The Wealth of Nations marked the culmination of Enlightenment political economy and the advent of modern economics. It became one of the most influential works on capitalism, being used variously as a practical guide, a theoretical description, a defense, and a critique of industrialization and the market.
Adam Smith’s Inquiry into the Nature and Causes of the Wealth of Nations (1776; commonly known as The Wealth of Nations) exerted greater influence in the systematization and development of economic theory than any other single work. In this volume, as in his lectures, Smith extracted economic theory from the broad field of moral philosophy
Smith was reared by his widowed mother in the Scottish village of Kirkcaldy in Fifeshire and attended the University of Glasgow, where he studied moral philosophy under Professor Francis Hutcheson, who taught an optimistic natural philosophy. He subsequently studied classics at Oxford and lectured on rhetoric and belles lettres in Edinburgh. In 1751, he became professor of logic at Glasgow University, and he was made professor of moral philosophy in the following year. In 1759, he published his The Theory of Moral Sentiments,
In 1763, Smith resigned his position to become tutor to the young duke of Buccleuch, and with his pupil he traveled on the Continent for two years. In France, he met Anne-Robert-Jacques Turgot
The Wealth of Nations reveals Smith as widely read in the political and economic theory of the seventeenth and eighteenth centuries, and as indebted to many individuals and schools of thought for his insights. Yet Smith also shows that he is more than a mere systematizer or popularizer of the ideas of others. The Wealth of Nations breaks new ground, and its comprehensiveness is far superior to many of its nineteenth century successors as well as its physiocratic and other predecessors.
Smith’s work commences with a discussion of the importance of labor
In the second book of The Wealth of Nations, Smith turns to a consideration of the nature, accumulation, and employment of capital.
In the third book, Smith reveals his historical account of the progress of wealth in different nations. This served the purpose of explaining the transition from agricultural to commercial societies, and of the historical basis of his later critique of mercantilism.
Smith considers the economic functions of the state in the fifth book of The Wealth of Nations. He recognizes three duties of the state according to his system of natural liberty:
As a moral philosopher, Smith recognized in issues such as the division of labor and the pursuit of self-interest particular challenges to civic morality. Smith was particularly concerned that the laboring poor have the education and moral instruction necessary to retain their psychological independence and wholeness in the face of pursuit of self-interest upon their part and that of their employers. Commerce and liberty had in Britain enjoyed a general mutually rewarding relationship. Yet Smith was concerned that commerce created increasingly complex social relationships that could endanger civic liberty; therefore, the statesman must carefully monitor commercial progress with an eye to legislation that will protect liberty.
A 1790 engraving of Adam Smith.
The economic system of natural liberty advocated in The Wealth of Nations had many prominent advocates in the eighteenth and nineteenth centuries. A notable disciple of Adam Smith was the British prime minister William Pitt the Younger, who sought to introduce free trade principles in British economic policy. The
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Campbell, R. H., and A. S. Skinner. “General Introduction.” In An Inquiry into the Nature and Causes of the Wealth of Nations, by Adam Smith. New York: Oxford University Press, 1979. This scholarly edition of The Wealth of Nations provides a very useful outline of Smith’s major work and of his earlier works as well. -
Dougherty, Peter J. Who’s Afraid of Adam Smith? How the Market Got Its Soul. New York: J. Wiley, 2002. Analyzes two of Smith’s books: The Wealth of Nations, with its ideas about the free market, and the more obscure A Theory of Moral Sentiments, expressing Smith’s belief that free markets can flourish only in societies with social capital and strong institutions of civil society. -
Fleischaker, Samuel. On Adam Smith’s “Wealth of Nations”: A Philosophical Companion. Princeton, N.J.: Princeton University Press, 2004. Fleischaker explains Smith’s economic ideas within the context of Smith’s moral theory and philosophies of science and social science. He also relates Smith’s ideas to the thoughts of his contemporaries, including David Hume and Francis Hutcheson. -
Heilbroner, Robert L. The Worldly Philosophers: The Lives, Times, and Ideas of the Great Economic Thinkers. New York: Simon & Schuster, 1953. Still a very useful and readable introduction to the history of the discipline of economics, in which Smith plays a formative role. -
Hont, Istvan, and Michael Ignatieff, eds. Wealth and Virtue: The Shaping of Political Economy in the Scottish Enlightenment. New York: Cambridge University Press, 1983. This collection of essays offers compelling accounts of the historical background of Smith’s political-economic thought. -
Raphael, D. D. Adam Smith. New York: Oxford University Press, 1985. A short, clear work by an expert, with a good introduction to Smith’s writings. -
Ross, Ian Simpson. The Life of Adam Smith. New York: Oxford University Press, 1995. A comprehensive and scholarly biography of Smith. -
Skinner, Andrew S., and Thomas Wilson, eds. Essays on Adam Smith. Oxford, England: Clarendon Press, 1975. A full and wide-ranging set of scholarly essays on Smith in his capacities as moral philosopher and political economist.
Financial Collapse of the John Law System
Collapse of the South Sea Bubble
Famine in Southern Italy
Flour War
Hamilton’s Report on Public Credit
Speenhamland System
Malthus Arouses Controversy with His Population Theory
David Hume; William Pitt the Younger; Adam Smith; Anne-Robert-Jacques Turgot.