Adam Smith - The Wealth of Nations

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The foundation for all modern economic thought and political economy, «The Wealth of Nations» is the magnum opus of Scottish economist Adam Smith, who introduces the world to the very idea of economics and capitalism in the modern sense of the words. Smith details his argument in the following five books:
Introduction and plan of the work
Part 1 Of the Causes of Improvement in the productive Powers of Labour, and of the Order according to which its Produce is naturally distributed among the different Ranks of the People
Chapter 1 Of the Division of Labour
Chapter 2 Of the Principle which gives Occasion to the Division of Labour
Chapter 3 That the Division of Labour is limited by the Extent of the Market
Chapter 4 Of the Origin and Use of Money
Chapter 5 Of the real and nominal Price of Commodities, or of their Price in Labour, and their Price in Money
Chapter 6 Of the component Parts of the Price of Commodities
Chapter 7 Of the natural and market Price of Commodities
Chapter 8 Of the Wages of Labour
Chapter 9 Of the Profits of Stock
Chapter 10 Of Wages and Profit in the different Employments of Labour and Stock
Chapter 11 Of the Rent of Land
1. First Period
2. Second Period
3. Third Period
4. First Sort
5. Second Sort
6. Third Sort
7. Conclusion of the chapter
Part 2 Of the Nature, Accumulation, and Employment of Stock
Chapter 1 Of the Division of Stock
Chapter 2 Of Money considered as a particular Branch of the general Stock of the Society, or of the Experience of maintaining the National Capital
Chapter 3 Of the Accumulation of Capital, or of productive and unproductive Labour
Chapter 4 Of Stock lent at Interest
Chapter 5 Of the different Employment of Capitals
Part 3 Of the different Progress of Opulence in different Nations
Chapter 1 Of the Natural Progress of Opulence
Chapter 2 Of the Discouragement of Agriculture in the ancient State of Europe after the Fall of the Roman Empire
Chapter 3 Of the Rise and Progress of Cities and Towns, after the Fall of the Roman Empire
Chapter 4 How the Commerce of the Towns contributed to the Improvement of the Country
Part 4 Of Systems of political Economy
Chapter 1 Of the Principle of the commercial, or mercantile System
Chapter 2 Of Restraints upon the Importation from foreign Countries of such Goods as can be produced at Home
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
1. Of the Unreasonableness of those Restraints even upon the Principles of the Commercial System
2. Of the Unreasonableness of those extraordinary Restraints upon other Principles
Chapter 4 Of Drawbacks
Chapter 5 Of Bounties
Chapter 6 Of Treaties of Commerce
Chapter 7 Of Colonies
1. Of the Motives for establishing new Colonies
2. Causes of Prosperity of New Colonies
3. Of the Advantages which Europe has derived from the Discovery of America, and from that of a Passage to the East Indies by the Cape of Good Hope
Chapter 8 Conclusion of the Mercantile System
Chapter 9 Of the Agricultural Systems, or of those Systems of Political Economy, which represent the Produce of Land, as either the sole or the principal Source of the Revenue and Wealth of every Country
Part 5 Of the Revenue of the Sovereign or Commonwealth
Chapter 1 Of the Expences of the Sovereign or Commonwealth
1. Of the Expense of Defence
2. Of the Expense of Justice
3. Of the Expense of Public Works and Public Institutions
4. Of the Expense of Supporting the Dignity of the Sovereign
5. Conclusion
Chapter 2 Of the Sources of the general or public Revenue of the Society
1. Of the Funds or Sources of Revenue which may peculiarly belong to the Sovereign or Commonwealth
2. Of Taxes
Chapter 3 Of public Debts
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It is difficult to preserve potatoes through the year, and impossible to store them like corn, for two or three years together. The fear of not being able to sell them before they rot discourages their cultivation, and is, perhaps, the chief obstacle to their ever becoming in any great country, like bread, the principal vegetable food of all the different ranks of the people.

===Part 2: Of the Produce of Land which sometimes does, and sometimes does not, afford Rent===

Human food seems to be the only produce of land which always and necessarily affords some rent to the landlord. Other sorts of produce sometimes may and sometimes may not, according to different circumstances.

After food, clothing and lodging are the two great wants of mankind.

Land in its original rude state can afford the materials of clothing and lodging to a much greater number of people than it can feed. In its improved state it can sometimes feed a greater number of people than it can supply with those materials; at least in the way in which they require them, and are willing to pay for them. In the one state, therefore, there is always a superabundance of those materials, which are frequently, upon that account, of little or no value. In the other there is often a scarcity, which necessarily augments their value. In the one state a great part of them is thrown away as useless, and the price of what is used is considered as equal only to the labour and expense of fitting it for use, and can, therefore, afford no rent to the landlord. In the other they are all made use of, and there is frequently a demand for more than can be had. Somebody is always willing to give more for every part of them than what is sufficient to pay the expense of bringing them to market. Their price, therefore, can always afford some rent to the landlord.

