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Contributions from the father of classical economic thought.
From Inside the Mind of Adam Smith
For Econ 303
Western Washington University
March 4, 2013
By: Joe Savarese
This paper is meant to focus on just a few of the contributions to economic thought, method, and theory that were made by Adam Smith in his publication An Inquiry into the Nature and Causes of the Wealth of Nations. Specific to this paper the topics included are from his discussions of profit, the East Indies Trading Co. and agriculture. Further examinations of such related or tangential topics are discussed, such as, his view of the merchant class and government interaction as it pertains to joint-stock companies and economic vision. As well as his influencers, the Physiocrats, and his historical observations on which he predicated his thoughts and theories.
Part A: Biographical Introduction and Contextual Overview
A discussion of the modern state of economic thought and method inevitably entitles mention of the preliminary works of Adam Smith, the founder of the classical school of economics; and in understanding its progression, it is impossible not to recognize the year of 1776 as historically significant. The year Adam Smith published An Inquiry into the Nature and Causes of the Wealth of Nations. This book had a profound influence on the study of economics; still ringing resonant sounds as boisterous as those years following its release.
A well educated Scottish man, Adam Smith not only opportunistically seized the moment of an emerging transition in economics; he far exceeded the limitations of time and place with thorough evaluations and incredible foresight. During his time rapid changes in all aspects of living were advancing through Europe and its peripheries. Adam Smith, spending much of his early life in Scotland, a time period known as the “Scottish Enlightenment”, was undoubtedly a product of it. Similar to the European Enlightenment much emphasis was placed on the human ability of reason in objective analysis without regard to authoritative or traditional preconceptions that couldn’t viably endure meticulous scrutiny (Bristow). In contrast to the more general European Enlightenment, the Scottish Enlightenment was predicated on optimism in humanities ability to alter and shape their state of existence for the better which resonated with Adam Smith and can be observed in his writing (Bristow). At the age of 14, he attended the University of Glasgow, where he studied under the moral philosopher Francis Hutcheson; who was making immense contributions to the predominant ideas that were circulating and seems to have made quite an impression on Smiths own moral philosophical writings. Specifically, this influence is seen in his book, The Theory of Moral Sentiments, published in 1759 in which he describes the basic moral foundation for his later contentions concerning the economy (Fleishacker). Argumentative premises for his theories that include and/or are derived from the idea that harmony and societal benefit result from the liberation of an individual’s right to act in their own rational self-interest are contrived within the text. He explored the nature of a person’s emotional connection to society as well as the psychological processes of rationalization and explicitly within The Wealth of Nations explains how those factors motivate economic forces (Fleishacker). Laying out those appropriations on the nature of the individual and their relation to society allowed him to endeavor his assault on the mercantile perspective that at the time was experiencing criticism and an increasing decline in faith.
The Industrial Revolution was under way, factories emerged with technological innovations and techniques, advanced markets were forming, and Smith recognizing that the use of mercantile policy was fast becoming outdated, sought to release the market forces from their political confines. With the continuing rise in strength and influence of the nation state, the counter-productivity relative to the negative consequences to the growth and progress of economies that stemmed from mercantile policies faced relentless attack. Emerging was opposition to the idea that the wealth and well-being of a nation could be measured solely by the amount of currency in a nation’s possession, finding it fallacious and its policy implications to be adversely affecting the economy. In France such dissatisfaction gave rise to a group of economists called the Physiocrats who Smith encountered during his tutoring duties there (Ekelund, Hebert, 102). Befriending the leader Francois Quesnay and enticed by their method of study as well as some of their views, Adam Smith polished his arsenal of economic theory by assimilating the Physiocratic insights into his own views. Often citing the Physiocrats in The Wealth of Nations, it’s clear he was well aware that they were on to something and seems to have adopted their systematic landscaping of exchange to better realize causal relationships. The Physiocrats along with other philosophers were promoting a “laissez-faire” role for government so they could be free from the destructive forces of oppression; a rallying cry that Adam Smith borrows in his own arguments to free up the markets and the power of individual self-interest (Ekelund, Hebert, 102). These are just a couple of many examples where his ideas in economics were being drawn from influential thinkers, he had a rapidly growing repository of information to pull from to which he and others could implement the refined critical thinking strategies in the social sciences that were quickly developing.
