Adam Smith uses historical examples and analytical thinking
in this wonderful book which more than any laid the foundations of modern economics.
He viewed labor as the source of value, explored the need for specialization of labor and the emergence of markets for labor. He introduced the assumption underlying modern rational theorizing that each individual pursues their best interests.
The concepts of marginal utility and scarcity are foreshadowed in his work. Hw showed how, under ideal circumstances, supply and demand meet to clear markets. He discussed that macro consequences of competition where each actor was motivated by his own best interests, and showed that it could lead to better conditions for all, as if by an “invisible hand.”.
He also emphasized the importance of government in providing international and domestic security as well as providing public works and institutions such as education (the minimalist state).
This is still a great and important introduction to modern economics.
The Bantam paperback version contains Smith’s complete and unabridged final version of the Wealth of Nations. It also provides footnotes on Smith’s wording, the historical context, and the differences between Smith’s 5th edition and previous editions.
PS: Theory of Moral Sentiments is the work which Smith himself considered his most important work.
“Adam Smith’s enormous authority resides, in the end, in the same property that we discover in Marx: not in any ideology, but in an effort to see to the bottom of things” –Robert L. Heilbroner
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