7 - An Unnatural Path to Natural Progress: Smith Represents the Power of His Principles in Book III of The Wealth of Nations

Summary

REVIEWING “THE NATURAL PROGRESS OF OPULENCE”

Smith titles Chapter 1 of WN Book III “Of the natural progress of opulence” because therein he reviews the “general rule” (WN, 377) of “the progress of opulence” that he has established in WN Book II: the progress of opulence begins where the essentials of human life (“subsistence” (WN, 377)) are produced, in agriculture. It is from that foundation and with that support that the production of commodities for “conveniency and luxury” (WN, 377) follows.

Using Smith's country/town dichotomy, progress begins in the country and proceeds to the towns, where concentrations of people allow for the finer division of labor and thus the production of more complex and elegant goods. Variations on this pattern are feasible since towns can reach beyond their immediate locale for sources of subsistence, but although there are “considerable variations,” (WN, 377) these form “no exception to the general rule” (WN, 377).

Here, as he reviews his representation of the “natural progress of opulence” (WN, 376), Smith introduces the issue of risk. His risk analysis complements those general principles he developed in WN Book II, and it provides a segue to the narrative history he is about to tell.

Human beings are, according to Smith, naturally risk averse. As a consequence,

[u]pon equal, or nearly equal profits, most men will chuse to employ their capitals rather in improvement and cultivation of land, than either in the manufactures or in foreign trade. […]