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Blink 3 of 8 - The 5 AM Club
by Robin Sharma
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The Wealth of Nations summary
Adam Smith
The most influential economic book of all time
11 mins
Brief summary
"The Wealth of Nations" by Adam Smith is a classic economics book that examines the factors that contribute to a thriving economy and the benefits of free trade.
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The Wealth of Nations
Summary of 4 key ideas
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Key idea 1 of 4
A division of labor increases productivity; a marketplace enables people to specialize.
Imagine you want to start a factory to produce pins, and hire an uneducated worker to produce them.
Your worker performs all 18 steps in the process of making one pin by himself, and the result is rather poor: he barely produces a single pin in a work day.
But what if you hired a team of 18 uneducated workers, employing a division of labor, so that each worker specializes in one of the 18 steps?
Would the result be just 18 pins per day? Not really; the team could produce almost 50,000 pins a day!
A division of labor significantly increases productivity. But how does it work?
When one worker has to switch between many different types of work, it costs time. By employing a division of labor, one worker can focus on one skill; and that wasted time is turned instead into productive time.
What’s more, people are more likely to innovate in areas where their whole attention is devoted to a specific task. Innovations in turn result in increased productivity.
For example, the first fire engines were greatly improved when a boy employed a string to open and shut the truck’s water valve. Unsurprisingly, the boy’s job before this invention was to manually open and shut the valve!
As productivity increases, a surplus of unwanted products often results, which can be then traded away. For instance, a butcher who finds himself with a surplus of meat could trade the meat for bread from the baker.
But what about products that aren’t in demand? What if the baker doesn’t want the butcher’s meat?
This predicament is why money was introduced. The butcher can sell his meat to whomever is a willing customer in the market, and then use the money to purchase bread from the baker.
And what if the butcher doesn’t want bread, but rather cheese? He can go to the market and buy cheese with the money he earned from selling his meat.
In this way, people are able to specialize in their respective crafts or fields, another kind of division of labor. A division of labor increases productivity; which in turn gives rise to the market where craftsmen can trade surplus produce.
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What is The Wealth of Nations about?
The Wealth of Nations is a profoundly influential work in the study of economics and examines exactly how nations become wealthy. Adam Smith advocates that by allowing individuals to freely pursue their own self-interest in a free market, without government regulation, nations will prosper.
The Wealth of Nations Review
The Wealth of Nations (1776) by Adam Smith is a classic economics book that explores the principles of capitalism and its impact on society. Here's why this book is worth reading:
- Packed with insightful theories and economic analysis, it sheds light on the origins of wealth and the importance of free markets in driving economic growth.
- Through detailed explanations and historical examples, the book provides a comprehensive understanding of the complexities of the economic system.
- Smith's clear and logical arguments make the book accessible to a wide range of readers, ensuring that even those unfamiliar with economics can grasp its concepts.
Best quote from The Wealth of Nations
The sole use of money is to circulate consumable goods.
—Adam Smith
Who should read The Wealth of Nations?
- Anyone who wants to understand the foundations of capitalism and the free market
- Anyone curious about the core tenets of a fundamental work of economic theory
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The Wealth of Nations FAQs
What is the main message of The Wealth of Nations?
The main message of The Wealth of Nations is the importance of a free market and division of labor.
How long does it take to read The Wealth of Nations?
The reading time for The Wealth of Nations varies, but it typically takes several hours. The Blinkist summary can be read in just 15 minutes.
Is The Wealth of Nations a good book? Is it worth reading?
The Wealth of Nations is worth reading for its insights on economics and the birth of capitalism.
Who is the author of The Wealth of Nations?
The author of The Wealth of Nations is Adam Smith.
What to read after The Wealth of Nations?
If you're wondering what to read next after The Wealth of Nations, here are some recommendations we suggest:
- Superintelligence by Nick Bostrom
- The Communist Manifesto by Karl Marx and Friedrich Engels
- Lying by Sam Harris
- Freakonomics by Steven D. Levitt and Stephen J. Dubner
- Capital by Karl Marx
- Life 3.0 by Max Tegmark
- A Vindication of the Rights of Woman by Mary Wollstonecraft
- The Black Swan by Nassim Nicholas Taleb
- Capitalism and Freedom by Milton Friedman
- Zero to One by Peter Thiel with Blake Masters