Adam Smith's Simplified Wealth of Nations, Book 2, Introduction
In the rude state of society, there is no division of labour and exchanges are seldom made.
- Every man provides everything for himself
- Stock does not need to be accumulated beforehand to carry on the business of society.
- Every man supplies his own wants by his own industry.
But when the division of labour has been thoroughly introduced, the produce of a man's own labour can supply only a few of his wants.
- Most of them are supplied by the produce of other men's labour.
- He buys them with the price of his own produce.
- But this purchase cannot be made until his produce has been sold.
- Therefore, a stock of goods must be stored up to supply him with the materials and tools of his work until he can sell his produce.
- A weaver must have enough stock to supply him with the materials and tools of his work, until he has sold his web.
- This accumulation is a prerequisite for his work.
3 The accumulation of stock must be previous to the division of labour.
4 The accumulation of stock leads to, and is necessary for, the great increase in productivity.
- Labour can only be more subdivided according to the stock that has been more accumulated.
- The amount of materials, which the same number of people can work up, increases greatly as labour becomes more subdivided.
- Each worker's operations becomes simpler.
- New machines come to be invented for facilitating those operations.
- As the division of labour advances, an equal stock of provisions and more materials and tools must be accumulated beforehand to give constant employment to the same workers.
- But the number of workers in every business increases with the division of labour in that business.
- The increase of the number of workers enables them to subdivide themselves.
- The employer wishes to employ his stock in the most efficient way.
His success in these two depend on the extent of his stock or the number of people it can employ.
Therefore, the amount of industry increases with the increase of the stock which employs it.
- He arranges the most proper distribution of employment.
- He furnishes them with the best machines he can buy or invent.
- The increase in stock allows the same amount of industry to generate more work.
5 Such are the effects of the increase of stock on industry and productivity.
6 In Book 2, I explain:
- the nature of stock
- the effects of
- its accumulation into different kinds of capitals
- the different employments of those capitals
This book has five chapters.
- Chap. 1 - I show the different branches which the stock of an individual or a society, naturally divides itself into.
- Chap. 2 - I explain the nature and operation of money, as a branch of the stock of society.
- Accumulated stock is called capital.
- It may be:
- employed by its owner or
- lent to others.
- Chap. 3 to 4 - I examine how money operates:
- when it is employed by its owner and
- when it is lent.
- Chap. 5 - I explore the immediate effects of the different employments of capital on:
- the amount of national industry
- the annual produce of land and labour
Next: Book 2, Chapter 1a: Division of Stock