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

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Adam Smith's The Wealth of Nations was recognized as a landmark of human thought upon its publication in 1776. As the first scientific argument for the principles of political economy, it is the point of departure for all subsequent economic thought. Smith's theories of capital accumulation, growth, and secular change, among others, continue to be influential in modern economics.

This reprint of Edwin Cannan's definitive 1904 edition of The Wealth of Nations includes Cannan's famous introduction, notes, and a full index, as well as a new preface written especially for this edition by the distinguished economist George J. Stigler. Mr. Stigler's preface will be of value for anyone wishing to see the contemporary relevance of Adam Smith's thought.

1152 pages, Paperback

First published March 9, 1776

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About the author

Adam Smith

929 books1,670 followers
For other authors of this name, see Adam Smith.

Wealth of Nations (1776) of Scottish political economist and philosopher Adam Smith laid the foundations of classical free-market theory.

Despite the unknown exact date, authorities recorded his baptism on 16 June 1723 at Kirkcaldy.

This pioneer among the key figures of the Enlightenment authored The Theory of Moral Sentiments . People consider the first modern work of economics as his magnum opus and widely cite this father.


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Displaying 1 - 30 of 1,241 reviews
Profile Image for Szplug.
467 reviews1,226 followers
Shelved as 'intermittently-reading'
July 29, 2016
Sometimes I feel so very goddamned embarrassed by my lack of higher education. There are just too many of the foundational works of Western civilization that I am only getting around to now, in my early forties—and even with the padding of years, I feel depressingly unprepared heading into them. So much fucking time wasted doing shit, when I could have been reading...

Smith is smooth, like a nice rye whisky. Right off the bat, this artful Adam opens with a remark about the productive powers of labour, and only my recently ingrained terror of 1200 page books prevented me from levering it up to Position Number One. I have the unabridged edition, which other reviews seem to warn means being exposed to more discussion of English corn than could ever be warranted, even by the most patient and diligent of readers. But, what the hey, that's the camp I'm joining! I plan to have a swimming time, me and Adam, cruising through silver and gold pricing of bountiful British harvests. Hooray for the Invisible Hand! (If you look carefully at the cover of the handsome edition that I possess, you'll see that incorporeal extremity craftily incorporated into the pleasingly attractive rural design).
Profile Image for Scott.
56 reviews1 follower
April 17, 2008
For a truth, about 3/4 of this book is 18th century blabber about corn prices. Of the remaining 1/4, about 1/2 is criticism of mercantilsm, which is mostly obvious and definitely boring.

The remaining 1/8 of the book, however, is worth fighting through the rest for. Even if you've heard the explanation of the "invisible hand" a thousand times, there is something magical about reading the actual words by the father himself:

"It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages."

"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 the society that it was no part of it. By pursuing his own interest he frequently promotes that of society more effectually than when he really intends to promote it."

Big time. Seriously.
Profile Image for Ahmad Sharabiani.
9,566 reviews56.6k followers
January 14, 2022
The Wealth of Nations, Adam Smith

An Inquiry into the Nature and Causes of the Wealth of Nations, generally referred to by its shortened title The Wealth of Nations, is the magnum opus of the Scottish economist and moral philosopher Adam Smith. First published in 1776.

The book offers one of the world's first collected descriptions of what builds nations' wealth, and is today a fundamental work in classical economics. By reflecting upon the economics at the beginning of the Industrial Revolution, the book touches upon such broad topics as the division of labor, productivity, and free markets.

تاریخ نخستین خوانش روز نوزدهم ماه سپتامبر سال1978میلادی

عنوان: ثروت ملل؛ نویسنده: آدام اسمیت؛ مترجم: سیروس ابراهیم زاده؛ تهران، پیام، سال1357؛ در سه جلد: جلد نخست «علل بهبود نیروی مولد کارگر، نظم و ترتیبی که بر طبق آن محصول محصول وی به طور طبیعی میان گروههای مختلف مردم توزیع میشود»؛ جلد دوم «در باره ماهیت سرمایه، نحوه ی انباشته شدن، و کاربرد آن»؛ و جلد سوم: «درباره سیر توانگری و ثروت بین ملتهای مختلف»؛ موضوع درباره ی اقتصاد از نویسندگان اسکاتلند - سده18م

در سال1395 هجری خورشیدی نیز چکیده ای از کتاب را انتشارات پیام در362ص منتشر کرده است

با نگارش کتاب «ثروت ملل» بود، که «آدام اسمیت» مرزهای اقتصاد را گسترش دادند، تا حوزه های دیگر، همانند «علوم سیاسی»، و حتی «انسان شناسی» را نیز، در بر بگیرد؛ نسخه اصلی کتاب «ثروت ملل»، پنج جلد است، و تنها دو جلد نخستین است، که الهام بخش هستند؛ در این دو جلد است، که ایشان علت بنیادین «ثروت ملل»، یعنی تمایز بین «قیمت طبیعی»، و «قیمت بازار» کالاها را، توضیح میدهند؛ جلدهای سوم تا پنجم اما، مباحثی را شامل میشود، که خوانشگر انتظار ندارد، آنها را در یک کتاب اقتصادی بیابد؛ اگرچه «آدام اسمیت»، هماره بدگمانی ژرفی، در باره رفتار بازرگانان، و قانونگزاران داشته، و وظایف دولت را، تنها، برآوردن آن دسته از خدمات اجتماعی میدانسته، که «بخش خصوصی» قادر، یا تمایل به انجام آن خدمات ندارد؛ ایشان مدافع نظریه ی «مزیت نسبی و آزادی عملکرد بازار» بودند؛ اما همیشه کسانی نیز هستند، که بگویند «این موارد، تمام آن چیزی نیست، که مورد نظر آدام اسمیت بوده باشد»، بدون شک همین موارد، بخش عمده ی پیام پیچیده ی ایشان بوده و در روزگار کنونی، و با فروپاشی «نظام اقتصاد متمرکز»، و اقبال همگانی، از سیاستهای «اقتصاد آزاد»، چنین به نظر میرسد، که پس از گذشت بیش از دو سده، روح «آدام اسمیت»، هنوز هم بر فراز «اقتصاد جهانی»، استوار، و سر فراز، ایستاده است؛

تاریخ بهنگام رسانی 28/10/1399هجری خورشیدی؛ 23/10/1400هجری خورشیدی؛ ا. شربیانی
Profile Image for Jon Nakapalau.
4,923 reviews684 followers
May 29, 2023
One of the hardest books I have ever read - I feel overwhelmed as far as the concepts - so I will just make a general comment: If you want to understand the foundational concepts of economic policy and have the perspective of a true genius then this book is for you. It is SCARY how many situations Adam Smith predicted - and it is sad how little things have changed as far as the wealthy and the poor. If you read this book and Das Capital I would argue that you will be able to hold your own as far as any 'laymen arguments' that are so often touted by the media. Took me 5 years to get through this book - but it was worth it.
Profile Image for Richard Fulgham.
Author 13 books41 followers
April 19, 2009
"The Wealth of Nations" is the book that changed greed to a virtue instead of a sin.

In fact, greed is one of the Seven Deadly Sins in Christian theology. Greed is a sin in ALL the great religions, including Judaism, Islam, Hinduism, Zen Buddhism, Buddhism, American Indian Spiritualism, Wiccan nature love, Bahá'í Faith, Gnosticism · · Rastafari,Samaritanism, Indian Ayyavazhi, Jainism, Sikhism Iranian Ahl-e Haqq, Manichaeism, Mazdak, Yazidi,Zoroastrianism, East Asian Confucianism, Taoism,Recent Cao Dai,Chondogyo, Neopaganism, New Age, Seicho-No-Ie, Tenrikyo, Unitarian Universalism Ethnic/Folk African, Ancient religions, Prehistoric Near East Egyptian, Semitic, Mesopotamian
Indo-European Celtic, Germanic Illyro-thracian, Greek (Gnosticism · Neoplatonism), Mithraism, Vedic Hinduism . . . .

All these religions say greed is wrong. All these religions say you should not gather wealth at the expense of your neighbors. But this man Adam Smith says it is OK to do whatever is necessary to obtain wealth. Adam Smith says it is a good thing to allow your instinct toward selfishness to rule your life. He calls it Capitalism. And it works for a century or so before the robbed and disenfranchised revolt and kill off the greedy ones who rule society to their benefit.

