Class 13 -Adam Smith and the Source of Wealth

Today we looked at Adam Smith's "Wealth of Nations" (1776).

Smith said that the government should provide police and courts, a national defense, and regulation of public works. The government should not be involved in trade: laissez-faire! If the government allowed free and peaceful trade then good things would happen. The things that lead to success and not chaos are protected rights to property, a division of labor, a peaceful exchange of goods, and no special privilege granted by government.

The source of wealth is our ability to produce and exchange.

Smith said that through self-interest good things happen and we exchange goods. It is the invisible hand. People should be able to produce and buy whatever they want and there should be no restrictions into any jobs.

Spontaneous order, by Ferguson (1767),  said that oder naturally happens in society. We have the instinct to improve our lives.

Smith worried that big interest groups were trying to mess with the little guy. As grain increased, the rich land owners got money people didn't buy from them with the expensive prices. England then made tariff laws and Corn Laws that prevented people from buying any corn that wasn't in England. This is the kind of special privilege that Smith feared.