It’s unclear whether the actual nature of Smiths well rounded method of inquiry including deductively theorizing by proposition or axiom in addition to inductively describing reality from empirical evidence was deliberately taught, or just a direct effect of learning across disciplines. What is abundantly apparent is that whatever the contributive factor, when coupled with his ingenious mind the products are timeless works containing a plethora of insights. Credibly discussing them all would take a lifetime but narrowing the focus to just a few topics one can respectfully digest his ideas surrounding them. The topics that follow for a more intensive discussion are profit, the East India Company, and agriculture. Of course, all being loaded, the intent is to pin-point Adam Smith’s key insights and observations.
Part B: Profit; of its Nature and Role
Adam Smith goes to great lengths describing profit, what it is, its nature in the economy, and of its consequences. Prior to engaging in a discussion of it, he first sets out to define what exactly profit is, or as he calls it, “profits of stock”, concluding that profit is more or less the excess value and interests of a commodity after covering the price of advanced wages for labor and materials used in production, this is an allotment for the risk the employer undergoes for investing capital in the hopes of some uncertain future payoff (54-55, Vol. I). Later Adam Smith attempts to convey his observations of profits of stock in the economy during present and previous periods of time. This is difficult, he writes, because it’s consistently in flux, but cleverly finds a way around trying to gage averages and rates of the discontinuous profits writing, “But though it may be impossible to determine with any degree of precision, what are or were the average profits of stock, either in the present, or in ancient times, some notion may be formed of them from the interest of money” (99, Vol. I).
Consequent to this rumination he has presented a method capable of empirically understanding profits and remarkably comes to a very important insight. The notion of what today has been denoted “profit motive”, that there exists a conscious tendency for those who have accumulated excess capital to employ it to generate profits. More importantly, he explains this as a strong and necessary force of good for society, noting that “It is the stock that is employed for the sake of profit, which puts into motion the greater part of the useful labour of every society” (277, Vol. I), and in logical succession he states, “The plans and projects of the employers of stock regulate and direct all the most important operations of labour, and profit is the end proposed by all those plans and projects” (278, Vol. I). Suggesting that those in the possession of a surplus of capital are essential drivers of economic production and therefore of economic growth. Let them then employ their capital freely in the competitive markets in the pursuit of maximizing their own profits and soon the economy will be vibrant and flourishing. Modern economic theory still invoking this concept can trace its origins to the pages in The Wealth of Nations that for over 200 years has been revered.
Although, this is not where his insight into profit motive ends, as he has a tendency to do throughout the book, he acknowledges the limitations and possibly dangerous outcomes of his propositions to watch for and avoid. He goes on to warn about what he calls a certain order of men, by which he means capital owning profit seekers, who by employing the largest shares of capital maintain greater public consideration and political clout. In practically the same breath as celebrating profit motives beneficence his wariness of legislation being dictated or influenced by employers of capital is expressed as he writes, “It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it” (278, Vol. I). If the proper barriers and discretion don’t exist politically the competitive climate that harbors what Smith believes is in a sense, good profit seeking behavior, is disrupted and the distorted interests of employers impose their will without the natural market restrictions, thereby engaging in a habit of bad profit seeking behavior. Not surprising then is how adamant he was in maintaining a laissez-faire role in governance and the economy. Keeping governments from meddling in economic activity was imperative to augmenting social and economic well-being because it in large part protected the people from unscrupulous individuals or groups that wished to subvert the general interests of the public.
Other perceptive considerations from Adam Smith on profit are found within his remarks on the determinants of and variations in profits of stock according to circumstance. Both the rate of wages and profit, which maintain an innate relationship, are said to correspond to different factors. He expounds these factors influencing wages and profits in his chapter on the natural and market price of commodities, “This rate is naturally regulated… partly by the general circumstances of the society, their riches or poverty, their advancing, stationary, or declining condition; and partly by the particular nature of each employment” (62, Vol. I). In light of his comprised differentials, an examination across them provided reasonable causality between the differing states of profit concurrently being observed.
Hence, his incredible description on the falling rate of profit could consequently be exemplified in this statement, “The great stocks employed in every branch of trade, and the number of rich competitors, generally reduce the rate of profit in the former below what it is in the latter” (101, Vol. I); the former being rich, extensive, and competitive branches of trade in great towns, and the latter being a country village with opposite characteristics. The larger quantity of employable stock forces interest payments down leading to the diminution of profits and the well established branches of trade make it difficult to find new avenues to employ capital for profit. As the rate of profit rises or falls so too does the proportion of interest (109, Vol. I). This is a preliminary notion to the modern microeconomic assumptions of perfect competition, where in perfect competition firms will continue to enter the industry until economic profit reaches zero, which as Adam Smith argues is the natural tendency of the established market. Also what may be gleaned from falling rates of profit is when and how they may rise. If the extent and diversity of a market are advancing and the number of firms remains equal or doesn’t increase quickly enough in relative proportion to the markets growth, then those firms will experience a period of higher profits until enough firms enter.
