Thursday, June 28, 2007

New Edition of Wealth Of Nations

A new edition of Adam Smith’s Wealth Of Nations has been published this week by Harriman House at the amazingly low price of GBP19.99.

The publicity leaflet I received today from the Adam Smith Institute, London, is extraordinary in that it captures the authentic essence of what Smith was doing when he wrote his classic. Let me quote from it:

The Wealth Of Nations is a treasured classic of political economy. First published in March of 1776, Adam Smith wrote the book to influence a special audience – the British Parliament – and its arguments in the early spring of that year pressed for peace and cooperation with Britain’s colonies rather than war.

Smith’s message was that the economic exploitation, through the monopoly trade of empire, stifled wealth creation in both home and foreign lands. Moreover, protectionism preserved the status quo, and privileged a few elties at the expense of long run growth.

Smith wrote: ‘It is the industry which is carried on for the benefit of the rich and powerful that is principally encouraged by our mercantile system. That which is carried on for the benefit of the poor and indigent is too often either neglected or oppressed.

That is an exactly correct summary of what Smith was about, unusual because most commentators, including Nobel Prize winning economists, often make problematical claims about Wealth Of Nations.

Smith did not write a textbook, though he is often judged as if he did (Schumpeter, et al.) He did not write about capitalism, or laissez-faire or the invisible hand of markets (as claimed by practically all neoclassical authors).

He wrote about the emerging commercial society from the 5th to the 18th century, that had been diverted from its natural growth trajectory into national states, jealousy of trade rivals, internal regulations, monopolies, colonies, wars and protectionism by governments and legislators following the fallacies of mercantile political economy, all of which conspired to channel wealth creation (the products of labour and land, or the production and exchange of the ‘necessaries, conveniences, and amusements of life’) into lopsided lower growth paths, and partly stifle progress towards opulence, especially for the ‘lower orders’.

I commend the authors of the publicity leaflet who got it right for this occasion. May readers get it right too.

The quotation, by the way, comes from Wealth Of Nations, Book IV.viii.4: p 644)


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