Listen to the AudioBook: An Inquiry into the Nature and Causes of the Wealth of Nations by Adam Smith

An Inquiry into the Nature and Causes of the Wealth of Nations

by Adam Smith

INTRODUCTION AND PLAN OF THE WORK.

The annual labour of every nation is the fund which originally supplies it with all the necessaries and conveniencies of life which it annually consumes, and which consist always either in the immediate produce of that labour, or in what is purchased with that produce from other nations.

Accordingly, as this produce, or what is purchased with it, bears a greater or smaller proportion to the number of those who are to consume it, the nation will be better or worse supplied with all the necessaries and conveniencies for which it has occasion.

But this proportion must in every nation be regulated by two different circumstances: first, by the skill, dexterity, and judgment with which its labour is generally applied; and secondly, by the proportion between the number of those who are employed in useful labour, and that of those who are not so employed. Whatever be the soil, climate, or extent of territory of any particular nation, the abundance or scantiness of its annual supply must, in that particular situation, depend upon those two circumstances.

The abundance or scantiness of this supply, too, seems to depend more upon the former of those two circumstances than upon the latter. Among the savage nations of hunters and fishers, every individual who is able to work is more or less employed in useful labour, and endeavours to provide, as well as he can, the necessaries and conveniencies of life, for himself, and such of his family or tribe as are either too young, or too old, or too infirm to make occasion for all their time and industry. Under such circumstances, though there is no separation of labour, and every man does every thing he can, the abundance or scantiness of their supply must wholly depend upon the natural or unimproved state of the division of labour above mentioned.

It is otherwise in an advanced state of society among those nations which enjoy a great division of labour. In these, a small proportion of the inhabitants are employed in useful labour, and the great proportion produces a surplus of the necessaries and conveniencies of life, which, by means of the division of labour, is brought forth in such abundance as is sufficient to maintain them all. The labour of the far greater part of the members of any well-governed, civilized society, therefore, not only supplies them all with the necessaries and conveniencies of life, but furnishes the surplus wherewith to purchase a still greater surplus, by means of which they purchase the manufactured goods and foreign commodities which they have occasion for.

The greatest improvement in the productive powers of labour, and the greatest part of the skill, dexterity, and judgment with which it is any where directed, or applied, seem to have been the effects of the division of labour. It will be worth while to examine this principle a little more particularly.

It is the maxim of every prudent master of a family, never to attempt to make at home what it costs him more to make than to buy. The tailor does not attempt to make his own shoes, but buys them from the shoemaker. The shoemaker does not attempt to make his own house, but employs a carpenter. The farmer does not attempt to make his own clothes, but employs a weaver and a fulling miller. It is this regard to the maxim of economy of applying the stock and labour which one has in the way that is likely to turn it to the best account, that originally gives occasion to the division of labour.

When the division of labour is once thoroughly established, it must always afford the means of carrying that division still further. Whatever stock the master of the family can spare, after maintaining himself and his family, he naturally endeavours to employ in the employment that is likely to afford him the best revenue in proportion to the stock which he parts with, in order to give the most employment to the greatest number of people.

The number of the employed, therefore, may increase in every society, without an apparent augmentation of stock. This enables them to produce a greater surplus, and consequently to purchase a greater quantity of other goods.

The division of labour is thus the result of the natural propensity in human nature to truck, barter, and exchange one thing for another. This propensity is not a product of reason, but of a certain moral sense, which, though the brute animal be entirely without it, is found in man, even in his earliest state of society.

It is impossible to carry the division of labour to the extreme point of which it is capable, until we can exchange all that surplus part of the produce of his own labour, which is over and above his own consumption, for such parts of the produce of other men’s labour as he may stand in need of. This power of exchanging all surplas produce for whatever other kind of produce he has occasion for, is what is called the market or vent for that produce.

The extent of that market, therefore, will always determine the degree to which the division of labour can be carried in any country. For the greater the market is, the greater is the number of artificers, manufacturers, and the greater is the division of labour among them, and consequently the greater is the quantity of the produce of their respective kinds that can be brought forth.

Thus, the division of labour can only increase in proportion to the extent of that market.

The need for a medium of exchange to facilitate this truck and barter, the convenience of which is the origin of money, will be the subject of the next chapter.

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