'The Wealth Of Nations' Adam Smith; Summary Book 1 Chapter 1

In this first video in the series of chapter summaries for 'The Wealth Of Nations', we look at Adam Smith's idea of the division of labor, which Smith believed was one of the most important causes of the creation of wealth. Using clear and easy to understand examples we will summarize and analyse one of the key texts for understanding modern economics.

The Wealth Of Nations by Adam Smith was the first modern book of economics, the foundation on which all later economics was built. First published in 1776, its influence is still felt today. If you are interested in the works of later economists or theorists of political economy, they all build off what he started. Although some of the ideas are a bit dated now, it still has much to offer and is standard reading for anyone interested in economics. Much quoted, it is a bible of classical economics and free markets. It is often misunderstood though, and many of its ideas might surprise free market proponents today.

The first chapter presents Smith's most famous idea, that it was through the division of labor that nations grew richer. Here he presents his famous example of pin makers, where a group working together, each specializing in a particular task within the process, could make many times more than one person performing each task himself. He argues there are three ways this division increases production; through allowing people to become more skilled at each task, through saving time by not having to switch tasks, and through allowing for the development of new techniques and technologies for each task.

[danielcory]

Such a great series. Are you going to finish? This is amazing!

[psikeyhackr]

Adam Smith used the word 'education' 80 times in Wealth of Nations. If you search it for 'and account' you will find he wrote, "read, write, and account" multiple times. Never "read, write and arithmetic".

In 1790 50% of Brits were illiterate. Making accounting mandatory in the schools for most kids would have been impossible. The United States could have done it since Sputnik. When do economists ever suggest that? Smith never saw planned obsolescence and television commercials.

Economists can understand pins. I asked a PhD economist from the University of Chicago to explain how an automobile engine worked. He could not even start.