Literature Study GuidesThe Wealth Of NationsVolume 2 Book 4 Chapter 9 Summary

The Wealth of Nations | Study Guide

Adam Smith

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The Wealth of Nations | Volume 2, Book 4, Chapter 9 : Of the Agricultural Systems, or of those Systems of Political Economy which Represent the Produce of Land, as either the Sole or the Principal Source of the Revenue and Wealth of Every Country | Summary

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Summary

Smith wraps up his book on mercantilism by offering a glimpse of an alternate system of political economy, which he calls the "agricultural system." In contrast to the mercantile system, which is designed to encourage commerce, the agricultural system promotes farming at the expense of both manufacturing and trade. Proponents of this system draw a distinction between productive and unproductive workers, but they divide up these categories quite differently. In the agricultural system, farmworkers are universally deemed productive, while manufacturers and merchants are unproductive or even barren, since they merely refine or trade the raw materials collected by the farmers. Unsurprisingly, Smith sees this as a mistaken way of thinking. Throughout the previous three books, he has pointed out ways in which manufacturers and merchants really do increase the economic productivity of society. Smith also casts doubt on the notion that a country favoring agriculture at the expense of trade and manufacturing can simply rely on its neighbors for manufactured goods and commercial services. Overall, however, he finds the system an "ingenious" and thought-provoking alternative to the usual mercantilist doctrine.

Analysis

The system of economic thought sketched out in this chapter is historically known as physiocracy, from Greek words meaning "the rule of nature." It became fashionable among the intelligentsia in 18th-century France and had a notable but short-lived impact on the economic policies enacted after the French Revolution. More generally, the physiocrats can claim credit for being the forerunners of economics in its modern, empirically-grounded form—in fact, they dubbed themselves the économistes. The system's most notable proponent was Dr. François Quesnay ("Quesnai" in Smith's spelling), a physician who later turned his attention to the social sciences. It is Quesnay's magnum opus, the Tableau économique (1758), that is cited by Smith as the source for his own explanation of physiocratic principles.

Smith seems to look on the physiocratic system with a mixture of scorn and admiration, but it is sometimes hard to tell where one leaves off and the other begins. On the one hand, there is no reason to doubt Smith's sincerity when he describes the system as "ingenious," but this only means he is impressed by its cleverness, not necessarily by its fairness or its likelihood of succeeding in practice. Elsewhere, Smith resorts to the kind of dry sarcasm he usually reserves for the mercantilists. At one point he mockingly observes that "the establishment of perfect justice, of perfect liberty, and of perfect equality is the very simple secret" to the success of physiocracy. His admiration for the physiocrats was probably genuine, but by the time he wrote The Wealth of Nations, it was tempered by a sense of their system's unrealistic goals.

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