Purpose of the Book
Adam Smith’s book “The Wealth of Nations” talks about the productivity of the workers in their jobs. For Adam it is important that we know the division of labor to our workers it is for a better production of small task in the workplace. This was the central theme of the book it’s all about production and division of work to the employees. This is to help businessmen to treat their employees fairly as possible. Smith’s insight to the wealth of nation was really about the goods and services that it the nation is creating. The country’s future income depends on capital of the country, the more investment that are happening the better productive process will come. If people are going to build their own capital or their own business it should be secured from theft at all times, the business will grow if they managed it well and protect it very well. The Wealth of Nations begins with Smith’s talking about and explaining the production and exchange of products and what its contribution to the income. He simply explains it by using the example of pin factory; he said that having specialization to a common item can boost human productivity extremely. Clearly the book was able to characterize the state control and regulation of the economy; there is a belief that the effect of piling gold, silver and other precious materials are god for the country’s capital. A successful nation must maintain its colonies as a source of materials and it is a market for finished products manufactured in its nation. Smith argued that there is a natural human tendency towards self-interest and prosperity of work would naturally result when people are able to produce, sell and trade goods as they want. In addition, Smith looked at trade economics as a case of rising in trading goods. He also said that free market economies would be able to rise if it’s free from government regulations. Workers may contribute for the progress of the company. The book treats the nature of capital stock, the manner in which different quantities of labor is put into motion. Though there are different plans in the book Smith clearly explained what is the book is about.
Author’s qualifications and viewpoint
Adam Smith was an 18th-century philosopher renowned as the father of modern economics, and a major proponent of laissez-faire economic policies. In his first book, “The Theory of Moral Sentiments,” Smith proposed the idea of the invisible hand—the tendency of free markets to regulate themselves by means of competition, supply and demand, and self-interest. Smith is also known for his theory of compensating wage differentials, meaning that dangerous or undesirable jobs tend to pay higher wages to attract workers. Blenman.J (2017, February 7) Smith is famous for his work or book “The Wealth of Nations”, but his first work was really “The Theory of Moral Sentiments”. Smith was known to be the Father of Capitalism; he discusses charity and human ethics very precise in his books.
Thesis of the Book
Smith’s work was focused on how mercantilism was present during the British colony. He clearly states the guide to free market economies will grow if they are free from the regulation of the government. It’s like having free trade to other countries where they can freely produce and exchange goods in their chosen business market. The book is giving advices to the readers on how well they can manage a business and helps the nation to grow some capital. And how the nation can cope up with the changes in the market and how they can set goals in their businesses. The greatest improvements can be seen when there is equal trade and equal distribution of work in the company. There may be some consequences but there are a lot lessons to be learned in the book. And how a person can help to keep the wealth of a nation to be stable.Summary of Contents
In the introduction of the book, Adam Smith starts by making a statement that he was going to talk about “wealth” and how certain countries will tend to have more wealth than the others. The introduction tends to give us a brief background on what is the book going to talk about. it usually depends on the number of people that is going to be productive in their work. Smith wants to figure out the proportion in every nation must be regulated by different circumstances. First, is by skill and judgment which labor is applied. Second, was the proportion between the number of those who are employed in useful labor.
Chapter I- Division of LabourAdam Smith wants us to be informed that the one of the biggest achievements of wealthy countries is the division of labor. The greatest manufacturers are destined to supply the wants of the people; there are different branches of work that you can employ a number of workmen. He also gave an example that you are a pin-maker who probably don’t have enough idea on how to make a pin but still insist to do one pin per day. But when you ten specialized people in the industry one man can draw the wire another one can straight it then the last one will be the one to cut it. We must divide the work equally because we are all just humans who gets tired when there’s a lot of work to do. And if you saw someone who did their job very well you must reward them for them to be able to be more motivated at their work.
