Literature Study GuidesThe Wealth Of NationsVolume 1 Book 1 Chapter 3 Summary

The Wealth of Nations | Study Guide

Adam Smith

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The Wealth of Nations | Volume 1, Book 1, Chapter 3 : That the Division of Labor is Limited by the Extent of the Market | Summary



This chapter sets forth a basic but important point: the more people a person can sell their wares to, the more specialized that person can afford to be. Some trades, Smith says, require a large population, while others can be conducted even in a small rural town. A village carpenter, for example, will have to do a little bit of everything—cabinetry, wheel-making, house-framing—whereas someone in a big city might be able to specialize in just one of those tasks.

Since it is much cheaper to transport goods by water than by land, he adds, the size of any given market will be limited by its access to navigable rivers, canals, or a seacoast. In Smith's view the differences in such access largely explain the different rates of economic growth and technological progress in various parts of the world. Central Asia and the African interior, for example, remain "barbarous and uncivilized" because they have few navigable rivers and no coast. Eastern China, in contrast, is prosperous because its vast network of rivers allows for ample inland trade.


This isn't the first time Smith has used words such as barbarous and savage to describe non-European cultures, and it won't be the last. The bias in his reading of economic history comes largely from ignorance: few English- or French-language resources were available for learning about the histories of the supposedly "uncivilized" parts of the world. During his time at Glasgow and Oxford, Smith was likely to learn a great deal about the rise of Western civilization, but he was unlikely even to hear of the Empire of Mali (13th–16th centuries), which rivaled contemporary European kingdoms both in extent and in its administrative and technological sophistication. In part, this was a result of active propaganda: proponents of the transatlantic slave trade—practiced legally in Great Britain throughout Smith's lifetime—worked to portray Africans as an inferior race with no hope of attaining a European standard of culture. Spreading this myth meant suppressing or denying much of medieval African history. Thus, Smith may have honestly, but erroneously, believed that "the inland parts of Africa" had always been in an underdeveloped state.

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