Wealth of Nations - Smith

Adam Smith wrote 'An Inquiry into the Nature and Causes of the Wealth of Nations' because he wanted to tell the world how it was that some areas were wealthy and some were poor.  It was interesting to read The Wealth of Nations (well, Book One, through Chapter 9) in part because his ideas are considered close to settled science.  I don't know how revolutionary they were in his day but they must have caused some consternation.  He's clearly arguing against his contemporary practices, especially mercantilism.
Smith argued that the self interest of merchants was a positive market force.

He will be more likely to prevail if he can interest their self-love in his favour, and shew them that it is for their own advantage to do for him what he requires of them. Whoever offers to another a bargain of any kind, proposes to do this. Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.

In other words, in every deal that is freely struck, both parties benefit.  If the price of a loaf of bread is the price that you will buy it at, you are, by definition, not being taken advantage of.  The couple of dollars is worth less to you, than the time, expertise and labor it would take to gather the ingredients and make it yourself.  This one concept needs to be taught much, much more than it is.
Smith also talked (at great lengths) on the benefits of division of labor.  He also writes (again at great length) at how attempts to put less precious metal in coins, simply leads to inflated prices.  Both of these concepts are important, but they're pretty well absorbed into financial discourse.
One point he made that I'd never heard before is that the size of a market, alone, can increase value throughout.  The more potential customers a product has, the easier it is for a seller to find a good price to sell at.  And the more sellers a customer has, the better the chance of finding a better price to buy at.  He suggests, for example, that the difficulty of travel is responsible for Africa's relative poverty.
A difficult read, and perhaps one that would work better in summaries.  But if Smith hadn't written 'A Wealth of Nations' would we know as much as we do today?

Biography of Adam Smith

Adam Smith was born around the 5th of June, 1723.  His father was a lawyer and he died about two months after young Adam was born.  He was very close with his mother who encouraged him to study and read.  (At some point I'll go back and see how many of the Great Books authors came from well-to-do families.  The vast majority to this point.)  Apparently he was abducted by Gypsies (!) when he was four but was quickly rescued. 
He started university studies in Glasgow but was awarded a scholarship to go to one of the Oxford colleges.  Smith thought that the atmosphere in Glasgow was better for study.  In Book five of  'Wealth of Nations' he wrote, "In the University of Oxford, the greater part of the public professors have, for these many years, given up altogether even the pretence of teaching." 
In 1748, he was back in Glasgow and giving lectures.  There he met David Hume, and the two became very close.  In short time he became a full professor and a member of the Philosophical Society of Edinburgh.  Smith later saw this academic period as one of the most productive times of his life. 
In 1759, Smith published 'Theory of Moral Sentiments' and it made him an intellectual star.  He continued to teach and tutor.  His tutoring led him to travel throughout Europe and that meant Smith had an opportunity to rub shoulders with various intellectuals in Paris.  This included meeting Benjamin Franklin.  It was here that Smith met with some French economists, who greatly influenced his thinking.
Smith published 'An Inquiry into the Nature and Causes of the Wealth of Nations' in 1776.  It was an instant success.  Two years later he was given a post in Scotland.  He returned there and died in 1790.  On his deathbed, he had regrets that he hadn't accomplished more. 

December Reading

Two selections for December:

• Adam Smith - The Wealth of Nations, Book One, through Chap. 9 link
• Marx/Engles - Communist Manifesto link

Yes, we're deep into economics this month.  I haven't read either pieces, though I've read quite a bit about each one.  My early economic knowledge was informed by Ayn Rand's 'Capitalism: the Unknown Ideal'.  If I recall, she was broadly on board with Smith. 
Similarly, I've been anti-communist since I was very young.  I'm going to try very hard though, to read the Manifesto in the sense of the period in which it was written.  In other words, in terms of how things looked at that stage of the industrial revolution and fairly new democracies.  Maybe after I'll write about how various communist attempts have worked out.

December Reading

Two things for December

• Adam Smith - The Wealth of Nations, Introduction and Book One link
• Marx, Engles - Manifest of the Communist Party link