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, 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 labour, productivity, and free markets.[1]

The Wealth of Nations
Wealth of Nations
AuthorAdam Smith
CountryScotland, Great Britain
LanguageEnglish
GenreEconomics, Philosophy
PublisherW. Strahan and T. Cadell, London
Publication date
1776

History

The Wealth of Nations was published March 9, 1776,[2] during the Scottish Enlightenment and the Scottish Agricultural Revolution.[3] It influenced several authors and economists, such as Karl Marx, as well as governments and organisations, setting the terms for economic debate and discussion for the next century and a half.[4] For example, Alexander Hamilton was influenced in part by The Wealth of Nations to write his Report on Manufactures, in which he argued against many of Smith's policies. Hamilton based much of this report on the ideas of Jean-Baptiste Colbert, and it was, in part, Colbert's ideas that Smith responded to, and criticised, with The Wealth of Nations.[5]

The Wealth of Nations was the product of seventeen years of notes and earlier works, as well as an observation of conversation among economists of the time concerning economic and societal conditions during the beginning of the Industrial Revolution, and it took Smith some ten years to produce.[6] The result, An Inquiry to the Wealth of Nations, was a treatise which sought to offer a practical application for reformed economic theory to replace the mercantilist and physiocratic economic theories that were becoming less relevant in the time of industrial progress and innovation.[7] It provided the foundation for economists, politicians, mathematicians, biologists, and thinkers of all fields to build upon. Irrespective of historical influence, The Wealth of Nations represented a clear paradigm shift in the field of economics,[8] comparable to Sir Isaac Newton's Principia Mathematica for physics, Antoine Lavoisier's Traité Élémentaire de Chimie for chemistry, or Charles Darwin's On the Origin of Species for biology.

Adam Smith bust, Adam Smith Theatre, Kirkcaldy
Bust of Smith in the Adam Smith Theatre, Kirkcaldy

Five editions of The Wealth of Nations were published during Smith's lifetime: in 1776, 1778,[9] 1784, 1786 and 1789.[10] Numerous editions appeared after Smith's death in 1790. To better understand the evolution of the work under Smith's hand, a team led by Edwin Cannan collated the first five editions. The differences were published along with an edited sixth edition in 1904.[11] They found minor but numerous differences (including the addition of many footnotes) between the first and the second editions, both of which were published in two volumes. The differences between the second and third editions, however, are major.[12] In 1784, Smith annexed these first two editions with the publication of Additions and Corrections to the First and Second Editions of Dr. Adam Smith’s Inquiry into the Nature and Causes of the Wealth of Nations, and he also had published the three-volume third edition of the Wealth of Nations, which incorporated Additions and Corrections and, for the first time, an index. Among other things, the Additions and Corrections included entirely new sections, particularly to Bk 4 Chs 4 & 5, and Bk 5 Ch 1, as well as an additional chapter (8), ‘Conclusion of the Mercantile System’, in Bk 4.[12]

The fourth edition, published in 1786, had only slight differences from the third edition, and Smith himself says in the Advertisement at the beginning of the book, "I have made no alterations of any kind."[13] Finally, Cannan notes only trivial differences between the fourth and fifth editions—a set of misprints being removed from the fourth and a different set of misprints being introduced.

Reception and impact

Great Britain

Intellectuals, critics, and reviewers

Edward Gibbon by Henry Walton cleaned
Edward Gibbon praised The Wealth of Nations

The first edition of the book sold out in six months.[14] The printer William Strahan wrote on 12 April 1776 that David Hume said The Wealth of Nations required too much thought to be as popular as Edward Gibbon's The History of the Decline and Fall of the Roman Empire. Strahan also wrote: "What you say of Mr. Gibbon's and Dr. Smith's book is exactly just. The former is the most popular work; but the sale of the latter, though not near so rapid, has been more than I could have expected from a work that requires much thought and reflection (qualities that do not abound among modern readers) to peruse to any purpose."[15] Gibbon wrote to Adam Ferguson on 1 April: "What an excellent work is that with which our common friend Mr. Adam Smith has enriched the public! An extensive science in a single book, and the most profound ideas expressed in the most perspicuous language".[16] The review of the book in the Annual Register was probably written by Whig MP Edmund Burke.[17] In 1791 the English radical Thomas Paine wrote in his Rights of Man that "Had Mr. Burke possessed talents similar to the author 'On the Wealth of Nations,' he would have comprehended all the parts which enter into, and, by assemblage, form a constitution."[18]

In 1800, the Anti-Jacobin Review criticized The Wealth of Nations.[19] In 1803, The Times argued against war with Spain:

She is our best customer; and by the gentle and peaceable stream of commerce, the treasures of the new world flow with greater certainty into English reservoirs, than it could do by the most successful warfare. They come in this way to support our manufactures, to encourage industry, to feed our poor, to pay taxes, to reward ingenuity, to diffuse riches among all classes of people. But for the full understanding of this beneficial circulation of wealth, we must refer to Dr. Adam Smith's incomparable Treatise on the Wealth of Nations.[20]