Greed is the basis and essence of Capitalism, especially US Capitalism, in which every individual is guaranteed the "right to pursue happiness". Has anyone EVER questioned that? Why is more important to be happy than to know where you fit into the Grand Scheme? Why is more important to make money than to find and free your spirit? Look at any wealthy person who gained his or her wealth through competiton -do they have a healthy or unhealthy spirit?

In turning greed to virtue, Adam Smith has created an economic system that more accurately has been called "Social Darwinism". In other words, according to Smith, it is perfectly natural for the meanest, strongest, most clever individuals to gobble up so much capital that the great majority of people are left with crumbs.

The weakest of us "deserve" to be poor, according to Smith. The Bible and every civilized religion in the world disagree, saying greed is a sin because the individual chooses to be greedy even though he/she knows it will cause great shortages of money among the meek and powerless.

Capitalism therefore is a sin, not an acceptable economic system. So long as there exists a middle class nothing catastrophic should happen to the society embracing this sin. But right now the middleclass is disappearing in the USA (as it has in all empires), leaving only the few monsters at the top and everyone else in poverty.

Forgive me for reading and for using my mind to agree or disagree with the author. I know most of you are capitalist because you are citizens of the USA. I am frankly a disciple of Diogenes and believe we should all be free and enjoy life -- there is plenty to go around without getting into a harness and working yourself to death. Let's face it, communism would have worked if they'd killed off the hogs as they rose to power. There are always hogs in society -- it is the duty of society to keep them chained or jailed.

Adam Smith, to a real Christian, is Satan personified. How devious and clever to claim a sin is a virtue. I recommend reading this admittedly fascinating book because it is an explanation of why Rome, Great Britian, the Ottoman Empire, et al, in the end collapsed because of greed made a virtue.

Adam Smith eloquently and wittily pretends to be a friend to the common person. So does "Das Kapital" and "Mein Kampf".

I personally am not a communist, socialist nor capitalist. I'm absolutely a nobody and you can take that to your corrupt bank. I revel in the freedom of my mind! I am an old graybeard and have read a thousand books --I was cast out of the 20th Century for chastising lesser minds, indifferent minds. I have been driven mad -- but in that madness there has come a clarity. It is so bright and wonderful that I can see clearly what I could not see before.

I hope this will attract bitter diatribes (Webster: bitter and abusive writings) against me and my blanket condemnation of Adam Smith's dangerous book. That will mean that my words here have been read and considered. Is that too much to ask in this dispassionate world?
Profile Image for Manny.
Author 29 books13.6k followers
Want to read
August 27, 2014
For some reason, the American Right tend to be as vehemently in favor of the Invisible Hand of the market as they are vehemently against the Invisible Hand of Darwinian selection. And the old USSR was exactly the same, except that they reversed the two positions.

Am I the only person who thinks this is just plain weird?
Profile Image for Erik Graff.
5,006 reviews1,116 followers
January 15, 2015
A prideful and ambitious boy, hearing that President Kennedy had been a speed reader, I cut lawns and shovelled walks to pay for an Evelyn Wood Reading Dynamics program. We met in the spare basement of the hideous modern structure that passed for Park Ridge's "Inn"--a residence primarily for attendants and pilots from the airlines utilizing nearby O'Hare International Airport. I was a sophomore, the youngest in class, quite serious and full of myself.

The Wood method consisted, basically, of two parts. First, don't subvocalize while reading. Second, run a finger down the page while soft-focusing on the text. The rest was a matter of practice and ever-faster fingers until some of us were "reading" as fast as we could turn the pages.

The texts for class were, one suspects, Ms. Wood's efforts to make the world a better place. They included Ayn Rand's Anthem, an early exercise, and Adam Smith's An Inquiry into the Nature and Causes of the Wealth of Nations, the final exercise. I was so expert by that time that the Wealth of Nations took no longer than Rand's novella had--thirty or forty minutes maybe.

The whole business was a sham of course. What we were learning was how to skim and cram, skim and cram for examinations designed to pick up on the kinds of material one might retain from a skim and cram method. The rest depended upon what Marx termed "the labor theory of value"--we had spent a lot of money and time on this stuff, so it had better have paid off or we'd be fools.

It took me about a year of skimming and cramming to give up and decide I had, in fact, been a fool. Thus I returned to the old, much more pleasant ways of reading and, in time, even reread Marx's great hero, Adam Smith...while on the beach in Michigan and over several days.
Profile Image for Saadia  B..
181 reviews70 followers
June 2, 2021
Oh this book was such a tiresome read that I finished 4 other books before completing this one.

Started to take toll on me with so much unnecessary explanations which made no sense. Sometimes cringe worthy!

Adam Smith was one of the few individuals who wanted the economic cycle to run itself. Hence he was in full support of market setting the momentum. But can we give such liberty to markets? With inflation, resources cramped within few hands and power politics his notion have failed to a large extend in today’s world. As the richer are getting rich with each day whereas the poor are left on their mercy which never comes.

Nonetheless this book gave certain valuable parameters which can be used and revised to make things better. According to him abundance or scantiness depend upon two circumstances:

1. By skill, dexterity and judgement with which it’s labour is applied
2. By the proportion between the employer and unemployed

Wages, rent and profit are the three original sources of all revenues and exchangeable value. Altogether there are 3 classes who contribute towards the annual produce of the land and labour:

1. The proprietors of land
2. Cultivators, farmers and country labourers who are honoured with the peculiar appellation of the productive class
3. Class of artificers, manufactures and merchants who endeavour to degrade by the humiliating appellation of the barren or unproductive class

The sovereign as in the state has only three duties to attend to:
1. The duty of protecting the society from violence and invasion of other independent societies
2. The duty of protecting every member of the society from injustice or oppression by every other member of it
3. The duty of erecting and maintaining certain public works and institutions

Though Smith kept condemning the Mercantile System but his free markets have led to the very anarchy which even mercantilist couldn’t bring in the world.

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Profile Image for Anne.
7 reviews5 followers
April 24, 2008
How can one go through life without reading the Wealth of Nations?

Adam Smith had the idea of modern economics before the United States was even sovereign (I go not so much for good writers, as I do for innovative and groundbreaking thinkers). Imagine coming up with your own idea of an economic system long before the world was ready. And unlike Marx, may I mention, Smith's ideals are not only flourishing and still seen today, but they are the foundation of the many, many economies and nations.
Profile Image for Jacqueline.
35 reviews5 followers
November 15, 2011
Always a great classic on economics. His one fatal flaw was opening the door for Marx. By placing value based on labor, laborers feel they are the ones that deserve all the reward. Labor means nothing if no one wants the item being produced. The free market drives price, not the amount of labor put into a product.

Great chance to see and understand how economics developed.
Profile Image for Amit Mishra.
233 reviews667 followers
August 1, 2018
An erudite who not only changed the shape of economics thinking but also laid the foundation of capitalism and industrialization. The book by him can be regarded as The Bible of economics.
Profile Image for Gary.
941 reviews205 followers
March 12, 2020
People suggesting I read Adam Smith for an understanding of economic is something I find disgusting and offensive. Adam Smith was man who defended the very system of his time which allowed children as young as four or five to be sent down mines or up chimneys to horrific deaths. , worked women to death and made it legal for the bosses to rape them whenever they liked!
Adam Smith and Ludwig von Mises were therefore evil to the core!
Profile Image for Patrick Peterson.
462 reviews187 followers
July 29, 2022
2013 One of the best and most important books ever written. Period.

Smith made a few mistakes, but he was a pioneer and what he did for the world with this book and his other book, Theory of Moral Sentiments, are incomparable gifts to mankind.

His opening analysis of "division of labor" as being the crucial key to increases in productivity and wealth production was not only a monumental insight but also one of the most pleasurable and neato things I have ever read. You may have heard of his example of the pin factory. Well, it is right there in the beginning of the book, and just fascinating and as easy to read, these 242 years after he first published it, as it shook the world then.

