Today we share the words of Adam Smith (1723–1790) from his famous work ‘The Wealth of Nations’, which was originally published in 1776. Adam Smith, often referred to as the “father of modern economics,” emphasized free markets, division of labor, and the importance of self-interest in driving economic growth as well as individual well-being and prosperity.
A Top Level Review Of ‘The Wealth Of Nations’
‘An Inquiry into the Nature and Causes of the Wealth of Nations’, generally referred to by its shortened title ‘The Wealth of Nations’, covers various key points that have now become foundational to classical economics:
Critique of Mercantilism – Smith criticizes the prevailing economic theory of mercantilism, which focused on accumulating gold and silver through trade, and argues for a more balanced approach to trade.
Division of Labor – Smith emphasizes the benefits of division of labor in increasing productivity and efficiency in production processes.
Free Markets – Smith advocates for free markets, where prices are determined by supply and demand without government intervention, believing that this leads to optimal allocation of resources.
Labor Theory of Value – Smith discusses the labor theory of value, stating that the value of a good or service is determined by the amount of labor required to produce it.
Role of Government – While supporting free markets, Smith also acknowledges the need for government intervention in certain areas such as defense, justice, and public works.
“The Invisible Hand” – Smith introduces the concept of the “invisible hand,” suggesting that individuals pursuing their self-interest unintentionally contribute to the overall good of society by promoting economic growth and prosperity.
Wealth Creation – Smith explains how the accumulation of wealth through productive activities benefits society as a whole.
Quotes From ‘The Wealth Of Nations’
Quotes are organized by topic and excerpted from the Bantam Classics edition of ‘The Wealth of Nations,’ published in 2003 and featuring an introduction by Alan B. Krueger.
Groups
“The greatest improvement in the productive powers of labour, and the greater part of the skill, dexterity, and judgment with which it is any where directed, or applied, seem to have been the effects of the division of labour… It is the great multiplication of the productions of all the different arts, in consequence of the division of labour, which occasions, in a well-governed society, that universal opulence which extends itself to the lowest ranks of the people.” – Chapter 1 – On The Division Of Labour
“Among men, the most dissimilar geniuses are of use to one another.” – Chapter 2 – On the Principle Which Gives Occasion To The Division Of Labour
“To promote the little interest of one little order of men in one country, it hurts the interest of all other orders of men in that country, and of all men in all other countries.” – Book 4, Chapter 7, Part 3 – Of The Advantages Which Europe Has Derived From The Discovery Of America, And From That Of A Passage To The East Indies By The Cape Of Good Hope
“The whole consumption of the inferior rank of people, or of those below the middling rank, it must be observed, is in every country much greater, not only in quantity, but in value, than that of the middling and of those above the middling rank.” – Book 5, Chapter 2, Part 2, Article 4 – Taxes Upon Consumable Commodities
Liberty
“No society can surely be flourishing and happy, of which the far greater part of the members are pour and miserable. It is but equity, besides, that they who feed, cloath, and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, cloathed and lodged.” – Chapter 8 – Of The Wages Of Labour
“Whenever the legislature attempts to regulate the differences between masters and their workmen, its counsellors are always the masters. When the regulation, therefore, is in favour of the workmen, it is always just and equitable.” – Chapter 10 – Of Wages And Profit In The Different Employments Of Labour And Stock
“Advantages and disadvantages tend to equality where there is perfect liberty.” – Chapter 10 – Of Wages And Profit In The Different Employments Of Labour And Stock
“The rent of land… is naturally a monopoly price.” – Chapter 11 – On The Rent Of Land
“Countries are populous, not in proportion to the number of people whom their produce can cloath and lodge, but in proportion to that of those whom it can feed.” – Chapter 11 – On The Rent Of Land, Part 2
“But no positive law can oblige a person who sells goods, and who is at liberty to sell or not to sell, as he pleases, to accept of a shilling as equivalent to a guinea in the price of them.” – Book 2, Chapter 2 – Of Money Considered As A Particular Branch Of The General Stock Of The Society, Or Of The Expence Of Maintaining The National Capital
“Thirdly, and lastly, commerce and manufactures gradually introduced order and good government, and with them, the liberty and security of individuals, among the inhabitants of the country, who had before lived almost in a continual state of war with their neighbours, and of servile dependency upon their superiors.” – Book 3, Chapter 4 – How The Commerce Of The Towns Contributed To The Improvement Of The Country
