The Wealth of Nations
The Wealth of Nations confirms the old adage, that a “classic” is a book that everybody’s heard of and nobody’s read. In the case of this classic, that fate has undoubtedly been assisted by its being, at 950 pages in modern print (in the Glasgow edition), a very large work.
The book is itself divided into five books. The first is concerned with the pricing of commodities and the functional distribution of income (most particularly, wages, profits and rents); though importantly, it opens with three chapters on technical change and labour productivity growth (“division of labour”). Book II examines capital accumulation and economic growth. Roughly speaking, these first two books together, amounting to a little under two-fifths of the text as a whole, constitute Smith’s core economic theory. Books III to V then consider successively: the actual historical course of economic development in Europe, contrasted with the “natural” course of development; the actual policy regimes in place in Europe (“the mercantile system” or mercantilism), with a final chapter here also evaluating Physiocracy; and, finally, public finance at great length (259 pages in the Glasgow edition).While Smith is capable of a fine prose style, WN is not an elegant work in its overall construction and character. Nevertheless, there is a clear unity of purpose. The central theoretical theme is the causes of economic development (economic growth involving qualitative change), including in this, rising living standards extending down to the mass of society. The “wealth” referred to in the title of the book is the flow of annual national product. It is the causes of the dynamics of this, and its distribution and allocation, which Smith explores. The primary policy theme is a critique of government policies that are restrictive of economic freedom or discriminatory, contrasted with Smith’s preferred “system of natural liberty”. The highlighting in the title of the book of “the nature” as well as the “causes” of wealth points to this: critique of mercantilism and its alleged misconception of the nation’s wealth as its stock of precious metals.