The Nexus Archive
Political Economy · Treatise
The Wealth of Nations
by Adam Smith · The Philosopher of Exchange · Scottish Enlightenment, 1723-1790
The founding work of political economy on labor, markets, trade, incentives, and national wealth.
- Brutal
- 1776
- ~28 hr read
- 37 chapter guides
- Public domain
Start reading · Read the Book I, Chapter I guide free
Before the text
Editor's Prelude
The Work Behind the Wealth
A woolen coat brings together the work of shepherds, spinners, dyers, weavers, and distant carriers. For Adam Smith, that ordinary possession opens a large question: how does the work of many people become the means of living for a whole society?
Published in 1776, The Wealth of Nations follows that question from workshops and farms to banks, trade laws, and public treasuries. Smith builds arguments through examples, historical comparisons, and patient disputes with other writers. Prices and accounts matter because they reveal human choices: who can bargain, who carries a loss, and who can persuade a government to protect a private advantage.
The inquiry gives markets a powerful role while keeping the people within them in view. Productive work can enlarge common prosperity and also narrow a worker’s life. Commerce can connect distant peoples and become a reason for conquest. Government must provide protection and public services, yet its ambitions have costs. The scale keeps changing; the question of how people live remains.
The opening pages
Book I, Chapter I: Division of Labour
BOOK I. OF THE CAUSES OF IMPROVEMENT IN THE PRODUCTIVE POWERS OF LABOUR, AND OF THE ORDER ACCORDING TO WHICH ITS PRODUCE IS NATURALLY DISTRIBUTED AMONG THE DIFFERENT RANKS OF THE PEOPLE.
CHAPTER I. OF THE DIVISION OF LABOUR.
The greatest improvements in the productive powers of labour, and the greater part of the skill, dexterity, and judgment, with which it is anywhere directed, or applied, seem to have been the effects of the division of labour. The effects of the division of labour, in the general business of society, will be more easily understood, by considering in what manner it operates in some particular manufactures. It is commonly supposed to be carried furthest in some very trifling ones; not perhaps that it really is carried further in them than in others of more importance: but in those trifling manufactures which are destined to supply the small wants of but a small number of people, the whole number of workmen must necessarily be small; and those employed in every different branch of the work can often be collected into the same workhouse, and placed at once under the view of the spectator.
In those great manufactures, on the contrary, which are destined to supply the great wants of the great body of the people, every different branch of the work employs so great a number of workmen, that it is impossible to collect them all into the same workhouse. We can seldom see more, at one time, than those employed in one single branch. Though in such manufactures, therefore, the work may really be divided into a much greater number of parts, than in those of a more trifling nature, the division is not near so obvious, and has accordingly been much less observed.
To take an example, therefore, from a very trifling manufacture, but one in which the division of labour has been very often taken notice of, the trade of a pin-maker: a workman not educated to this business (which the division of labour has rendered a distinct trade), nor acquainted with the use of the machinery employed in it (to the invention of which the same division of labour has probably given occasion), could scarce, perhaps, with his utmost industry, make one pin in a day, and certainly could not make twenty. But in the way in which this business is now carried on, not only the whole work is a peculiar trade, but it is divided into a number of branches, of which the greater part are likewise peculiar trades. One man draws out the wire; another straights it; a third cuts it; a fourth points it; a fifth grinds it at the top for receiving the head; to make the head requires two or three distinct operations; to put it on is a peculiar business; to whiten the pins is another; it is even a trade by itself to put them into the paper; and the important business of making a pin is, in this manner, divided into about eighteen distinct operations, which, in some manufactories, are all performed by distinct hands, though in others the same man will sometimes perform two or three of them. I have seen a small manufactory of this kind, where ten men only were employed, and where some of them consequently performed two or three distinct operations. But though they were very poor, and therefore but indifferently accommodated with the necessary machinery, they could, when they exerted themselves, make among them about twelve pounds of pins in a day. …
Chapter guides · 37
Book I, Chapter I
Productivity Begins With Divided Work
Dividing a task among workers can greatly increase what their combined labor produces.
