The Wealth of Nations

What It Is

An Inquiry into the Nature and Causes of the Wealth of Nations, published in 1776 after roughly twelve years of work. Smith was a professor of moral philosophy at Glasgow who had already written a well-received book on ethics, and he did not think of himself as founding a science. Economics did not exist. He was writing philosophy about how a commercial society actually functions.

Five books, about a thousand pages. Inside them: a theory of value and wages, a history of European agriculture, an eighty-page digression on the price of silver, an attack on the East India Company, and a long final book on what a government is for. It is capacious, patient, dry in places, and much funnier than its reputation.

Why It Matters

It is the first sustained account of how a society can be wealthy without anyone planning it. Smith's division of labour, his analysis of how prices coordinate the actions of strangers, and his demolition of mercantilism gave governments a new vocabulary and a new argument, and by the 1840s that argument had won in Britain.

But the Smith who is quoted on placards is a fiction, and reading him is the cure. He is savage about businessmen, and the line everyone half-remembers about what happens when men in the same trade get into a room together is his. He is against monopolies, against merchant lobbies, and clear that the interests of employers are not the interests of a country. He worried that the division of labour would make the men performing it stupid, and proposed public education as the remedy. He supported progressive taxation on carriages and thought bank regulation entirely proper.

What he actually believed is more interesting than either side's caricature, and every serious argument about markets since — including Marx's, who read him closely and took him seriously — has had to go through this book.

Before You Read

Forty hours or more. Not intellectually hard; the prose is eighteenth-century and orderly, and Smith explains himself. It is simply large.

Books I and II carry the core: division of labour, price, wages, profit, capital. Book III is short and historical. Book IV is the polemic against mercantilism, where Smith is angriest and best. Book V, on the duties of the sovereign, is the one nobody expects, and it is where the moral philosopher reappears.

The long digression on the value of silver in Book I is skimmed by nearly everyone, and you lose nothing essential. Read the rest properly.

Which Edition to Read

• Edwin Cannan's text (Modern Library Classics, 2000) — recommended. Complete and unabridged in one volume, with Cannan's notes, his enlarged index, and the marginal summaries that make a thousand-page book navigable — you can find the argument you half-remember in under a minute. Cheap, and the sensible choice for anyone who intends to read the whole thing. The cost: Cannan's editorial notes are a century old, and Robert Reich's introduction is a politician's essay rather than a scholar's. View on Amazon →
• The Glasgow Edition, edited by Campbell and Skinner (Oxford, 1976; reprinted in two volumes by Liberty Fund). The definitive scholarly text and apparatus, and the edition every serious commentator cites. The cost: two volumes, and far more apparatus than a first reading requires.
• Penguin Classics, edited by Andrew Skinner. Books I to III, well introduced, in a bag-sized paperback. The cost: it is a third of the book, and it cuts Books IV and V, which is where Smith's politics live. Most abridgements of this work quietly remove the pages that complicate the caricature.

Take Cannan to read, the Glasgow Edition to cite, and abridge only if the alternative is not reading it at all.

Getting the Most From This Book

Read Books I, IV and V if you cannot read all five. That combination gives you the economics, the argument, and the conscience.

Read The Theory of Moral Sentiments alongside it, or at least know it exists. Smith wrote two books in his life and spent his last year revising the other one. He did not think this was the important half.

Do not treat the digressions as interruptions. Smith argues from evidence, and the long historical detours are the evidence. Take a chapter or two an evening, mark the sentences that surprise you, and expect to be surprised often.