The skins of the larger animals were the original materials of clothing. Among nations of hunters and shepherds, therefore, whose food consists chiefly in the flesh of those animals, every man, by providing himself with food, provides himself with the materials of more clothing than he can wear. If there was no foreign commerce, the greater part of them would be thrown away as things of no value. This was probably the case among the hunting nations of North America before their country was discovered by the Europeans, with whom they now exchange their surplus peltry for blankets, fire-arms, and brandy, which gives it some value. In the present commercial state of the known world, the most barbarous nations, I believe, among whom land property is established, have some foreign commerce of this kind, and find among their wealthier neighbours such a demand for all the materials of clothing which their land produces, and which can neither be wrought up nor consumed at home, as raises their price above what it costs to send them to those wealthier neighbours. It affords, therefore, some rent to the landlord. When the greater part of the highland cattle were consumed on their own hills, the exportation of their hides made the most considerable article of the commerce of that country, and what they were exchanged for afforded some addition to the rent of the highland estates. The wool of England, which in old times could neither be consumed nor wrought up at home, found a market in the then wealthier and more industrious country of Flanders, and its price afforded something to the rent of the land which produced it. In countries not better cultivated than England was then, or than the highlands of Scotland are now, and which had no foreign commerce, the materials of clothing would evidently be so superabundant that a great part of them would be thrown away as useless, and no part could afford any rent to the landlord.

The materials of lodging cannot always be transported to so great a distance as those of clothing, and do not so readily become an object of foreign commerce. When they are superabundant in the country which produces them, it frequently happens, even in the present commercial state of the world, that they are of no value to the landlord. A good stone quarry in the neighbourhood of London would afford a considerable rent. In many parts of Scotland and Wales it affords none. Barren timber for building is of great value in a populous and well-cultivated country, and the land which produces it affords a considerable rent. But in many parts of North America the landlord would be much obliged to anybody who would carry away the greater part of his large trees. In some parts of the highlands of Scotland the bark is the only part of the wood which, for want of roads and water-carriage, can be sent to market. The timber is left to rot upon the ground. When the materials of lodging are so superabundant, the part made use of is worth only the labour and expense of fitting it for that use. It affords no rent to the landlord, who generally grants the use of it to whoever takes the trouble of asking it. The demand of wealthier nations, however, sometimes enables him to get a rent for it. The paving of the streets of London has enabled the owners of some barren rocks on the coast of Scotland to draw a rent from what never afforded any before. The woods of Norway and of the coasts of the Baltic find a market in many parts of Great Britain which they could not find at home, and thereby afford some rent to their proprietors.

Countries are populous not in proportion to the number of people whom their produce can clothe and lodge, but in proportion to that of those whom it can feed. When food is provided, it is easy to find the necessary clothing and lodging. But though these are at hand, it may often be difficult to find food. In some parts even of the British dominions what is called a house may be built by one day's labour of one man. The simplest species of clothing, the skins of animals, require somewhat more labour to dress and prepare them for use. They do not, however, require a great deal. Among savage and barbarous nations, a hundredth or little more than a hundredth part of the labour of the whole year will be sufficient to provide them with such clothing and lodging as satisfy the greater part of the people. All the other ninety-nine parts are frequently no more than enough to provide them with food.

But when by the improvement and cultivation of land the labour of one family can provide food for two, the labour of half the society becomes sufficient to provide food for the whole. The other half, therefore, or at least the greater part of them, can be employed in providing other things, or in satisfying the other wants and fancies of mankind. Clothing and lodging, household furniture, and what is called Equipage, are the principal objects of the greater part of those wants and fancies. The rich man consumes no more food than his poor neighbour. In quality it may be very different, and to select and prepare it may require more labour and art; but in quantity it is very nearly the same. But compare the spacious palace and great wardrobe of the one with the hovel and the few rags of the other, and you will be sensible that the difference between their clothing, lodging, and household furniture is almost as great in quantity as it is in quality. The desire of food is limited in every man by the narrow capacity of the human stomach; but the desire of the conveniences and ornaments of building, dress, equipage, and household furniture, seems to have no limit or certain boundary. Those, therefore, who have the command of more food than they themselves can consume, are always willing to exchange the surplus, or, what is the same thing, the price of it, for gratifications of this other kind. What is over and above satisfying the limited desire is given for the amusement of those desires which cannot be satisfied, but seem to be altogether endless. The poor, in order to obtain food, exert themselves to gratify those fancies of the rich, and to obtain it more certainly they vie with one another in the cheapness and perfection of their work. The number of workmen increases with the increasing quantity of food, or with the growing improvement and cultivation of the lands; and as the nature of their business admits of the utmost subdivisions of labour, the quantity of materials which they can work up increases in a much greater proportion than their numbers. Hence arises a demand for every sort of material which human invention can employ, either usefully or ornamentally, in building, dress, equipage, or household furniture; for the fossils and minerals contained in the bowels of the earth; the precious metals, and the precious stones.

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