Wealth of nations a critical study.

Dr Eamonn Butler, Director of the Adam Smith Institute very rightly said, The Wealth of Nations changed our understanding of the economic world just as Newtons Principia changed our understanding of the physical world and Darwins Origin of Species. Adam Smiths theories and inferences have completely changed the way the world economy functioned. And, The Wealth of Nations is the biggest evidence for the same.

The basic theme of the book revolves around the invisible hand that guides individuals to their deeds. This when simplified means that the consequences of any action of pursuing ones needs or wants are unknown. Smith writes,
By preferring the support of domestic to that of foreign industry, he intends only his own security and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.
Book 1 of the Wealth of Nations talks about the causes of this improvement in the productive powers of nature, and the order, according to which its produce is naturally distributed among the different ranks and conditions of men in the society. He talks about division of labor and how it helps in improved productivity. He also states that one can be decided to be rich or poor only by the amount of labor he can purchase. .
In Book 2, Smith explains the nature of stock, the effects of its accumulation into capitals of different kinds, and the effects of the different employments of those capitals. He explains how the nature of the labor adds to the value of the manufactured good and how it decides it as well. He also talks about the stock lent is always considered as capital by the lender.
Book 3 records how the rural progress in Europe couldnt take place because of rapid industrialization. In fact, he writes, all for ourselves, and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind.
In Book 4, Smith attacks politics of the government which prevented industrialization and flourishing of the rural economy. He condemns government interference in the economy and irrelevant taxes and tariffs which create inefficiency and high prices of goods. Smith writes,
      It is the highest impertinence and presumption, therefore, in kings and ministers to pretend to watch over the economy of private people, and to restrain their expense. They are themselves always, and without any exception, the greatest spendthrifts in the society.
Smith in Book 5 postulates or lays down four maxims of tax, which are proportionality, transparency, convenience, and efficiency. This book deals with the revenue of commonwealth. In the earlier books, Smith argues about the economy for individual. It is the first time he talks about sovereign or commonwealth.
Smiths theories in Wealth of Nations had a huge impact on the Western world. Prior to Smith, such an extensive work on economics was unquestionable. Many nations have adapted Smiths policies and have gained innumerable results from the same. The U.S is one such example. Smiths work has established economics as a science. In Smiths own words, The propensity to truck, barter and exchange one thing for another is common to all men, and to be found in no other race of animals.

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