The Wealth of Nations
“An Inquiry into the Nature and Causes of the Wealth of Nations” is a 1,200-page book written by the 18th-century economist and philosopher Adam Smith who is called as the father of economics.
The market economy system currently adopted by most countries began to appear around the 17th century and matured through the industrial revolution in the 18th century. In the book, Adam Smith explains what a nation’s wealth is, what drives a nation to accumulate wealth, and what people misunderstand about the wealth of the country at the time.
Before Adam Smith, people valued commercial activities, so people thought that the greater the amount of gold or silver earned through commerce, the greater the wealth of a country. The bookIt says that the wealth should be thought to be the total amount of necessities or conveniences available. It shows that how rich and strong a country is not that just how much money the merchant class earns, but how much the total amount of various products that the entire population can consume is.
Adam Smith identified that the driving force behind the increase in national wealth was the division of labor and the accumulation of capital. The principle of division of labor is that people do not produce the goods they need individually without the help of others. If they engage in activities that have their own merits and exchange the goods they produce in the market, society as a whole produces and consumes much more goods. Accumulation of capital means that facilities such as factory machine, buildings, i.e., capital, are needed for production, and when such capital is increased in a society, more people are employed and more goods can be produced accordingly.
The principle of increase in national wealth grasped by Adam Smith is being used as it is in modern economics and is being used as a key concept in modern economics.