An Inquiry Into the Nature and Causes of the Wealth of Nations
Recommended supplement
Political economy had been studied long before Adam Smith, but the Wealth of Nations may be said to constitute it for the first time as a separate science. The work was based on considerable historical knowledge, and its principles were worked out with skill and ingenuity. Despite more than two centuries of criticism, new facts, and fresh experiences, the work still stands as the best all-around statement and defense of some of the fundamental principles of the science of economics.
Perhaps the most notable feature of the teaching of the Wealth of Nations, from the point of view of its divergence from previous economic thought as well as of its subsequent influence, is the statement of the doctrine of natural liberty. Smith believed that "man's self-interest is God's providence" and held that if government abstained from interfering with free competition, industrial problems would work themselves out and the practical maximum of efficiency would be reached. This same doctrine was applied to international relations, and Smith's development of it is the classical statement of the argument for free trade.
Smith wrote the Wealth of Nations in five books:
- Book I: Of the Causes of Improvement in the Productive Power of Labour, and of the Order According to which its Produce Is Naturally Distributed Among the Different Ranks of the People.
- Book II: Of the Nature, Accumulation, and Employment of (Capital) Stock
- Book III: Of the Different Progress of Opulence in Different Nations.
- Book IV: Of Systems of Political Economy
- Book V: Of the Revenue of the Sovereign or Commonwealth.
To explain in what has consisted the revenue of the great body of the people, or what has been the nature of those funds, which, in different ages and nations, have supplied their annual consumption, is the object of these Four first Books. The Fifth and last Book treats of the revenue of the sovereign, or commonwealth.
Adam Smith
