An Inquiry Into the Nature and Causes of the Wealth of NationsBy: Adam Smith
Major Topic: Economics
Minor Topic: Politics
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BOOK THREE: On the Different Rates of Economic Progress in Different Nations
Chapter One: On Natural Economic Progress
In all great countries the greatest part of commerce is carried out between the cities and the countryside. Each side provides what the other needs through mutually beneficial trade: namely subsistence and raw materials from the countryside and luxuries and conveniences from the town. But because subsistence is more important and ontologically prior to luxury and convenience, the development of the countryside must come first. It is only the surplus produce of the countryside that allows the towns to develop and then only to the level of surplus over the needs of the countryside's people.
It is the surplus of the countryside that provides a market for the goods and services of the town. The town was created while in search of investments for the surplus produce of the countryside. As the town grows it provides a more secure impetus for improving the countryside. In this way the countryside and the towns symbiotically grow together in wealth and opulence.
In the natural grown path the capital of the towns is first put into agriculture, secondly into manufacturing and lastly into foreign commerce. Such is the natural development of nations which, however, has been disturbed by various laws and institutions to the point that in Europe at the time of the author's writing the process was running in reverse. With some countries having more great commerce with foreigners without having cultivated their own fields.
Chapter Two: The History of the Discouragement of Agriculture
After the fall of the Roman Empire trade between the towns and the countryside collapsed. This resulted in the desertion of the towns and the development of a proprietor system of land ownership. This small evil was magnified by a greater evil: the law and custom of primogeniture in which the whole estate was inherited by the oldest son. This resulted in vast tracks of land that were not be split up or divided. This enriched one and impoverished many.
Further evils were introduced in the form of entails which forbade the sale or division of land outside of one's family. As it turns out great proprietors are not good innovators on or improvers of land.
Improvements are still less expected from the slaves of the proprietors. “The pride of man makes him love to domineer, and nothing mortifies him so much as to be obliged to condescend to persuade his inferiors. Whenever the law allows it, and the nature of the work can afford it, therefore, he will generally prefer the service of slaves to that of freemen.” Slaves do not innovate and will only work as little as they are safely able to.
A sharecropper has a slight advantage over the slave since he has an interest in securing the largest harvest, however, he does not have any incentive to improve the land.
A farmer with a long lease may make some attempts to improve the land if he believes that the lease will be enforced and if it is long enough to guarantee a return on his investment. In England the laws that have secured the long leases of farmers have probably done more to help English agriculture than any and all other laws ever passed.
Other onerous duties of surfs continued and were a hindrance to the development of land; Public duties such as provisioning the army and paying an array of taxes also stalled the development of land. Laws that limited trade such as export prohibitions and restraints on transportation discouraged the improvement of land.
Chapter 3: A History of the Rise and Development of Cities and Towns
Towns grew out of convenience for defense and market. The proprietors of land (or lords) also found it easier to collect taxes in towns. Then a simple pole tax was found easiest to collect, but in so doing the proprietors gave up some sovereignty over the town. The town, having tasted self-government, was loath to relinquish it.
The King found in the towns a useful ally against the lords. In their mutual interest they supported each other. The kings that were most loathsome to the lords often granted the towns the most powers. Though self-government the towns and cities were able to effect peace and good government for their inhabitants while in the countryside the people still suffered from lawlessness and the arbitrariness of lords and all the previously mentioned problems of large proprietors.
When ever stock was saved in the countryside it was moved to safer locations in the cities and towns.
Because the inhabitants of cities must get all of their subsistence from the countryside it was in the cities best interest to expand their neighborhood. As it turned out this was most easily and safely carried out by international trade. In this way the countryside around a great city could still be mired in poverty. While the city develops a countryside far away from lords that would seek to rule at their caprice.
Chapter 4: How the Commerce of the Town Helps Improve the Country
There are three ways in which the commerce of the towns helps the nation: (1) the towns creates a market for all the produce of their countryside and any other countryside with which the town has dealings; (2) The wealth of the people in cities is often used to buy rural estates and when they do the merchants that have done so tend to be much better improvers of land; (3) commerce introduces order, good government, liberty and security of person to the countryside.
As mentioned before, the caprice of lords was a major hindrance to the development of the land but, thanks to commerce, the great lords of the countryside have bartered their whole power and authority for the vanities which commerce can supply. Where in the past the lords maintained many people as servants and attendants today they maintain many more though the market. But since in the market they make up a very small part of the market their authority and power has decreased even as their riches have increased.
It is worth noting that a commercial society has few great estates owned by old families whereas in countries with low commerce there seem to be a great many old families that pass large estates from father to son.
Although it is possible to invert the natural order of development, a country the tries will have a difficult time and an uncertain time of it. One only needs to compare the rate of progress in European nations with the colonies in North America to see that the unnatural order is possible but far less beneficial than the natural order as practiced in North America.
Added on: 2010-05-29 07:05:22
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