Three gains
Smith separates three gains from divided labor: dexterity grows, time lost between tasks falls, and concentrated work invites machinery. The pin factory makes these changes visible. Many ordinary workers together can produce far more than each could make alone.
Shared dependence
He then follows the many trades needed to make a common woolen coat and other household goods. Even a laborer depends on people he will never meet. Smith closes by suggesting that an industrious European peasant may live better than many an African king. The comparison measures comfort through the goods that divided labor supplies.
Book I, Chapter IV
Money Makes Exchange Easier
A widely accepted means of payment helps people trade when neither wants the other’s goods.
From barter to coins
Once labor is divided, barter repeatedly fails because each trader may not want what the other offers. Smith follows different goods used as money, then metal, weighed pieces, and stamped coins. Public stamps reduce the trouble of testing weight and purity. Rulers who reduce a coin’s metal content can also cheat creditors.
Two meanings of value
Smith ends by separating usefulness from purchasing power. Water is essential but buys little; diamonds have little practical use but buy much. These examples lead him to ask how exchange value is measured, what makes up a price, and why market prices change.
Book I, Chapter VII
Market Price Moves Around a Center
The amount offered for sale and the demand able to pay can pull a market price away from ordinary costs.
Book I, Chapter VIII
Higher Wages Can Support Better Work
Smith argues that better pay can improve workers’ strength and effort, while growing capital can also make their work more productive.
Book I, Chapter IX
High Profits Can Raise Prices Too
Smith argues that merchants’ profits can increase prices as well as workers’ wages.
Book I, Chapter X, Part II
Wage Laws Can Favor Masters
Smith challenges wage rules that restrain workers while leaving their employers free to combine.
Book I, Chapter XI, Part II
Scarcity Makes Precious Metals Valuable
Gold and silver owe much of their exchange value to scarcity, so producing more of them can reduce the value of what each mine supplies.
Book I, Chapter XI, Part III: Is Silver Still Falling?
Higher Prices Need an Explanation
Dearer raw produce can reflect real changes in production rather than a fall in silver’s value.
Book I, Chapter XI, Part III: Mines and Precious Metals
More Silver Need Not Mean More Wealth
Changes in the supply of precious metals can alter money prices without altering a country’s real resources.
Book I, Chapter XI
Who Gains From a Growing Economy?
Smith closes Book I by comparing the interests of landlords, workers, and owners of capital.
Book II, Chapter II: Money and Real Revenue
Money Circulates Income
The money used to exchange goods is different from the goods that make up society’s real income.
Book II, Chapter II: Circulating Bills and Bank Failure
Repeated Loans Can Hide a Failing Venture
Fresh credit can keep an unsound project alive while making its final losses larger.
Book II, Chapter II: Conditional Paper and Colonial Currency
Paper Money Depends on Its Terms
A promise payable at once differs from one that lets its issuer delay payment.
Book II, Chapter III
Some Spending Leaves More Behind
Smith compares expenses by how much useful property and productive work they leave after the money is spent.
Book II, Chapter V
Capital Has a Geography
The speed and direction of trade affect how much work a given amount of capital supports at home.
Book III, Chapter II
Secure Tenants Have More Reason to Improve
Farmers invest more confidently when they can keep a fair return from improving the land.
Book III, Chapter IV
Commerce Changed Power Without a Plan
Smith argues that private spending and trade helped dissolve the personal dependence on which feudal power rested.
Book IV, Chapter I
Six Ways to Direct Trade
The mercantile system uses import restraints and export favors to try to increase a country’s treasure.
Book IV, Chapter II
Changing Trade Rules Has Human Costs
Smith supports freer trade while weighing retaliation and the losses caused by a sudden change in protection.
Book IV, Chapter III, Part II: National Loss and National Gain
A Rich Neighbor Can Be a Good Customer
Smith separates prosperity gained through trade from the fear that another country must lose for one’s own to gain.
Book IV, Chapter V
Plenty Depends on More Than Export Rules
Smith favors open grain markets but judges each rule by how it affects supply, cultivation, and people facing scarcity.
