An Inquiry Into the Nature and Causes of the Wealth of Nations, Vol 2
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Criticizing mercantilists who sought to use the state to increase their nations' supply of precious metals, Smith points out that a nation's wealth should be measured by the well-being of its people. Prosperity in turn requires voluntary exchange of goods in a peaceful, well-ordered market. How to establish and maintain such markets? For Smith the answer lay in man's social instincts, which government may encourage by upholding social standards of decency, honesty, and virtue, but which government undermines when it unduly interferes with the intrinsically private functions of production and exchange.
tradition dominates and supplies many illustrations of early times. Given the inevitable paucity of source material for an account of an earlier age, and yet given the necessity of formulating such an account as part of an essential background to the dynamic historical evolution which he was seeking, Smith--in common with others who adopted his approach--was forced to use another group of source materials: the travellers' tales and accounts of contemporary societies which were at a much earlier
vi.Io8--9 and LJ (B) 239, ed. Cannan I85. Cf. LJ (A) vi.x x4: 'It was necessary that the government should be at the trouble and expence of coinage; no other could find their interest in it. The stamp gives it no additionall value; it merely ascertains the value. The government found it in their interest to be at that expence, as money facilitated taxes and the intercourse by commerce, which as it enriched the people was beneficial to the government.' See below, I.v.38, where it is noted that the
of labour requires an uncommon degree of dexterity and ingenuity, the esteem which men have for such talents, will naturally give a value to their produce, superior to what would be due to the time employed about it. 3 Such talents can seldom be acquired but in consequence of long application, and the superior value of their produce may frequently be no more than a reasonable compensation for the time and labour which must be spent in acquiring them. In the advanced state of society, allowances
fishing--a mode of acquiring subsistence which is antecedent to any social organization in production. As a result, Smith suggested that such communities would be small in size and characterized by a high degree of personal liberty--due of course to the absence of any form of economic dependence. Smith also observed that in the absence of private property which was also capable of accumulation, disputes between different membersmagistrate of the community would administration be minor 'so there
if possible, still worse. Instead of waiting indolently in their work-houses, for the calls of their customers, as in Europe, they are continually running about the streets with the tools of their respective trades, offering their service, and as it were begging employment. 2° The poverty of the lower ranks of people in China far surpasses that of the most beggarly nations in Europe. In the neighbourhood of Canton many hundred, it is commonly said, many thousand families have no habitation on