In 1810, a correspondent writing under the pseudonym of Publicola included at the head of his letter Smith's line that "Exclusive Companies are nuisances in every respect" and called him "that learned writer".[21] In 1812, Robert Southey of the Quarterly Review condemned The Wealth of Nations as a "tedious and hard-hearted book".[19] In 1821, The Times quoted Smith's opinion that the interests of corn dealers and the people were the same.[22] In 1826, the English radical William Cobbett criticised in his Rural Rides the political economists' hostility to the Poor Law: "Well, amidst all this suffering, there is one good thing; the Scotch political economy is blown to the devil, and the Edinburgh Review and Adam Smith along with it".[23]

The Liberal statesman William Ewart Gladstone chaired the meeting of the Political Economy Club to celebrate the centenary of the publication of The Wealth of Nations.[24] The Liberal historian Lord Acton believed that The Wealth of Nations gave a "scientific backbone to liberal sentiment"[25] and that it was the "classic English philosophy of history".[26]

Legislators

Smith's biographer John Rae contends that The Wealth of Nations shaped government policy soon after it was published.[27]

In 1777, in the first budget after the book was published, Prime Minister Lord North got the idea for two new taxes from the book: one on man-servants and the other on property sold at auction. The budget of 1778 introduced the inhabited house duty and the malt tax, both recommended by Smith. In 1779, Smith was consulted by politicians Henry Dundas and Lord Carlisle on the subject of giving Ireland free trade.[27]

Charles James Fox00
Charles James Fox was the first person to mention The Wealth of Nations in Parliament.

The Wealth of Nations was first mentioned in Parliament by the Whig leader Charles James Fox on 11 November 1783:

There was a maxim laid down in an excellent book upon the Wealth of Nations which had been ridiculed for its simplicity, but which was indisputable as to its truth. In that book it was stated that the only way to become rich was to manage matters so as to make one's income exceed one's expenses. This maxim applied equally to an individual and to a nation. The proper line of conduct therefore was by a well-directed economy to retrench every current expense, and to make as large a saving during the peace as possible.[28]

However Fox once told Charles Butler sometime after 1785 that he had never read the book and that "There is something in all these subjects which passes my comprehension; something so wide that I could never embrace them myself nor find any one who did."[29] When Fox was dining with Lord Lauderdale in 1796, Lauderdale remarked that they knew nothing of political economy before Adam Smith wrote. "Pooh," replied Fox, "your Adam Smiths are nothing, but" (he added, turning to the company) "that is his love; we must spare him there." Lauderdale replied: "I think he is everything", to which Fox rejoined: "That is a great proof of your affection".[29] Fox also found Adam Smith "tedious" and believed that one half of The Wealth of Nations could be "omitted with much benefit to the subject".[30] The Wealth of Nations was next mentioned in Parliament by Robert Thornton MP in 1787 to support the Commercial Treaty with France. In the same year George Dempster MP referenced it in the debate on the proposal to farm the post-horse duties and in 1788 by a Mr. Hussy on the Wool Exportation Bill.[28]

The prime minister, William Pitt, praised Smith in the House of Commons on 17 February 1792: "…an author of our own times now unfortunately no more (I mean the author of a celebrated treatise on the Wealth of Nations), whose extensive knowledge of detail, and depth of philosophical research will, I believe, furnish the best solution to every question connected with the history of commerce, or with the systems of political economy."[31] In the same year it was quoted by Samuel Whitbread MP and Fox (on the division of labour) in the debate on the armament against Russia and also by William Wilberforce in introducing his Bill against the slave trade. The book was not mentioned in the House of Lords until a debate in 1793 between Lord Lansdowne and Lord Loughborough about revolutionary principles in France.[32] On 16 May 1797, Pitt said in the debate on the suspension of cash payments by the Bank of England that Smith was "that great author" but his arguments, "though always ingenious", were "sometimes injudicious".[33] In 1798, Sir John Mitford, the Solicitor-General, cited the book in his criticism of bills of exchange given in consideration of other bills.[34]

During a debate on the price of corn in 1800 Lord Warwick said:

There was hardly any kind of property on which the law did not impose some restraints and regulations with regard to the sale of them, except that of provisions. This was probably done on the principles laid down by a celebrated and able writer, Doctor Adam Smith, who had maintained that every thing ought to be left to its own level. He knew something of that Gentleman, whose heart he knew was as sound as his head; and he was sure that had he lived to this day and beheld the novel state of wretchedness to which the country was now reduced ...; that Great Man would have reason to blush for some of the doctrines he had laid down. He would now have abundant opportunities of observing that all those artificial means of enhancing the price of provisions, which he had considered as no way mischievous, were practised at this time to a most alarming extent. He would see the Farmer keeping up his produce while the poor were labouring under all the miseries of want, and he would see Forestallers, Regraters, and all kinds of Middle-men making large profits upon it.[35]

Lord Grenville replied:

[W]hen that great man lived, ... his book was first published at a period, previous to which there had been two or three seasons of great dearth and distress; and during those seasons there were speculators without number, who ... proposed that a certain price should be fixed on every article: but all their plans were wisely rejected, and the Treatise on the Wealth of Nations, which came forward soon after, pointed out in the clearest light how absurd and futile they must have been.[35]

Hon. Richard Corden, M.P - NARA - 528678
The Wealth of Nations influenced Richard Cobden