This does not mean that the actual sum of profits is lower for the developed and extensive markets than the one in what Smith describes as the country village market because the mentioned rate of profit is simply looking at the margins rather than the total. Summing it up nicely is this particular section, “In the small towns and country villages… trade cannot always be extended as stock extends… though the rate of a particular person’s profits may be very high, the sum or amount of them can never be very great… In great towns, on the contrary, trade can be extended as stock increases” (126-127, Vol. I). He also adeptly recognizes something about the relationship between profits and wages that later in the 1800’s becomes obscured for some time under the predominance of David Ricardo. He points out that high wages and high profits can exist simultaneously.
Using the colonies of North America as an example he explains that there isn’t an immutable inverse relationship between wages and profits, “In our North American and West Indian colonies, not only the wages of labour, but the interest of money, and consequently the profits of stock, are higher than in England” (103, Vol. I). In an earlier chapter there is an explanation of the cause of this rare case, “The demand for labourers, the funds destined for maintaining them, increase, it seems, still faster than they can find labourers to employ” (79, Vol. I). In principal it seems that one could conjecture that any profitable industry, that for whatever reason experiences a period of labor demand exceeding labor supply, will show characteristics of same. For example, throughout the multitude of references to wages and profit it seems possible to deduce that this won’t only occur during the early stages in development of a society but can occur when a new branch of industry is introduced and developing. It is also possible to deduce that there is a possibility for this same effect delitescent within discussions of the increased rates of profit from opening up new markets. As long as the demand for products increased with such rapidity as to stave off the counter-balancing entry to the labor force, perhaps from educational or other exogenous restrictions, the theoretical possibility of high wages coinciding with high profits could take place. Contrary to these deductions though, Smith narrows his assertions to but the single case of new colonies, “High wages of labour and high profits of stock, however, are things, perhaps, which scarce ever go together, except in the peculiar circumstances of new colonies” (103, Vol. I). Although, from attentively reading his other discussions on wages, profit, and new industries, one can’t justifiably knock this narrowing because often times Smith seems to actively avoid proposing the other possibilities due to their infrequent, intermittent, and brief occurrence. Essentially he only ascertains the case that can empirically support an event of high wages and profits being sustained for a considerable amount of time.
Part C: The East India Company (EIC); of its Adverse Dispositions
Adam Smith’s The Wealth of Nations, for good reason, was one of the most compelling arguments to turn the page on mercantilism and open a new economic chapter. A major source of his combative work is within his discussions of the East India Company; virtually the culmination of mercantile policy. European nations were enjoying the produce acquired from extensive trade with the Asian continent, particularly the Indian sub-continent, subjecting them to frequent monopolistic territory disputes over rights to goods, services, and trade routes. Great Britain was host to a class of rich merchants and aristocrats who maintained exclusive privileges to those rights; later becoming a joint-stock company. Adam Smith provides the history of the old company that was competing with an emerging one, that “In 1702 the two companies… united by an indentured tripartite, to which the queen was the third party…” by parliament were “…perfectly consolidated into one company…. the United Company of Merchants Trading to the East Indies” (272, Vol. II). The company owned its own military and effectively ruled portions of India. By nature of the actions they carried out, one could consider them a peripheral sovereign of Great Britain for the sole purpose of abounding production.
Despite all of the nations of Europe participating in this monopoly grab of trade markets, Adam Smith recognized the abhorrent nature of these companies and the hazard they posed on the affiliated nation’s economy. “Even the regulations by which each nation endeavors to secure to itself the exclusive trade of its own colonies, are frequently more hurtful to the countries in favour of which they are established than to those against which they are established” (142, Vol. II). He refers to colonies, which encompasses American and African territories that were acquired as well, but directly applying the message to the occupied territories of the EIC suggests the same implications. The regulatory policies being invoked by Great Britain, regardless of other nations acting in same, are actually more detrimental to Great Britain than to its competitors it sought to transcend. He explains that this is partly because those who maintain the rights to legislate are meant to be those who seek the opulence of their particular sovereign, “But a company of merchants are, it seems, incapable of considering themselves as sovereigns, even after they have become such” (154, Vol. II). They are manipulative entities backed by the British parliament who exercise their narrow minded authority for themselves and their investors/shareholders sake, in an attempt to experience gains from the trade without regard for anyone else. This is an example of what aforementioned in the profits section was bad profit seeking behavior that Smith warned of, where restricted liberty of the free market causes inefficient economic decisions; a blatant exploitation of privileged circumstance.
