The Wealth of Nations
by: Adam Smith
Central Theme:
Acting in your own self-interest can benefit society as a whole.
Recommendation:
“The Wealth of Nations” is a magnum opus on Adam Smith’s economic theories that provides the foundation for modern economics. It details how productivity in society is maximized by instituting a division of labor that allows individuals to specialize. Effectively, it created the landmark concept that individuals acting according to rational self-interest promotes the best interests of society.
Summary:
A division of labor significantly increases productivity because each worker can specialize on one skill and increase productivity. And since humans are naturally self-serving, we are motivated to trade with others and invest our own capital in a way that will produce the most gain for us. While this may seem selfish on the micro level, it actually can help increase societal value as a whole. With increased production comes increased revenue, and spreading the capital continues to guide society to produce more in general, which ultimately results in the maximum wealth for the ‘nation’. The “invisible hand” will lead us to promote society’s interests, even if that was not each individuals’ intention.
A division of labor significantly increases productivity because each worker can specialize on one skill and increase productivity. And since humans are naturally self-serving, we are motivated to trade with others and invest our own capital in a way that will produce the most gain for us. While this may seem selfish on the micro level, it actually can help increase societal value as a whole. With increased production comes increased revenue, and spreading the capital continues to guide society to produce more in general, which ultimately results in the maximum wealth for the ‘nation’. The “invisible hand” will lead us to promote society’s interests, even if that was not each individuals’ intention.