The Radical MP Richard Cobden studied The Wealth of Nations as a young man; his copy is still in the library of his home at Dunford House and there are lively marginal notes on the places where Smith condemns British colonial policy. There are none on the passage about the invisible hand.[36] Cobden campaigned for free trade in his agitation against the Corn Laws. In 1843, Cobden quoted Smith's protest against the "plain violation of the most sacred property" of every man derived from his labour.[37] In 1844, he cited Smith's opposition to slave labour[38] and claimed that Smith had been misrepresented by protectionists as a monopolist.[39] In 1849 Cobden claimed that he had "gone through the length and breadth of this country, with Adam Smith in my hand, to advocate the principles of Free Trade." He also said he had tried "to popularise to the people of this country, and of the Continent, those arguments with which Adam Smith ... and every man who has written on this subject, have demonstrated the funding system to be injurious to mankind."[40]

Cobden believed it to be morally wrong to lend money to be spent on war. In 1849, when The Times claimed political economists were against Cobden on this, Cobden wrote: "I can quote Adam Smith whose authority is without appeal now in intellectual circles, it gives one the basis of science upon which to raise appeals to the moral feelings."[41] In 1850, when the Russian government attempted to raise a loan to cover the deficit brought about by its war against Hungary, Cobden said: "I take my stand on one of the strongest grounds in stating that Adam Smith and other great authorities on political economy are opposed to the very principle of such loans."[42] In 1863, during Cobden's dispute with The Times over its claims that his fellow Radical John Bright wanted to divide the land of the rich amongst the poor, Cobden read to a friend the passage in the Wealth of Nations which criticized primogeniture and entail. Cobden said that if Bright had been as plain-speaking as Smith, "how he would have been branded as an incendiary and Socialist".[43] In 1864, Cobden proclaimed, "If I were five-and-twenty or thirty, ... I would take Adam Smith in hand, and I would have a League for free trade in Land just as we had a League for free trade in Corn. You will find just the same authority in Adam Smith for the one as for the other."[44]

United States

After the British took control over occupied French North America in the Seven Years' War, Charles Townshend suggested that the American colonists provide help to pay for the war debt by paying an additional tax on tea. During this time, Adam Smith was working for Townshend and developed a relationship with Benjamin Franklin, who played a vital role in the United States' independence three months after Smith's The Wealth of Nations book was released.[45]

James Madison, in a speech given in Congress on 2 February 1791, cited The Wealth of Nations in opposing a national bank: "The principal disadvantages consisted in, 1st. banishing the precious metals, by substituting another medium to perform their office: This effect was inevitable. It was admitted by the most enlightened patrons of banks, particularly by Smith on the Wealth of Nations."[46] Thomas Jefferson, writing to John Norvell on 14 June 1807, claimed that on "the subjects of money & commerce, Smith's Wealth of Nations is the best book to be read, unless Say's Political Economy can be had, which treats the same subject on the same principles, but in a shorter compass & more lucid manner."[47]

Modern evaluation

With 36,331 citations, it is the second most cited book in the social sciences published before 1950, behind Karl Marx's Capital.[48]

The Wealth of the Nation, Seymour Fogel
Bustling with work and activity, "The Wealth of the Nation" by Seymour Fogel is an interpretation of the theme of Social Security.

George Stigler attributes to Smith "the most important substantive proposition in all of economics" and foundation of resource-allocation theory. It is that, under competition, owners of resources (labour, land, and capital) will use them most profitably, resulting in an equal rate of return in equilibrium for all uses (adjusted for apparent differences arising from such factors as training, trust, hardship, and unemployment).[49] He also describes Smith's theorem that "the division of labour is limited by the extent of the market" as the "core of a theory of the functions of firm and industry" and a "fundamental principle of economic organisation."[50]

Paul Samuelson finds in Smith's pluralist use of supply and demand—as applied to wages, rents, and profit—a valid and valuable anticipation of the general equilibrium modelling of Walras a century later. Moreover, Smith's allowance for wage increases in the short and intermediate term from capital accumulation and invention added a realism missed later by Malthus, Ricardo, and Marx in their propounding a rigid subsistence-wage theory of labour supply.[51]

In noting the last words of the Wealth of Nations,

If any of the provinces of the British empire cannot be made to contribute towards the support of the whole empire, it is surely time that Great Britain should free herself from the expence of defending those provinces in time of war, and of supporting any part of their civil or military establishments in time of peace, and endeavour to accommodate her future views and designs to the real mediocrity of her circumstances.[52]

Ronald Coase suggests that if Smith's earlier proposal of granting colonies representation in the British parliament proportional to their contributions to public revenues had been followed, "there would have been no 1776, … America would now be ruling England, and we [in America] would be today celebrating Adam Smith not simply as the author of the Wealth of Nations, but hailing him as a founding father."[53]

Mark Blaug argues that it was Smith's achievement to shift the burden of proof against those maintaining that the pursuit of self-interest does not achieve social good. But he notes Smith's relevant attention to definite institutional arrangements and process as disciplining self-interest to widen the scope of the market, accumulate capital, and grow income.[54]

