I want to write the first article in this business book blog about ‘The Wealth of Nations’ (or as the full title of the book is “An Inquiry into the Nature and Causes of the Wealth of Nations”) by Adam Smith was already published in 1776 and is in my opinion still one of the most important business books.
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I choose this book not only because I think to start with ‘Adam’ is funny, but also because I think this is for me something like the “mother of all modern business books” and classic economic thought. It introduces a wide range of basic (and also some not so basic) concepts in business and economic sphere. The book influences generations of authors including non-economic writer Alexander Pushkin (in Eugene Onegin) .
Overall, the “The Wealth of Nations” consists of 5 ‘books’ which are usually combined in a single publication.
- Book I: Of the Causes of Improvement in the productive Powers of Labour
- Book II: Of the Nature, Accumulation, and Employment of Stock
- Book III: Of the Different Progress of Opulence in Different Nations
- Book IV: Of Systems of Political Economy
- Book V: Of the Revenue of the Sovereign or Commonwealth
While the book is from nowadays perspective at times a bit hard to read (it probably already was at the time it was published in 1776) it is still insightful and of practical use. E.g., Smith wrote: “great part of the machines made use of in those manufactures in which labour is most subdivided, were originally the inventions of common workmen, who, being each of them employed in some very simple operation, naturally turned their thoughts towards finding out easier and readier methods of performing it.” Yes, indeed ‘you don’t need a university degree to be innovative’ was already addressed in his book.
However, the focus of this book is clearly on the origins of business interactions. Smith, for example, elaborates in-depth on the origins of business interactions e.g., how the price of money and how the role of coins changed over times (stating with starting with ancient empires like Egyptian and Roman civilizations). This means it is a reflection on the fundamental practices of economic interaction and it foundations. I think it can be helpful to go back to the basics when you want to think about the role of modern technologies like cryptocurrency, high-frequency trading and alike. This book provides an interesting perspective as Smith was a good observer and described workflows in detail (which can sometimes end up in somewhat lengthy explanations).
While Smith’s is very famous for the ‘invisible hand’ as market mechanism is his book not simple pro-capitalism reasoning (as it is sometimes perceived), but a much more nuanced observation and analysis of the world. He argues for more liberalized global trade but also reduced military spending and progressive taxation.
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