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Monday, July 19, 2021

An Inquiry into the Nature and Causes of the Wealth of NationsAn Inquiry into the Nature and Causes of the Wealth of Nations by Adam Smith
My rating: 5 of 5 stars

After more than half a lifetime of being told that Adam Smith was one hell of a brilliant man and he should be a must-read for anyone wanting to understand what capitalism really means, I FINALLY went ahead and READ Wealth of Nations.

Okay. So I'm a bit late for the party. I've read the Kensians and I've read tons of books on how the Chicago school really f**ked up so many developing nations and I've been a student of the stock market, global economy, and how it directly ties to history. It's a hobby. I learn a lot.

So, was Adam Smith this horribly dry Englishman from the time of the American Revolution that liked to drone on about business?

Hell, no. Or rather, he was a contemporary and he was a student of business and trends and markets, but he was also a very good writer, continually interesting, conversational, and frankly brilliant in the way that a great mentor or teacher ought to be.

And it is brilliant. No doubts about it. But let's keep it real. This is about the Invisible Hand of the marketplace. He illustrates how neither workers nor employers can dictate economic conditions. Putting one's finger on the conditions can lead to serious imbalances and overcorrections.

Of course, he was illustrating these ideas hundreds of years ago and since that time there have been thousands of people attempting to argue or disprove the premise or at least to game the system in such a way that they can pretend to be economic magicians.

But the fact is this: without outside shenanigans, coercion, or fraud, Adam Smith's observations are still as valid now as they were back then.

My favorite takeaway: the Scottish banks and how they began lending out more money than what they had on hand because people were gaming the exchange rates of gold in other countries, and how gold prices, even though they OUGHT to have been stable as a guide of value, suddenly proved to be quite unreliable. And that's not even bringing up the mines and new gold.

This has been an ongoing issue in modern economics, the question of fiat versus gold standard. And it also discusses the fundamentals of fractional reserve and debt-based liquidity. Not in great detail, mind you, but the successes of stocks, freer investments, and trust really underlined the spirit of the markets and even more for the system we have today.

Not surprising, I know. For all the people who keep quoting him and all the people who have probably never read him, he's bandied about as the father of economics. Interestingly enough, now that I've read it, I note that there are a lot MORE people who read into him a lot of heavier conclusions than he would have made, himself.

He was the first to admit that trying to strangulate the market by trusts and coalitions of market makers always tend to create massive upheavals, poverty, and violence. Let me restate that: people who try to game the system in big ways are the very ones who cause the whole system to go belly up.

Profit is natural. So is loss. When systems are created to limit one and enhance the other, it capitalizes and consolidates the inequality. When the Invisible Hand comes, it comes down hard.

That's a natural correction, folks.

This isn't a question of Marxism or Capitalism. Indeed, this is older than either. It's just a natural observation of economics and people.

This review is not a comprehensive review, mind you. I was pretty much enthralled by the read. I learned a lot even if it just overlapped with all my previous studies. But best of all, I think it's a fantastically good and easy read. It's good enough that I don't want a break. I'm moving right on to another of Adam Smith's books right away.

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