Adam Smith explains why Europe was economically stronger than the Pre-Colombian peoples of America.

All the ancient arts of Mexico and Peru have never furnished one single manufacture to Europe (p. 162).

Good point. Pre-Colombian America had a wealth of architectural achievements: Machu Pichu, Tikal, etc. Yet when it came to trade, they manufactured nothing. Their wealth came from the land, via gold and tropical fruits. And they were able to expand their empires via war. Yet they never created a notable product that was bought and sold in foreign markets.

Today, we can see the wealth of nations in a similar way. What nations are manufacturing items? America, Japan, Germany…these are the wealthy countries. Conversely, most of the poor nations—like Haiti or Bolivia—manufacture nothing. Have you ever seen a Haitian or Bolivian car for sale? What about a refrigerator?  Or a stereo? You get my point.

Manufacturing requires great skill. It indicates a society that, at its base, is highly developed:

  • Intellectual skill: the ability to create a new item: car, refrigerator, etc.
  • Organizational skill: the ability to create many of the items in question via factories
  • Distribution skill: the ability to disseminate the item throughout the culture and world

Manufacture is more than a word – it shows the greatness of a people. It highlights a nation that’s dreaming bigger, that’s pushing farther. It requires the genius of the inventor and the integrity of a people. And make no mistake about it…the eyes of the world are centered on the nations that manufacture goods.

For a link to the book, see the following:  Wealth of Nations PDF

9 thoughts on “Adam Smith on the Economic Difference Between Europe and Pre-Colombian America

  1. Whilst manufacture is one of the differences between nations as you describe I don’t think it fully explains the differences. For example, in the strictest sense, the UK is no longer classed as a manufacturing nation but is still one of the strongest economies in the world. For a modern day explanation “Why Nations Fail” by Acemoglu and Robinson gets very close to it in their description of Inclusive vs Extractive institutions and politics. They certainly debunk things like geography, culture, natural resources amongst other things as being determinants. One of their recurring examples is of Mexico and the US, separated by a river (or a wall!) with many common elements between them yet a chasm in relation to economics. They put it down to the extractive nature of almost every national institution that is not serving the people but serving the few; government bureaucracy that is not serving the people, corrupt politicians who extract all they can personally …..
    “A brilliant and uplifting book—yet also a deeply disturbing wake-up call. Acemoglu and Robinson lay out a convincing theory of almost everything to do with economic development. Countries rise when they put in place the right pro-growth political institutions and they fail—often spectacularly—when those institutions ossify or fail to adapt. Powerful people always and everywhere seek to grab complete control over government, undermining broader social progress for their own greed. Keep those people in check with effective democracy or watch your nation fail.” —Simon Johnson, coauthor of 13 Bankers and professor at MIT Sloan

    1. “For a modern day explanation “Why Nations Fail” by Acemoglu and Robinson gets very close to it..”

      Thanks for the recommendation. I’ve added it to my list. 🙂

      1. Dr B…you’re keeping my busy! 🙂

        But I appreciate it. I respect your perspective on material…and I’m always open to a new take on something.

      2. I’ll be seeking your perspective soon on a birthday test for me in April ….. Trans America Rail, 21 days San Francisco to New York !!! Entry permitting 😂😂😂

      3. Oh wow…that should be great. Lots to see, no doubt. Cool sites abound, but nature reigns supreme in my opinion (Yellowstone, Yosemite, Grand Canyon, etc.).

      4. Maybe not in the correct sequence: SF, Las Vegas, Yosemite, Grand Canyon, Monument Valley, Durango, Silverton, Denver, Chicago, Buffalo/Niagara, NY. Two overnights on Amtrak, variable number of days in each town. Adds to my earlier collection of Miami, Memphis, New Orleans!

    2. “For example, in the strictest sense, the UK is no longer classed as a manufacturing nation but is still one of the strongest economies in the world.”

      Point well taken.

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