What follows, are barriers to growth that are typically exhibited in an obvious way; he deductively describes how “It tends to make government subservient to the interest of monopoly, and consequently to stunt the natural growth of some parts at least of the surplus produce of the country to what is barely sufficient for answering the demand of the company” (155, Vol. II). This is interesting because he saw what most did, the exploitation of the monopolized trade of the EIC as a hindrance to those local economies, but realized that this wasn’t just affecting them and actually hurt the merchants who employed such trade restrictions as well. They were destroying the very markets that they drew their profits from. Upon further historical examination he notes a dissonance between the degrees of benefit obtained from the East Indies compared to the Americas. He derives this disadvantage from the monopolizing of trade that continued to persist through efforts of the EIC but observed it in the past when the Portuguese had complete control of the trade (471, Vol. I). It’s safe to say that some of the stories being told by the state of the Indian territories at the time maintained similar obstructions to growth. Disgustedly Adam Smith writes about Bengal, “In a fertile country which had before been much depopulated, where subsistence, consequently, should not be very difficult, and where, notwithstanding, three or four hundred thousand people die of hunger in one year, we may be assured that funds destined for the maintenance of the labouring poor are fast decaying” (82, Vol. I).
The problems consistent with adequate funds being misappropriated is caused by the efforts of the merchants, who blinded by their own sophistry, act according to a falsely surmised perceived self-interest rather than hindsight’s revealed interests had they disbanded their monopoly. What is amazing about his mangling of mercantile policy is that although the monopoly pursues their own individual gains, they are self-destructive if left alone, leaving their market desolate and all those impacted at a lesser state too. Eloquently stated is that “All the different regulations of the mercantile system, necessarily derange more or less this natural and most advantageous distribution of stock” (146, Vol. II). The burden bearers then, are the inhabitants of the country that has established the monopoly. More specifically, even though it does affect the merchant class, they aren’t the ones who face the greatest magnitude of the consequences. For example, prices rise as a result of restrictions on the sales of the competitors produce to domestic markets and is “…finally paid by the land-lords, farmers, and labourers of the country who have seldom opposed the establishment of such monopolies” (143, Vol. I). This argument, and others, appear to be humanitarian arguments about the plight of the poor and the exploited inhabitants under authority of the EIC, a stark contrast to the utility of the poor arguments that before Smith held prevalence. The legitimacy of the argument, or at least the only reason anyone would give it due diligence, is because it’s simultaneously showing the class of people in the limelight of public consideration lose too when the lowly classes are at a loss. The very markets that result in the merchants profitable endowments, by way of such derangement in resources, cause the diminution in the average revenue; the beating heart of those markets. This implies that their monopolistic actions are in fact holding down the potential prosperity of the nation as a whole; the end that gave worth and justification for all mercantilist means, especially those that were most degrading to the already unfortunate.
In light of Adam Smith’s discouraging portrayal of the EIC and their military occupation as negligent, profuse, oppressive, and domineering, the nations of Europe needed a new method to prosper without such joint-stock companies and monopolies on trade. He gives some policy advice regarding such potential prosperity, claiming that trade under monopolistic competition riddled with regulations or bounties are a common hindrance to the home country, “But that trade which, without force or constraint… is always advantageous, though not always equally so…” (514, Vol. I). Meaning free international trade will always be advantageous even if the equality of trade isn’t because it’s not in the way mercantilists would expect. As he later goes on to say, this advantage is not in the increase in the quantity of gold or silver, but an increase in that of the annual exchangeable value of the annual produce of the land and labor of the country, or an increase in the annual revenue of its inhabitants (514, Vol. I). In a nutshell his reaction to the EIC has provided the free trade arguments used ever since classical economic theory emerged. In bashing the EIC with an astonishing cause-and-effect analysis he dismantled the theoretical grounds of mercantilism in their entirety and envisioned a future founded on liberty, not in the pursuit of gold and silver, but in the pursuit of productive capacity, allowing the natural tendencies of economic forces to serve the greater good and justly distribute resources to all.
