Last Updated 07 Dec 2022

The greatest improvement

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The greatest improvement in the productive powers of labor, and the greater part of the skill, dexterity, and judgment with which it is any where directed, or applied, seem to have been the effects of the division of labor.”

This is the first paragraph excerpted from Adam Smith’s The Wealth of Nations. Adam Smith is regarded as the Father of Modern Economics, and the Father of Capitalism. Smith’s most famous work, The Wealth of Nations was the first systematic attempt to explain the workings of the economy in market terms, emphasizing the importance of the division of labor.

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The fundamental element in Smith’s viewpoint is his focus on the importance of the free market in ensuring the highest level of quality of commodities at the lowest prices. Smith’s philosophy is that human beings are naturally individualistic.

He furthers political theories that emphasize the individual, and proclaims the worth of each individual. He believes that human beings will interact most effectively when they live in a society of economic freedom, with individualistic philosophies that tend to emphasize what people can do as individuals, not what they can do as groups. In The Wealth of Nations, he states that: “In a free economic system, an individual is led by an invisible hand to promote an end which was no part of his intention…

By pursuing his own interest, he frequently promotes that of the society more effectually than when he really intends to promote it.” We can understand in this excerpt that because individuals constantly seek to better their own condition, they will continually direct resources to better uses when it is possible to do so. This will result to their and other people’s advantage which can consequently better or improve the conditions of others as well.

Adam Smith believes that the tenets of the free market system can improve the living conditions of individuals. In his view, free markets allow all individuals in an economy to improve their conditions. This collective improvement by individuals results to national improvement – the wealth of nations. He believes that a free market enables individuals’ significant self interest to exercise itself within the limits established by a government that controls people from performing positively bad actions.

Smith states: “Man has almost constant occasion for the help of his brethren, and it is vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in his favor, and show them that it is for their own advantage to do for him what he requires of them…It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.”

This paragraph very well sums up Adam Smith’s philosophy that individualistic tendencies can very well result to the improvement of others, and to the wealth of nations.

Smith greatly believes on the benefits of the division of Labor. The division of labor is a fundamental component of economic growth and it is this division allows the wealth of nations and individuals to develop. The division of labor requires a free market in order to be most effective.

Where there is a closed or highly regulated market, or monopolies or guilds control productive practices, inefficiencies can often result. Subsequent to John Locke, Smith also sees labor as the ultimate source for all value. Smith states: “Labor…is the real measure of the exchangeable value of all commodities.”


1.      Great Political Thinkers. Plato to the Present. Sixth Edition. William Ebenstein. Allan Ebenstien. Chapter 23: Smith. Pages 492-497.


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