His arguments for free trade vs. government controls/mercantilism are excellent, and just as applicable and important today as they were when written. Oh, if Donald Trump and more of his supporters would only take an hour or so to read the relevant passages, they might see the ultimate folly of their rhetoric and actions that penalize the American public with higher tariffs...

I had the opportunity to read this book in college during my Junior year January "Interterm" Tutorial with a wonderful Religion Professor, Dr. Young. He was not expert in the economics aspects of this book, but he was great at keeping me focused, honest and able to persevere in finishing it in the one month time allotment. That was significant since it is a 700+ page book and there are sections (for instance "Digression on Silver") which were not too easily or productively gone through.

Then again about 2005 I was very happy to have found a group in San Jose, CA near where I lived which went through and discussed the book over a several month time frame. These were graduate and undergraduate students in economics, so that aspect of the book was given much more careful analysis. Also very helpful in getting more meaning and detail out of the book.

Before and since then, I have noted many varying scholars who have praised or (usually foolishly) condemned Smith for his great insights and central importance to, though sometimes setting an unproductive or worse course (for instance his very misleading and not helpful Labor Theory of Value, promotion of Usury Laws and other ideas that contradicted his sound general adherence to laissez faire principles. Scholars who I especially admire on their comments on Smith's WoN are:
Ludwig Mises
Gene Epstein
Dierdre McCloskey
Jerry Muller
Dan Klein
and others.
Others who really got Smith wrong:
Karl Marx
Abba Lerner
and most all other socialists.
35 reviews
October 20, 2010
Up there with the Bible as one of the most misquoted books of all time? I strongly suspect that most people who believe themselves to be disciples of Adam Smith have never actually read this book. Adam had no time for theoretical economic models and doctrinaire dog-eat-dog free market dogma. He was an empiricist and a moralist who believed people should be given the opportunity to make the best of themselves, but that the most vulnerable members of society should be taken care of by the group. Hard going at times, but pick around the long sections on obsolete institutions of the day, and prepare to be surprised. By the way, the metaphor of "the invisible hand" - the most abused quotation of all - is mentioned once in passing within this enormous tome.
Profile Image for Dave.
232 reviews19 followers
July 13, 2012
Adam Smith’s “An Inquiry Into The Nature And Causes Of The Wealth Of Nations” (often called simply “The Wealth Of Nations”) is one of two great works from the Scottish economist and philosopher, the other being the lesser known “The Theory of Moral Sentiments”. “The Wealth Of Nations” was published on March 9th, of 1776, but there were additional editions in 1778, 1784, 1786, and 1789. I read the free Kindle version of “The Wealth Of Nations”, and while I do not recommend that version I do recommend the overall work.

The issues with the Kindle version are that it is poorly formatted, and it is painful to attempt to read the numbers in the tables at the of Book I. You are much better off getting a hard copy so that you can more easily flip to the section of interest, and to read the information in a better format. As for the rest, the content is all there, once you get past the poor formatting.

The work contains five books within. The first is “Of the Causes of Improvement in the productive Powers of Labour”. In this book he discusses the benefits of the division of labor, the origin and benefits of using money, a section on the “real” price of commodities (i.e. how much toil it takes to produce them), a discussion of the natural and market prices of commodities (the forces of supply and demand), the effect of controlling a commodity can have on the price, the wages of labor (again a case of supply and demand with the commodity of labor), the profits of stock, a discussion of the ill effects of groups who use their influence to manipulate the government (this would include banking conglomerations, trade unions, etc.), and closes with a section on rent.

The second book is “Of the Nature, Accumulation, and Employment of Stock” which deals with accumulating wealth which lasts a longer period of time. This book starts with how one divides their stock into what they need for personal use, and what they can dispose of in exchange for others available stock. He then moves into a discussion of money as a type of stock, and then how to use their excess money/stock to gain interest.

The third book is “Of the different Progress of Opulence in different Nations”, where he talks about the balance between the inhabitants of towns and those of the country areas and goes into how agriculture is discouraged over time, while cities and towns prosper.

The fourth book is “Of Systems of political Economy” in which Smith discusses the commercial system, along with importation which contains a detailed look at the effects of restraints on importation/exportation. Smith also discusses commerce treaties, and the role of colonies. This book also has a brief section on the agricultural system, but here he is referring to a specific system where the produce of land is the sole source of the revenue of a nation

The fifth book is “Of the Revenue of the Sovereign or Commonwealth” in which Smith deals with taxation. This is an important area to read and understand, as it is the one which many ignore when using Smith to try to support other areas. There are hints here of the progressive tax, as well as a discussion of the expenses of the nation, an important acknowledgement that the poor spend the greater part of their income on the fundamentals, such as food, and so he suggests luxury taxes as not unreasonable. Smith then closes the final book with a discussion of the costs of war, both for the actual fighting, and in terms of the loss of trade.
Profile Image for Петър Стойков.
Author 2 books268 followers
December 20, 2022
Тази книга е ГОЛЯМА не защото ще получите кой-знае колко много икономически познания от Адам Смит. Така или иначе, ако разбирате от икономика, нищо ново няма да видите в нея, а ако не разбирате - едва ли ще се хванете да четете над 1000 странична книга от 18 век.

"Богатството на народите" е важна книга заради простия език и елементарните примери, с които борави, за да покаже икономическите отношения и принципите, които те следват, като нещо съвсем делнично, нормално, житейско.

За болшинството хора, даже за много от завършилите икономика, самата икономика и икономическите отношения са нещо изключително сложно, пълно с графики, формули и други али-бали и те по никакъв начин не могат да свържат цялата тая какафония с това, което става в реалния живот и държавната политика. И именно заради това неразбиране на даже елементарни неща, се раждат идейни малформации като социализъм, антиблобализъм и др. опити да се "поправи икономиката".

Защото болшинството хора като чуят "пазарна икономика" не разбират, че тя не е нещо сложно, някаква измислица, "създадена за да се потискат бедните" или нещо такова - а просто нормалният начин на съществуване и функциониране на човешкото общество, в което всеки отделен човек има максималната свобода да избира какво да купи и какво да произвежда, на кого да даде парите си и как да ги харчи. Че не е наложена "от горе", та да бъде поправяна с политики, а идва от долу, от обикновения начин на отношение на хората едни към други, от изборът, който всеки човек прави всеки ден за това какъв хляб да си купи, примерно.

Точно това постига Адам Смит и затова книгата му е гениална за мен. Не защото е поставил основите на икономическата наука (макар безспорно да го е направил). Книгата му е ценна тук и сега, защото той отлично описва малките хора, с техните делнични, малки желания и стремежи, които заедно, но всеки за себе си, изграждат развиващия се свободен свят.

"It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages."
Profile Image for Michael Perkins.
Author 6 books356 followers
October 25, 2020
How the message of this book was falsified by removing an important chapter.

The entire edifice of modern mainstream economic theory has effaced the emphasis that enlightenment thinkers placed on economic fairness and accountability for corporate crime, thus legitimizing unfair, exploitative and often violent practices. A keystone is Adam Smith’s Inquiry into the Nature and Causes of the Wealth of Nations. This study has been used to support some of economics’ most comforting narratives, including the ideas of shared prosperity through enlightened self-interest and avoidance of corruption through minimizing government regulation. But this is a willful misreading of Smith enabled by a concerted exclusion of central aspects of his thought.

Many modern editions omit the entirety of Book V, Of the Revenue of the Sovereign or Commonwealth, in which Smith writes at length about the necessity of government intervention, and includes an account of the East India Company’s heinous abuses of monopoly privilege, including torture and coercion of Indians and the ransacking and looting of villages and palaces.

The result of the omission of Smith's chapter means that present economic theory, from undergraduate textbooks to received wisdom, is built on a lie. Corporations benefit from historically inaccurate theories about the ability of government regulation to improve public welfare, leading to an erosion of checks and balances and a reduction in corporate responsibility. The idea that a free market benefits everyone is, then, founded on a received theory that never existed, and the editing of Wealth of Nations is one of the most brazen knowledge heists in modern scholarship.

Profile Image for The Duke.
10 reviews2 followers
February 22, 2018
A text that's still relevant (and its main points still taught). The Wealth of Nations is far from a short read, but I feel like it's main points are pretty easy to sum up and since when they have been put into practice we have seen the results intended, it has maintained its importance.

