This week, our discussion of American society focused on the economic differences of this new nation.  Much of America’s reputation since the 20^th Century has roots in an economic model which came forth in, you guessed it, 1776.  However, this model did not come from an American; rather it came from what Adam Smith put forth as “An Inquiry into the Nature and Causes of the Wealth of Nations.â€�  This was perfect timing because America would take this model and experiment with it as no other nation could.  In fact many of our present views (speaking of America as a whole) arose from Adam Smith’s original contribution of defining wealth which came at the same time our Founding Fathers were defining liberty. 

    How much are you worth?  Depending on who you ask you might get a different response to this open-ended question.  Well, whoever may be reading this . . . your worth has just increased to me (although I do not know it).  How about a nation though?  Although you may not like a certain country, if they are powerful, you cannot deny this fact.  Before Adam Smith’s model, which in American history we call a Market Economy, wealth was based on evidence.  We call this mercantilism which for a nation includes its hand in trade, controlling the assets of the people, having wealth in a physical place such as a bank, and military power to name a few.  I light-heartedly contrast this with today’s model which is based on faith, and even blind faith in some cases.  If I were to continue with this analogy, then the most effective interpretation of the new ‘wealth’ is the true faith of action based on evidence and true, which truly becomes a quality, a power, and a freedom.  In this sense what Adam Smith did was include the people into the equation.  Thus it does not matter how much money is in the bank if the people are so removed from it that it is effectively not even there for them. 

    This applies not only for money but for everyday lives and behaviors which could in some way or another be affected by wealth.  This is where quality of life comes in and freedom from oppression due to lack of wealth.  Thus the definition of wealth cannot be translated by a simple ‘word for word’ linear translation between people or nations although we invent ways to compare these.  Some of the most advertized of these are statistics such as the Gross Domestic Product (GDP) or various “Per Capitaâ€� statistics.  This is an attempt to see how wealthy a nation is based on averages of its people.  Adam Smith’s model applies to individuals, parties, or consumers as well where the relevant principle is that of exchange being interpreted as a liberty.  With the expansion of liberty exchange is voluntary; it is based on mutual self-interest in which both parties do it of their own free will as to benefit themselves.  Thus the market system more or less operates on its own as a system of action-reaction.  If something fails then an invisible hand will set things right again.  I am reminded of President Samuelson’s devotional address this year as he warned against a mindset of “Que Será, Será – What will be, will be.â€�  Adam Smith gave helped form these ideas concerning our understanding of the “wealth of nations.â€�  I say for the moment, “I am novice, but with tomorrow will come understanding.â€�

Tags: Wealth Of Nations Adam Smith American Economy

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