mar 9, 1776 - The Wealth of Nations
Description:
An Inquiry into the Nature and Causes of the Wealth of Nations was a book written by Adam Smith in which he examined what makes nations prosperous. In it, he discredits the prevailing economic theory of mercantilism. Under this system, countries operated under the belief that there was a finite amount of wealth in the world, and so the more prosperous one's neighbors were, the worse off one's own country was. Wealth was amassed by minimizing imports and maximizing exports, as well as frequent piracy. Smith criticizes mercantilism for equating precious metals like gold and silver with wealth, instead arguing that a nation's wealth is better measured by the amount of goods and services it can output. This was the advent of the concept of gross domestic product (GDP), which is still used today to evaluate the prosperity of a country. He argues that gold and silver should not be hoarded, but kept in circulation, as that would keep more money flowing throughout the economy, which leads to more production, which leads to more wealth. Smith also advocated for little government intervention into the economy, claiming that in a totally free market, would be self-regulating. This idea was named "the invisible hand of the free market" and is another central idea to capitalism, the economic system that Smith vouches for in his book. Mercantilism soon fell out of favor among most countries and would adopt capitalism in its place, including the United States, a country that would become its primary defender during the Cold War.
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