Basically it states that producers are better off investing in capital and labor (creating a division of labor) so each laborer only has to specialize in one task, thus creating a far more efficient output. Ultimately specialization doesn't only increase speed and surplus (which can be traded for goods or exchanged for currency) but it also leads to further innovation, because the more familiar a person is with a task the easier it will be for them to find a way around it.

Next, self interest serves the economy as a whole, because the famous invisible hand will guide competitors to create higher quality products and offer better customer service because it's in their best interest. Avoiding these tasks or taking shortcuts will hurt them.

The market is more efficient than the government so the role of government should be limited to defense, infrastructure and education. Basically made it sound like the more centralized the decision are, the more harmful they can be towards the growth of the economy.

Ultimately, I'm happy I read this book. Whether you agree or disagree with a laissez-faire economy, it's good to read the source material.
Profile Image for 11811 (Eleven).
662 reviews139 followers
February 21, 2018
This is a pillar of western civilization but not much fun so don’t read it unless you have to. A Wiki should give you more information than you need to know. The 7 hour abridged Audible edition gave me more far more info than I needed or wanted. Thank God that’s over.
Profile Image for Mehrsa.
2,234 reviews3,657 followers
December 15, 2017
I think everyone who claims to be a free market capitalist should read this book so as not to over-do it
Profile Image for Naia Pard.
541 reviews82 followers
September 22, 2020
"Every tax, however, is to the person who pays it, a badge not of slavery, but of liberty. It denotes that he is subject to government, indeed; but that, as he has some property, he cannot himself be the property of a master." p.857 Madams et Messieurs, Adam Smith, the father of capitalism.

The first thing that intrigued me about this book (besides being the test of intelligence in one of the episodes of Killing Eve-seriously, at one point, Villanelle was disguised and the man in which home she infiltrated, tested her truth about having graduated with a diploma in philosophy/economics/social studies by asking her if she recognized “that book”—on the shelf was a penguin edition of An Inquiry into the Nature and Causes of the Wealth of Nationsy Adam Smith)

So, the first thing that intrigued me, aside from that little tidbit between brackets, was that it was published a few amounts before the US gained its independence. It was published in the spring of 1776. Imagine me reading a book in which the author kept referring to the USA as “our colonies” and me being: “oh, you got a thing or two coming your way”.

Do not imagine that by reading this book you are on your way towards Wall Street. It is more of a contemplative work, than a 101 guide to your financial brake trough.

The author does relay of his age`s statistics when making arguments, but “in that rude state” in which they found themselves (in comparison to us) things could only be of a basic nature. There was no bitcoin to throw around and make the trade even more complex than it already was. At that time, the rave was about CORN.
Yes. Corn.
I wouldn`t have guessed that corn meant so much for the eighteenth century. It was the material against which gold and silver was valued. If I were to sart a historical fiction, I know in what my character would invest.
However, it is surprisingly actual in some regards. Like the passages about taxes or rent. He explains the basics of it, and you can see how they would be applied in our age, too. Or why the soft power (diplomatic agreements) matters so much for the well being-the economical fairing of a country.
You would thing that you already knew a lot of the things presented, but often times I found myself ending a chapter and be like “huh. I guess, now I know why the world seems so f**** up”.

” The pretence that corporations are necessary for the better government of the trade, is whitout any foundation. p.135”

The voice of the narrator is down to Earth. He is poised and in the most parts he is not ready to razzle dazzle you with how much he knows over you and how you must be ever so grateful for having read him. Not like others (I am looking at you, Rousseau Jean-Jacques 1712-1778).

”The hog, that finds his food among ordure, and greedily devours many things rejected by every other useful animal, is, like poultry, originally kept as a save-all.”

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Profile Image for Emre Poyraz.
37 reviews34 followers
February 9, 2011
I would say that this is the most overrated book in economics. That does not mean that this book is without its merits, but I was definitely frustrated. Let me tell you why:

1. Smith, in various places in the book, criticizes merchantilists and others. However, since the average reader (even the average economist) has no knowledge of merchantilists and physiocrats, all his comments SEEM correct, whereas in fact they are just simplistic and unfair (merchantilists never confused wealth and money, and physiocrats invented many important concepts in economics and public finance). So, lots of great economics books (think of John Steuart or Sir William Petty) were simply ignored.

2. Smith never quoted another writer. It is because he invented economics by himself? No... it is because he never bothered to give references, "forgot" to mention what he took from other great writers, especially the physiocracts. Thus, the book gives a false impression that he is MUCH more original than he actually is.

3. He did not invent free markets, market economy, or economics. Period. He is not a liberal, or even a liberal economist. Yet, he is claimed to be the founder of economics (labelled "classical" economics). Considering that there were economists before him, what makes him the father of anything? Simple answer: because economists do not read historically important works in economics, they just quote Smith.

(I could just go on and on, but there is no need to).

Let me simply say that if you want to get informed about the history of economics, start with the merchantilists. If you want to learn about modern economics , the true founding father of modern economics is Jeremy Bentham. He is the true inventor of homo economicus.

If you think that this book is pointless and boring, you are mostly right.
Profile Image for J.
194 reviews89 followers
March 26, 2021
Like swallowing a sponge, but helpful if you can stomach it.
Profile Image for Stephen.
1,516 reviews11k followers
August 30, 2008
4.0 stars. I read this on my own in law school. I know, I know, who does that right? Well I obtained this as part of my Easton Press colleciton of "Books That Changed the World." I remember being really intrigued by the book and it made me more interested in the history of economics.
Profile Image for Bradley.
Author 6 books3,966 followers
July 20, 2021
After more than half a lifetime of being told that Adam Smith was one hell of a brilliant man and he should be a must-read for anyone wanting to understand what capitalism really means, I FINALLY went ahead and READ Wealth of Nations.

Okay. So I'm a bit late for the party. I've read the Kensians and I've read tons of books on how the Chicago school really f**ked up so many developing nations and I've been a student of the stock market, global economy, and how it directly ties to history. It's a hobby. I learn a lot.

So, was Adam Smith this horribly dry Englishman from the time of the American Revolution that liked to drone on about business?

Hell, no. Or rather, he was a contemporary and he was a student of business and trends and markets, but he was also a very good writer, continually interesting, conversational, and frankly brilliant in the way that a great mentor or teacher ought to be.

And it is brilliant. No doubts about it. But let's keep it real. This is about the Invisible Hand of the marketplace. He illustrates how neither workers nor employers can dictate economic conditions. Putting one's finger on the conditions can lead to serious imbalances and overcorrections.

Of course, he was illustrating these ideas hundreds of years ago and since that time there have been thousands of people attempting to argue or disprove the premise or at least to game the system in such a way that they can pretend to be economic magicians.

But the fact is this: without outside shenanigans, coercion, or fraud, Adam Smith's observations are still as valid now as they were back then.

My favorite takeaway: the Scottish banks and how they began lending out more money than what they had on hand because people were gaming the exchange rates of gold in other countries, and how gold prices, even though they OUGHT to have been stable as a guide of value, suddenly proved to be quite unreliable. And that's not even bringing up the mines and new gold.

This has been an ongoing issue in modern economics, the question of fiat versus gold standard. And it also discusses the fundamentals of fractional reserve and debt-based liquidity. Not in great detail, mind you, but the successes of stocks, freer investments, and trust really underlined the spirit of the markets and even more for the system we have today.

Not surprising, I know. For all the people who keep quoting him and all the people who have probably never read him, he's bandied about as the father of economics. Interestingly enough, now that I've read it, I note that there are a lot MORE people who read into him a lot of heavier conclusions than he would have made, himself.

He was the first to admit that trying to strangulate the market by trusts and coalitions of market makers always tend to create massive upheavals, poverty, and violence. Let me restate that: people who try to game the system in big ways are the very ones who cause the whole system to go belly up.

Profit is natural. So is loss. When systems are created to limit one and enhance the other, it capitalizes and consolidates the inequality. When the Invisible Hand comes, it comes down hard.

That's a natural correction, folks.

This isn't a question of Marxism or Capitalism. Indeed, this is older than either. It's just a natural observation of economics and people.

