Adam Smith on power and maritime trade

Copyright © 2014 The Pennsylvania State University, University Park, PA.

Adam Smith's An Inquiry into the Nature and Causes of the Wealth of Nations is often interpreted as an explanation of the self-regulating nature of the market system, where an "invisible hand" leads to a harmonious coordination of different economic agents' pursuit of self-interest, so that economic development is brought about naturally through the division of labor. However, a closer reading of Smith's contribution shows that he saw the expansion of the market as a process typically driven by military and political power. For Smith, cases of a natural and spontaneous growth of industry occur only due to exceptional circumstances.