The Wealth of a Nation

Adam Smith made a very important contribution to the discussion on the wealth of nations. Before Smith’s book, it was widely believed that the wealth of a nation was determined by how much treasure they had. This notion of mercantilism was widely practiced from the 1500s up until the 1800s.
However, in his book Smith argued that it is not the amount of treasure a nation has that determines wealth, but the living conditions and lifestyle of the people. Or, in other words, the per capita income of the people living in the country actually determines wealth. Wealth does not come from stockpiling treasure and hording gold, but from consuming and producing, which is called consumer sovereignty.
The economy that emerges from consuming and producing is called a Market economy, and its basic method is self-interest. In order for a Market economy to flourish it needs personal relations among highly ranked officials, it needs to operate on its own without government involvement, and players that themselves respond to economic forces. Another point made by Adam Smith was that if human beings, if free to do so, will act in their own best interests.
Adam Smith’s book, The Wealth of Nations, was truly revolutionary in its ideas. It completely changed the way the world judged a nation’s wealth and moved more nations towards establishing a market economy.