Book Review: The Wealth of Nations by Adam Smith: A foundational work in classical economics

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The Wealth of Nations is one of the most significant works in economics history, and is a foundational text of classical economics. Written at a time when the Industrial Revolution was changing the face of Western societies, the book seeks to explain why some countries are wealthier than others and how a fair, productive society can be created. In particular, Smith’s advocacy of division of labour, free trade and free markets, with equilibrium guaranteed by the so-called “invisible hand of the market”, proved extremely influential in the UK and USA and shaped our modern economic system. The work is still widely studied today, and remains one of the most cited texts in the social sciences.

This book review and analysis is perfect for: 
• Students of economic theory and the history of economics
• Anyone who wants to gain a greater understanding of classical economics
• Anyone who is curious about why some countries are wealthier than others

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The Book Review series from the 50Minutes collection is aimed at anyone who is looking to learn from experts in their field without spending hours reading endless pages of information. Our reviews present a concise summary of the main points of each book, as well as providing context, different perspectives and concrete examples to illustrate the key concepts.

• Language: English
• Publisher: 50Minutes.com
• Release date: Apr 4, 2019
• ISBN: 9782808017664

Book preview

AN INTRODUCTION TO FREE TRADE AND FREE MARKETS IN A DEVELOPING WORLD

The Wealth of Nations, shortened from its full title An Inquiry into the Nature and Causes of the Wealth of Nations, is the most notable work of the Scottish economist and philosopher Adam Smith. The book is often revered as the foundation of classical economics, as it details what exactly builds a nation’s wealth, explains why certain nations are wealthier than similar nations and provides critiques of the current labour model.

The book reflects on the Industrial Revolution and how economics has evolved in regard to rapid changes in production. It details many aspects of economic theory, such as the division of labour, standards of productivity and the effectiveness of free markets and free trade. As the world began to develop, Smith’s works garnered increasing acclaim. The new political ideas he put forward would even affect legislation for centuries to come.

KEY INFORMATION

Reference edition: Smith, A. (1776) An Inquiry into the Nature and Causes of the Wealth of Nations. London: W. Strahan and T. Cadell.

1stedition: 1776

Authors: Adam Smith (Scottish economist and philosopher, 1723-1790)

Fields: economics, philosophy

Key words:

Free trade: a policy in which a government does not discriminate against imports or interfere with exports by applying tariffs (to imports) or subsidies (to exports). Free trade does not necessarily imply that a country abandons all control and taxation of imports and exports.

Free market: an unregulated system of economic exchange, in which taxes, quality controls, quotas, tariffs, and other forms of centralised economic interventions by government either do not exist or are minimal.

Division of labour: an economic concept which states that dividing the production process into different stages enables workers to focus on specific tasks. If workers can concentrate on one small aspect of production, this increases overall efficiency – so long as the volume and quantity produced are high enough.

Mercantilism: an economic