The Wealth of Nations: The year 1776 was remarkable in many ways. American revolution was beginning, the French revolution was brewing and the industrial revolution was gaining momentum. It was in that year that ‘Wealth of Nations’, the bible of free enterprise, came off the press. Unlike Paine’s ‘Common Sense’, its effect was not immediate and short lived. Like that of Thoreau’s ‘Civil Disobedience’, it has been slow but long lasting. At the time when Adam Smith, the celebrated author of Wealth of Nations, entered the scene, mercantilist policies were ruling the economic life of England dominated by the landed aristocracy. Prices were administered, wages were frozen, production and foreign trade were regulated and the government regulated every aspect of economic life. Adam Smith built up his magnum opus on the simple premise that every human being is motivated by self-interest. He found that selfish impulses act as incentives to the activities of mankind. So, he believed that selfishness of the individual is conducive to the welfare of the society. In a famous passage he suggested that a nation’s prosperity could be ensured by " allowing the uniform, constant and uninterrupted effort of every man to better his condition.…It was 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. We address ourselves not to their humanity, but to their self-love, and never talk to them of our own necessities, but of their own advantages.” Smith maintained that unconsciously a ‘divine hand’ leads a man so that in working for his gain, he contributes to the good of the whole society. He contended that modern industry is made possible by two important processes—Capital formation and Division of labor. He elaborated the principle of division of labor with the graphic example of 'pin making' in which eighteen distinct operations were performed by distinct hands. Extending the same principle, he maintained that division of labor among nations is as desirable as among individuals. Therefore, he advocated free trade among nations. The comparative advantages of free trade are emphasized in statements like: “It is the maxim of every prudent master of a family never to attempt to make at home what it will cost him more to make than to buy…What is prudence in the conduct of every private family can scarce be folly in that of a great kingdom.
If a foreign country can supply us with a commodity than we ourselves can make it, better buy it of them with some sort of produce of our own industry, employed in a way in which we have some advantage.” Regarding the controversial concept of ‘Value’, he maintained that labor ‘alone’ is the ‘real standard’ of value and price of a good while money is only the ‘nominal price.’ This idea was picked up later as a rallying cry by socialists and communists. Smith, who was dubbed as the godfather of capitalists never, in fact, said anything against the welfare of the working class. He was vociferous in his protests against the restraints placed on the workers by the apprentice statute and the settlement laws prevailing in his time. He argued that long periods of apprenticeship were unnecessary, for most trades could be learnt in a few weeks. He maintained further that apprenticeship regulations were an unfair interference with the worker’s right to choose his occupation. Adam Smith was able to view the rebellious American colonies with more objectivity than his fellow countrymen. Like Edmund Burke he believed that taxing American colonies without their representation in the British Parliament was meaningless. He revealed his prescience in a prophetic passage about the American colonies: “From shopkeepers, tradesmen and attorneys, they are become statesmen and legislators and are employed in contriving a new form of government for an extensive empire, which, they flatter themselves,