“Political Economy, considered as a branch of science of a statesman or legislator, proposes two distinct objects: first, to provide a plentiful revenue or subsistence for the people, or more properly to enable them to provide such a revenue or subsistence for themselves; and secondly, to supply the state or commonwealth with a revenue sufficient for the public services.” – Book 4 – Of Systems Of Political Economy – Introduction
“… every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it… 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. Nor is it always the worse for society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.” – Book 4, Chapter 2 – Of Restraints Upon The Importation From Foreign Countries Of Such Goods As Can Be Produced At Home
“To prohibit a great people, however, from making all that they can of every part of their own produce, or from employing their stock and industry in the way that they judge most advantageous to themselves, is a manifest violation of the most sacred rights of mankind.” – Book 4, Chapter 7, Part 2 – Causes Of The Prosperity Of New Colonies
“The establishment of perfect justice, of perfect liberty, and of perfect equality, is the very simple secret which most effectually secures the highest degree of prosperity to all.” – Book 4, Chapter 9 – Of The Agricultural Systems, Or Of Those Systems Of Political Economy, Which Represent The Produce Of Land As Either The Sole Or The Principal Source Of The Revenue And Wealth Of Every Country
“Taxation may diminish or destroy the landlord’s ability to improve his land.” – Book 5, Chapter 3 – Of Public Debts
Social Capital
“The division of labour, from which so many advantages are derived, is not originally the effect of any human wisdom. It is the necessary, though very slow and gradual, consequence of a certain propensity in human nature which has in view no such extensive utility; the propensity to truck, barter, and exchange one thing for another.” – Chapter 2 – On the Principle Which Gives Occasion To The Division Of Labour
“Labour is the only universal, as well as the only accurate, measure of value.” – Chapter 4 – Of The Real And Nominal Price Of Commodities, Or Of Their Price In Labour, And The Price In Money
“The poor, in order to obtain food, exert themselves to gratify those fancies of the rich, and to obtain it more certainly, they vie with one another in the cheapness and perfection of their work.” – Chapter 11 – On The Rent Of Land, Part 2
“As frugality increases, and prodigality diminishes the public capital, so the conduct of those whose expense just equals their revenue, without either accumulating or encroaching, neither increases nor diminishes it.” – Book 2, Chapter 3 – Of The Accumulation Of Capital, Or Of Productive And Unproductive Labour
“Every individual is continually exerting himself to find out the most advantageous employment for whatever capital he can command. It is his own advantage, indeed, and not that of the society, which he has in view. But the study of his own advantage naturally, or rather necessarily, leads him to prefer that employment which is the most advantageous to the society.” – Book 4, Chapter 2 – Of Restraints Upon The Importation From Foreign Countries Of Such Goods As Can Be Produced At Home
“The corn merchant is odious to the populace.” – Book 4, Chapter 5 – Digression Concerning The Corn Trade And Corn Laws
Sovereignty
“The common advantages which every empire derives from the provinces subject to its dominion consist, first, in the military force which they furnish for its defence; and, secondly, in the revenue which they furnish for the support of its civil government.” – Book 4, Chapter 7, Part 3 – Of The Advantages Which Europe Has Derived From The Discovery Of America, And From That Of A Passage To The East Indies By The Cape Of Good Hope
“The monopoly hinders the capital of that country, whatever may at any particular time be the extent of that capital, from maintaining so great a quantity of productive labour as it would otherwise maintain, and from affording so great a revenue to the industrious inhabitants as it would otherwise afford.” – Book 4, Chapter 7, Part 3 – Of The Advantages Which Europe Has Derived From The Discovery Of America, And From That Of A Passage To The East Indies By The Cape Of Good Hope
“At first sight, no doubt, the monopoly of the great commerce of America naturally seems to be an acquisition of the highest value. To the undiscerning eye of giddy ambition, it naturally presents itself amidst the confused scramble of politics and war as a very dazzling object to fight for. The dazzling splendour of the object, however the immense greatness of the commerce, is the very quality which renders the monopoly of it hurtful…” – Book 4, Chapter 7, Part 3 – Of The Advantages Which Europe Has Derived From The Discovery Of America, And From That Of A Passage To The East Indies By The Cape Of Good Hope
“It is the interest of such a sovereign, therefore, to open the most extensive market for the produce of his country, to allow the most perfect freedom of commerce, in order to increase as much as possible the number and the competition of buyers, and upon this account to abolish, not only all monopolies, but all restraints upon the transportation of the home produce from one part of the country to another, upon its exportation to foreign countries, or upon the importation of goods of any kind for which it can be exchanged.” – Book 4, Chapter 7, Part 3 – Of The Advantages Which Europe Has Derived From The Discovery Of America, And From That Of A Passage To The East Indies By The Cape Of Good Hope
