The Wealth of Nations is—far and away—the most difficult book I’ve read. The writing is dense and the ideas are complex. The book is a behemoth…a paragon in the Libraries of History.
Smith is a legendary thinker. He covers a wide array of topics, from the Chinese economy to the barter system of Ancient Peru. During the process, we realize that we’re in the presence of a GREAT MAN. He’s an economist, a historian, a philosopher…in short, he’s the Age of Enlightenment personified.
Here’s what I took away from the book:
Agriculture is a Vital Part of a Country’s Economy
Smith believed in agriculture. He points out that a country must—first and foremost—be able to feed itself. It needs to produce bread, rice, etc. And when a country cannot feed itself, it’s an economic liability.
The examples are numerous—just look at the Irish Potato famine. Once they lost the ability to feed themselves, a tragedy ensued. Another example can be seen in modern-day Venezuela, which did away with much of its agriculture. When a financial crisis occurred, the people were lacking in basic food commodities. Just look at how many supermarkets were raided in downtown Caracas.
Paper Money Should Be Connected to a Precious Money
According to Smith, paper money needs to be tied to a precious metal: gold, silver, etc. This prevents the country from printing paper money at will, which leads to inflation. Smith provides numerous examples, going as far back as the Roman Empire’s use of bronze as a way to stabilize its currency.
Needless to say, the United States is currently in this dilemma. Since it left the gold standard, the inflation has slowly been rising. This accounts for the fact that a dinner that once was worth five cents (such as in 1920) is now worth fifteen dollars. If the situation spirals out of control—such as in Venezuela—then the paper money can become pointless. Note how in Caracas, you need a backpack full of money to buy a lunch.
Every Armed Conflict Has an Economic Story
The Wealth of Nations was written in 1776…the year of American independence. Smith goes into great detail about the war. He points to the economic underpinnings of the battle, explaining an angle that’s rarely talked about. Through this lens, the American War of Independence was more than a fight for sovereignty—it’s was an economic battle.
How many wars are fought over money? What’s the real story behind any armed conflict? What about the Syrian battle? The Iraqi invasion? Money plays a huge role in these conflicts. Smith reminds us about the “unspoken cause of war” the conflict that’s always at play—the battle between a creditor and a debtor.
I highly recommend The Wealth of Nations. Regardless of your major, you should read this book. It will bring you up to speed with “the best in what’s been thought and said.” Adam Smith should be on the bookshelf of any self-respecting bibliophile.
4 thoughts on “Book Review: The Wealth of Nations by Adam Smith”
Sorry to do this to you again Ron, but I read this during the 80s when I discovered that Margaret Thatcher carried a copy in her handbag! It was probably partially there as a bit of extra weight to belt her ministers across the head if they disagreed with her!!
Ha! I love that tidbit…
I just picked this one up after seeing so many people online who claim to be experts on economic theory.
Good luck on that one, Ethan. It challenged me more than any book I have ever read!