Adam Smith: The Wealth of Nations and Globalization

An Inquiry into the Nature and Causes of the Wealth of Nations (1776) was the original title of the seminal book that lay down the conceptual framework for modern Economics. The book is commonly known as The Wealth of Nations; it was written by the Scottish Adam Smith (1723–1790). The impact of his brilliant work in the following generations has been such that Adam Smith is indisputably considered the father of economics.

I fully agree with many other economics practitioners that the book is the work of a genius. Adam Smith had an extremely perceptive mind –a lawyer by training– that was able to synthesize and explain the major foundations of the nascent discipline.

In addition to emphasizing the free market and the very apt invisible hand metaphor to illustrate it, among many other concepts, the title itself is very profound and relevant. So much so that, very sadly, the title continues to be a valid point nowadays: “… the Nature and Causes of the Wealth of Nations”.

In fact, that very same idea led me to look for a workable solution to the brutal disparity in output and income among nations, as a conclusion to my book Globalization. That brutal disparity in production can be very easily visualized by having in mind that, during 2011, the 22 richest nations on earth, comprising 13% of the world’s population, generated 46% of global output, whereas, at the other extreme of the spectrum, the 45 poorest nations on earth, comprising 19% of the world’s population, generated only 3% of global output! The weighted average of those two extreme groups results in a ratio slightly over 28 to 1 in production capacity per inhabitant. Granted, there is no way on earth to avoid a disparity –even a large one– between those opposite groups. Nonetheless, a 28 to 1 competitiveness ratio is obscene. A clear manifestation that something is profoundly wrong in the world’s current socioeconomic system, that requires to be fixed.

Smith’s effort is second to none given the extreme limitations in the tools and information that were available over two centuries ago. In contrast and very fortunately, 236 years after Smith published his seminal work, the current tools and means available today –particularly including a great deal of practical experiences– make this challenge a very manageable one. Moreover, the conclusion I have reached could not have been possible without the excellent foundations laid down by Smith and many other superb socioeconomic achievements afterwards. Furthermore, in the recent past, there have been numerous profound transformation cases of countries moving from rags to riches in just a few decades. Hence, from my personal perspective, all major elements to solve Smith’s challenging inquiries –over two centuries later– are finally in place and ready to be materialized. It seemed to me that all that it required was an appropriate final process of connecting-the-dots.

In The ABCs to a Global Social Revolution page there is a summarized version of my analysis and initiative regarding how to begin closing the humongous economic gap between failed and developed nations, in a systematic and massive way, which was originally presented in Section 3 of my book Globalization.

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About Martin Marmolejo

Global Investment Manager | Founder & Managing Director at MMA Global Investment Management | Proud husband and father | Follow me @globalmarmolejo.

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  1. […] Leave a Comment TweetIn the previous post we boarded a similar line of thought, regarding Adam Smith and The Wealth of Nations. It is only natural, almost a reflex, to do the same thing with another pillar of economics, the […]

  2. […] Leave a Comment TweetIn the previous post we boarded a similar line of thought, regarding Adam Smith and The Wealth of Nations. It is only natural, almost a reflex, to do the same thing with another pillar of economics, the […]

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