Customer Reviews

The Wealth of Nations: Books 1-3 (Penguin Classics) (Bks.1-3)

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Two centuries ago, Adam Smith explained the modern free-market economy. More than that, he discusses the need for, advantages of, and limitations of a free markets.

The introduction in this printing is especially good. Almost a book in itself, it extend for 50 pages and connects the book to other philosophers and economists. Almost, you don't need to read the book after you've read the introduction -- but do it anyway, just to be amazed at Smith's prescience.

My review does not concern the content. Rather, I just wish to point out that the Modern Library edition is complete and unabridged in one volume (over a thousand pages) for less money than the Penguin edition. Also the Modern Library edition has helpful glosses that summarize each paragraph. Plus, for those with a preference, the Modern Library edition has footnotes instead of endnotes.

Just a heads up.

This Book is a classic. I would not go so far as to add it to the western Canon, but it contains the foundations of modern Economics. Its explaination for how economies work is still unsurpassed. Division of Labour, the invisible hand of consumer demand and the uses and mis-uses of taxation are all here. It should be stressed however, that this edition does not include books IV and V which concern the proper role of govt. It is also the section most ideologues forget to read and contains all the rudiments for a minimal welfare state and and active role for govt. in planning FOR competition, NOT the planning OF competition --- a very important distinction and one lost on those who see no positive role for the state in the economy.

It is unfortunately most used as a classic for those seeking a rationale for exploitation. Smith did not intend it as such and to see it as that is indeed to read it very selectively. The invisible hand is a useful interpretation for demand economics, but it is, like all other things only a description of market forces as they operate. It is not always the best way to organise everything as modern day ideologues would presuppose. It is of course the basis of business --- and it should be --- but Smith also has lots to say about how other economic factors operate in society.

One thing to make clear is this: Smith is not anti-State, as some ideologues in the US would like to think. He is balanced in his view of the state --- it is best left out of economic planning --- but it does clearly have an important role to play. The role of the State is to

1) create the conditions for the smooth flow of capital and its allocation into its most efficient uses and not to erect barriers in the process.

2) It also must necessarily collect taxes since the smooth and efficient operation of the state and the benefits its provide is in the interest of the accumulation of Capital.

3) The State also directly participates in the economy when projects which are obvious to the public benefit, but "which to no one would accrue an economic profit" --- he offers such examples as lighthouses and some roads and defence --- areas where there is an obvious public good, but to which no one would make a profit. Lighthouses are good examples, but like everything else in today's economy an interpretation for this could be made for universal health care and, of course, education; the mere fact that people do not have to worry about providing for education or health allows them to carry on in amassing capital in other endevours. Of course there is a slippery logic here but such is the rationale for the limited, but much greater role, the state provides in most developed economies outside of the United States.

4) Taxation policy is here as well. In the last book, Book V (not included in this edition), Smith describes the foundation of taxation and where it works best. He starts with the idea that "those who benefit the most from the smooth functioning of the state, should also be the ones who pay more." While not a prescription for progressive taxation policies it is the right way to think about tax and certainly would never excuse preferential taxation policies for the rich (such as in the US) but could be used as a foundation for a universal flat tax.

Such a tax is perhaps the best, but as Smith points out, where and how to collect it is always the difficulty. He comes out more or less in favour of a consumption tax policy since it would approximate the wealth the people earn in the first place and would not, for example overburden companies or people with high income taxes when they may not have high earnings.

There is however little in here about social policy, but Smith does see it as the right of the State to, in his time, provide welfare in the guise of work houses (19th Century hell holes). But that was as good as public welfare got in those days so we can posit that Smith would have carried his logic somewhat forward and provided for some social programmes --- though the extent of them would be a subject of no doubt fierce debate.

Overall a book that every thinking person should have on their shelf. Like most things it has some warts over time, but it is still the logical Tome on which capitalism rests its bones. Not until Marx did someone really challenge its dictates --- Smith basically won the argument on most points. But willingness for those with an inability to think critically, to use this book as justification for the domination of the weak by the strong, has little to do with Smith --- it has everything to do with those who are looking for justification of Greed --- and Gordon Gecko and Adam Smith have little in common.

The first three "books" (the term for "chapters" in Smith's age) of the Wealth of Nations are the most important of the book. The introductory essay by the Smithologist Skinner also provides great insight into the book per se, Adam Smith and how Wealth of Nations fits into Smith's other works. This is despite the fact that it is only about 70 pages long. THis essay is much more enlightening than many books on either Smith or the Wealth of Nations. The price of the book is worth that essay alone.

The Wealth of Nations handles a lot of economical phenomena in a concrete but sometimes complex way. On one hand the book is filled with ideas, some convincing, some out-dated, some fundamental to the current believe in free-markets. These ideas are combined with appealing (or appalling) examples of the injustice done to people by disturbing the free-market. On the other hand however, I find that certain sections of the book require a lot of concentration. The book is an interesting, but slow and at times difficult, read.

Essentially, it is a treatise on the power of individuals to maximise their own wealth and therefor a support for the natural liberty of men and an argument for free-markets. Not as a perfect system in which there will be no misery, but as a system that gives individuals the greatest (and most just) opportunity to gain happiness and which will be the quickest to respond to changes in supply and demand (and therefor decrease the misery which is created when governments ignore gaps between supply and demand).

