Reading Journal

What I'm reading

Tuesday, April 14, 2009

The Wealth of Nations, by Adam Smith (up through "Treaties of Commerce")

This year I'm slowly working my way through The Wealth of Nations. What a magnificent defence and exposition of capitalism! It is however an extremely long book, and unfortunately someone else reserved it at the library just as I was getting ready to start the "Treaties of Commerce" chapter.

So, here are my favorite passages up to that point.

Adam Smith, the original work/life balance guru:
If masters would always listen to the dictates of reason and humanity, they have frequently occasion rather to moderate, than to animate the application of many of their workmen. It will be found, I believe, in every sort of trade, that the man who works so moderately, as to be able to work constantly, not only preserves his health the longest, but, in the course of the year, executes the greatest quantity of work.

He commented on why gold is valuable and speculated why it became the chief form of money.
With the greater part of rich people, the chief enjoyment of riches consists in the parade of riches, which in their eye is never so complete as when they appear to possess those decisive marks of opulence which nobody can possess but themselves.

He warned against trade lobbyists.
The proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution... 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.

The government, the military and so on do not add to GDP, so excessive spending there can lead to a country's ruin.
Great nations are never impoverished by private, though they sometimes are by public prodigality and misconduct. The whole, or almost the whole public revenue, is in most countries employed in maintaining unproductive hands.... Such people, as they themselves produce nothing, are all maintained by the produce of other men's labour....

It is the highest impertinence and presumption, therefore, in kings and ministers, to pretend to watch over the economy of private people, and to restrain their expence, either by sumptuary laws, or by prohibiting the importation of foreign luxuries. They are themselves always, and without any exception, the greatest spendthrifts in the society.

The famous "invisible hand" quote:
... by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention...By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it.

He anticipated the kind of tyrants who would be attracted to setting up planned economies. As Credence Clearwater Revival would put it hundreds of years later, "Five year plans and New Deals, wrapped in golden chains".
The statesman, who should attempt to direct private people in what manner they ought to employ their capitals, would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it.


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