Wealth of Nations
Class Notes
- Smith accurately described how Division of Labor works
- but does it reduce the meaning people have in their labor?
- it is human nature to exchange, which leads to DoL
- when productivity goes up, wealth of the nation goes up
- is wealth (of nations) the best ultimate goal?
- is he suggesting this system, or only explaining an existing system? (prescriptive or descriptive)
- maybe he's recommending Division of Labor as a benefit to a nation
- productivity leads to wealth (money, goods)
- maybe he's recommending Division of Labor as a benefit to a nation
- what makes a nation wealthy?
- is this moral philosophy or economics?
- deals are always based on self-interest, not pity
- that's why we exchange; value others things more than my own
- does benevolence have a role?
Summary
Since people like to barter and trade, Smith argued that people tend to become more specialized in what they do, and then trade the fruits of that labor for what they actually need. Smith called this "division of labor," and he said that it makes everyone more productive because each person can focus on just their own few tasks and can become much better at their roles. And as the size of their community grows, people can become more specialized in what they focus on. Everyone can do what they are good at, and trade for what they need. Eventually, people realize that instead of directly trading goods for goods, they could trade goods for some widely recognized, permanent currency. Metals fit the bill quite nicely, and in order to make the weights and amounts of them more universal, organizations can release coins in pre-determined sizes that will be accepted everywhere.