Chapter 2- Of the Principle Which Gives Occasion to the Division of LabourIn chapter 1 we learned that having a division of labor is very important. But Smith thinks that it is more important to create a wealthy nation that has open trade with other countries. As we go through the lessons of Smith in the book. We learned that as we grow up we had different choices to make, each one of us has a different talents. As we grow older and when we are mature enough we distinguished what do we really want in life. What profession we would like to pursue. Some of us go into specialized jobs and use this to create and sell products. Smith tells us that “each animal is obliged to support and defend itself, separately and independently.” And us a student for us to be able to do our work properly we must analyze ourselves where do we really fit. What kind of thing that we want to do.
Chapter 3- That the Division of Labour is Limited by the Extent of the Market
There are a lot of factors when it comes to choosing what kind of job you want. Adam Smith tells us that you can only exchange products to certain people because not everyone is easy to please. There are factors you have to consider when you choose a job it is the time and place of the work salary and etc., he also wants to tell us that is great to live near the water or by the seashore because in that way it is easy for you to export and import some products to another country. For example, country workmen are obliged to apply themselves everywhere to the different branches of industry. You must consider these factors in choosing your market are so that your business will be successful.
Chapter 4- Of the Origin and Use of Money
When it comes to money there is a lot of risk because you might end up empty. Smith talks about the use of metals were attended with two inconveniences; first is the trouble in weighing them and secondly assaying them. The metals, has a small differences in the quantity that makes a great difference in value. For example, you have to trade them there are a lot of consequences in trading them because you might lose or end up getting broke. Smith said that “the inconveniency and difficulty of weighing those metals with exactness, gave occasion to the institution of coins.”. If you tend to start a small business you must know the risks.
Chapter 5- Of the Real and Nominal Price of Commodities, or of their Price in Labour, and their Price in Money
Every man deserves to be paid in what work they have done. It is to be fair to the labor that they had done. He/she must receive the right amount of payment for them to be able to be motivated at their work. “Equal quantities of labour, at all times and places , may be said to be of equal value to the labourer.” In this statement, in order to receive a better service we must pay the price right. Nominal value of money is the amount of money that you paid.
Chapter 6- Of the Component Part of the Price of Commodities
Smith said that there are a lot of jobs that requires more skill and expertise than the others. For example, there are two different manufacturers, in each there are 20 workmen who are employed. There rate is 15 pounds a year each, and the expense was 300 a year in each manufactory. The price of their work must match to the price of commodities that they had occurred. The real value of all the different component parts of price must be observed the quantity of labor and the purchase of command.
Chapter 7- Of the Natural and Market Price of Commodities
In this chapter we are talking about the market price of the labor which there must be an average wage for the people to make their work. The average wage works the same way with the products and prices. And it is all determined by the Law of Supply and Demand. When the price of any commodity is more or less with what is sufficient to pay, the commodity is then sold precisely for what it is worth. There 2 things you have to looked for when you are looking at the price of labor and products. Which the supply and demand. The market price of every commodity is regulated by the proportion between the quantity which is brought in the market. Adam Smith wants us to understand what is like to control people’s wages.
Chapter 8- Of the Wages of LabourIn this chapter Smith wants to clear things for us that there are corrupt business people in the business industry. Because there had been incidents where there are biased treatments. For example, you are a son/daughter of the President of the Company there will be instances that even though you lack experience you might have the tendency to have a higher salary than others. The price of the wages of the workers must be able to supply them for their everyday lives.
Chapter 9- Of the Profits of Stock
When you increase the stock, there are possibilities that wages can be raised but it tends to lower the profit of the company. When countries are open for a free trade the country has a higher possibility to be wealthier than any country. Because they are open to international competition which their country has a higher chance of opening business to another country. Henry VIII said that the wealth and revenue of the country have been continually advancing which generally requires a greater stock to carry to any sort of trade.
