On Adam Smith's An Inquiry into the Nature and Causes of the Wealth of Nations. We discuss the foundational text of modern economics, first published in 1776. How does the division of labor and our instinct to exchange lead to the growth of wealth? Is the economy sufficiently machine-like to enable us to manipulate its output, or at least to tell us how not to screw it up?
The selections we read were:
- Book I, Ch. I–X with following omissions: the end of Ch. 5 (stop at "Though at distant..."), the end of Ch. X, pt. 1 (stop at "That the chance..."), and part of Ch. X, pt. 2 (stop at "Secondly" and start again at "I shall conclude..."). This covers the division of labor, the origin of money, and factors that contribute to prices, wages, and profit.
- Book II, Ch. I and III (stop at "The annual produce of the land and labor of England..."). This covers the accumulation of stock and the difference between productive and unproductive labor.
- Book III, Ch. I and IV (stop at "Merchants and manufacturers are the people..."). This covers the symbiotic relationship between town and country in the economy.
- Book IV, Ch. II (stop at "This order, however, being contrary to the natural…"), Ch. III, pt. 2 (stop at "It is in consequence of these maxims…"), Ch. IX end (start at "The greatest"). This is about why we shouldn't have tariffs or other protections for local trade over foreign trade.
- Book V, Ch. I, pt. 3, Article 2, about the economic incentives involved in education.
For more on Smith's moral views, listen to our ep #45. For a longer treatment, Econtalk recorded a six-part series on The Theory of Moral Sentiments. We also covered economics in our ep #123. For some potential alternatives to the stupefying effects of the division of labor, check out ep #83 on New Work and ep #103 on Thoreau.
Adam Smith picture by Solomon Grundy.