Book IV, Chapter VI
A Coinage Fee Can Protect Coins
Smith argues that a moderate fee for making coins can discourage people from melting good coins into bullion.
Book IV, Chapter VII, Part II: Colonial Government and Security
Colonial Growth Gives Governments Little Credit
Smith argues that colonies often prospered through the efforts of settlers despite the policies of European governments.
Book IV, Chapter VII, Part III: Colonial Taxation and Representation
Taxation Raises the Question of a Voice
Smith proposes representation as a way to share imperial burdens without destroying the political standing of colonial leaders.
Book IV, Chapter VII, Part III: Merchants as Sovereigns
Merchants Make Dangerous Sovereigns
A company’s wish to buy cheaply and sell dearly conflicts with a government’s interest in the lasting prosperity of its people.
Book IV, Chapter VIII
Production Exists for Consumption
Smith judges trade policy by what it does for the people who use goods, rather than by the gains of favored manufacturers.
Book IV, Chapter IX
Natural Liberty Still Leaves Public Duties
Smith argues that favoring one kind of industry can harm the wider exchange on which that industry depends.
Book V, Chapter I, Part I
Defense Costs More in a Commercial Society
Smith links the cost of defense to lasting military training and increasingly expensive weapons.
Book V, Chapter I, Part II
Judicial Independence Needs Secure Support
Courts need arrangements that reward their work without making their decisions serve a ruler’s private purposes.
Book V, Chapter I, Part III: Joint-Stock Companies Reconsidered
Joint-Stock Companies Need a Suitable Task
Smith allows a place for shared company capital when regular operations, broad public use, and unusual expense come together.
Book V, Chapter I, Part III: Education for Working People
Repetitive Work Creates a Need for Education
The same specialization that raises output can narrow a worker’s opportunities to think, invent, and judge.
Book V, Chapter I, Part IV
Public Costs Need a Fair Source of Payment
Smith connects the cost of public services with the people who benefit from them.
Book V, Chapter II, Part II
Four Maxims for Taxes
Smith tests taxes by fairness, certainty, convenience, and the burden they impose beyond the money government receives.
Book V, Chapter II: Consumable Commodities
Different Goods Call for Different Tax Payments
An annual charge can suit a lasting possession, while a tax paid with each purchase can better suit goods used up quickly.
Book V, Chapter II: Tax Farming and French Finance
Bad Collection Can Consume the Tax
Private contractors who collect taxes for profit can cost the public more than direct public collection.
Book V, Chapter III: National Bankruptcy and Money
Debt Can Damage More Than the Treasury
Smith argues that the taxes supporting public debt can weaken investment even when interest goes to people within the country.
Book V, Chapter III: Debt, Empire, and the Final Choice
Empire Must Fit the Means to Support It
Smith argues that Britain must either make its empire contribute to common revenue or give up the expense of sustaining it.
Questions readers ask
- How long does it take to read The Wealth of Nations?
- About 28 hr in total.
- How difficult is The Wealth of Nations?
- Brutal. A very long treatise; about 28 hours of reading.
- Which edition is this?
- The original English text, first published in 1776. The text follows Project Gutenberg eBook #3300 digital text.
- Can I read The Wealth of Nations for free?
- The Wealth of Nations is part of Nexus Premium, so reading it needs an account and a Premium subscription. The opening above and two chapter guides on this page are free to read.
- How many chapter guides are there?
- 37 chapter guides, written by the Nexus editors. Two open in full here; the rest show their opening line.
About Adam Smith
Adam Smith was a Scottish moral philosopher and political economist. His Wealth of Nations helped found modern economics, while his broader thought links markets, moral sentiments, labor, incentives, and institutions.
“How does self-interest become social order, and when does it fail?”
Smith lets Nexus build a serious economics shelf without losing the moral and institutional questions behind commerce.
Source text: public domain. Chapter guides: original Nexus writing. The Wealth of Nations is part of The Nexus Archive, guided Quests through the great works.