Adam Smith - The Wealth of Nations

After reading through parts of The Wealth of Nations there was one section that particularly caught my interest.  In Chapter IV he begins to discuss the systems of Political Economy in a free market setting.  There were two main concepts that stood out to me.  The first was in consideration of wealth, and the second was taking a critical look at barriers to international trade.



On Wealth...

That wealth consists in money, or and silver, is a popular notion which naturally arises from the double function of money, as the instrument of commerce and as the measure of value. In consequence of its being the instrument of commerce, when we have money we can more readily obtain whatever else we have occasion for than by means of any other commodity. The great affair, we always find, is to get money. When that is obtained, there is no difficulty in making any subsequent purchase. In consequence of its being the measure of value, we estimate that of all other commodities by the quantity of money which they will exchange for. We say of a rich man that he is worth a great deal, and of a poor man that he is worth very little money. A frugal man, or a man eager to be rich, is said to love money; and a careless, a generous, or a profuse man, is said to be indifferent about it. To grow rich is to get money; and wealth and money, in short, are, in common language, considered as in every respect synonymous.

In this paragraph Smith defines the foundational term of Wealth as a cumulation of some form of monetary placeholder.  As I read through this it seemed to point to three main requirements for any for of monetary system.

1. It has to be something that is transferable.
2. It has to be repeatable or come in multiples that are very similar.
3. It has to carry a somewhat consistent value.

Although these three concepts aren't anything new, the interesting thing about it all is the wide range of possibilities for measuring wealth.  The greatest example that Adam's uses is that of sheep.

Among the Tartars, as among all other nations of shepherds, who are generally ignorant of the use of money, cattle are the instruments of commerce and the measures of value

Adam's goes on to explain that when the Tartar invaders first analyzed France for take over they looked at the quantity of cattle as a deciding factor of whether or not to invade.  Its an interesting concept.  And what puts a whole new twist on it all is the change of modern currencies to a digital phenomenon.  Today we use credit as frequently or if not more so than any actual form of currency.  We pass imaginary numbers back and forth and peg a value of worth and wealth to them.  Its exciting to watch as we continue to shift to a purely digital monetary system.



On International Trade...


When those countries became commercial, the merchants found this prohibition, upon many occasions, extremely inconvenient. They could frequently buy more advantageously with gold and silver than with any other commodity the foreign goods which they wanted, either to import into their own, or to carry to some other foreign country. They remonstrated, therefore, against this prohibition as hurtful to trade... They represented, secondly, that this prohibition could not hinder the exportation of gold and silver, which, on account of the smallness of their bulk in proportion to their value, could easily be smuggled abroad. That this exportation could only be prevented by a proper attention to, what they called, the balance of trade.

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I am going to take a little shift on things for the rest of this post.  First of all I have embedded a phone conversation that recaps some of the ideas I have already presented along with a few others all focused around Adam Smith's writings on political economies.  This audio chat was recorded between me and two other BYU Scholars.

Before doing the recorded audio chat we also tried doing a full video conference over Skype, but were unable to get all the microphones and webcams to work.  We even started typing some of our ideas up to one another through IM but found it lacking.  So we finally were able to reconnect through Google chat to our cellphones and record the conversation.

Additionally in my studies I tinkered around with Diigo and recorded some highlighting and post-it-notes commentary.  However, after having it all posted and working fine for me; I tried getting on later to find that all my post-its had disappeared and the only remaining evidence of my studies was the highlighted information saved on Diigo.  So far I have come to like the concept of Diigo, but still have not found it to be that great of a tool in my personal studies.

(In the end I was able to consume, create, and connect the material through reading hard text, reading online, learning how to use Diigo, sharing on Diigo, learning how to do video chats on Skype, conversing through email, reconnecting through audio chat, and last learning how to embed an audio stream onto a blog.  So I think I have recovered all my personal requirements for the digital end of this class for about the third time.)