Book: 20260903 to 20261010, "the Wealth of Nations" by Adam Smith

20260903 - Preface

Hence Adam Smith's free-trade and free-market trinity: freedom, prosperity and security. p xii
This only suits democracy countries, which follow the same rules.

20260903 - An introduction by Tom Butler-Bowdon.....xiii

How much a good or service costs generally depends on the amount of labour that has gone into its making. p xix
What if this "amount of labour" turns into zero because AI and robots?

Smith admitted that the modern factory system could easily lobotomize workers. p xxi
That's the cost of high productivity. Bullshit Jobs

This aversion to war runs throughout The Wealth of Nations, principally because Smith felt it was a shocking waste of a society's resources. p xxviii
This is the weak point of this book. Robust is as important as productivity. We need to sacrifice some productivity to prevent building a fragile system. Globalization is important, but distributional production make the world stronger.

Smith highlights the fact that cities and towns which are maintained by national revenue, tend to be unentrepreneurial and even corrupt. p xxix
Because they don't need to be productive. This means, if UBI is implemented, then political corruption will be everywhere.
Why I never realize this before?
How can the transparency of the government and the legal system be maintained?

20260901 - Introduction and plan of the work......1

20260909 - Book I - Of the Causes of Improvement in the Productive Powers of Labour, and of the Order According to Which its Produce is Partially Distributed Among the Different Ranks of the People......6

20260909 - Chapter I - Of the Division of Labour....13

The whole society runs like a huge assembly line.
We tried very hard to optimize it.
Split and reorganize some segments into some other segments, remove unnecessary elements, and automate many procedures.
Energy and information are critical. Now we have AI.
If all production of the whole society are automated, what does that mean to individuals?

20260909 - Chapter II - Of the Principle Which Gives Occasion to the Division of Labour.....25

I think this is more about intelligence and trust. Why technology progressed so slow before industrial revolution?

20260909 - Chapter III - That the Division of Labour is Limited by the Extent of the Market .....31

This reminds me of the containerships. Only massive markets need it.
Unfortunately, AI+drones will give many countries the capabilities to control straits and rivers, which make it hard to transport goods freely.
Will people purchase/rent robots to make goods for themselves? The cost will be quite high, but billionaires surely can do that, especially on islands.
AI and robots will make goods production regional, which will reduce the need of containerships.

20260909 - Chapter IV - Of the Origin and Use of Money ....38

20260909 - Chapter V - Of the Real and Nominal Price of Commodities, or of their Price in Labour, and Their Price in Money.....48

Agree. The real value is based on labour of creating the goods , not the goods.
How much labour is needed to get water? Close to zero, so the price of water is close to zero.

20260909 - Chapter VI - Of the Component Part of the Price of Commodities.....54

Wages, profit, and rent, are the three original sources of all revenue, as well as of all exchangeable value. p61
"Rent" represents the interest and principal of asset loan.

20260913 - Chapter VII - Of the Natural and Market Price of Commodities.....62

The Wealth of Nations, published in 1776, argued that governments should minimize intervention in the market and allow it to develop naturally.

Over the ensuing century, the British government adhered almost strictly to The Wealth of Nations: aside from sectors concerning national security, it granted businesses free rein to compete in the market.

Yet this very century proved to be the most brutal and miserable period of capitalism.

After 1870, machinery grew significantly more complex across the board, requiring workers (and white-collar employees) months or even years of training to operate. This provided workers with bargaining power, leading to a gradual rise in wages.

Looking back, was "fair competition" truly the best strategy during the early days of the Industrial Revolution?

In the era of AI, is "fair competition" the best strategy?

Both white-collar and blue-collar workers are bound to lose their bargaining power.

20260914 - Chapter VIII - Of the Wages of Labour......74

The increase of revenue and stock is the increase of national wealth. p81
Not goods and services, but production.

The scanty maintenance of the labouring poor, on the other hand, is the natural symptom that things are at a stand, and their starving condition, that they are going fast backwards. p86
This remains a valid rule of thumb up to the present.
Yet it does not apply to an AI era of pervasive unemployment.
In ten years, perhaps the "volunteer" employment rate will be the measure to use.

20260914 - Chapter X - Of Wages and Profit in the Different Employments of Labour and Stock....91

There are a lot of jobs require unfair resources, such as high tuition fees, the backup plans, special social relationships, etc. These are the best jobs in a society.

20260917 - Book II - Of the Nature, Accumulation, and Employment of Stock......109

20260917 - Chapter I – Of the Division of Stock......115

20260917 - Chapter II - Of Money, Considered as a Particular Branch of the General Stock of the Society, or of the Expense of Maintaining the National Capital....126

20260918 - Chapter III - Of the Accumulation of Capital, or of Productive and Unproductive Labour....133

Unproductive labourers, and those who do not labour at all, are all maintained by revenue. p136
Adam Smith got it completely wrong here.
Unproductive labourers is the fruit of high productive society. People think harder and communicate more if they are not busy all day.
There is no clear line between productive and unproductive labourer. For example, producing Coca-Cola and cosmetic.
Coffee service, entertainment service and Real Estate renting are similar to clothing renting.
They are necessary, and make us more creative and more productive.
Technically say, Albert Einstein also belongs to "unproductive labourer".

