An Inquiry Into the Nature and Causes of the Wealth of Nations (Vol. 2)

Just as some editions of The Wealth of Nations should be avoided because of undisclosed abridgement (see reviewers below), other editions ought to be sought out and preferred. Look for versions involving Edwin Cannan as editor. These include the University of Chicago edition (1976) in paperback and the Modern Library edition (1994) in hardcover. (To my knowledge, neither of these editions is abridged.) In 1904, Cannan, a professor at the London School of Economics, did two things that greatly add to the value of Smith's book. First, Cannan prepared a detailed index. For example, "invisible hand" appears in it. Just try to find the one (and only one) appearance of that phrase without an index. Most of the non-Cannan editions I've looked at lack an index. Second, Cannan wrote and added brief marginalia. His words facilitate skimming, something most readers of this thousand page book are apt to do. His words and phrases are also easily ignored. They don't get in your way once you've found the pages you want to read. (Reviewer T. Grimes comments on the marginalia as well.) Finally, reading The Wealth of Nations shows Smith to be different from his usual portrayal. He can be wickedly satirical. Anyone who has been to college will recognize much that is familiar in his thoughts (in Book V) on "Education of Youth". And he also frankly addresses the downsides of capitalism. The book begins with the division of labor as a powerful means of adding productivity. But later (pp. 839-41 in my Modern Library edition), he recognizes the destructive effects of division of labor and, in response, recommends government investment in public education. As one who once earned a good living as a computer programmer, and who is now retraining, I am finding perennial relevance in The Wealth of Nations.

To be an economist without having read "The Wealth of Nations" is like being a priest without having read the Bible. As is often the case with second hand accounts, textbooks have distorted and watered down Adam Smith. Going back to the original text is both refreshing and enlightening.The "Wealth of Nations" remains the most truthful defense of the economic science. But remember that Adam Smith also wrote "The Theory of Moral Sentiments"; for Smith, economics was a search to better people's life rather than simply a quest to optimize mathematical functions or estimate variables using econometric models. To simply associate Smith with expressions such as the "invisible hand," does not do him justice. Take, for example, the opening chapter on the division of labor: first, Smith defends the division of labor as being efficient; then, he defends it as an essential component of the freedom to allocate one's labor to one's talents; finally, he links the division of labor to trade: without the freedom to exchange the fruits of one's labor, the division of labor is meaningless. The point is that Adam Smith defends the rationale for the market, rather than just explain its mechanics.Anyone studying economics in school would think that economics is all about efficiency; this preoccupation, inevitably, breeds economists who support the market simply because it works. But to read Adam Smith is to enter the realm of an economic science where the ultimate benchmark is not efficiency but human freedom and welfare. That is, probably, what Smith would remark if he were to sit in an economics class today, and why the "Wealth of Nations" is as revolutionary today as it was two centuries ago.

I am reviewing the Modern Library Classics version with an introduction by former labor secretary Robert Reich. To minimize repetition, the differences for this version: This massive book is complete and unabridged (all five books). There is a great added feature in the form of small summary notes in the margin that accompany each paragraph. Adam Smith was a masterful writer of prose and communicates some of the most important economic and philosophical ideas in the history of western civilization. Economic theory never read so beautifully. An interesting choice for an introduction is Robert Reich. He is one of the few intellectuals from the left, and while I disagree with him more often than not, I respect his thought process. He offers his interpretation of Smith and how the ideas found in TWoN fit neatly with his positions. Selective reasoning or not, Reich does offer a nice summary line: "In these times, as when Adam Smith wrote, it is important to remind ourselves of the revolutionary notion at the heart of Smith's opus-that the wealth of a nation is measured not by its accumulated riches, but by the productivity and living standards of all its people." Nicely said and I agree. I just disagree with Reich and his ilk on how the "wealth" of the modern nation is achieved. Adam Smith offers the roadmap, but it is up to us to keep lawmakers in DC or [insert any central government here] from regulating and taxing us to death --relegating Smith's work to the dust bin.

When I was twenty I set out to read the seminal works of a wide range of disciplines. I read Darwin, Newton, Einstein, Hobbes, Machiavelli, Plato, Aristotle, Levi-Strauss, Jung, Campbell, Freud, Frazer (abridged), Epictetus, Keynes, Adam Smith, and others I can't remember. In most cases I was disappointed. I realised that in many cases the first exposition of an idea is difficult and obscure, and that it is the later, summarising writers who collect the best and clearest explanations of profound thoughts.The exception was Adam Smith's 'Wealth of Nations'. Only later did I discover that he began his amazingly varied academic career as a teacher of English prose style. It came as no surprise.Smith's writing is a brilliant as Gibbon, but even more lucid. His insight is profound. And his marvellous style of explanation makes the reader feel like a genius. Somewhat to my astonishment, the only part of his argument that I found at all difficult was the section on international exchange, which I had to translate from terms of flow of specie to terms of exchange rates of fiat currencies. Of all that stuff I read that year, Smith's 'Wealth of Nations' was the clearest, most persuasive, and most inspiring.It is because of Smith that the next year I took up the study of economics at the Australian National University. I came first in my class: my prize? A copy of 'The Wealth of Nations', much appreciated.

Adam Smith's Wealth of Nations brilliantly analyzes how a nation's living standards can be raised. In large part his wisdom still applies today. To briefly summarize Smith's thinking:1. Standards of living are determined by the productivity of workers. 2. Productivity of workers is greatly enhanced by specialization (see the famous example of the pin factory in the first chapter!).3. Greater specialization is possible only if the market size grows. Thus, government laws that prohibit growth of the market hurt specialization, and thereby keep living standards from rising. This is why Smith opposed laws that restricted trade or created monopolies. Smith actively worked to keep Britain from going to war against its American colonies over trade issues. The Wealth of Nations is a political tract designed to sway the British parliament (obviously it failed in that regard).4. Productivity of workers is enhanced by raising their wages. 5. Productivity of workers is enhanced by publicly funded education.6. The role of markets is exquisitely analyzed by Smith. Self-interest leads people to carry out private activities that lead to social betterment, as if by an "invisible hand." 7. It is a serious misinterpretation of Smith to assert that greed or selfishness is the same as self-interest. Smith labored hard to avoid any such confusion. Please see his other book which addresses this specific issue: The Theory of Moral Sentiments.8. Clearly Smith favored limited government. But Smith was NOT a strict advocate of laissez-faire. He ended his illustrious career as commissioner of customs, a job he took seriously, and which he would not have taken had he not thought this level of intervention in the economy warranted.Read the first three chapters of WN: they contain the essence of the arguments above. Then look in the index to find reference to the "invisible hand" "monopoly" "colonies" and other subjects of interest.Buy the GLASGOW EDITION of the Wealth of Nations. This is the most up-to-date annotated version. It is available (very cheaply) from the Liberty Fund Press in America. If you only want one copy, that is the only one to buy today.