ID: The Wealth of Nations
When: 1776 (Published)
Who:
- Author: Adam Smith
What:
A groundbreaking work of economic theory published by Adam Smith. It argues for a free market system, based on the principles of self-interest, competition, and the “invisible hand” regulating supply and demand. Smith critiques mercantilism and advocates for laissez-faire economics. Key concepts introduced include the division of labor and the concept of national wealth not being based solely on gold and silver reserves, but on the production and exchange of goods and services.
Impact: Why Significant?:
- Foundation of Classical Economics: The Wealth of Nations laid the groundwork for classical economic theory and significantly influenced subsequent economic thought.
- Influence on American Capitalism: Its principles deeply influenced the development of American capitalism and shaped economic policies, although the extent and nuance of this influence is debated among historians.
- Critique of Mercantilism: Smith’s critique of mercantilism, a prevailing economic system of the time, challenged existing economic structures and promoted a more free-market approach.
- Promotion of Free Markets: The book championed the idea of free markets and limited government intervention, promoting competition and efficiency.
- Division of Labor: Smith’s analysis of the division of labor highlighted its productivity-enhancing effects, shaping industrial practices for centuries.
- Long-Term Impact: The book continues to be studied and debated, demonstrating its lasting influence on economics and societal understanding of wealth creation.