Economic anthropologist David Graeber argues that throughout antiquity, one can identify many different systems of credit and later monetary exchange, drawing evidence for his argument from historical and also ethnographical records, that the traditional explanation for the origins of monetary economies from primitive bartering systems, as laid out by Adam Smith, does not find empirical support.[55] The author argues that credit systems developed as means of account long before the advent of coinage around 600 BCE, and can still be seen operating in non-monetary economies. The idea of barter, on the other hand, seems only to apply to limited exchanges between societies that had infrequent contact and often in a context of ritualised warfare, rendering its conceptualisation among economists as a myth.[56] As an alternative explanation for the creation of economic life, the author suggests that it originally related to social currencies, closely related to non-market quotidian interactions among a community and based on the "everyday communism" that is based on mutual expectations and responsibilities among individuals. This type of economy is, then, contrasted with the moral foundations of exchange based on formal equality and reciprocity (but not necessarily leading to market relations) and hierarchy, based on clear inequalities that tend to crystallise in customs and castes.[56]

See also

References

Citations

  1. ^ O'Rourke, P. J. ""On 'The Wealth of Nations.'"" New York Times. 7 January 2007. 18 October 2018.
  2. ^ Sutherland, Kathryn (2008) [1776]. "Note on the Text". An Inquiry into the Nature and Causes of the Wealth of Nations: A Selected Edition. By Smith, Adam. Oxford University Press. p. 31. ISBN 978-0191504280.
  3. ^ See Smith, Adam (1776). An Inquiry into the Nature and Causes of the Wealth of Nations. 1 (1 ed.). London: W. Strahan. Retrieved 2012-12-07., volume 2 via Google Books
  4. ^ I Ousby ed, The Cambridge Guide to Literature in English (Cambridge 1995) p. 1000
  5. ^ K Sutherland ed., Wealth of Nations (Oxford 2008) p. 295 and p. 573
  6. ^ K Sutherland ed., Wealth of Nations (Oxford 2008) p. i and p. xiv
  7. ^ K Sutherland ed., Wealth of Nations (Oxford 2008) p. xxix–xxxi
  8. ^ K Sutherland ed., Wealth of Nations (Oxford 2008) p. xxi–ii
  9. ^ See Smith, Adam (1778). An Inquiry into the Nature and Causes of the Wealth of Nations. 1 (2 ed.). London: W. Strahan; T.Cadell. Retrieved 10 March 2015.; Smith, Adam (1778). An Inquiry into the Nature and Causes of the Wealth of Nations. 2 (2 ed.). London: W. Strahan; T.Cadell. Retrieved 10 March 2015. via Google Books
  10. ^ See Smith, Adam (1789). An Inquiry into the Nature and Causes of the Wealth of Nations. 1 (5 ed.). London: A. Strahan; T.Cadell. Retrieved 9 March 2015.; Smith, Adam (1789). An Inquiry into the Nature and Causes of the Wealth of Nations. 2 (5 ed.). London: A. Strahan; T.Cadell. Retrieved 9 March 2015.; Smith, Adam (1789). An Inquiry into the Nature and Causes of the Wealth of Nations. 3 (5 ed.). London: A. Strahan; T.Cadell. Retrieved 9 March 2015. via Google Books
  11. ^ An Inquiry into the Nature and Causes of the Wealth of Nations, by Adam Smith. London: Methuen and Co., Ltd., ed. Edwin Cannan, 1904. Fifth edition.
  12. ^ a b K Sutherland ed., Wealth of Nations (Oxford 2008) p. xlvi–vii
  13. ^ Smith, Adam. "An Inquiry Into the Nature and Causes of the Wealth of Nations ..., Volume 1." Google Books. 18 October 2018.
  14. ^ John Rae, Life of Adam Smith (London: Macmillan & Co., 1895), p. 285.
  15. ^ Rae, pp. 285–86.
  16. ^ Rae, p. 287.
  17. ^ Rae, p. 286.
  18. ^ Paine, Thomas (1995). Rights of Man, Common Sense, and Other Political Writings. Oxford University Press. p. 126. ISBN 978-0199538003.
  19. ^ a b J. J. Sack, From Jacobite to Conservative. Reaction and orthodoxy in Britain, c. 1760–1832 (Cambridge University Press, 2004), p. 182.
  20. ^ The Times (25 October 1803), p. 2.
  21. ^ The Times (8 February 1810), p. 2.
  22. ^ The Times (17 September 1821), p. 2.
  23. ^ William Cobbett, Rural Rides (Penguin, 2001), p. 335.
  24. ^ H. C. G. Matthew, Gladstone. 1875–1898 (Oxford University Press, 1995), p. 20.
  25. ^ G. E. Fasnacht, Acton's Political Philosophy. An Analysis (London: Hollis and Carter, 1952), p. 145.
  26. ^ Fasnacht, p. 241.
  27. ^ a b Rae, p. 294.
  28. ^ a b Rae, p. 290.
  29. ^ a b Rae, p. 289.
  30. ^ L. G. Mitchell, Charles James Fox (Penguin, 1997), p. 185.
  31. ^ John Ehrman, The Younger Pitt. The Years of Acclaim (London: Constable, 1969), p. 267, n. 1.
  32. ^ Rae, p. 291.
  33. ^ John Ehrman, The Younger Pitt. The Consuming Struggle (London: Constable, 1996), p. 12.
  34. ^ The Times (24 December 1798), p. 4.
  35. ^ a b The Times (6 December 1800), p. 2.
  36. ^ William D. Grampp, The Manchester School of Economics (London: Oxford University Press, 1960), p. 103.
  37. ^ John Bright and J. E. Thorold Rogers (eds.), Speeches on Questions of Public Policy by Richard Cobden, M.P. Volume I (London: T. Fisher Unwin, 1908), p. 45.
  38. ^ Bright and Thorold Rogers, Volume I, p. 92.
  39. ^ Bright and Thorold Rogers, Volume I, pp. 104–05.
  40. ^ John Bright and J. E. Thorold Rogers (eds.), Speeches on Questions of Public Policy by Richard Cobden, M.P. Volume II (London: T. Fisher Unwin, 1908), pp. 399–400.
  41. ^ Wendy Hinde, Richard Cobden. A Victorian Outsider (Yale University Press, 1987), p. 204.
  42. ^ Bright and Thorold Rogers, Volume II, p. 406.
  43. ^ Donald Read, Cobden and Bright. A Victorian Political Partnership (Edward Arnold, 1967), p. 189.
  44. ^ Bright and Thorold Rogers, Volume II, p. 493.
  45. ^ Costly, Andrew. "BRIA 23 1 a Adam Smith and The Wealth of Nations". crf-usa.org. Constitutional Rights Foundations. Retrieved 1 December 2018.
  46. ^ James Madison, Writings (The Library of America, 1999), p. 481.
  47. ^ Thomas Jefferson, Writings (The Library of America, 1984), p. 1176.
  48. ^ Green, Elliott (12 May 2016). "What are the most-cited publications in the social sciences (according to Google Scholar)?". LSE Impact Blog. London School of Economics.
  49. ^ George J. Stigler (1976). "The Successes and Failures of Professor Smith," Journal of Political Economy, 84(6), p. 1202 (pp. 1199–1213). Also published as Selected Papers, No. 50 (PDF), Graduate School of Business, University of Chicago.
  50. ^ George J. Stigler, 1951. "The Division of Labor Is Limited by the Extent of the Market." Journal of Political Economy, 59(3), pp. 185, 193. Reprinted in J.M. Buchanan and Y.J. Yoon, ed., 1994, The Return to Increasing Returns, pp. 47, 58.
  51. ^ Paul A. Samuelson (1977). "A Modern Theorist's Vindication of Adam Smith," American Economic Review, 67(1), p. 42. Reprinted in J.C. Wood, ed., Adam Smith: Critical Assessments, pp. 498–509. Preview.
  52. ^ Smith (1776). Bk. V: Of the Revenue of the Sovereign or Commonwealth, ch. 3 of Public Debts, para. 92.
  53. ^ R. H. Coase (1977). "The Wealth of Nations," Economic Inquiry 15(3), pp. 323–25 (309–25 Archived 14 May 2013 at the Wayback Machine). Press + button or Ctrl+.
  54. ^ Mark Blaug (1997). Economic Theory in Retrospect, 5th ed., in ch. 2, sect. 19, "Adam Smith as an Economist, pp. 59–62.
  55. ^ Graeber, David (2010). Debt: the first 5,000 years. Brooklyn, NY: Melville House. ISBN 978-1933633862.
  56. ^ a b Johnson, David V. (February 15, 2012). "What We Owe to Each Other An Interview with David Graeber, Part 1". Boston Review. Retrieved February 20, 2012.

