Harvard Classics Volume 10: The Wealth of Nations

The foundational tome in economics, The Wealth of Nations, by Adam Smith proved to be a worthwhile and interesting read for reasons the author didn’t intend. I’m going to get the one big complaint about this book right out of the way, if you’ve taken a course or even just an interest in economics, you have gotten the core message from The Wealth of Nations. In that sense, the book is a victim of its own success. Its ideas are embedded into discourse to this day, and the people who talk about economics in any serious way are familiar with his major points. To that extent, The Wealth of Nations is a book that would be extremely influential to a student in a great books program learning economics for the first time. It clearly states its ideas, and it gives mountains and mountains of evidence. There is so much in The Wealth of Nations, that the Harvard Classics uses an abridged version which cuts out much of the those mountains of evidence.

I didn’t really mind when some of the evidence was missing, I already generally agreed with Adam Smith’s arguments about various things. My only worry about the abridgment is that I missed out on what I really enjoyed in the book, a look into 18th century economic life. There are all sorts of weird things scattered through the book, such as how shoes could no longer be considered a luxury item since a poor woman walking barefoot in public would be unseemly. In other European nations at the time, footwear was not seen as such a necessary accessory. The details of the book illustrate how all-consuming agriculture was to economic life. Most countries in this period were agrarian, though some smaller nations were starting to transition into industrial economies. Fifty years after Wealth of Nations was released, economics would change radically.

There is also discussion of the effects of 50% infant mortality on the life of a country, and how people lived. There were interesting and relevant findings on how the largest manufacturing operations employed 20 people, and these were independently held businesses by the owners. This must have contributed greatly to an improvement in competition that is lacking now. Adam Smith also discussed joint-stock corporations, and how they needed to be limited enterprises, and only used for financial institutions and the maintenance of public works. These kinds of things paint a picture of a very different world that didn’t exist all that long ago, it was a short enough time ago that I could name several of my own ancestors alive during this time period.

The bulk of the text is taken up by a discussion of mercantilism, and government policy on spending and taxation. The arguments against mercantilism seem pretty pointless in a modern context, some of the things that were being done to bolster trade seem ridiculous in retrospect. The mercantilism vs free trade debate of Smith’s era was of an entirely different character than the one today. For Smith, the difficulty in transportation made foreign trade something that only happened when there was some natural resource reason for it to take place. For instance, England imported tobacco from Virginia because it was much easier to grow tobacco in Virginia. Similarly, England exported grain to Holland because the transportation wasn’t very difficult, and Holland had a population that was too high to satisfy its demand utilizing Dutch domestic land. The argument ignores the movement of capital and manufacturing outside of major European cities, because transportation was so expensive, it was incredibly advantageous to build things where you were going to sell them. The chief concern of mercantilism was managing the balance of trade to prevent a loss of precious metals to back bank deposits, and the modern anti-free trade arguments focus on entirely different issues such as the preservation of communities and ensuring sufficient demand for the labor pool of our nation to keep people off of government dependency.

The spending and taxation policy argues for a minarchist government, which builds, but does not manage roads. There is a long discussion on the best means and methods for taxation that are largely anachronistic today. Overall, Wealth of Nations was well worth reading, but not something that I felt pushed my own understanding of the world particularly far. I worry the same will be true with the next volume, The Origin of Species by Charles Darwin. Again, this will be going over theories that I, and most other people interested in science, have been exposed to our whole lives. Nevertheless, I look forward to reading it and seeing what unexpected bits I enjoy discovering.

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