“…every violation of that natural distribution, which the most perfect liberty would establish, must… necessarily occasion a gradual declension in the real wealth and revenue of the society.” – Book 4, Chapter 9 – Of The Agricultural Systems, Or Of Those Systems Of Political Economy, Which Represent The Produce Of Land As Either The Sole Or The Principal Source Of The Revenue And Wealth Of Every Country
“According to the system of natural liberty, the sovereign has only three duties to attend to: first, the duty of protecting the society from the violence and invasion of other independent societies; secondly, the duty of protecting, as far as possible, every member of the society from the injustice or oppression of every other member of it, or the duty of establishing an exact administration of justice, and, thirdly, the duty of erecting and maintaining certain public works and certain public institutions, which it can never be for the interest of any individual, or small number of individuals, to erect and maintain.” – Book 4, Chapter 9 – Of The Agricultural Systems, Or Of Those Systems Of Political Economy, Which Represent The Produce Of Land As Either The Sole Or The Principal Source Of The Revenue And Wealth Of Every Country
“The practice of funding has gradually enfeebled every state which has adopted it… When national debts have once been accumulated to a certain degree, there is scarce, I believe, a single instance of their having been fairly and completely paid.” – Book 5, Chapter 3 – Of Public Debts
Trust
“The wages of labour vary according to the small or great trust which must be reposed in the workmen… When a person employs only his own stock in trade, there is no trust, and the credit which he may get from other people depend, not upon the nature of his trade, but upon their opinion of his fortune, probity, and prudence. The different rates of profit, therefore, in the different branches of trade, cannot arise from the different degrees of trust reposed in the traders.” – Chapter 10 – Of Wages And Profit In The Different Employments Of Labour And Stock
Virtues
“The over-weening conceit which the greater part of men have of their own abilities is an ancient evil remarked by the philosophers and moralists of all ages.” – Chapter 10 – Of Wages And Profit In The Different Employments Of Labour And Stock
“The chance of gain is by every man more or less over-valued, and the chance of loss is by most men under-valued… The contempt of risk and the presumptuous hope of success are in no period of life more active than at the age at which young people chuse their professions.” – Chapter 10 – Of Wages And Profit In The Different Employments Of Labour And Stock
“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.” – Chapter 11 – On The Rent Of Land, Part 2
“… though the principles of common prudence do not always govern the conduct of every individual, they always influence that of the majority of every class or order.” – Book 2, Chapter 2 – Of Money Considered As A Particular Branch Of The General Stock Of The Society, Or Of The Expence Of Maintaining The National Capital
“Parsimony, and not industry, is the immediate cause of the increase of capital. Industry, indeed, provides the subject which parsimony accumulates. But whatever industry might acquire, if parsimony did not save and store up, the capital would never be the greater.” – Book 2, Chapter 3 – Of The Accumulation Of Capital, Or Of Productive And Unproductive Labour
“By what a frugal man annually saves, he not only affords maintenance to an additional number of productive hands, for that or the ensuing year, but like the founder of a public workhouse, he establishes as it were a perpetual fund for the maintenance of an equal number in all times to come.” – Book 2, Chapter 3 – Of The Accumulation Of Capital, Or Of Productive And Unproductive Labour
“The uniform, constant, and uninterrupted effort of every man to better his condition, the principle from which public and national, as well as private opulence is originally derived, is frequently powerful enough to maintain the natural progress of things towards improvement.” – Book 2, Chapter 3 – Of The Accumulation Of Capital, Or Of Productive And Unproductive Labour
“The pride of man makes him love to domineer, and nothing mortifies him so much as to be obliged to condescend to persuade his inferiors.” – Book 3, Chapter 2 – Of The Discouragement Of Agriculture In The Ancient State Of Europe After the Fall Of The Roman Empire
“The habits, besides, of order, economy and attention, to which mercantile business naturally forms a merchant, render him much fitter to execute, with profit and success, and project of improvement.” – Book 3, Chapter 4 – How The Commerce Of The Towns Contributed To The Improvement Of The Country
“The sophistry of merchants inspired by the spirit of monopoly has confounded the common-sense of mankind.” – Book 4, Chapter 3, Part 2 – Of The Unreasonableness Of Those Extraordinary Restraints Upon Other Principles
“Justice is never administered gratis.” – Book 5, Chapter 1, Part 2 – Of The Expense Of Justice
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