Book Review: Wealth of Nations

During my college capstone course for my economics major, our class read an excerpt from Adam Smith's Wealth of Nations discussing the notorious "Invisible Hand." Our professor made two separate comments about the work that stay with me today, one was that the hand is only mentioned in the work briefly, "by preferring the support of domestic to that foreign industry, he intends only his own security; and by directing that industry in such a manner as it produce may be the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention." The second was that only one professor in the entire Economics Department had actually read Wealth of Nations in its entirety, and we were certainly not about to attempt such a feat in his class. In starting this undertaking, I took one gigantic step for graduates everywhere.

Smith walks readers through a multitude of policies including economics, human behavior, commerce, and tax policy. Utilizing examples from historical accounts, his contemporaries, and domestic and foreign affairs, he outlines how he came to understand the world that he and we live in. To discuss the mercantile world he lived in, he breaks down the forces at work into main characters; labour, capital, landlords, and government. In crafting the piece, he outlines in much detail the function of each piece of the economy to eventually build a framework for each piece of the economic puzzle to interact within.

After providing the appropriate amount of background to understand how each segment of the marketplace interacts, Smith discloses the inequities and inefficiencies of the mercantile system. He does ever so subtly argue throughout for a new kind of system, a system not lead by the state. Not a system in which, as if prophesizing the damnation of England, and by extension, the entire mercantile system, state bankruptcy would come to pass due to war, indebtedness, and the decay of useful means of production. 

Smith tantalizes us with the argument for an economic system of limited government that prevents violence and invasion, enforcement of a justice, and public works important to society but monetarily unviable. A system by which self-interested buyers and sellers come together to exchange in a mutually advantageous agreement.

The most beneficial part of the book is not the end result, but how Smith builds and structures the economic levers. In analyzing how he comes to understand the world around him, we can better replicate his outline for studying the economy and implement in our modern day discussion of the balance of labour and capital. We can argue for and against tariffs, taxation, and monopolistic tendencies in our own decaying "free market." I argue that students need to take a step away from the Bloomberg terminals and financial spreadsheets and delve into the philosophy of how an economy actually works. Statistics and numbers have value, but the deeper questions of why we get the outcomes we do are glossed over. 

Smith's work reminds us, by its very existence, that we have traded a dearth of understanding about the means by which the system works for a limiting perception of how to grow one piece alone. In closing, I reiterate Smith's reminder that despite the exertion that people put into acquiring money, it really is not the accumulation of money that we seek but what the money can, as a medium of exchange, be traded for us self-interested individuals.