The Wealth of Nations by Adam Smith is a treatise on classical liberal economic thought. It is also an excellent primer on the subject of personal and economic freedom. Smith contends that a free society should be protected from economic forces that steal wealth from its people.
Classical liberalism, or classical liberal capitalism, was the idealism of the age. It was founded on the belief that all men are created equal and have legitimate rights to economic freedom. The classical liberal economic theory maintains that markets provide consumers with goods and services at reasonable prices. Because markets are competitive, all businesses must stay afloat to survive, and the government must intervene if it is serious about limiting competition.
The problem with this theory is that it ignores the reality of contemporary free markets. Free markets, after all, do not operate in a vacuum. They are constantly surrounded by forces that will seek to manipulate them for their own benefit. A perfect utopia based on classical liberal capitalism would have no obstacles in its pursuit of economic equality. Instead, all individuals would freely choose whatever economic systems they desired. A society based on such principles could never fail because no force in the world would attempt to skew the scales.
The Wealth of Nations by Adam Smith effectively shows how such a scenario would not work out well. By utilizing his principles regarding free markets, he shows how powerful forces can affect free societies. For instance, through the use of state-monopoly money, a nation’s economy becomes captive to lenders who control the money supply.
Because of this, Smith reveals how small countries can easily succumb to powerful international financiers and how large nations can become impoverished through excessive levels of taxation. Additionally, he shows how a classical liberal policy can be manipulated by selfish interests. For instance, an interest group, lobby, or political faction may decide to increase taxes to increase their wealth at the expense of others. A classical liberal government is forced to deal with such issues because it cannot do anything to stop itself.
Smith also shows how nations with a classical liberal outlook can become wealthy without working for any amount of capital. In earlier writings, he has argued that labor should be taxed because it enables nations to exploit cheap labor worldwide. However, Adam Smith shows how labor can be controlled through taxation and that there is no need to tax capital. For this reason, he suggests that capital controls or restrictions should be put in place before wealth can be legitimately amassed. For instance, capital goods like factories and ships can be controlled through taxation to prevent economic inequality.
The Wealth of Nations by Adam Smith is not a book about getting rich through natural means. It is rather about how humans can become morally superior to nature in the course of history. The principles laid out in the book make it clear that individuals and nations are obligated to each other through force. However, it also teaches individuals to rely on the wisdom and knowledge of their fellow human beings. This helps humans preserve their social relationships and work together to produce the wealth that all of humanity possesses.
The Wealth of Nations by Adam Smith is an extremely valuable guide to studying human action and its causes and effects. The principles laid out in the book make it clear that individuals have the right to pursue happiness by acting independently and that they are not obligated to blindly follow another person’s actions. The principles also show that there is a natural order to things, making it impossible for a single person or group to benefit from another’s action. However, it is important to remember that just because the principles are written down does not mean that the reader will necessarily apply them in their lives. Reading the work leisurely and often -taught can help people develop the proper attitude for making these valuable suggestions. By doing so, people will have a much better understanding of the principles of classical-liberal thought, and they will be able to take the ideas they learn and apply them to their own lives.