Part D: Agriculture; of Societal Genesis and Proceeding Referrals
It’s easy to gloss over Smith’s writings on agriculture and conclude that on the surface he accepted the Physiocratic principles, made one step in the right direction with critiques on productive labor, and had a few minute additions to their analysis. But beneath the surface, a thoughtful examination reveals that his insights into agriculture, despite the brevity of his discussion, are actually surprising emanations of his sheer brilliance. It’s true that he consolidated the views of intrinsic value proposed by Physiocrats to a nation’s wealth and utilized the body of their work in forming his own understanding, but the way he took their staunch theories and painted a complete picture of an agricultural genesis that transforms itself throughout the changing progressive circumstances is quite admirable to say the least.
Physiocrats held the agricultural sector as the only value producing sector and the sole derivation of a nation’s wealth. Smith acknowledges this notion but strikes at the true quality of agriculture in society, describing it instead as an origin of relative value. Historically, humans can only gather in permanent residences by cultivating the land, and that all other industry is only possible given an agricultural surplus. On the topic of food, the basic subsistence, he writes, “Food not only constitutes the principal part of the riches of the world, but it is the abundance of food which gives the principal part of their value to man, other sorts of riches” (194, Vol. I). Yes, the initial wealth of that society, is solely determined from the agricultural lands, but when encountering his criticisms on the Physiocratic short sightedness it’s clear that as societies open up trade and transform with the rise of towns through this surplus; so too does the role of agriculture. He points out that the capital error of Physiocratic theory “…seems to lie in its representing the class of artificers, manufacturers, and merchants, as altogether barren and unproductive” (195, Vol. II). The agricultural sectors become dependent upon the others, which do in fact create productive labor because their parsimony and technological developments are requisite for the improvements of land and cultivation; thus, requisite for economic growth.
Strung together are sequences of the natural routes to affluence and the latent transformation of agriculture. The elaborations on such sequential processes are perceptive in their own right but amazingly so after scrutinized. First, in an observation of proper colonial business, he marks the logical origin of prosperity as improving agriculture because “…the cheapness of land renders more advantageous than any other… instead of importing it from other countries, they have generally a large surplus to export” (124, Vol. II). If one were to amalgamate this idea with the very early pages of The Wealth of Nations it’s only fair to allot due credit for Adam Smith’s introduction of the existence of comparative advantage in free trade. For when he says, “But though the poor country, notwithstanding the inferiority of its cultivation, can, in some measure rival the rich country in the cheapness and goodness of its corn, it can pretend to no such competition in its manufactures…” (10, Vol. I), and after slight extrapolation from agriculture specifically, to all branches of industry generally, he’s suggesting that a country can maintain profitable trade with other countries that contain absolute advantage in both branches by simply choosing to allocate towards that which they have relatively the greatest propinquity in production. The large surplus to export, as described in the former quote, is traded for the produce of the industry it can pretend no such competition, as described in the latter.
As for the transformation, agriculture transitions from the power source of a society’s economic system and becomes just another component for circulation in the landscape of exchange. “After agriculture, the capital employed in manufactures puts into motion the greatest quantity of productive labour, and adds the greatest value to the annual produce” (387, Vol. I). Therefore, newly allocated capital investments won’t be as beneficial in the agriculture of society any longer and to generate a higher rate of wealth capital should be invested in the manufacturing industry. From there follows the growing inclination to improve commerce as well because “By means of trade and manufactures, a greater quantity of subsistence can be annually imported… than its own lands… could afford” (198, Vol. II). Noticing the economic dominance of Britain had much to do with the strength in their manufacturing exports; any lost subsistence at the expense of that industry flourishing were imported from the opulent agricultural areas like the East Indies or the American colonies.
Even though he recognized when agriculture is particularly the most important sector for a countries development and when it is surpassed during that development it’s crucial not to forget about the fundamental preconditions he is advocating. There should be no intrusive government intervention attempting to assist these processes because “Every such encroachment, every violation of that natural distribution, which the most perfect liberty would establish, must… necessarily degrade… the value and sum total of the annual produce…” (194, Vol. II). There are causal fallacies in policy that exist to encourage or discourage behavior of economic agents. He deductively retorts such efforts to aid manufacturing, “That system, by encouraging manufactures and foreign trade more than agriculture, turns a certain portion of the capital of the society from supporting a more advantageous, to support a less advantageous…” (208, Vol. II). Also, the opposite policy, a government attempt to aid agriculture is equally destructive, “This policy… discourages agriculture in two ways… by sinking the real value of its produce, and thereby lowering the rate of its profit; and… by raising the rate of profit in all other employments” (193, Vol. II). In effect, doing the exact opposite of what was intended. The interest of the capital owner is artificially geared to invest less in the more advantaged agricultural sector because of smaller profits and invest more in the other, less advantaged sectors that have larger profits. Overall, what is earned when meddling in the domestic agricultural sector, like monopolizing the home produce market, falls short of the earnings had they not prohibited the trade of foreign nations.