Sources

  • Smith, Adam. The Wealth of Nations: A Translation into Modern English, Industrial Systems Research, 2015. ISBN 978-0906321706 [1]
  • An Inquiry into the Nature and Causes of the Wealth of Nations: A Selected Edition Adam Smith (Author), Kathryn Sutherland (Editor), 2008, Oxford Paperbacks, Oxford. ISBN 978-0199535927.
  • O'Rourke, P.J. (2006), On The Wealth of Nations, Books That Changed the World, Atlantic Monthly Press, ISBN 978-0871139498

External links

Absolute advantage

In economics, the principle of absolute advantage refers to the ability of a party (an individual, or firm, or country) to produce a greater quantity of a good, product, or service than competitors, using the same amount of resources. Adam Smith first described the principle of absolute advantage in the context of international trade, using labor as the only input.

Since absolute advantage is determined by a simple comparison of labor productiveness, it is possible for a party to have no absolute advantage in anything.

Adam Smith

Adam Smith (16 June [O.S. 5 June] 1723 – 17 July 1790) was a Scottish economist, philosopher and author as well as a moral philosopher, a pioneer of political economy and a key figure during the Scottish Enlightenment, also known as ''The Father of Economics''. Smith wrote two classic works, The Theory of Moral Sentiments (1759) and An Inquiry into the Nature and Causes of the Wealth of Nations (1776). The latter, often abbreviated as The Wealth of Nations, is considered his magnum opus and the first modern work of economics. In his work, Adam Smith introduced his theory of absolute advantage.Smith studied social philosophy at the University of Glasgow and at Balliol College, Oxford, where he was one of the first students to benefit from scholarships set up by fellow Scot John Snell. After graduating, he delivered a successful series of public lectures at Edinburgh, leading him to collaborate with David Hume during the Scottish Enlightenment. Smith obtained a professorship at Glasgow, teaching moral philosophy and during this time, wrote and published The Theory of Moral Sentiments. In his later life, he took a tutoring position that allowed him to travel throughout Europe, where he met other intellectual leaders of his day.

