An Inquiry into the Nature and Causes of The Wealth of Nations By Adam Smith 1723-1790

1. An Inquiry into the Nature and Causes ofThe Wealth of NationsBy Adam Smith 1723-1790 “The annual labour of every nation is the fund which originally supplies it with all the necessaries and conveniences of life which it annually consumes…”

2. According to The Wealth of Nations • Wealth is not a fixed quantity - wealth is a function of productivity and therefore of people, and of the incentives which encourage them. • Even today, some people still mistakenly believe that the world’s wealth is a fixed quantity, and where one grows richer and another grows poorer.

3. The Wealth of Nations - Division of Labor • Nations have become wealthy because labour has become more productive. • Labour is more productive because it is more specialized; tasks have been divided and subdivided until anyone can easily learn to do any job and do it well. • The division of labor saves time that is lost “in passing from one species of work to another.” • The division of labour leads to invention, and it makes it easier for a worker to learn and become skilled at the job.

4. The Wealth of Nations - Market and Capital Stock • The extent of the division of labour is limited by the extent of the market. • The more people there are involved in mutual exchange, the more specialized each can be. • The accumulation of capital (stock) is also relevant - “Labour can be more and more subdivided in proportion only as stock is previously more and more accumulated”

5. The Wealth of Nations - Liberalism Laissez Faire • A system of natural liberty: a nation’s wealth is increased by whatever industry is most profitable, i.e. whatever industry produces the greatest surplus, available to support further division of labour. • “Every man, as long as he does not violate the laws of justice, is left perfectly free to pursue his own interest his own way…” • Therefore, the government should not try to direct industry into export industry, or into agriculture, or in any particular direction.

6. According to Adam Smith • Self-interest is an unchangeable part of human nature, so it is wise to let personal incentives build a richer economy. • Strong government was a great necessity, particularly to create and enforcelaws and to ensure justice.

7. Adam Smith Government and the people should do what it does best: businessmen should not control the justice system; government should not try to run businesses.

8. Adam Smith “The sovereign has only three duties: first… protecting the society from violence and invasion… secondly… protecting … every member of the society from the injustice or oppression of every other member thirdly… erecting and maintaining certain public works and certain public institutions which it can never be for the interest of any individual, or small number of individuals…”

9. According to Adam Smith 財富分配 “No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.”

10. According to Adam Smith According to Adam Smith (1723-1790) in an Inquiry into the Nature and Causes of The Wealth of Nations, wealth is a function of productivity and therefore of people, and of the incentives which encourage them.

11. According to Adam Smith “Adam Smith’s economy grows to its ‘full complement of riches’ as permitted by its laws and institutions, and there it rests.” Arthur W. Lewis, 1984