Chapter 10- Of Wages and Profit in the Different Employments of Labour and Stock
There are 2 parts of this chapter the first part was about inequalities arising from the nature of the employments themselves. There 5 principal circumstances in some employments. First, agreeableness or disagreeableness of the employments themselves; Second, easiness and cheapness, third the constancy or inconstancy of employment in them. Fourth, small or great trust and last the probability or improbability of success in them. these 5 circumstances is about the wages of labor of the employees. A job’s wage will depend on how they perform their job. and usually other jobs requires skill. And you have to pay more to attract them to apply to this job. The second part of this chapter is about inequalities occasioned by the Policy of Europe.
Chapter 11- Of the Rent of Land
Rent was considered to be the price paid for the use of land. Adam Smith said that it was the highest which a tenant afford to pay. For him landlords are the worst because they don’t exert effort to earn money for living. While others tend to work 8-10 hours a day while the landlords are just their waiting for someone to pay rent.
This part of the book tackles personal stocks of wealth. Smith tells us that some of us need to do hard work for us to be able to be rich. When people tend to save money there is a higher chance that they will have investment in the future.
Chapter 1- Of the Division of Stock
There are 2 different ways in which capital may be employed. The first one was about circulating capital where the cash circulates it usually don’t turn into a real money until it reach to the point where the owner cashes it in. The second was, fixed capital where the owner is very sure that he/ she is making money.
Chapter 2- Of Money Considered as a Particular Branch of the General Stock of the Society, or of the Expense of Maintaining the National Capital
In this chapter Adam Smith, wants us to learn more about the difference between gross and net revenue. Gross revenue is recorded while the net revenue is usually reported when there is a commission that needs to be recognized. (Hong, 2017). The wealth of the country cannot be measured it can only be recognized when there’s a lot of stuff happening that is capable of controlling it.
Chapter 3- Of the Accumulation of Capital, or of Productive and Unproductive LabourThere are two types of labor. It is productive and unproductive labor. When people tend to focus on their jobs they tend to finish it earlier, we cannot take our job for granted. Smith wants us to learn that it doesn’t matter how much money does a country have the important thing is what goods does country produces and if the goods are being valued well.
Chapter 4- Of Stock Lent at Interest
Smith said that when the stock is lent at interest it will always be considered as a capital by the lender. If a man borrows in order to spend it for personal use then he/she will soon be ruined. We must return it right away the money that we lent for us to be able to have a stable and peaceful business.
Chapter 5- Of the Different Employments of Capitals
There are four methods of employing. This will help us to employ people when we tend to have our own business someday. Adam Smith believes that when the government doesn’t care about any private businesses the business turns out to be a success. The same capital in a country will have to put motion into a greater or smaller quantity. Whenever a country produces goods there are possibilities that they have so much to offer to another country.
Chapter 1- Of Natural Progress of Opulence
This chapter talks about how to improve a land necessarily, the priority of every country is to improve the land that they had. Agricultural land can belong to the foreign trade.
Chapter 2- Of the Discouragement of Agriculture in the Ancient State of Europe After the Fall of the Roman Empire
Smith just describes the process in this chapter which involves the slaves of modern Europe. He just tells us a story why slaves don’t make sense. Because they don’t have something to offer to their country.Chapter 3- Of the Rise and Progress of Cities and Towns, after the Fall of the Roman Empire
In this chapter Adam Smith talks about the fall of the Roman Empire. That he thinks that the world doesn’t have any law because of what is happening in Europe.
Chapter 4- How the Commerce of the Towns Contributed to the Improvement of the Country
The cities did a great job on creating a good government. After the fall of the Roman Empire the owners of the land seems privileged. Many people bought a lot of land to use it and turn it to a agricultural land. There are a lot of things that happened in the past which I think they learned a lot of lesson from it.
Of Systems of Political Economy
Political economy was considered as the branch and science of every statesman in the country. It has been said that it use to propose and enrich both the people and the sovereign.
Chapter 1- Of the Principle of the Commercial or Mercantile System
He criticizes the economy and policies of one nation. There are a lot of policies that have been discussed in the public. He criticizes the idea of money in wealth.