Smith laid the foundations of classical free market economic theory. The Wealth of Nations was a precursor to the modern academic discipline of economics. In this and other works, he developed the concept of division of labour and expounded upon how rational self-interest and competition can lead to economic prosperity. Smith was controversial in his own day and his general approach and writing style were often satirised by Tory writers in the moralising tradition of William Hogarth and Jonathan Swift. In 2005, The Wealth of Nations was named among the 100 best Scottish books of all time.

Adam Smith School of Economics and Finance

The Adam Smith Business School (formerly known as 'Adam Smith School of Economics and Finance') at Glasgow University continues an academic record which dates back to the father of economics, Adam Smith (1723–1790). Serving as Professor of Moral Philosophy, he published a series of seminal works such as The Theory of Moral Sentiments, The Wealth of Nations and Lectures on Jurisprudence; the culmination of which set a foundational precedent for classical economic theory 300 years after the university's inception in 1451.

The school continues research in international finance, international economics and macroeconomics. As of 2016 the business school offered four undergraduate, 35 postgraduate as well as various Ph.D. dDegrees and is one of few institutions holding the honourable triple crown accretidation.

Adam and Company

Adam and Company is a trading division of The Royal Bank of Scotland plc catering for the needs of private bank customers based in the United Kingdom. It offers a range of private banking services including discretionary investment management and financial planning services to high net worth clients in the UK.

The bank was founded in 1983 in Edinburgh, often referred to as the birthplace of Scottish Enlightenment, and one of the leading lights of that era, Adam Smith, published ‘An inquiry into the Nature and Causes of the Wealth of Nations’ in 1776 which revolutionised economic theory. Adam & Company was named after this leading figure of the time.

The bank's principal office is located at 25 Saint Andrew Square in Edinburgh and they have three further offices.

Anders Chydenius

Anders Chydenius (Swedish: [²anːdɛʂ kʏˈdeːnɪɵs]; 26 February 1729 – 1 February 1803) was a Finnish priest and a member of the Swedish Riksdag, and is known as the leading classical liberal of Nordic history.

Born in Sotkamo, Finland (then part of Sweden) and having studied under Pehr Kalm at the Royal Academy of Åbo, Chydenius became a priest and Enlightenment philosopher. He was elected as an ecclesiastic member of the Swedish Riksdag of the Estates in 1765–66, in which his Cap party seized the majority and government and championed Sweden's first Freedom of the Press Act, the most liberal in the world along with those of Great Britain and the Seven United Provinces. Vehemently opposed to the extreme interventionist policies of mercantilism preached by the previously predominant Hat party since decades, he was ultimately coerced into retirement for his criticism of the Cap administration's radical deregulation policies and their social and political consequences.

Following Gustav III's coup d'état in 1772, which meant the end of parliamentary rule for another century, Chydenius briefly returned to prominence and worked to increase civil liberties and economic freedom as part of Gustav's doctrine of enlightened despotism, and contributed the abolishment of torture as means of interrogation, the limitation of capital punishment, and the legalisation of Jewish and Catholic immigration into Sweden. Ultimately, the king's increasingly autocratic position brought Chydenius out of favour again, and he retired to private life in Ostrobothnia, where he died at age 73.

An early pioneer—also by international standards—and proponent of economic liberalism, freedom of religion, freedom of speech and migration (writing a pamphlet on the invisible hand a decade before the publication of The Wealth of Nations) he was one of the first comprehensive philosophers of liberalism.

Classical economics

Classical economics or classical political economy is a school of thought in economics that flourished, primarily in Britain, in the late 18th and early-to-mid 19th century. Its main thinkers are held to be Adam Smith, Jean-Baptiste Say, David Ricardo, Thomas Robert Malthus, and John Stuart Mill. These economists produced a theory of market economies as largely self-regulating systems, governed by natural laws of production and exchange (famously captured by Adam Smith's metaphor of the invisible hand).

Adam Smith's The Wealth of Nations in 1776 is usually considered to mark the beginning of classical economics. The fundamental message in Smith's book was that the wealth of any nation was determined not by the gold in the monarch's coffers, but by its national income. This income was in turn based on the labor of its inhabitants, organized efficiently by the division of labour and the use of accumulated capital, which became one of classical economics' central concepts.In terms of economic policy, the classical economists were pragmatic liberals, advocating the freedom of the market, though they saw a role for the state in providing for the common good. Smith acknowledged that there were areas where the market is not the best way to serve the common interest, and he took it as a given that the greater proportion of the costs supporting the common good should be borne by those best able to afford them. He warned repeatedly of the dangers of monopoly, and stressed the importance of competition. In terms of international trade, the classical economists were advocates of free trade, which distinguishes them from their mercantilist predecessors, who advocated protectionism.

The designation of Smith, Ricardo and some earlier economists as 'classical' is due to Karl Marx, to distinguish the 'greats' of economic theory from their 'vulgar' successors. There is some debate about what is covered by the term "classical economics", particularly when dealing with the period from 1830–75, and how classical economics relates to neoclassical economics.