The reasons why his discussions into agriculture are significantly intuitive are their implications to modern stages of development in the globalized market. For example, by his logic, subsidies or bounties, like that of the current U.S. government to agricultural development, are counter-productive. The policy of Adam Smith would say to quit such subsidies and let the natural distribution take place. Perhaps so lesser developed nations like Jamaica, whose farmers have evidently been affected by this policy, improve their export produce and increase their annual revenue. Possibly leading to more extensive markets that import other such goods and services that in the U.S. are naturally more rewarding to produce. These ideas, still relevant have aroused the formation of institutions like the World Trade Organization to handle disputes between countries that practice these policies; which is why from a society’s agricultural genesis to the subsequent transition of being relatively dependent on all other sectors, Adam Smith saw beyond the contextual constraints and into modernity.
Part E: In Conclusion
Some think that the merit of a genius comes from the originality in their theoretical contributions; within this group of people are those who discredit Smith, but they are foolish and wrong. Their arrogance in hindsight misconstrues the relative merit of the contributions and their ignorance stifles the various kinds of existing genius. Say Smith did have empty theoretical contributions; the vitality just in the nature of their presentation is still something that requires particular intellectual prowess. Measuring, not the originality of ideas, but instead his mastery of the art of persuasion and skillful communication. Adam Smith, in many ways an antithesis to the moral status quo, was disguised as a pragmatic economist and synthesizer who published a book that if nothing else should be deemed meritorious for being a vehicular transport of humanitarian optimism in economics through the pessimistic and degenerative rent-seeking muck of his time. Indeed, he was a man that assisted in a drastic shift in the due course of things.
Bristow, William, "Enlightenment", The Stanford Encyclopedia of Philosophy (Summer 2011 Edition), Edward N. Zalta (ed.), URL = <http://plato.stanford.edu/archives/sum2011/entries/enlightenment/
Ekelund Jr., Robert B., Hebert, Robert F. A History of Economic Theory and Method. Fifth Edition. Long Grove: Waveland Press, Inc., 2007. Print.
Fleischacker, Samuel, "Adam Smith's Moral and Political Philosophy", The Stanford Encyclopedia of Philosophy (Spring 2013 Edition), Edward N. Zalta (ed.), forthcoming URL = <http://plato.stanford.edu/archives/spr2013/entries/smith-moral-political/>.
Smith, Adam. An Inquiry into the Nature and Causes of The Wealth of Nations. Chicago: The University of Chicago Press, 1976. Print. (194, Vol. II). There are causal fallacies in policy that exist to encourage or discourage behavior of economic agents. He deductively retorts such efforts to aid manufacturing, “That system, by encouraging manufactures and foreign trade more than agriculture, turns a certain portion of the capital of the society from supporting a more advantageous, to support a less advantageous…” (208, Vol. II). Also, the opposite policy, a government attempt to aid agriculture is equally destructive, “This policy… discourages agriculture in two ways… by sinking the real value of its produce, and thereby lowering the rate of its profit; and… by raising the rate of profit in all other employments” (193, Vol. II). In effect, doing the exact opposite of what was intended. The interest of the capital owner is artificially geared to invest less in the more advantaged agricultural sector because of smaller profits and invest more in the other, less advantaged sectors that have larger profits. Overall, what is earned when meddling in the domestic agricultural sector, like monopolizing the home produce market, falls short of the earnings had they not prohibited the trade of foreign nations.
Some think that the merit of a genius comes from the originality in their theoretical contributions; within this group of people are those who discredit Smith, but they are foolish and wrong. Their arrogance in hindsight misconstrues the relative merit of the contributions and their ignorance stifles the various kinds of existing genius. Say Smith did have empty theoretical contributions; the vitality just in the nature of their presentation is still something that requires particular intellectual prowess. Measuring, not the originality of ideas, but instead his mastery of the art of persuasion and skillful communication. Adam Smith, in many ways an antithesis to the moral status quo, was disguised as a pragmatic economist and synthesizer who published a book that if nothing else should be deemed meritorious for being a vehicular transport of humanitarian optimism in economics through the pessimistic and degenerative rent-seeking muck of his time. Indeed,