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An Inquiry into the Nature and Causes of the Wealth of NationsAn Inquiry into the Nature and Causes of the Wealth of Nations is the magnum opus of the Scottish economist Adam Smith. It is a clearly written account of economics at the dawn of the Industrial Revolution, as well as a rhetorical piece written for the generally educated individual of the 18th century - advocating a free market economy as more productive and more beneficial to society. The work is credited as a watershed in history and economics due to its comprehensive, largely accurate characterization of economic mechanisms that survive in modern economics; and also for its effective use of rhetorical technique, including structuring the work to contrast real world examples of free and fettered markets. ThemesThe invisible handA phrase often quoted and alluded to, it conveys the unintentional benefits stemming from individuals' pursuit of their own wants and needs. An example from the earlier chapters: The Butcher, the Baker, and the Brewer provide goods and services to each other out of self-interest; the unplanned result of this division of labor is a better standard of living for all three. There are two important features of Smith's concept of the "invisible hand". First, Smith was not advocating a social policy (that people should act in their own self interest), but rather was describing an observed economic reality (that people do act in their own interest). Second, Smith was not claiming that all self-interest has beneficial effects on the community. He did not argue that self-interest is always good but that the alternative is worse: "By pursuing his own self interest he frequently promotes that of 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"(WoN, 456). Smith only used the phrase "invisible hand" once in this work, in chapter two of the fourth book, "Of Restraints upon the Importation from Foreign Countries." His usage was in the context of a problem, in Smith's view, posed by free and open markets among nations. If markets were free and open, the question arose how would a nation (such as Great Britain, the nation Smith cared about) could keep its capitalists from moving their capital out of the nation and into other countries where labor could be bought more cheaply. The answer, Smith says, is that they will act with a view toward their own particular nationalistic interests which happen to correspond with the "public interest" at home. In this way, by "preferring the support of domestic to that of foreign industry," the capitalist will in a sense be "led by an invisible hand to promote an end which was no part of his intention." MeritocracyMeritocracy is an important factor in the work; Smith emphasizes the advancement that one can take based on their will to better themselves. People would want to do things with a strong mindset without the interference of the outside norms. Smith also points out the fact that the outside forces lead to infancy in the division of labor, therefore slowing the economic growth. Because the idea of self-improvement is very strong, meritocracy efficiently moves the outcomes of the division of labor, ultimately leading to more efficiency in the economy. HistoryThe Wealth of Nations was first published on March 9, 1776, during the Age of Enlightenment. It influenced not only authors and economists, but governments and organizations. For example, Alexander Hamilton was influenced in part by The Wealth of Nations to write his Report on Manufactures, in which he argued against many of Smith's policies. Interestingly, Hamilton based much of this report on the ideas of Jean-Baptiste Colbert, and it was, in part, to Colbert's ideas that Smith wished to respond with The Wealth of Nations. Many other authors were influenced by the book and used it as a starting point in their own work, including Jean-Baptiste Say, David Ricardo, Thomas Malthus and, later, Karl Marx and Ludwig von Mises. The Russian national poet Aleksandr Pushkin refers to The Wealth of Nations in his 1833 verse-novel Eugene Onegin. Irrespective of historical influence, however, The Wealth of Nations represented a clear leap forward in the field of economics, similar to Sir Isaac Newton's Principia Mathematica for physics or Antoine Lavoisier's Traité Élémentaire de Chimie for chemistry. Publishing historyFive editions of The Wealth of Nations were published during Smith's lifetime: in 1776, 1778, 1784, 1786, and 1789. Numerous editions appeared after Smith's death in 1790. To better understand the evolution of the work under Smith's hand, a team led by Edwin Cannan collated the first five editions. The differences were published along with an edited fifth edition in 1904. They found minor but numerous differences (including the addition of many footnotes) between the first and the second editions, both of which were published in two volumes. The differences between the second and third editions, however, are major: In 1784, Smith annexed these first two editions with the publication of Additions and Corrections to the First and Second Editions of Dr. Adam Smith’s Inquiry into the Nature and Causes of the Wealth of Nations, and he also had published the now three volume third edition of the Wealth of Nations which incorporated Additions and Corrections and, for the first time, an index. Among other things, the Additions and Corrections included entirely new sections. The fourth edition published in 1786 had only slight differences with the third edition, and Smith himself says in the Advertisement at the beginning of the book, "I have made no alterations of any kind." Finally, Cannan notes only trivial differences between the fourth and fifth editions — a set of misprints being removed from the fourth, and a different set of misprints being introduced. Anachronisms and terminologySome commentary on the work suffers from anachronism - imposition of modern context and political contests on a two hundred and fifty year old work. The book is written in the English of the late 1700s, so there are some points to consider:
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