This review is not a comprehensive review, mind you. I was pretty much enthralled by the read. I learned a lot even if it just overlapped with all my previous studies. But best of all, I think it's a fantastically good and easy read. It's good enough that I don't want a break. I'm moving right on to another of Adam Smith's books right away.

Profile Image for Saeed.
173 reviews53 followers
May 19, 2017
کتاب تعداد صفحاتش زیاده و شاید به صرفه نباشه که بخونیدش، ولی اگه بخوام بگم آدام اسمیت عمرش رو صرف نوشتن این کتاب کرده (ازدواج نکرده و استاد دانشگاه بوده انگار) کتابی که پدر علم اقتصاد نوشته، باعث به وجود آوردن لیبرالیسم شده است
این از دلسوزی قصاب، آشپز یا نانوا نیست که، شام خود را توقع داریم، بلکه از توجه آنان به نفع شخصی خودشان است. توجه ما به خود ماست، نه به انسان دوستی آنان، بلکه به خودخواهی آنان و هرگز با آنان درباره‌ی نیازهای ضروری خود نمی گوییم، بلکه از مزیت های آنان سخن می گوییم

کتاب پر از تاریخ و عدد است و خیلی کند جلو می رود، خیلی سنگین است و مثل دایره المعارف است. اسمیت می گوید بازتاب زیبایی بازار این است که خود حافظ خود است و بازار که اوج آزادی اقتصادی فرد است، سخت گیرترین تمام کارفرماهاست.

به نظر من هر کسی میخواهد ثروتمند شود باید این کتاب را بخواند؛ حالا این که تعداد صفحاتش زیاده بهتون پیشنهاد میدم که به جای این که 5 کتابش رو بخونید 3 کتاب اول را بخوانید؛ که به فارسی هم ترجمه شده است؛ به نظر من جز باید های مطالعاتی است. در زیر لینک دانلود 3 کتاب اول ثروت ملل رو میارم


دو کتاب آخر انگار به فارسی ترجمه نشده اند
Profile Image for SeyedMahdi Hosseini.
119 reviews68 followers
July 24, 2020
در این کتاب به طور بسیار خلاصه با چند تا از تئوریهای اقتصادی مهم آدام اسمیت آشنا می‌شوید. اهمیت آن در این است که به ادعای مترجم بخشهایی از کتاب «ثروت ملل» ترجمه شده که قبلا ترجمه نشده بود.
Profile Image for Garret Macko.
187 reviews42 followers
January 11, 2021
While there are any number of ways that a book can be read, there are a few that come to mind first, and they are probably the most common angles from which readers digest the books they read. First, there is reading that comes from an academic perspective—this ranges from a high school English class’s reading of To Kill a Mockingbird to a professor of literature’s laborious and systematic study of Moby Dick. Next, there is reading that comes from a non-academic utility-based perspective like, for example, books on personal financial management. And last but certainly not least, reading that takes place for personal enjoyment. Sometimes, we read books and satisfy all three; sometimes, it’s simply one or the other.

Let me start by saying that if you read The Wealth of Nations strictly for fun, in the way that someone reads popular science, fiction, or romance, you’re either out of your mind or a special kind of genius—perhaps a very healthy combination of the two. I love to learn: I find it very enjoyable. In that sense, reading the Wealth of Nations was...fun. But in every other sense it definitely wasn’t akin to riding a rollercoaster or any other number of enjoyable and exciting things. The same, however, I think, does not apply to Smith’s moral treatise, The Theory of Moral Sentiments, and I say that as a non-genius, average guy, who admittedly might be slightly out of his mind—at least insofar as finding The Theory of Moral Sentiments “fun” can classify someone. But I’ll make my way back to this point later.

My reading was primarily centered around the non-academic utility-based perspective, which meant parsing out the normative from the descriptive; and believe me, there’s a lot of descriptive information. Take, for example, his nearly 150 page “digression” on the historical price, trade, and laws surrounding corn. As I type those words, confetti and balloons begin falling from my ceiling—I guess it wasn’t so shabby after all. But seriously, while the corn digression possesses some useful and interesting kernels (intentional and without shame) of insight for readers in the year 2021, it’s loaded with tons of other information that, for casual readers, doesn’t impact their lives in any way, shape, or form. And that’s perfectly fine—economies, after all, are constantly changing. I had a great economics professor at community college who frequently reminded me that when surveying the past for fundamental truths, particularly those that can be understood in the field of economics, what really mattered was being able to look beyond the circumstances and particularities surrounding a topic to its core, to its underpinnings and the philosophical mechanisms through which it moved. And the excellent news is that there are an abundance of fundamental truths and concepts that readers can draw from The Wealth of Nations. Smith’s opus may advocate for some antiquated strategies, some of which may not have been right to begin with, but at the core of each is a method of reasoning through problems from which a wealth of knowledge can be amassed; knowledge with an impressive amount of practical import and timelessness. Most notably, I think, is the conceptual tracing of the division of labor as well as the notion that all value can ultimately be reduced down to the labor through which it came about. While I think these are some of the more enduring economic principles presented by Smith, I also think they present an immense deal of merit simply from a methodological standpoint. Because of the dynamic nature of our world and the erratic behavior of us humans, I’m typically very skeptical of meta-narratives and cookie-cutter theories that purport to solve/dissolve the problems of humanity, but that’s not to say that I’m completely opposed to the idea that there are certain indefeasible principles and building blocks from which we can begin general assessments. I am personally disposed to agree with some of those that Smith presents, namely the propensity to exchange and a sense of self-interest or preservation. Surrounding the question of why some nations are rich and others aren’t, you’ll also find topics such as an argument against mercantilism and the inadequacies of the balance of trade, the origin and concepts behind currencies, and much, much more.

Which brings me to my final point, one which has been remarked on extensively, but is also something that I myself wanted to offer my $0.02 on. I think that we all can agree that capitalist societies are deeply familiar and even perhaps entrenched with the idea that consumers can buy their way to happiness. A fair amount of reason and empirical observation reveals to us that it’s not that easy: we can’t buy our way to the good life. But I think there’s much more to it than that. Smith’s ideas have often been misinterpreted/misrepresented and wielded by anti-capitalists in an attempt to paint free market economics as a mean and cruel system that will only ever be able to exploit the poor. They love to cherry pick lines and passages, severing their connection to the overarching ideas from which their meaning arises. And so people hear Smith say in The Wealth of Nations that “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest. We address ourselves not to their humanity but to their self-love, and never talk to them of our own necessities, but of their advantages” and automatically think that the mechanisms of capitalism rely on malevolent selfishness, failing to recognize that there exists an economically optimal, morally good place in between pure selflessness and unempathetic egoism, they fail to account for the fact that, as Smith eloquently states in the opening line of his moral treatise, The Theory of Moral Sentiments, “How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it.” All of Smith’s work relies on this idea, that human beings are necessarily self-interested, but that empathy and fellow-feeling are necessarily constituent of self-interest; it is a part of human nature. This is the space in which societies can stand strongly and say “we can, through our habits of consumption, move the needle that defines the world in the right direction.” I think Smith presents a compelling case for the idea that free enterprise can empower individuals and better the world, that capitalism can continually evolve to better reflect our shared humanity. So while I do think that we certainly can’t buy our way to the good life, I also think that consumer capitalism and free enterprise can optimize the conditions which best facilitate it, affording individuals’ autonomy and the freedom of choice. These remarks bring me into the jaws of what is maybe one of the greatest debates of all time—one that I’m probably too underqualified to deeply engage in, but one that I nonetheless have an opinion on. An opinion which, of course, may be revised over time.

As noted above, I think that Smith’s earlier work, The Theory of Moral Sentiments, is brilliant. It was so profoundly earth-shattering that after initially reading it, I couldn’t tell if it was brilliant or crazy: I quality I’ve found pervades some of the best books. The prose is flowing but not flowery, and his arguments are unique, rigorous, and human. If you could only read one or the other, I’d recommend you go for The Theory of Moral Sentiments. But don’t overlook The Wealth of Nations—it has much to offer. Like extended discussions on the trade of corn *Get Ready For This begins playing, disco lights shoot in every direction, and confetti and balloons once more begin falling from the ceiling*
Profile Image for Xander.
420 reviews141 followers
December 11, 2017
Whoa! I'm actually finished with this thing! It took me three days off and some evenings of fully committing myself to reading this monster. But I'm not disappointed, not in the least.