It is not a book that believes in the pure goodness of companies (but explicitly states that companies have a interest which is directly opposite to that of society as a whole. I.e. the interest of companies is to create a supply shortage so they can ask prices above costprice), but says that the best way to break the power of these companies is the allow free competition. It also reveals that political decisions that at fist glance seems compassionate, might in fact be inhumane, cruel and the cause of much suffering (because on the long run they lead to a supply shortage). The examples given here, are still relevant to view the decisions made by politicians in today's so-called free market countries.

This is one of the truly great books produced by the Western world. Although much has been written on economics since, it considerably broadened my perspective to read it in the original.

I can't help feeling that those who pan Wealth of Nations as an apology for exploitation simply haven't read it. Thats simply not what the book is about. For if you really do care about the underpriveleged masses -- and it's imminently clear that he really does -- then you better consciously organize your state in such a manner that money will flow naturally where it's most needed.

I'd been told before I read it by several people that AS was, for example, apologizing for the East India Trading Company? Does his apology for EIT include the lengthy chapter which discuss in full detail how and why the East India Trading Company was responsible for an wide array of abuses in the Far East, and why no similar company would be legal if a society were fully moral and knew its own best interest?

Nor is it a blind apology for laissez faire economics, though it does recommend non-intervention by the government insofar as that is possible. Still he fully recognizes the need for social services, rightly understood and rightly executed.

In fact, I can't see how anyone who reads it could view it as an apology at all -- it's simply a statement of fact. Adam Smith is not the one carrying an ideology around on his shoulder. You may not like it that the world works this way -- that's another matter. But that IS the way it works... you are made to see that for yourself. It is not imposed on you as dogma.

And after reading AS, I'm left feeling very happy that that's the way the world works.

I think the most fundamental idea I am left with after reading all those pages, is that wealth is a verb, not a noun. Land and labor (i.e. food and farming) are the bottom line of economics. Treat your farmers well. Unjust practices in trading will ultimately backfire.

The dynamo which runs the machine that creates wealth lies within each individual - it is the individuals will to better his or her condition. To the degree that this aspect of human nature is given the power to express itself , the nation will be vitalized internally.

This book is so widely cited and interpreted contrary to the author's original thought, that every economist should read it completely to avoid being misled by such incorrect interpretations.

First, let us take the "invisible hand" metaphor. When I have studied economy in the University, I was taught that almost the entire book is devoted to the "invisible hand" which means "self-corrective markets", "liberalism", "Laissez-faire" and "state non-intervention". After reading this book, I have found out that Adam Smith did use the term "invisible hand" only once in the entire book, in the discussion of domestic versus foreign trade.

To illustrate the point, let me quote the text where term "invisible hand" is used: "First, every individual endeavours to employ his capital as near home as he can, and consequently as much as he can in the support of domestic industry, provided always that he can thereby obtain the ordinary, or not a great deal less than the ordinary profits of stock. Thus, upon equal, or nearly equal profits, every wholesale merchant naturally prefers the home trade to the foreign trade of consumption, and the foreign trade of consumption to the carrying trade. In the home trade, his capital is never so long out of his sight as it frequently is in the foreign trade of consumption. [...]Secondly, every individual who employs his capital in the support of domestic industry, necessarily endeavours so to direct that industry, that its produce may be of the greatest possible value. [...]As every individual, therefore, endeavours as much as he can, both to employ his capital in the support of domestic industry, and so to direct that industry that its produce maybe of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of 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. Nor is it always the worse for the society that it was no part of it."

After reading this book, I have found out that Adam Smith was influenced by French Physiocrats. The Physiocrats saw the true wealth of a nation as determined by the surplus of agricultural production over and above that needed to support agriculture (by feeding farm labourers and so forth). Other forms of economic activity, such as manufacturing, were viewed as taking this surplus agricultural production and transforming it into new products, by using the surplus agricultural production to feed the workers who produced the extra goods. While these manufacturers and other non agricultural workers may be useful, they were seen as 'sterile' in that their income derives ultimately not from their own work, but from the surplus production of the agricultural sector.

I have found out that this book is not about "invisible hand" or "Laissez-faire". It is quite a complete study that covers almost every basic aspect of the economy, and remains an effective introduction to economics to this day.

This book is so often mischaracterized and politicized that I suggest you to read it completely by yourself. This is a must read for every economist. You can get an audio version of this book to avoid lengthy read.

"The market price of every particular commodity is regulated
by the proportion between the quantity which is actually
brought to market, and the demand of those who are willing
to pay the natural price of the commodity."
[The Wealth of Nations]
Not easiest book to read, nor shortest one. But it deserves attention of serious student of Economics. It constitutes the baseline from which all modern Economics theories developed. Kind regards, Mario.

The Wealth of Nations by Adam Smith is the economic principles of freedom. This is the economic principles that our Founding Fathers' followed to make the USA one of the wealthiest nations in the history of the world. Unfortunately, Keynesian economics theories have replaced freedom-loving economic policies that have lead to the USA's economic downfall. The Wealth of Nations will teach the economic principles that need to be reinstated in order to make the USA great again.

Im 15 and wanted to read this book. Its okay in some parts, but almost all of it i have to reread a few times to get what its saying...then i would forget.. Ill try reading it when im older. 16 or 17