Adam Smith' age is quite different from now.
He didn't know what would happen in the next 250 years, and goods and services are always in scarcity.

20260921 - Book III - Of the Different Progress of Opulence in Different Nations ....155

20260921 - Chapter I Of the Natural Progress of Opulence .....157

The greater part of the capital of every growing society is, first directed to agriculture, afterwards to manufactures, and, last of all, to foreign commerce. p163
This only suits UK 300 years ago.
Agriculture is still very important, because unexpected disaster may happen which disrupt foreign food import. Nevertheless, there are many states rely on imported food.
Foreign commerce is with extra cost, such as long distance communication and transportation. This is a major factor 300 years ago, but not anymore today.

20260921 - Chapter II - Of the Discouragement of Agriculture in the Ancient State of Europe, after the Fall of the Roman Empire....165

In China, the government owns all land. So it's the government's responsibility to improve the land, such as building more facilities. The temporary operators only want to grab as much as they can, even by sacrificing the long term benefit.
Other aspects are same.

20260921 - Chapter III - Of the Rise and Progress of Cities and Towns, after the Fall of the Roman Empire...182

Everyone in the economy need to get fair cut, or else, they would do their work poorly, which make the cost of the goods and services much higher.
That's why USSR collapsed.

20260921 - Chapter IV - How the Commerce of Towns Contributed to the Improvement of the Country....198

Agriculture was the foundation of everything. Nowadays, energy is the foundation of everything.
The first signal of social collapse is lacking of energy, then the disappear of free trading.

Adam Smith raised an excellent question: what scale of a team can $1M support?
If the average salary is $100K, then 500 years ago, $1M can support a team with 10 people.
Now, it has potential to support a team with 100 or even 1000 people.
To economy, Money is similar to blood to our body. It make it possible for trillions of cells to cooperate with each other.

20260926 - Book IV - Of Systems of Political Economy .....217

20260927 - Chapter I - Of the Principle of the Commercial or Mercantile System......221

It is not by the importation of gold and silver that the discovery of America has enriched Europe. By the abundance of the American mines, those metals have become cheaper. p228
Money, including gold and silver, is also goods.

20260927 - Chapter II - Of Restraints upon Importation from Foreign Countries of such Goods as can be Produced at Home .....235

Adam Smith's world is an ideal environment. It assumes all government do their best for their people.
Relative advantage is real when relating to atmosphere and soil, but not the cause if the goods are built in factories.

20260928 - Chapter III - Of the Extraordinary Restraints Upon the Importation of Goods of almost all Kinds, from those Countries with which the Balance is Supposed to be Disadvantageous....253

The modern maxims of foreign commerce, by aiming at the impoverishment of all our neighbours......p257
Nowadays, the aim of many foreign commerce are at the unemployment of neighbours. If most of people in a country staying at home watching screens, then the country is falling.
Machines are far more productive than human, and they are getting better almost every year. The main threat is from unemployment.
However, at some point, large scale of unemployment is inevitable.

One of the reasons that people in UK got higher pay after 1850, is because many low class people migrated to America.

20260929 - Chapter VII - Of Colonies......260

Colony is bad idea.
Only rich people have the capabilities to pay high tax.
Rich society represents high productivity, and advanced civilization.

20260929 - Chapter IX - 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 iv ......287

This reminds me of "Why nations fail". The government officials hate changes, including prosperity of manufacturing industry.

20261009 - Book V - Of the Revenue of the Sovereign or Commonwealth ....301

20261010 - Chapter I - Of the Expenses of the Sovereign or Commonwealth ....303

p340
The East India company is a good example that state owned monopoly doesn't bring best benefit to the people.
However, Adam Smith didn't explain the deep cause here.

In order to obtain the honors of graduation, it is not necessary that a person should bring a certificate of his having studied a certain number of years at a public school. p341
Certificate is easy and quick way to verify someone's capability. It's NOT 100% correct, but may be correct in 90% of cases, which is good enough. That saves a lot of time and money for employers.

The more they are instructed, the less liable they are to the delusions of enthusiasm and superstition, which, among ignorant nations frequently occasion the most dreadful disorders. p347
Here, "instructed" means study of "read, write and account(arithmetic)".
Today, I think people need to know more to understand daily events, and to handle most of the office work. Such as history, biology, geography, etc.
But most of the stuff above Year 10, seems not useful to most of people. Especially with the help from AI.

20261010 - Conclusion ....348

20261010 - Chapter II - Of the Sources of the General or Public Revenue of the Society ....351

20261010 - Chapter III – Of Public Debts...358

The government of such a state is very apt to repose itself upon this ability and willingness of its subjects to lend it their money on extraordinary occasions. It foresees the facility of borrowing, and therefore dispenses itself from the duty of saving. p364
"Gold standard" had been abolished 70 years ago. Now, the government can get money from thin air.
The real valuable stuff is not gold, cash or even food.
The devices which can provide energy and intelligence worth more.