Chapter 2- Of Restraints Upon the Importation from Foreign Countries of Such Goods as can be Produced at Home
In this chapter, they talked about the duties of the foreign countries when it comes to monopolistic market. Also, they mentioned about Great Britain’s monopoly home market.
Chapter 3- Of the Extraordinary Restraints upon the Importation of Goods of almost all Kinds, from those Countries with which the Balance is supposed to be Disadvantageous
When we trade with other countries we must know all the advantages and disadvantages of it because when we don’t have enough knowledge about it we might end up getting broke. When we enter free trade we must know the rotation of business in the country on how would they import and export goods. They also tackled in this chapter that in England there are a lot of poor people and you can distinguished them by their drinking activity.
Chapter 4- Of Drawbacks
This chapter talks about the certain drawbacks in your life. It usually a result of refunds in your goods or services. It also talks about the business in Great Britain which it became the largest part of duty upon in their importation activity.
Chapter 5- Of Bounties
Bounties are allowed in many countries this is about encouraging trade. But in this case it is a manner of you cannot force people to buy goods from your business. When you are a owner you are required to sell your goods to others but you cannot replace your business partners capital if ever. Free market is alright but you just have to make the right choices.
Chapter 6- Of Treaties of Commerce
Adam Smith talks about the case study that was concluded during the 1703. It states that Portugal and Great Britain has this treaty. The case study includes only three articles. By this treaty Portugal pays only two-thirds or their duty in competing to wine business. I t also talks about the monetary policy of Great Britain.
Chapter 7- Of Colonies
The colony of Greek and Rome was tackled in this chapter. Greece was literally a small territory than Rome. Greece was really a boring city that never had enough business to put up to. While, unlike Rome is like other republics with big businesses. Rome was founded upon the Agrarian Law. Despite of the difference between the two countries, they have established to put up for a trade.
Chapter 8- Conclusion of Mercantile System
Smith concludes that this whole system would not work. Because it will only work with the rich people but not with the poor people. The whole system was been established by merchants for their own benefit and not for the benefit of the nation. He thinks that the British government is wasting money for the expensive mercantilism of the American people.
Chapter 9- Of the Agricultural Systems, or of those Systems of Political Economy which Represent the Produce of Land, as either the Sole of the Principal Source of the Revenue and Wealth of Every Country
The “Agricultural Systems” is in contrast of the mercantilist system. Agricultural System promotes farming and it both support manufacturing and trade. Cultivation requires a lot of process.
Book 5- Of the Revenue of the Sovereign or Commonwealth
Chapter 1- Of the Expenses of the Sovereign or Commonwealth
Author’s use of evidence to support the thesis and secondary points
Contribution of the book
As I read the book and do some research about it I was impressed because as you read it, you will feel that you learned a lot from Adam Smith. I learned a lot from him and it does break a new ground for me. He does consult other sources when he’s trying to make a point. He does respect the opinion of other and when he talks about the past about the fall of the Roman Empire it turned to be really an interesting part. Throughout the book Adam Smith characterized mercantilism in this book. There are proponents of mercantilism believed that trade is a game. It was a state control and it regulates the economy of a certain country. It opens a new perspective to business owners and economist on how to trade goods and the kinds of labor does a employee do have.
Overall worth of the book
This book gave me a new perspective in life. In such way it was quite long and you got to have a lot of patience while reading this book. I would not recommend it to the person who is not really interested in knowing a lot from economics. Maybe, I can recommend it to the people who are in the business industry and people who are interested in trading. Adam Smith did really make a good work in writing this book because he sent us messages for us to learn something from him. Yes he did accomplish to write the purpose of this book. When you read it you will completely understand it. I did a lot of research for me to be able to understand deeply what Adam Smith is trying to point out in some parts of the book.
Book Review on
The Wealth of Nations
In Partial fulfillment of the requirements for the course
Basic Microeconomics with TAR
Duran, Noreen Grace A.
Bachelor of Science in Business Administration
Mr. Ron Romero