Study Guide

The Wealth of Nations Plot Analysis

By Adam Smith

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Plot Analysis

Exposition (Initial Situation)

Why Rich, Why Poor?

Adam Smith opens this book by saying that he wants to tell us all about why some countries are wealthier than others. He hopes that by doing so he'll be able to figure out the main things a country can do in order to make itself richer.

Before moving into the next section of his book, he gives us a little hint. Rich countries are rich because they have modern markets where everyone is acting as selfishly as possible. Now that might not sound like a winning strategy for some people. After all, you can't run a good football team if you tell everyone to play as selfishly as possible. But for Smith, economies just don't work like football teams. Clear eyes plus full hearts does not equal "can't lose."

Rising Action (Conflict, Complication)

That's Just the Way It Is

As the free market works more efficiently, some people are going to start owning more and more property privately. Other people will have to pay rent to live on this property… and eventually you'll get a class system where some people are rich and others are poor.

And for Smith, this is a good thing, because it'll make people more competitive. More competition means more efficiency in the market because everyone will always be trying to create a better product or service. But that means that we have to accept the fact that there are always going to be poor people in society. It's not because they don't try hard enough; it's just that we have to sacrifice them if the market is going to be efficient.

Climax (Crisis, Turning Point)

Drumroll, Please…

And now it's time for the secret to success that we've all been waiting for. Adam Smith is going to reveal to us exactly why some countries get richer than others. And at the end of the day, it's all about having a government that just leaves the economy alone and lets it do its own thing.

On top of that, it's all about making sure that special interest groups (like farmers or business people) don't find ways of manipulating the government into rigging the market in their favor. It doesn't matter if someone thinks of themselves as a "job creator." The government should never give one ounce of special treatment to a specific business or type of business.

Falling Action

I'm Right, But It Doesn't Matter

Despite his confidence in his arguments, Adam Smith is super pessimistic about his chances for inspiring any actual change in Britain's economic policy. That's because he's convinced that people will very rarely act rationally.

If Britain wanted to be better off, its government would leave the economy alone and let all of its overseas colonies become independent countries. But Smith is convinced that dumb pride will prevent the government from doing these things. So Britain will have to go on losing out on all the great things its economy could be doing.

Resolution (Denouement)

And Then There's the King and Taxes

Adam Smith spends the last section of this book talking about how the King of England imposes taxes on the British people and uses those taxes to support public schools and other institutions for the public good.

It's all pretty dry… but also surprising, because it shows that Smith actually believes in taxes and public institutions. Many free market-types would think that both of these things are bad and that Smith would never support them. But it's all there in black and white.

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