THE FOLIO SOCIETY

In 1776, the streets of London, Liverpool and Bristol teemed with goods, brought from overseas by a burgeoning Empire that was only decades old. Britain was now an established global power, its citizens more prosperous than ever before. Textiles from the Far East, precious metals and jewels, tobacco, tea and sugar were just a few of the new commodities flooding into the ports of Britain. At the same time, however, dissenting voices blamed society’s ills – corruption, drunkenness, vice – on this new ‘rapacious’ materialism.

That same year, An Inquiry into the Nature and Causes of the Wealth of Nations was first published, in which Adam Smith, with the cool detachment of an enlightened empiricist, suggested that commercial self-interest, far from being immoral, could lead society towards greater co-operation and increased benefits. The concepts of the ‘free market’, ‘supply and demand’ and the ‘division of labour’ – phrases that are now part of our everyday language – were put forward, clearly and elegantly, by Smith in this magisterial work.

Adam Smith recognised that in a fast-changing world global market forces were emerging to replace the feudal, agrarian system that had prevailed for centuries, and argued that these changes were both natural and inevitable. He was the first to identify the co-dependence of the different elements of a market economy, from the skills of the labour force to rents, wages, stock and capital. Most of all, Smith had a shrewd understanding of human nature. He saw that if individuals were allowed to fully exploit their own talents and abilities, productivity would increase, an outcome that could only lead to more widespread general wealth.

The Wealth of Nations is much more than an economics treatise. Thanks to Smith’s observations of day-to-day life in Britain and his fascination with the wider world, The Wealth of Nations is an intriguing first-hand portrait of a rapidly expanding society and one of the most important achievements of the British Enlightenment. As Eamonn Butler, director of the Adam Smith institute, explains, Smith ‘scoured the world for examples that remain just as vivid today, from the diamond mines of Golconda to the price of Chinese silver in Peru; from the fisheries of Holland to the plight of Irish prostitutes in London’.

Thanks to Smith’s ability to write about economics in a way that even non-specialists could understand, the influence of The Wealth of Nations has transcended the years. In fact, by explaining his arguments so convincingly, he effectively established economics as a new field of study. His economic genius was unparalleled, and his great gift was to make complex ideas accessible to everyone. His style is engaging and his ideas are illustrated with practical examples at every turn, whether he is discussing taxes placed on merchants and manufacturers in Britain or cattle trading under Genghis Khan. With a powerful prose style that rivals his contemporary Edward Gibbon, The Wealth of Nations is remarkable both for its absence of jargon and for its author’s dry wit which is never far from the surface.