Adam Smith’s Classic of Modern Economic Thought

by Admin on April 30, 2012 · Business & Economics

The Wealth of the Nations by Adam Smith

In a 1776 publication of a book with the title An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith (1723-1790) declared that the difference between wealth and poverty of a nation is relative to the freedom of its markets and the degree to which the average person shares in the overall growth of that nation’s economy. Today, the first edition of the 2 volumes of the Wealth of Nations, published by W. Strahan & T. Cadell, is worth over a quarter of a million US dollars. The book is very scarce and its price performance is hard to track due to a very limited transaction activity. As a result, the Rare Book Sale Monitor is showing a lukewarm performance in the category of Business and Economics in general, for the last two years in a row.

In the most recent years of harsh economic times, many developed world nations including USA, Ireland, Greece, Spain, Italy and more recently the Netherlands, have experienced firsthand what it means to be in a financial crisis. People of these nations are raising questions as to how different markets, financial institutions and institutions of state work. Some people argue that the economic difficulties of today do not, call for some “new capitalism”, but they do demand an open-minded understanding of older ideas about the reach and limits of the world market economy.

Adam Smith never used the term capitalism to describe his economic thoughts. In his book The Wealth of Nations, he talked about the important role of broader values for the choice of behavior, as well as the importance of institutions. It was in his first book, The Theory of Moral Sentiments, that he extensively investigated the powerful role of non-profit values. He argued that “humanity, justice, generosity, and public spirit, are the qualities most useful to others”.

Considered to be the first and greatest classic of modern economic thought, The Wealth of Nations, ends with a historic account of economic development, an attack on the mercantile system, and some advanced warnings on the limits of economic control. Adam Smith warned that a true laissez-faire economy would quickly become a conspiracy of businesses and industry against consumers, with the former scheming to influence politics and legislation.

Adam Smith spent ten years in the writing and perfecting of The Wealth of Nations. The book succeeded at once, and the first edition was exhausted in six months. W. Strahan & T. Cadell, of London in 1778 published the second edition which is as scarce as the first with only 500 copies printed and is the only other edition published in quarto format. This second edition exhibits a number of alterations large and small and is valued at around $200,000. The same publisher released the third edition in 3 volumes in 1784 which is easier to come across and can be purchased for less than $20,000. The first American edition was printed in 1789 by Thomas Dobson which was taken from the fourth London edition and is available at the more affordable price of around $10,000.

A truly visionary collection of economic thought that is arguably the most important and influential economic treatise of all time, especially when examined through the lenses of times such as the ones we are currently experiencing. This financial crisis and the special circumstances that caused it have prompted Smith’s book to become the object of historical enquiry. The Wealth of Nations had no rival in scope or depth when first published and it is still one of the few works in the field that have sustained critical and adulatory behavior for more than 230 years later.

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