48 pages • 1 hour read
The Wealth of Nations. The Theory of Moral Sentiments
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Book 4Chapter Summaries & Analyses
Book 4: “Of Systems of Political Economy”
Book 4, Introduction Summary
Smith states:
Political economy, considered as a branch of the science of a statesman or legislator, proposes two distinct objects; first, to provide a plentiful revenue or subsistence for the people, or, more properly, to enable them to provide such a revenue or subsistence for themselves; and, secondly, to supply the state or commonwealth with a revenue sufficient for the public services. It proposes to enrich both the people and the sovereign (135).
Much of Smith’s arguments in the following chapters relate to this idea: how to best enrich the people and sovereign of a nation. At the time of Smith’s writing, there existed two theories of how to accomplish this: the mercantile system and the agricultural system.
Book 4, Chapter 1 Summary: “Of the Principle of the Commercial or Mercantile System”
Under the mercantile system, wealth consists of money. Under such a system, a wealthy person or nation is one who has accumulated great quantities of gold and silver. The mercantilist system then, prioritizes accumulating large quantities of gold and silver by any means, and consequently favors foreign trade and colonizing, but disfavors allowing that money to leave the nation. Mercantilist nations, as Smith illustrates, frequently have prohibitions on exporting gold and silver, and base much of their policy on obtaining more gold and silver.
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