Adam Smith's most famous book (but maybe not his most important, read on) The Wealth of Nations (published in 1776) comes in two volumes and spans more than 1000 pages. Smith is a gifted writer and a brilliant scientist, and this shows on each page: the book is (surprisingly) written very well, for an eighteenth century book.

So what is it about? Basically, it's Smith's sociological study of economics. He uses various methods to accomplish this magnificent task: collecting tables of prices of grain (i.e. quantitative analysis), comparing different countries (i.e. comparative analysis), applying logic to problems (i.e. qualitative analysis). In short, Smith is the first philosopher that applied the scientific method - finding correlations between phenomena with quantitive analysis and then explain this by causal mechanisms with a theory - to the economy. He is definitely the first economist.

(I cannot help but remark that The Wealth of Nations reminds me of Montesquieu's d'Esprit de Lois, in which Montesquieu did something similar. Montesquieu tried to explain law in terms of sociological factors. Although Smith makes a much stronger case and his book is much more convincing because of the use of quantitive data and a much more rigorous, less speculative approach. But maybe it's unfair to compare the two and I should just end by saying that Smith did for economics what Montesquieu did for law).

For Smith economics boils down to the market. This is more than a superficial analogy (in his childhood, Smith's window looked out on the marketplace), for Smith all of economics is the continuous interplay between supply and demand. This mechanism is the infamous 'invisible hand'. We all try to satisfy our needs and lead happy lives, and in doing so interact with other people. Others have things we desire and we need to work together to accomplish goals. Out of this interplay emerges the market: the correlation between supply and demand of goods and services leads to particular prices.

Because situations of pure barter (trading bread for wine, for example) are scarce, an artificial means of valuing different commodities relative to each other is invented: money. Money will become the oil that makes the machine run smoothly. We save some and buy what we want later on. For Smith, money is the means by which we cooperate with other human beings. Focusing on the value of money is, according to Smith, the wrong way to look at things - we should focus on what money can buy. In other words purchasing power is the tool to use in economics.

It is surprising that Smith is known as that old, die hard capitalist for whom egoism is the spring of everything. This was my conception of Smith before reading The Wealth of Nations, and it's a conception one comes across frequently. After closing this tome, though, I have to correct this view. Smith advocates economic cooperation to accomplish goals. We all want things and desire goods and services; only by working together - worldwide - can we assure that each gets his or her share. So, Smith advocates egotism (striving to fulfil your desires), but at the same time he offers cooperation as the means to this. Capitalism is worldwide cooperation.

In this sense, Smith is the first marketeer. Nowadays, marketing is a specialized profession, but for Smith marketing is the only road to success. We should not look at what people produce, but at what people actually want: demand should determine production and not vice versa. This is why governmental tactics to artificially boost productions (by subsidizing the production of certain products or punish certain products of competitors) will lead to disasters - it distorts the market mechanism that ensures 'to each his or her own'. According to Smith, this way of looking at economics is the only road to success. Any other road will lead to unnecessary suffering and to the (relative) loss of one's competitive force.

Of course, one can add countless caveats to this, but one shouldn't lose Smith's objective while doing so. The Wealth of Nations is one big tirade against monopolies, mercantilism, and corporatism. For Smith, any governmental intervention or artificially created advantages are dangerous. It is in this light that one has to read Smith. This can be viewed as 'die hard capitalism' but (in my opinion) this is a shallow objection... The only (workable) alternative is socialism, in which someone or some party decided who gets what and who works where. Of course there are more options, but they all fall on the continuum between Smith's liberalism and Marx's communism - the only (political) question is how much the government distorts which markets.

But back to Smith. In the eighteenth century a handful of European nations dominated the world. For example, England still possessed her North American colonies while Smith was writing this book and Portugal and Spain possessed almost all of South America. This created a situation of monopolies. Spain and Portugal possessed most of the world's mines of gold and silver. This led to both countries owning all the gold and silver that was brought on the market. This looks beneficial, but Smith manages to show that in doing so, Spain and Portugal deflated the prices of gold and silver, making it cheaper for the other European countries to buy gold and silver and dearer for Spain and Portugal to buy consumable goods.

In the case of the American colonies, England created a monopoly of all the trade with these lands. This led, first of all, to smuggling (something Smith stresses time and time again) and, more importantly, to the fact that England had to pay dearer for the goods that were being traded. By knocking out all competition, England created artificially high prices for American goods. But this wasn't all. Since England needed all of her ships in the colonial trade, other European countries could specialize in the West Indian and inter-European trade, earning all the money and leaving England with nothing to show for it.

Another major market distortion in Smith's time was slavery. Alexis de Tocqueville, in his Democracy in America (1841), wrote that the Southern states have a characteristic lazy style. He traced this economic laziness to the institution of slavery. Owners of capital possessed an infinite amount of (almost) free labour; this led, according to Tocqueville, to the mindset of irresponsible economic behaviour. Southern Americans weren't (aren't?) motivated to produce anything or to seek means of increasing productivity; they could let others work for them - for free. Northern Americans had the economic incentives to work hard and seek means of increasing productivity - economically, they had to rely on themselves. This, Tocqueville noted, was the main difference between Northern and Southern Americans and the cause for the differences in wealth.

Applying Smith's thinking to slavery: it distorts the market by creating an infinite, cheap (free) labour force. This leads to artificially low prices of production costs, but also destroys the incentive to innovate and seek increased labour productivity. The slave has no reason to work hard (let alone, harder); the master can only increase productivity by punishing, but this will not result in real gains of productivity and has to be kept up at all time. At the same time, the owner of capital (i.e. the slave owner) gets a maximum amount of profit without doing anything. This will lead to distorted market prices for the goods.

One can summarize the whole of Smith's conception of economics in a few sentences. The price we pay for the products we buy, has to incorporate all the real values of the labour, capital and rent involved in producing these products. If one or more factors become distorted, this will show itself in the relative price of the products we buy. Clothes bought from H&M can be sold cheap to us, Westerners, because in Asia children will work long days in horrible conditions to produce these clothes. Smith would see this as a market distortion; somehow, there is no channeling of the (horrible) labour conditions into the market price. This can be solved by working on the demand side of the equation: we, as consumers, should be informed about these conditions, so we can either buy these same clothes in the knowledge that we support child labour, or else to make us buy other clothes, leading to a gradual change in working conditions for the people producing our clothes.

Smith's message is clear: any intervention in the market will lead to disaster. Governments should be small and focus on their core tasks: (1) offering society safety from foreign invasion, (2) distributing justice within their territory, and (3) making sure that the public works run smoothly (public education, roads, canals, etc.). These public expenditures should be localized as far as possible, since this will garantuee a situation in which one or more people actively participate in the project and make it their responsibility that the project works the way it is supposed to. If one wants to change the conditions of classes of people or individual people, one has to make them become 'worth more' to capital: developing new skills, learning new knowledge, etc. For Smith, this is the only way up, all other ways will lead to suppression. Demand determines production.

I will add some more thoughts on the book later on. For now, this is all I can come up with. It needs more time to click into place. I would have given this book five stars - for me its on par with Darwin's Origin of Species and Newton's Principia - were it not for the long and tiresome second volume. After reading 700 pages, just when you're almost able to breathe, you'll get bogged down in technicalities on government, public revenue and debts... Smith is so extensive and meticulous, that often one encounters endless digressions on, for example, the prices of grain in the past six centuries. If the book was 25% shorter and slightly less long winding, I might have given it the full five.


Additional thoughts on Smith's ideas on public works, taxation and public debt (mainly book 5).

In Book 5, Smith is mainly concerned with explaining wherin consists public revenue. In other words: what institutions should be publicly funded? In essence, this boils down to four institutions. Public revenue, through taxation, should be used to (1) defend the nation with the use of a professional military force; (2) to keep up an impartial judiciary system that regulates society, garantuees the reliability of contracts, etc.; (3) to ensure a certain level of infrastructure (roads, canals, etc.), preferably with personal/regional responsibility; (4) and public education.

