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His study traces the stages in the development of the modern economic system in an attempt to explain it, maps out the origins of money, and finally tackles the issues facing the mercantile system which controlled the society he lived in. In the process, he provides an exposition for his vision of a laissez faire economy, that is, capitalism as we now know it. More broadly, however, Smith’s account reveals his views on the nature of the human condition, and not a single theme is explored without some observation being made upon human tendencies and decisions. Most importantly, however, one finds that Smith’s views have often been interpreted in a very simplistic way by modern economists and used selectively as justification for contemporary decision-making processes. Moreso, certain criticisms and reflections made by Smith, in particular, his scorn for businessmen, would appear to have been (conveniently?) overlooked. Adam Smith wrote the Wealth of nations as a result of some eighteen years of contemplation. The book, which is concerned with the wealth of nations, that is, the standard of living and the effect that economic prosperity has upon general opulence, is outlined well in Adam Smith's own introduction. Smith wrote the book to explain how a country like England, a commercial society, could prosper. To explain this fully, Smith found it necessary to lay the very foundations for his contemporary political economy. In one instance, Smith traces the economy back before the current commercialism and interdependence, back through the feudal and manorial system of farming, back through simple nomadic agriculture, and finally, back to the original "rude" system of primitive man, a state which relied upon simple barter and exchanging goods. Looking at his own society’s economic system, Smith explores the division of labour, the role it has to play in industrialization, and its general impact upon the wealth of the state. Smith regards the division of labour and the resultant specialization as the key to increasing the productivity of labour, rather than the increase in mechanization since the Industrial Revolution began, as many would argue. Naturally, a highly specialized economic unit would be dependent upon interaction with other, similarly specialized units, and Smith illustrates that a system of fair and accessible trade is necessary for an The much quoted example of the pin maker is used to demonstrate Smith’s point about the division of labour. Despite its questionable accuracy, this example does much to illustrate the plight of labour under a system of increasing specialization. That is to say, it shows the boredom and melancholia which can be associated with repetitious and laborious work. For Smith, however, any such problem is amply compensated for by the relative prosperity of a society based upon specialized markets and trades. For instance, he asserts that an English worker under that system of divided labour is richer than an African king, though it would appear that he looks quantitatively at such wealth rather than taking a more relative, subjective approach. The second major economic or scientific theme of Smith’s study is that of the ‘invisible hand’, or the unseen guiding force in operation in any given market. This guiding force was individual self interest. That is to say, the principle of the ‘invisible hand’ articulated Smith’s notion that if an individual were to act according to their own interest then they will in fact be acting in the best interests of society. Each member of society must barter and trade in their own self interest in order for maximum efficiency to be attained. Self interest and the guiding force of the ‘invisible hand’ ensure that the market flourishes and that inter-dependence between individuals is cemented. When the market allows for the pursuit of self interest it necessarily creates a division of labour, as described earlier by Smith. This leads to efficiency and, more importantly for human society, an inter-dependency emerges whereby efficient production cannot occur without cooperation between individuals, even when they are operating purely according to their own self interest. This pattern, Smith believes, is the divinely ordained order of things. Putting these economic principles aside, however, we also see that Smith makes observations about the human condition itself. Not only does he attest that the only thing separating humans from other members of the animal kingdom is the “propensity to truck, barter and exchange”, but the continual assertion that individuals are driven almost exclusively by their self interest points to a very negative world view. Further, labourers are characterized as lazy and easily distracted. Fortunately, Smith’s views on human nature extend to the merchant classes, and it is in this regard that his assertions have been largely overlooked or dismissed. Adam Smith, when read closely, comes across as the most eminent anti-business conspiracy theorist of the last few centuries. Although The Wealth of Nations does much to justify the division of labour and the adoption of laissez faire economics, Smith is scathing in his remarks about the nature of the merchants of his time. To a large degree, his book was written as a reaction to the mercantile system of the day which he saw as not only inefficient, but unfair and exploitative. Smith concluded his chapter on profits with the comment: Our merchants and master manufacturers complain much of the bad effects of high prices in raising the price, and thereby lessening the sale of the goods both at home and abroad. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people. Such comments amount to a possible explanation for the problems which many identify today: high inflation in the non-tradeable sectors of the economy in which profits and high-level salaries have been consistently outstripping wage rates over the last two What would Adam Smith have made of on organisation called the "Business Roundtable"? He says that while "the violence and injustice of the rulers of mankind is an ancient evil" it is not as bad as "the mean rapacity, the monopolizing spirit of merchants and manufacturers, who neither are nor ought to be, the rulers of mankind". At the root of Smith's conspiracy theory is the tension that has always existed between economists and businessmen, a tension accentuated by the fact that governments and journalists have tended to listen to businessmen as if they were economists. Writers on economics can be classified into three types: businessmen, philosophers and technocrats. Smith, the son of a customs official, was a professional philosopher, who, in his later years, also became a customs official. He will have had some knowledge of "the sneaking arts of underling tradesmen"; perhaps enough to permanently sour his views about the motives behind the policy arguments of businessmen. It is easy to see where the success of Adam Smith’s The Wealth of Nations lies. While the political theories may not have been entirely new nor revolutionary, they are succinctly presented, and, coupled with his observations on humanity, serve as a narrative for modern society. And, while recognition is given to the short-comings of any system due to the fallibility of human nature, Smith offers an alternative to the mercantile system of his day which he considered so tyrannous. We can only hope that his cynicism about the nature and cations of the business community can be rejuvenated and acted upon positively in the near future. Bibliography: Word Count: 1298
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