An Inquiry Into the Nature and Causes of the Wealth of NationsSmith, Adam
General
An Inquiry Into the Nature and Causes of the Wealth of Nations
Smith, Adam
Economics
The economy of individuals arises from a principle which is universally
diffused, and one that is continually in action; the desire of
ameliorating their condition. This principle supports the existence and
increase of national wealth, in spite of the prodigality of some
individuals; and even triumphs over the profusion and errors of
governments--ibid.
Of the different modes of spending money, some are more favourable than
others to the increase of national wealth--ibid.
Those branches of employment which require a capital, never fail to call
forth more or less labour; and thus contribute, in a greater or less
degree, to increase the extent of national labour.
Capital can be employed only in four ways:
1. In cultivating and improving the earth, or, in other words,
multiplying its rude produce;
2. In supporting manufactures;
3. In buying by the gross, to sell in the same manner;
4. In buying by the gross, to sell by retail.
These four modes of employing capital are equally necessary to, and
serve mutually to support, each other. The first supports, beyond all
comparison, the greatest number of productive hands; the second occupies
more than the two remaining; and the fourth the fewest of any.
Capital may be employed, according to the third mode, in three different
ways; each contributing in a very different degree to the support and
encouragement of national industry.
When capital is employed in exchanging one description of the produce of
national industry for another, it then supports as great a portion of
industry as can be done by any capital employed in commerce.
When it is employed in exchanging the produce of national for that of
foreign industry, for the purposes of home consumption, half of it goes
to the support of foreign industry; by which means, it is only of half
that service to the industry of the nation which it would have been had
it been employed another way.
Lastly, when it is employed in exchanging one description of the produce
of foreign industry for another, or in what is termed the _carrying
trade_, it then serves wholly for the support and encouragement of the
industry of the two foreign nations, and adds only to the annual produce
of the country the profits of the merchant--book 2, chap. v.
Self-interest, when left uncontrouled, will necessarily lead the
proprietors of capitals to prefer that species of employment which is
most favourable to national industry, because it is, at the same time,
most profitable for themselves--ibid. For, when capitals have been
employed in a way different from that suggested by the infallible
instinct of self-interest, it has always been in consequence of the
peculiar circumstances of the European governments, and of that
influence which the vulgar prejudices of merchants have had over the
system of administration which these governments have adopted.
Public-domain text, read in full here on John Shaqi.
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