Wealth of Nations Short Summary
- Date:Jul 31, 2019
- Category:Wealth of Nations
- Topic:Wealth of Nations Summaries
In this book, Adam Smith delves into the economic concepts that drive the global economy. In the first part of the book, the author introduces the basic economic concepts that are to be explained in the rest of the piece. These aspects include the prices, the concept of labor division, and stocks. The author says that money does not determine the wealth a nation has. It is just the storage of wealth. The real wealth is contained in labor and other commodities. In Smith’s view are made up of three components; the payment offered to labor in the form of wages, profits obtained from stock, and rent paid to the landlords.
The author later delves into the concept of stock. He subdivides stock into capital and revenue. He asserts that society should store stock in the form of investment instead of spending in unproductive activities. Smith maintains that domestic trade has more benefits compared to international trade because more goods are being exchanged.
In the next section, Smith delves into the explaining economic situation in the Roman Empire. He concludes that a natural economic model favors agriculture, followed by manufacturing, and trade.
It can be seen that Smith is opposed to the mercantilist economic system that was the most predominant during his period. In the model, wealth was created by reducing the number of imports and increasing exports. Mercantilism was aimed at ensuring the country accumulated gold and silver. In Smith’s view, this system made the country poorer as less revenue is accumulated.
In the last section, Smith insists that some expenses by the government cannot be avoided. Such activities have to be financed using taxes. Additionally, the government should look at ways of reducing the cost by doing away with the colonies that perform poorly.