The Wealth of Nations Summary | Chapterly

The Wealth of Nations by Adam Smith: A Complete Summary "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest." Overview An Inquiry into the Nature and Causes of the Wealth of Nations (1776) is the founding text of modern economics. Published the same year as the American Declaration of Independence, it declared independence from mercantilism and laid the groundwork for free-market capitalism. Smith asks: Why are some nations wealthy and others poor? His answer: productivity, which comes from the division of labor, capital accumulation, and free trade. The Division of Labor Smith opens with his most famous example: the pin factory. "One man draws out the wire, another straights it, a third cuts it, a fourth points it, a fifth grinds it at the top for receiving the head..." Ten workers specializing can make 48,000 pins per day. Each working alone might make 20. Why Specialization Works 1. Increased dexterity: Doing one task repeatedly builds skill 2. Time saved: No switching between tasks 3. Machinery: Specialized tools become worthwhile to develop The division of labor is limited by the extent of the...