Introduction and Plan of the Work

The annual labor of every nation is the fund that originally supplies it with all the necessities and conveniences of life it consumes each year. These consist either of the immediate produce of that labor or of what is purchased from other nations with that produce.

Accordingly, as this produce, or what is purchased with it, bears a greater or smaller proportion to the number of people who must consume it, the nation will be better or worse supplied with the necessities and conveniences it requires.

But in every nation this proportion must be governed by two distinct circumstances: first, the skill, dexterity, and judgment with which its labor is generally applied; and second, the proportion between the number employed in useful labor and the number not so employed. Whatever a particular nation’s soil, climate, or extent of territory, the abundance or scarcity of its annual supply must, in its particular circumstances, depend on these two things.

The abundance or scarcity of this supply, moreover, seems to depend more on the first circumstance than on the second. Among nations of hunters and fishers, every person able to work is more or less employed in useful labor and tries, as best he can, to provide the necessities and conveniences of life for himself and for those members of his family or tribe too old, too young, or too infirm to hunt and fish. Yet such nations are so desperately poor that sheer want frequently reduces them, or at least makes them think themselves reduced, to the necessity of sometimes killing their infants, their old people, and those suffering from lingering diseases outright, and sometimes abandoning them to starve or to be devoured by wild beasts. Among civilized and thriving nations, by contrast, a great many people do not labor at all, and many of these consume the produce of ten times, often a hundred times, more labor than most of those who work. Yet the produce of the whole society’s labor is so great that all are often abundantly supplied; and a worker even of the lowest and poorest rank, if frugal and industrious, may enjoy a greater share of life’s necessities and conveniences than any hunter or fisher in those nations could possibly acquire.

The causes of this improvement in the productive powers of labor, and the order in which its produce is naturally distributed among the different ranks and conditions of people in society, are the subject of the first book of this Inquiry.

Whatever the actual state of the skill, dexterity, and judgment with which labor is applied in any nation, the abundance or scarcity of its annual supply must, so long as that state continues, depend on the proportion between those employed each year in useful labor and those not so employed. As will appear later, the number of useful and productive laborers everywhere bears a proportion to the quantity of capital stock employed to set them to work and to the particular way in which it is employed. The second book therefore treats of the nature of capital stock, how it gradually accumulates, and the differing quantities of labor it sets in motion according to the ways in which it is employed.

Nations reasonably advanced in the skill, dexterity, and judgment with which they apply labor have followed very different plans for its general conduct or direction; not all of these plans have favored the greatness of its produce equally. The policy of some nations has given extraordinary encouragement to the industry of the countryside; that of others, to the industry of towns. Hardly any nation has treated every kind of industry equally and impartially. Since the fall of the Roman empire, European policy has favored arts, manufactures, and commerce—the industry of towns—more than agriculture, the industry of the countryside. The circumstances that seem to have introduced and established this policy are explained in the third book.

Though these different plans may first have been introduced by the private interests and prejudices of particular groups of people, with neither regard for nor foresight of their effects on society’s general welfare, they have given rise to very different theories of political economy. Some exalt the importance of the industry carried on in towns, others that carried on in the countryside. These theories have considerably influenced not only the opinions of learned people but the public conduct of princes and sovereign states. In the fourth book I have tried to explain these different theories, and their principal effects in different ages and nations, as fully and distinctly as I can.

The object of these first four books is to explain what has constituted the revenue of the great body of the people, or the nature of the funds that have supplied their annual consumption in different ages and nations. The fifth and final book treats of the revenue of the sovereign or commonwealth. In it I have tried to show, first, which expenses are necessary to the sovereign or commonwealth, which of them ought to be met by the general contribution of the whole society, and which by the contribution of only some particular part or particular members of it; second, the different ways in which the whole society may be made to contribute toward meeting the expenses incumbent on it, and the chief advantages and disadvantages of each way; and third and last, the reasons and causes that have led almost all modern governments to mortgage part of this revenue or to contract debts, and the effects of those debts on real wealth—the annual produce of society’s land and labor.

Every year, a nation's labor produces the resources that supply everything its people need and use that year. Those supplies come either directly from what its people produce or from goods bought from other nations with that produce.

The more of these goods a nation has compared with the number of people who will use them, the better supplied its people will be with the things they need and find useful. The smaller that amount, the worse supplied they will be.

In every nation, two things determine this relationship. The first is the skill, dexterity, and judgment generally used in its labor. The second is the proportion of people doing useful work compared with people who do not. Whatever a nation's soil, climate, or size, these two things determine whether its annual supply is plentiful or scarce under those conditions.

The first of these two things seems to matter more than the second. In nations of hunters and fishers, everyone able to work does some useful labor. Each tries as well as possible to provide necessities and comforts for themselves and for family or tribe members too old, too young, or too ill to hunt or fish. Yet these nations are so poor that shortages often force them, or make them think they are forced, to kill or abandon infants, old people, and those with long-lasting illnesses. Those people then die of hunger or are eaten by wild animals. In prosperous, civilized nations, by contrast, many people do no labor at all. Many of them consume the product of ten times, often a hundred times, more labor than most working people do. Even so, society's total labor produces so much that everyone is often well supplied. Even a worker in the poorest and lowest position, if thrifty and hardworking, may have more of life's necessities and comforts than any person in a hunting or fishing society can obtain.

The first book of this Inquiry deals with the causes of this increase in labor's productive power. It also deals with the way its products naturally come to be shared among people in different ranks and circumstances in society.

Whatever the current level of skill, dexterity, and judgment with which a nation works, while that level remains unchanged its annual supply depends on the ratio of those doing useful labor each year to those who are not. As we shall see later, the number of useful and productive workers everywhere depends on how much capital stock is used to put them to work, and exactly how that stock is used. The second book therefore covers the nature of capital stock, how it gradually builds up, and how many workers it sets to work when used in different ways.

Nations that have made fairly good progress in applying labor skillfully and thoughtfully have followed very different plans for directing it. Those plans have not produced equally large results. Some nations' policies have especially encouraged work in the countryside; others have encouraged work in towns. Almost no nation has treated every kind of work fairly and equally. Since the fall of the Roman empire, European policy has favored the arts, manufacturing, and trade—the work of towns—more than farming, the work of the countryside. The third book explains how this policy seems to have begun and become established.

Different plans may first have come from the private interests and prejudices of particular groups of people, without any thought about their effects on society as a whole. Yet those plans have led to very different theories of political economy. Some theories exaggerate the importance of work in towns, while others exaggerate the importance of work in the countryside. These theories have strongly influenced both scholars' opinions and the public actions of rulers and independent states. In the fourth book, I have tried to explain these theories as fully and clearly as I can, along with the main effects they have had in different times and nations.

These first four books aim to explain what has made up the revenue of most people, or what resources have supplied their yearly consumption in different times and nations. The fifth and last book deals with the revenue of the ruler or the commonwealth. In it I have tried to show, first, what expenses the ruler or commonwealth must meet; which should be paid by contributions from all of society, and which should be paid only by particular groups or members. Second, I explain the different ways the whole society can contribute to expenses that fall on it as a whole, and the main advantages and disadvantages of each. Third and finally, I explain why almost all modern governments have mortgaged part of this revenue or taken on debts, and what those debts have done to real wealth—the annual output of society's land and labor.