Smith is a realist, since he recognizes that private projects (like private education) are often qualitatively better than publicly funded altnernatives, yet without the garantuee of public defence, justice, infrastructure and education, society would degrade into anarchy. For Smith, public education is important, since it teaches human beings to value truth and to make them resistant to the rallying cries of monopolistic institutions (like the church).

A public infrastructure is, for Smith, the only solution to the 'tragedy of the commons' in which a commonly shared project lacks a person responsible (and thus liable) for the upkeep of the project, leading to the exhaustion of the shared means. Yet, Smith realizes his solution - public works - leads to debates about fairness. His answer, as with almost anything else in The Wealth of Nations, is proportionality. The user pays, leading to a system of proportional taxation that varies with use.

How does Smith want to pay all this? Smith's conception of taxation is liberal, meaning that he seeks the answer to economic problems on the consumer side of the equation - instead of government intervention on the production side. In general, Smith favors tax on property (i.e. land) and stays away from other means of taxation. This is pragmatic (i.e. less liable to corruption by hiding profit, income, etc. from the government), but also more fair: the landlord will delegate the government's tax on land to the person or family renting his land. So the consumer pays, and pays inversely proportional to the rent he or she pays the landlord.

Yet, the problem with Smith's way of collecting taxes is that his system is founded on a society in which land is the property of a small number of families. Nowadays, in most Western countries, most people own small pieces of land, leading to a problem of collecting enough money (let alone the expenses necessary for a public registration of all private property). But maybe this problem is impossible to solve, if we want to keep to Smith's valuation of a free market (at least as free - from artifical intervention - as possible).

Smith notices that - at least in his time - states would incure huge public debts by going to war (some countries almost perpetually). This notion is a popular one, for example it is clear that one of the major causes of the French Revolution was the bankruptcy of the French state, which was in itself mainly caused by the many wars France fought in the 18th century. England incurred huge debts by trying to defend its colonies and the state of Holland used a fair sum of money to upkeep its trade army. Smith sees that waging war by taxation takes away the motivation of the people necessary for the war. In other words, no cannon fodder in a war based on taxation. To overcome this problem, governments take loans from rich individuals, who are themselves better off in a safe and just society. Since governments are so important, not to mention durable, they are able to take loans against highly favorable conditions. In other words, the government sells bonds to finance its wars. (One should only look at the modern day USA to see Smith's point - the US government own trillions of dollars due to the wars it fought the last decades.)

So, to sum up, we see that Smith is in favour of public defence budgets, a public system of justice, public education and public infrastructure. This is a totally different conception, compared to contemporary mainstream conceptions of Adam Smith as a die-hard capitalist, who thinks everyone should just fend for themselves. True, Smith is highly critical of debts, taxes and public funding, and he in general promotes individual freedom and maximum rights to the fruits of labour. Yet, this is only healthy, since democracy has the tendency to corrupt people's minds in a peculiar way. We all vote for politicians who promise us to take money and derive rights of OTHER people, in favour for our OWN goals and freedom. We, for example, vote for politicians who finance our own valued projects by levying (higher) taxes on our fellow human beings. This is highly paradoxical and problematic, and the only answer to the problem is limiting governmental intervention as far as possible - all the while keeping human rights in sight.
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March 17, 2022

It is clear why this classic work is considered the milestone of Economics. Adam Smith seeks to comprise in a single work all the relevant economic phenomena of his time, describing them in detail and extracting fundamental insights, laws and general conclusions of Economics, many of them used until today. The result is an enormous work both in importance and in extension. The vast quantity of information gathered attest to Smith’s genius and his incredible research.

It is therefore a comprehensive work, though surprisingly easy to read (not necessarily pleasant most of the time), and conducted with sobriety and pondered narrative. Smith has a long-winded style, as can be expected of any author of that era, and he digs deep into many explanations of issues relevant solely to that time, also deviating from the strict economic theme on and off. However, it is worth reading the entire work to follow his rationale, and because general insights and brilliant passages appear here and there abundantly and not very systematically.

The author starts out with magisterial conjectures about productivity and division of labor (the famous example of the pin factory), going through many examples of commercial practices of the time governed by the law of supply and demand, digressions on the value of goods and gold and silver, land use, manufacture, the role of banks, productivity, subsidies, the mercantilism, the commerce of the European nations with colonies all over the world, taxation, public debt, among others.

It is undeniable that the work leans in the direction of freedom to exercise economic activities in the face of State laws, the importance of competition and the harm provoked by monopolies and collusion between entrepreneurs, the benefits of foreign trade, and the importance of simplifying taxation — concepts which are still quite modern. It is very important to emphasize Smith’s sharp (and minimalist) view of the functions a State must focus on to contribute to the wealth of the nation: (i) defend its people from foreign offenders; (ii) create and administer an exact system of Justice; and (iii) create and maintain works and institutions which are important for the society but lack incentives for individuals to endeavor due to the lack of profits. Good political institutions, by the way, were the cause of prosperity of the English colonies (so it seems that modern institutionalists descend directly from Smith).

Smith, however, was a broad thinker and sought to capture the economic phenomena in a complete way — something that most modern economists clearly abandoned when narrowing the object of study with excessively simple theoretical premises, on the one hand, and extremely complex execution via mathematical elaboration, on the other.

Smith analyzes the functioning of economic systems from 100% practical topics, distancing his focus from the individual and his subjectivities, since years earlier he had written the Theory of Moral Sentiments in this regard (see my review: https://www.goodreads.com/review/show...). The distinctive features of economic reasoning are there: investigation of causes and effects of broad collective phenomena with economic content, opportunity costs, and economic side effects of actions or measures originally intended to meet specific objectives. The famous “invisible hand” image he became so famous for plays an important role in this aspect, though it expressly appears only once at the middle of Book Four. For Smith, economic agents acting in the markets pursuing solely their own interests are taken as if by an “invisible hand” and end up benefitting the public. The image appears in fact with more strength — though Smith does not mention the term — at the beginning of the book, in the famous passage in which he posits that the products and services we need are produced and provided not due to the producers’ and providers’ benevolence and sympathy for our needs, but because they pursue their own interests in profiting with their economic activities.

Although Smith does not focus his study on individual subjectivities (which ultimately is the original unit of the economic phenomena), but rather occupies himself in explaining economics as a system, it is interesting to read some rare passages in which he takes such subjectivities into account, such as the one on excessive work as a cause of occupational diseases. An unsuspecting reader might think this is a modern author discussing the excesses of workload in modern liberal society and the corresponding need to preserve the workers’ health against burnout!

It is no surprise that someone from Great Britain in the 1700s brought together the most advanced economic thought of the time. The country was excelling in the leadership of the world’s economic scenario. It was the beginning of the industrial revolution, the economy was heating up and gaining complexity. Smith, however, still ranks agriculture as the most economically productive activity, putting manufacturing in second place. Agriculture had developed nations and allowed manufacturing to exist. It is even notable the defense he makes of the US to focus on agriculture to continue developing. For him, it would be a mistake if the US intended to seize the trade in manufactured goods hitherto imported from Great Britain, as it would divert resources from agriculture, which was developing the US, and channel them into an activity that would delay its development. Although one could accuse the existence of a perhaps more geopolitical rather than technical-economic base in this argument, the fact is that it is consistent with his defense of the superiority of agriculture in terms of economic productivity.

Interesting to note, though, that Smith, in an apparent contradiction, acknowledges in the book Introduction that rich nations generally outperform others in both agriculture and manufacturing, but are distinguished more by their superiority in manufacturing, once it implies greater division of labor. If having more manufacture promotes greater wealth, how would the US option to develop its manufacture delay its development?

Another point which calls attention is that Smith’s main criticism against mercantilism — the fact that it was co-opted by so many private interests which successfully created market protections and privileges — is exactly one of modern capitalism’s main problems too. Also, his critique that mercantilism was wrong in preaching surplus in foreign trade as a sacred rule is also criticized by those who sustain that Great Britain thrived and won international trade by doing exactly that.

Finally, it is interesting to note the work’s lack of a conclusion. Smith covered so many issues that putting a general conclusion together would certainly be impracticable. He finishes it with a sharp defense of Great Britain to get rid of its colonies insofar as they did not contribute with revenues to the British Empire and required defense expenses in wars.

