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is in Books IV and V of The Wealth of Nations that Adam Smith
offers his considered response to the French Physiocrats,
perhaps the first great school of economic theorists, and
assesses the nature of the mercantile system, particularly
the colonial relationship with America, whose achievements
could have been even more spectacular if conditions of free
trade and economic union had existed. Even on the eve of the
Declaration of Independence, Smith famously predicted that
America "will be one of the foremost nations of the world."
It is also here that he develops the case for a limited state
role in economic planning, notably to combat market failure
and induce efficiency in areas such as education, public works,
justice, and defense. His pioneering analysis still provides
many subtle and penetrating insights into one of today's most
vital and controversial policy debates.
All Customer Reviews
5 out of 5 - April 13, 2001
Given the apotheosis of Mr. Smith in various
market-fundamentalist circles, I expected a work saturated
in ideology prior to reading. Being prejudiced by selective
citations in the economic literature, it turned out I was
in error.
Conservatives and libertarians will ultimately
be infatuated with this monumental achievement. However, to
give skeptical lefties a taste of what lies within, here are
a few brief quotations--
Book five is loaded with instances calling for
government intervention. Take education--this line of thought
was reiterated a few decades later by Tocqueville: "In
the progress of the division of labor...the man whose life
is spent in performing a few simple operations ... has no
occasion to exert his understanding, or to exercise his invention
... He naturally loses, therefore, the habit of such exertion,
and generally becomes as stupid and ignorant as it is possible
for a human creature to become." twon bk5 ch1
Marxists will dig this: "Labor alone, therefore,
never varying in its own value, is alone the ultimate and
real standard by which the value of all commodities can at
all times and places be estimated and compared. It is their
real price; money is their nominal price only." twon
bk1 ch5
Smith is verbose, sometimes superfluous, but
unequivocally took a fantastic step forward for the "science"
of economics. A must read, regardless of one's ideology.
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