Classical liberalism

Classical liberalism is a political ideology and a branch of liberalism which advocates civil liberties under the rule of law with an emphasis on economic freedom. Closely related to economic liberalism, it developed in the early 19th century, building on ideas from the previous century as a response to urbanisation and to the Industrial Revolution in Europe and the United States. Notable individuals whose ideas contributed to classical liberalism include John Locke, Jean-Baptiste Say, Thomas Robert Malthus and David Ricardo. It drew on the classical economic ideas espoused by Adam Smith in Book One of The Wealth of Nations and on a belief in natural law, utilitarianism and progress. The term classical liberalism has often been applied in retrospect to distinguish earlier 19th-century liberalism from social liberalism.

Cost the limit of price

Cost the limit of price was a maxim coined by Josiah Warren, indicating a (prescriptive) version of the labor theory of value. Warren maintained that the just compensation for labor (or for its product) could only be an equivalent amount of labor (or a product embodying an equivalent amount). Thus, profit, rent, and interest were considered unjust economic arrangements. As Samuel Edward Konkin III put it, "the labor theory of value recognizes no distinction between profit and plunder."In keeping with the tradition of Adam Smith's The Wealth of Nations, the "cost" of labor is considered to be the subjective cost; i.e., the amount of suffering involved in it.

Dunnsville, Western Australia

Dunnsville is an abandoned town in Western Australia located 46 km north-west of Coolgardie in the Goldfields-Esperance region of Western Australia.

In 1894, gold was discovered in the area by a prospector, John George Dunn F.R.G.S, and the townsite was gazetted on 9 December 1897.By 1898, the population of the town was 67 (60 males and 7 females).The original lease later became better known as the Wealth of Nations mine. A coach service operated between the town and Coolgardie.Between 1894 and 1938, the combined gold production of Dunnsville and the nearby Jaurdi Hills was 28,041 ounces from 45,500 tonnes of ore.

History of the Jews in Brazil

The history of the Jews in Brazil is a rather long and complex one, as it stretches from the very beginning of the European settlement in the new continent. Although only baptized Christians were subject to the Inquisition, Jews started settling in Brazil when the Inquisition reached Portugal, in the 16th century. They arrived in Brazil during the period of Dutch rule, setting up in Recife the first synagogue in the Americas, the Kahal Zur Israel Synagogue, as early as 1636. Most of those Jews were Sephardic Jews who had fled the Inquisition in Spain and Portugal to the religious freedom of the Netherlands. In his The Wealth of Nations, Adam Smith attributed much of the development of Brazil's sugar industry and cultivation to the arrival of Portuguese Jews who were forced out of Portugal during the Inquisition. (See History of Pernambuco#Jews in Pernambuco).

After the first Brazilian constitution in 1824 that granted freedom of religion, Jews began to arrive gradually in Brazil. Many Moroccan Jews arrived in the 19th century, principally because of the rubber boom, settling on the Amazon, where their mixed-race descendants continue to live. Waves of Jewish immigration occurred first by Russian and Polish Jews escaping pogroms and the Russian Revolution, and then during the 1930s during the rise of Nazis in Europe. In the late 1950s, another wave of immigration brought thousands of North African Jews. Nowadays, the Jewish communities thrive in Brazil. Some anti-Semitic events and acts have occurred, mainly during the 2006 Lebanon War such as vandalism of Jewish cemeteries.

Brazil has the ninth largest Jewish community in the world, about 107,329 by 2010, according to the Brazilian Institute of Geography and Statistics (IBGE) Census, and has the second largest Jewish population in Latin America after Argentina. The Jewish Confederation of Brazil (CONIB) estimates that there are more than 120,000 Jews in Brazil.

IQ and Global Inequality

IQ and Global Inequality is a 2006 book by psychologist Richard Lynn and political scientist Tatu Vanhanen. IQ and Global Inequality is follow-up to their 2002 book IQ and the Wealth of Nations, an expansion of the argument that international differences in current economic development are due in part to differences in average national intelligence as indicated by national IQ estimates, and a response to critics. The book was published by the controversial Washington Summit Publishers.

Lynn and Vanhanen's research on national IQs has attracted widespread criticism of the book's scores, methodology, and conclusions. However, the book was positively received by some academics, such as J. Philippe Rushton.

IQ and the Wealth of Nations

IQ and the Wealth of Nations is a 2002 book by psychologist Richard Lynn and political scientist Tatu Vanhanen. The authors argue that differences in national income (in the form of per capita gross domestic product) are correlated with differences in the average national intelligence quotient (IQ). They further argue that differences in average national IQs constitute one important factor, but not the only one, contributing to differences in national wealth and rates of economic growth.

The book has drawn widespread criticism from other academics. Critiques have included questioning of the methodology used, the incompleteness of the data, and the conclusions drawn from the analysis. The 2006 book IQ and Global Inequality is a follow-up to IQ and the Wealth of Nations by the same authors.

Invisible hand

The invisible hand describes the unintended social benefits of an individual's self-interested actions. Adam Smith first introduced the concept in The Theory of Moral Sentiments, written in 1759, invoking it in reference to income distribution. In this work, however, the idea of the market is not discussed, and the word "capitalism" is never used.By the time he wrote The Wealth of Nations in 1776, Smith had studied the economic models of the French Physiocrats for many years, and in this work the invisible hand is more directly linked to production, to the employment of capital in support of domestic industry. The only use of "invisible hand" found in The Wealth of Nations is in Book IV, Chapter II, "Of Restraints upon the Importation from foreign Countries of such Goods as can be produced at Home." The exact phrase is used just three times in Smith's writings.

