The Wealth of Nations

Adam Smith famously used a pin factory to illustrate the advantages of specialization ... because the different tasks were performed under one roof: "... the important business of making a pin is, in this manner, divided into about eighteen distinct operations, which, in some manufactories, are all performed by distinct hands ..." By improving workers' skills and encouraging purpose-built machinery, the division of labor leads to miraculous productivity gains. Even a small and ill-equipped manufacturer, Smith wrote in The Wealth of Nations, could boost each worker's output from a handful of pins a day to nearly 5,000.

In his great treatise — An Inquiry into the Nature and Causes of the Wealth of Nations — Smith asked, what have been the traditional means of combating poverty throughout history? The answer, of course, was government. People had always believed that governmental policies were necessary to ensure that people did not starve to death or suffer lives of impoverishment. Yet, despite the best efforts of governmental officials throughout the ages — such as with the English Poor Laws, the Corn Laws, price controls, and antispeculation laws — people had continued to suffer deep privation.

Leonard's first move was to publish an outline of the aims of the Foundation and its proposed activities ... I condense them here: ... books: the abridgment, publica­tion, and distribution of classical works such as, for instance, The Wealth of Nations and The Federalist Papers ... this seems dreadfully disheartening. But it must be acknowledged that the American ideological situation is much better than if FEE had never come into being ... Even Adam Smith's Wealth of Nations, let us remember, did not begin to change actual legislation until many years after its original appearance.

The "invisible hand" passage of Smith's Wealth of Nations reads like a gloss on the "Gnomes" episode ...:

... [E]very individual ... neither intends to promote the publick interest, nor knows how much he is promoting it ... [B]y directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention ... By pursuing his own interest he frequently promotes that of the society more effectively than when he really intends to promote it ...

Look at this passage from The Wealth of Nations:

[The] happiness and perfection of a man, considered not only as an individual, but as the member of a family, of a state, and of the great society of mankind, was the object which the ancient moral philosophy proposed to investigate. In that philosophy the duties of human life were treated of as subservient to the happiness and perfection of human life. But when moral, as well as natural philosophy, came to be taught only as subservient to theology, the duties of human life were treated of as chiefly subservient to the happiness of a life to come ...

Indulge me as I quote from The Wealth of Nations (book 1, chapter 7):

The market price of every particular commodity is regulated by the proportion between the quantity which is actually brought to market, and the demand of those who are willing to pay the natural price of the commodity, or the whole value of the rent, labour, and profit, which must be paid in order to bring it thither ... the interest of all other labourers and dealers will soon prompt them to employ more labour and stock in preparing and bringing it to market. The quantity brought thither will soon be sufficient to supply the effectual demand ...

I'm hardly alone in my uneasiness ... In my camp is no less a personage than Adam Smith. Look at this passage from The Wealth of Nations:

The happiness and perfection of a man, considered not only as an individual, but as the member of ... mankind, was the object which the ancient moral philosophy proposed to investigate. In that philosophy, the duties of human life were treated of as subservient to the happiness and perfection of human life. But when moral, as well as natural philosophy, came to be taught only as subservient to theology, the duties ... were treated of as chiefly subservient to the happiness of a life to come ...

In the first chapter of The Wealth of Nations, [Adam Smith] wrote,

In civilized society [the individual] stands at all times in need of the co-operation and assistance of great multitudes, while his whole life is scarce sufficient to gain the friendship of a few persons ... man has almost constant occasion for the help of his brethren ... 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. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.