Adam Smith Book REview Wealth of Nations
The Wealth of Nations by Adam Smith.
The Wealth of Nations by Adam Smith was first published in 1776. The book alluded to create a new understanding of ‘classical economics’. It aimed to overturn the disallusion of mercantilist systems, and simultaneously preached the benefits of free trade, particularly encouraging the usage of government intervention through regulation, but not with vested interests. Smith also frequently inserted policy recommendations combined with moral philosophy to extend his arguments and create a sound and particularly well justified piece. The book itself is substantially long, and is split into 6 books, each with a specific theme. In my review I will examine each book, picking up on the major themes and analysing their relevance to economics today.
Book 1 focuses on the division of labour. Smith reiterates many times that improving the productive power of labour is solely dependant on the division of labour. He states three different reasons for the increase in productivity; firstly that the division of labour saves the labourer, and indeed the firm, time. By having only one task as opposed to many, it ensures that the labourer becomes efficient and diligent at performing this one task. Secondly; the division of labour ensures an unparelled knowledge of a particular task, therefore ensuring the labourers are engaged and more productive. Thirdly, and finally, the time spent by the labourer on the isolated task leads to initiative and then potentially, technological advances that will inevitably ensure the task becomes easier.
Book 2 discusses that capital (man made aids to production) is a hugely important part of an economy – and thus that a fraction of it should be kept to ensure the expansion of an economies productive capacity. As the capital is saved, this ensures future prosperity as the saved capital can be put to greater use. Adam Smith argues this is necessary – as without the saved capital – an economy would not
The Wealth of Nations by Adam Smith was first published in 1776. The book alluded to create a new understanding of ‘classical economics’. It aimed to overturn the disallusion of mercantilist systems, and simultaneously preached the benefits of free trade, particularly encouraging the usage of government intervention through regulation, but not with vested interests. Smith also frequently inserted policy recommendations combined with moral philosophy to extend his arguments and create a sound and particularly well justified piece. The book itself is substantially long, and is split into 6 books, each with a specific theme. In my review I will examine each book, picking up on the major themes and analysing their relevance to economics today.
Book 1 focuses on the division of labour. Smith reiterates many times that improving the productive power of labour is solely dependant on the division of labour. He states three different reasons for the increase in productivity; firstly that the division of labour saves the labourer, and indeed the firm, time. By having only one task as opposed to many, it ensures that the labourer becomes efficient and diligent at performing this one task. Secondly; the division of labour ensures an unparelled knowledge of a particular task, therefore ensuring the labourers are engaged and more productive. Thirdly, and finally, the time spent by the labourer on the isolated task leads to initiative and then potentially, technological advances that will inevitably ensure the task becomes easier.
Book 2 discusses that capital (man made aids to production) is a hugely important part of an economy – and thus that a fraction of it should be kept to ensure the expansion of an economies productive capacity. As the capital is saved, this ensures future prosperity as the saved capital can be put to greater use. Adam Smith argues this is necessary – as without the saved capital – an economy would not