Smith may have come up with the two meanings of the phrase from Richard Cantillon who developed both economic applications in his model of the isolated estate.The idea of trade and market exchange automatically channeling self-interest toward socially desirable ends is a central justification for the laissez-faire economic philosophy, which lies behind neoclassical economics. In this sense, the central disagreement between economic ideologies can be viewed as a disagreement about how powerful the "invisible hand" is. In alternative models, forces which were nascent during Smith's lifetime, such as large-scale industry, finance, and advertising, reduce its effectiveness.Interpretations of the term have been generalized beyond the usage by Smith.

Lists by country

This is a series of lists by country. The lists generally cover topics related to sovereign countries; however, states with limited recognition are also included.

Physiocracy

Physiocracy (French: Physiocratie; from the Greek for "government of nature") is an economic theory developed by a group of 18th-century Enlightenment French economists who believed that the wealth of nations was derived solely from the value of "land agriculture" or "land development" and that agricultural products should be highly priced. Their theories originated in France and were most popular during the second half of the 18th century. Physiocracy is one of the first well-developed theories of economics.

The movement was particularly dominated by François Quesnay (1694–1774) and Anne-Robert-Jacques Turgot (1727–1781). It immediately preceded the first modern school, classical economics, which began with the publication of Adam Smith's The Wealth of Nations in 1776.

The most significant contribution of the physiocrats was their emphasis on productive work as the source of national wealth. This is in contrast to earlier schools, in particular mercantilism, which often focused on the ruler's wealth, accumulation of gold, or the balance of trade. Whereas the mercantilist school of economics said that value in the products of society was created at the point of sale, by the seller exchanging his products for more money than the products had "previously" been worth, the physiocratic school of economics was the first to see labor as the sole source of value. However, for the physiocrats, only agricultural labor created this value in the products of society. All "industrial" and non-agricultural labors were "unproductive appendages" to agricultural labor.At the time the physiocrats were formulating their ideas, economies were almost entirely agrarian. That is presumably why the theory considered only agricultural labor to be valuable. Physiocrats viewed the production of goods and services as equivalent to the consumption of the agricultural surplus, since the main source of power was from human or animal muscle and all energy was derived from the surplus from agricultural production. Profit in capitalist production was really only the "rent" obtained by the owner of the land on which the agricultural production was taking place."The physiocrats damned cities for their artificiality and praised more natural styles of living. They celebrated farmers." They called themselves Les Économistes, but are generally referred to as physiocrats to distinguish them from the many schools of economic thought that followed them.

Standing army

A standing army, unlike a reserve army, is a permanent, often professional, army. It is composed of full-time soldiers (who may be either career soldiers or conscripts) and is not disbanded during times of peace. It differs from army reserves, who are enrolled for the long term, but activated only during wars or natural disasters, and temporary armies, which are raised from the civilian population only during a war or threat of war and disbanded once the war or threat is over. The term dates from approximately 1600, although the phenomenon it describes is much older.

Stringer Bell

Russell "Stringer" Bell (born September 17, 1969) is a fictional character in The Wire, played by Idris Elba. Bell serves as drug kingpin Avon Barksdale's second-in-command, assuming direct control of the Barksdale Organization during Avon's imprisonment. Bell attends economics classes at Baltimore City Community College and maintains a personal library, including a copy of Adam Smith's The Wealth of Nations. He attempts to legitimize the Barksdale Organization and insulates himself from direct criminality through money laundering and investments in housing development, aided through his buying of influence from politicians.

Tatu Vanhanen

Tatu Vanhanen (17 April 1929 – 22 August 2015) was a Finnish political scientist and author. He was a professor of political science at the University of Tampere in Tampere, Finland. Vanhanen was a coauthor with Richard Lynn of IQ and the Wealth of Nations (2002) and IQ and Global Inequality (2006), and author of Ethnic Conflicts Explained by Ethnic Nepotism (1999) and many other works. His son, Matti Vanhanen, is a former Prime Minister of Finland.

Theories of taxation

Several theories of taxation exist in public economics. Governments at all levels (national, regional and local) need to raise revenue from a variety of sources to finance public-sector expenditures.

Adam Smith in The Wealth of Nations (1776) wrote:

"Such things as defending the country and maintaining the institutions of good government are of general benefit to the public. Thus, it is reasonable that the population as a whole should contribute to the tax costs. It is also reasonable to demand certain other things of a tax system – for example, that the amounts of tax individuals pay should bear some relationship to their abilities to pay… Good taxes meet four major criteria. They are (1) proportionate to incomes or abilities to pay (2) certain rather than arbitrary (3) payable at times and in ways convenient to the taxpayers and (4) cheap to administer and collect." [1]In modern public-finance literature, there have been two main issues: who can pay and who can benefit (Benefit principle). Influential theories have been the ability theory presented by Arthur Cecil Pigou and the benefit theory developed by Erik Lindahl. There is a later version of the benefit theory known as the "voluntary exchange" theory.Under the benefit theory, tax levels are automatically determined, because taxpayers pay proportionately for the government benefits they receive. In other words, the individuals who benefit the most from public services pay the most taxes. Here, two models adopting the benefit approach are discussed: the Lindahl model and the Bowen model.

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