It is true that Smith spends so many lines detailing bureaucratic and certainly dated, episodic issues, providing figures on interest rates, tax collection and historical and contemporary prices even from other countries. This is understandable, however, as it seems that he set out to cover all economic topics and perhaps put together the greatest economics guide of the time. Also, he did not have a crystal ball to know what would stand the test of time. Of course, this is a critique from someone reading the work in his comfortable armchair nearly 250 years later, in an entirely different world. The work, however, has stood the test of time very well, as it brings general economic insights that are fundamental and still applicable today.


Fica claro por que essa obra clássica é considerada o marco da Economia. Adam Smith procura reunir em uma única obra todos os fenômenos econômicos relevantes de seu tempo, descrevendo-os em detalhes e extraindo insights fundamentais, leis e conclusões gerais da Economia, muitos deles utilizados até hoje. O resultado é um trabalho enorme tanto em importância quanto em extensão. A grande quantidade de informações coletadas atesta a genialidade de Smith e sua incrível pesquisa.

É, portanto, uma obra abrangente, embora surpreendentemente fácil de ler (não necessariamente agradável na maior parte do tempo), e conduzida com sobriedade e narrativa ponderada. Smith tem um estilo prolixo, como se pode esperar de qualquer autor daquela época, e ele se aprofunda em muitas explicações de questões relevantes apenas para aquele tempo histórico, desviando-se também do estrito tema econômico de vez em quando. No entanto, vale a pena ler a obra inteira para seguir seu raciocínio, e porque insights gerais e passagens brilhantes aparecem aqui e ali de forma abundante e não muito sistemática.

O autor parte de magistrais conjecturas sobre produtividade e divisão do trabalho (o famoso exemplo da fábrica de alfinetes), passando por muitos exemplos de práticas comerciais da época regidas pela lei da oferta e da procura, digressões sobre o valor das mercadorias e do ouro e prata, uso da terra, manufatura, o papel dos bancos, produtividade, subsídios, o mercantilismo, o comércio dos países europeus com colônias em todo o mundo, tributação, dívida pública, entre outros.

É inegável que o trabalho se inclina na direção da liberdade de exercício das atividades econômicas em face das leis estatais, a importância da concorrência e os malefícios provocados pelos monopólios e conluios entre empresários, os benefícios do comércio exterior e a importância da simplificação da tributação — conceitos ainda bastante modernos. Muito importante ressaltar a visão aguçada (e minimalista) de Smith sobre as funções que um Estado deve focar para contribuir com a riqueza da nação: (i) defender seu povo de ataques estrangeiros; (ii) criar e administrar um sistema exato de Justiça; e (iii) criar e manter obras e instituições importantes para a sociedade, mas que não apresentam incentivo para empreendedores individuais se aventurarem dada a falta de lucro. As boas instituições políticas, aliás, foram a causa da prosperidade das colônias inglesas (pelo visto, os institucionalistas modernos descendem diretamente do Smith).

Smith, no entanto, era um pensador amplo e buscava captar os fenômenos econômicos de forma completa – algo que a maioria dos economistas modernos claramente abandonou ao estreitar o objeto de estudo com premissas teóricas excessivamente simples, por um lado, e execução extremamente complexa via elaboração matemática, por outro.

Smith analisa o funcionamento dos sistemas econômicos a partir de tópicos 100% práticos, distanciando seu foco do indivíduo e de suas subjetividades, pois anos antes havia escrito a Teoria dos Sentimentos Morais a esse respeito (v. minha revisão: https://www.goodreads.com/review/show...). As características distintivas do raciocínio econômico estão aí: investigação de causas e efeitos de fenômenos coletivos amplos com conteúdo econômico, custos de oportunidade e efeitos colaterais econômicos de ações ou medidas originalmente destinadas a atingir objetivos específicos. A famosa imagem da “mão invisível”, pela qual ele se tornou tão famoso, desempenha um papel importante nesse aspecto, embora apareça expressamente apenas uma vez no meio do Livro Quatro. Para Smith, os agentes econômicos que atuam nos mercados buscando unicamente seus próprios interesses são tomados como que por uma “mão invisível” e acabam beneficiando o público. A imagem aparece na verdade com maior força — embora Smith não mencione o termo — no começo do livro, na famosa passagem na qual ele menciona que os produtos e serviços de que nós precisamos são produzidos e fornecidos não pela benevolência e simpatia dos produtores e fornecedores com nossas necessidades, mas porque eles buscam seus interesses próprios em lucrar com suas atividades econômicas.

Embora Smith não concentre seu estudo nas subjetividades individuais (que, em última análise, é a unidade original dos fenômenos econômicos), mas se ocupe em explicar a economia como um sistema, é interessante ler algumas passagens raras em que ele leva em conta tais subjetividades, como a do excesso de trabalho como causa de doenças ocupacionais. Um leitor desavisado pode pensar que ele é um autor moderno discutindo os excessos de carga de trabalho na sociedade liberal moderna e a necessidade correspondente de preservar a saúde dos trabalhadores contra o burnout!

Não é surpresa que alguém da Grã-Bretanha nos anos 1700 tenha reunido o pensamento econômico mais avançado da época. O país se destacava na liderança do cenário econômico mundial. Era o início da revolução industrial, a economia estava aquecendo e ganhando complexidade. Smith, no entanto, ainda classifica a agricultura como a atividade economicamente mais produtiva, colocando a manufatura em segundo lugar. A agricultura desenvolveu as nações e permitiu que a manufatura existisse. É até notável a defesa que ele faz dos EUA em focar na agricultura para continuar se desenvolvendo. Para ele, seria um erro os EUA pretenderem apoderar-se do comércio de manufaturados até então importados da Grã-Bretanha, pois desviaria recursos da agricultura, que estava desenvolvendo os EUA, e os canalizaria para uma atividade que atrasaria seu desenvolvimento. Embora se possa acusar a existência de uma base talvez mais geopolítica do que técnico-econômica nesse argumento, o fato é que ele é consistente com sua defesa da superioridade da agricultura em termos de produtividade econômica.

Interessante notar, porém, que Smith, em uma aparente contradição, reconhece na Introdução do livro que as nações ricas geralmente superam as outras tanto na agricultura quanto na manufatura, mas se distinguem mais por sua superioridade na manufatura, uma vez que esta implica maior divisão do trabalho. Se ter mais manufatura promove maior riqueza, como a opção dos EUA por desenvolver sua manufatura atrasaria seu desenvolvimento?

Outro ponto que chama a atenção é que a principal crítica de Smith ao mercantilismo – o fato de ter sido cooptado por tantos interesses privados que criaram com sucesso proteções e privilégios de mercado – é exatamente um dos principais problemas do capitalismo moderno também. Além disso, sua crítica de que o mercantilismo estava errado ao pregar o superávit no comércio exterior como uma regra sagrada também é criticada por aqueles que sustentam que a Grã-Bretanha prosperou e se destacou no comércio internacional fazendo exatamente isso.

Por fim, é interessante notar a falta de conclusão do trabalho. Smith cobriu tantas questões, que reunir uma conclusão geral certamente seria impraticável. Ele termina com uma forte defesa da Grã-Bretanha em se livrar de suas colônias, na medida em que não contribuíam com receitas para o Império Britânico e exigiam despesas de defesa em guerras.

É verdade que Smith gasta muitas linhas detalhando questões burocráticas e certamente datadas, episódicas, fornecendo números sobre taxas de juros, arrecadação de impostos e preços históricos e contemporâneos, mesmo de outros países. Isso é compreensível, no entanto, pois parece que ele se propôs a cobrir todos os tópicos econômicos e talvez estabelecer o maior guia econômico da época. Além disso, ele não tinha uma bola de cristal para saber o que resistiria ao teste do tempo. Claro, esta é uma crítica de alguém lendo o trabalho em sua poltrona confortável quase 250 anos depois, em um mundo totalmente diferente. O trabalho, no entanto, resistiu muito bem ao teste do tempo, pois traz insights econômicos gerais que são fundamentais e aplicáveis ​​ainda hoje.
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