motivation of the instructors over publicly funded ones, but then later seems to imply that public educations would be better in due to the official recognition.

He often attempts to quantify activities in locations where he apparently has no first hand knowledge or experiences. Example: quantifying how much time "savages" devote to making clothing for the family, thus freeing up others for food production. His point is correct; however, I feel his need to use such examples, odd, in today's context... An example of how the ideas are current even though much of the actual text is dated. Possibly an effect of the time where W. Europeans felt themselves intellectually superior to others.

Discussion on the nature of what sorts of things remove capital from the economy of a nation. Luxuries, government spending (I'm using our term, not his), military/war. Basically, these expenses remove of circulating capital from the system and are not converted into fixed capital and stock, and thus are not used to produce more "rude" produce. Makes the explicit point that war is a waste of capital and labor resources. Soldiers could be working and adding to an economy instead of fighting wars and consuming circulating capital. He seems to think war is a waste of money.

Tariffs and subsidies bad and harmful to a free economy in the long run. They are inhibitory of industry as they swing costs and labor out of their natural state and discourage innovation. The consumer doesn't benefit as they would pay in taxes (subsidies) what they might pay for more expensive foreign goods. Also goods that can be made cheaper abroad should be made abroad thus freeing up labor to other industrious pursuits at home. Interesting discussion about the value of colonies, he spends some effort in discussing the negative virtues of a mercantile economy but concedes that colonies are good and that both the colony and the home country benefit from the relationship more than they suffer (so long as liberties are preserved). His view on slavery is hard to get around. He clearly states that slavery is a bad practice, inhumane, etc… but feels the need to mention that slave labor has a positive influence on profits.

Currency should be issued by a central authority and it is OK to commit revenue (taxes) to keep this system running. Generally says that there are public positions and infrastructure such as schools, roads and bridges, police/military protection that are necessary to facilitate commerce and should be paid for with public money (taxes). These positions are good so long as they only serve to promote the flow of commerce. Very suspicious of taxation. He writes that taxation should be at the convenience of the payer and really only when necessary. Cautions about corruption in publicly funded positions and warns of publicly funded officials wasting money.

Debt is bad, countries that spend more on luxuries than rude produce cannot sustain this practice and will eventually fail. Interesting discussion about Great Britain's sustaining of colonies during this period. He has contempt for the American colonies because of the money Britain has spent (often contracted debt for) to sustain them, much of it military debts. Ultimately he seems to think that Britain should either expect the colonies to pay more of their own expenses or Britain should cut them loose. He then says that the colony benefits more than the parent nation from this arrangement.

[Carter · Rating 4 out of 5]

This is something, that was assigned reading in college, for a sociology class, with M. Postone. I recently, have been reviewing the book again. Old classics like these, are a window in time- a detailed and thorough analysis, which became the foundation for early economics specific to capitalism.

[Austin Anderson · Rating 2 out of 5]

Read for Integrated Humanities IV
Book I, chapter 4
Book II, chapter 3
Book IV, chapters 1-2

[Mario Cerqueira]

tough read

[Sam]

"Of the division of labour"
"Of the natural and market price of commodities"
"Of colonies"

[Marina Furmanov · Rating 4 out of 5]

Must read

[Morgan Smith · Rating 3 out of 5]

He has far too much to say and takes up every space of the 500 pages of this book to do so. His thoughts on the division of labor do go kinda hard but this could’ve been an email.

[Hugh McArthur · Rating 4 out of 5]

The ultimate Bible of capitalism. Although as old as the United States Declaration of Independence, Smith’s theory of the economy is as relevant as it was almost 300 years ago.

[Nick McLaren · Rating 3 out of 5]

Upon reaching the outdated points I found myself drifting a loosing interest. It’s not to say that this isn’t interesting subject matter, nor to say it isn’t well written by a man of clear intelligence. But what I thought I’d get from this treatise I didn’t get and realised that this was not for me.

[John Ledingham · Rating 5 out of 5]

Close read the first 2 books on labor/money/capital and wages/profits/rent, whereas I mostly skimmed the last 3 on mercantilism and political economy. But most of the macroeconomic theory was what I was here for, and far more interesting to me than Smith's various historical accounts and timely opinions. Terrific book, anyhow. Not just for what it does for economics, but for its eminent readability too. The way the evolution of human ingenuity is traced in the evolution of industry, and even the pictorial descriptions of 18th century economy and working-life, the grand Bruegel-esque symphony of codependent specialization that brought our modern world to life from out of civilization's very basics. Full of intuitive knowledge of economic processes and relations. Smith turns out to be an advocate of the free market less altogether laissez-faire than many of his idolaters, supporting public roads, education, homeless shelters, worker's rights, even the progressive tax among other means of fighting monopoly. That's not to make him some kind of saint or hero of him, he's definitely a supporter of capitalist exploitation of the environment and accepting of its consequences, he speaks ambivalently on colonization and against slavery almost exclusively as an inferior and less efficient mode of employment. His ideology is behind much of what is considered evil and gone-wrong in society today. But for his time, Smith's vision was revolutionary, and his earnest support of individualism encouraged liberalization for much of the economy that may have once been little more than feudal slaves. And one can easily understand given his place in history where his liberal values now considered cynical or oppressive could have germinated in good faith.

[Durakan · Rating 5 out of 5]

An excellent book, that appealed not only to my adopted interest in economics, but also my natural interest in history and philosophy.

What I really like about the Wealth of Nations is the way Smith explains everything with absolute clarity, covering the fundamentals that are generally left out of the modern classroom (e.g. why we use coinage, and exactly what it represents). While much of the book uses contemporary evidence to support itself, the principles can generally be applied to the present day, although I still harbour a perverse desire to bring Adam Smith back from the dead and hear his thoughts on our modern economies that subsist predominantly on what he terms 'unproductive' labour. I bet he didn't see that one coming!

The one problem is that I have now been turned into a vigorous proponent of free market economics, so I probably need to read some criticism to rebalance my views. Smith likes to accuse mercantilists of sophistry, but (at least according to the editor of my edition) he occasionally seems to stray into that territory himself, and omits altogether any criticism of the policies that he supports most strongly... but hey, he's probably right.

In short, I loved it, and it has significantly increased my understanding of the way things work!

[Ly Casnocha · Rating 4 out of 5]

Wealth of Nations by Adam Smith left impression for the comprehensive nature, as well as the writing style of the author. It was sort of detailed and covered major events in the European economy and its history over the course of time. This work is indeed a classic publication, and the notable point about it was the fundamental matters related to the economy of Europe in general and Great Britain in particular. I think it is a helpful and worthwhile publication for anyone concerned about the economy, and its history.

[Cameron Mitchell · Rating 4 out of 5]

It's much more compelling to read Adam Smith than the economists who bastardize his theories.

[John Poulain · Rating 4 out of 5]

Essential Basic Foundations for economics.

[Nathan Daniel · Rating 5 out of 5]

When I read this book, I was a poor, starving artist. Now I am a financial advisor. Results not guaranteed.