Review of The Wealth of Nations (1776/1789)

Adam Smith (writer).

Read in 2026.

Smith is worth reading mainly for his influence on other writers, many of whom have not read Smith. He is knowledgeable but he is not very systematic; what he calls a digression on the British Corn Laws is not a digression at all, but he does spend quite a lot of time on irrelevant corners of the history of the ancient world, including fun and interesting sections on Aristotle’s wages and the corruption of the educational system under the influence of Christian theology.

Although he is not ready to present a fully coherent overview, and he often struggles to put his ideas into words, Smith does grasp economic fundamentals, including the principles of supply and demand. The division of labour is a central concept to him; he opens book I with it, but it does take until book V for him to acknowledge the downsides of it. In book I, chapter II, he tries to describe the division of labour in metaphor, using greyhounds, but Smith’s grasp of natural philosophy is slippery at best. He thinks that hunters do not need to adapt to hunting in packs. In a separate dog-based simile, he thinks that different breeds of dogs cannot benefit from one another’s bred-in differences. Writing generations before Darwin, he is so ignorant of the niches and efficiencies of an ecosystem that instead of using ecology to help himself or his readers understand economics, he just trips himself up. It is the same with his metaphor of the invisible hand, which “leads” the individual economic actor “to promote an end which was no part of his intention”. Saying this, he is trying to convey the paradox that both purpose and leadership can be absent in an efficient market, as they are absent in an efficient ecosystem, but Smith’s own motif of an invisible (angelic) hand naturally symbolizes exactly the opposite.

Smith started his career as a moral philosopher. His discussion of the downsides of an extensive division of labour in contemporary British industrialization is an example of his openness to the paradoxes and tensions of political economics. His views on human nature are murky, but he is clearly not a free-market fundamentalist; he often talks about selfish interest corrupting the economy by the political leverage of wealth. The final paragraph of book I is a warning against allowing capitalists (“those who live by profit”) to interfere with politics:

The proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.

Here he is in book III, chapter IV, on landlords escaping the limits of a local feudal economy into a modern international one:

But what all the violence of the feudal institutions could never have effected, the silent and insensible operation of foreign commerce and manufactures gradually brought about. These gradually furnished the great proprietors with something for which they could exchange the whole surplus produce of their lands, and which they could consume themselves, without sharing it either with tenants or retainers. 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. As soon, therefore, as they could find a method of consuming the whole value of their rents themselves, they had no disposition to share them with any other persons. For a pair of diamond buckles, perhaps, or for something as frivolous and useless, they exchanged the maintenance, or, what is the same thing, the price of the maintenance of 1000 men for a year, and with it the whole weight and authority which it could give them.

The phrase “what is the same thing” is a hallmark of Smith’s. He writes for an audience that can barely distinguish between the market value of the silver in a coin from the symbolic value of the complete coin as such in an established order of implicit trust. A Scotsman, he discusses how the two banks of Edinburgh are “joint-stock companies, without any exclusive privilege” and yet still able to function. He describes a generic smuggler as “though no doubt highly blameable for violating the laws of his country, [yet] incapable of violating those of natural justice”. That is, by the mere act of taxation, the state incentivizes the crime of tax evasion.

Besides Smith’s moral judgements, he invigorates his text by the two historical coincidences that the USA was emerging out of the British Empire at the time of writing, and that the industrial revolution was getting into partial swing. All three of these threads combine when he defends the right of the Americans—which he calls “the most sacred rights of mankind”!—to establish their own industries instead of being forced to sell their wool, iron, and other materials, to Britain. Leaning on more famous philosophical voices of the Enlightenment, Smith does a pretty good job connecting what the individual labourer finds good to what is actually good for their society, “upon the liberal plan of equality, liberty, and justice”.

This is not to say that Smith is an anarchist or a socialist. In book I, chapter VIII, he does note that it is illegal for labourers to “combine” (e.g. unionize) to raise the price of work, and legal for “the masters” to combine to lower it. This system, he knows, keeps workers on the edge of starvation and therefore unable to achieve equality, liberty and justice. He writes in a time when chattel slavery is still current, but he doesn’t invent the term “wage slavery”. He does not anticipate game theory either, and he doesn’t take up Aristotle’s discussion of the tragedy of the commons, but again, he does grasp the fundamentals. His personal interests, however, are mainly academic, and he sees enough improvements to be made through the correction of bad theory as opposed to any redistribution of wealth more direct than a subtle tax. He devotes the largest volume, book IV, to the subject of two pre-classical systems of political economy: Mercantilism (“the mercantile system”) and physiocracy (“the agricultural systems”), both of which he and Ricardo ultimately replaced.

References here: The Ego and Its Own (1844), Capital: A Critique of Political Economy (1867/1887), The Conquest of Bread (1892), Means and Ends: The Revolutionary Practice of Anarchism in Europe and the United States (2023).

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