Wealth of Nations

Adam Smith was known as father of modern economics. His views about economics were far beyond his time. In 1776, he put forward all his views about the economics in the book "Wealth of Nations". He was the advocate of free trade and specialization.

His view expressed in this views are applied to nation at macro level, and can be applied to personal wealth creation at micro level.

Before Adam smith, wealth of the nation was only focused on how much crop a particular nation is able is to produce. This mindset was of problem. Let me explain you with an example. India has vast area of land under it. Hence it was able to produce much. But, Britain was island nation. It didn't had enough land for it produce crop. Hence to expand its control on land it took out invasion on other countries. Adam smith's view were different. He didn't think that nation's land expansion was necessary at all.

If all the land in the nation was used up for agriculture and all the individuals are into farming producing crop. There would be a situation where crop produce is greater than that of crop required. This will make supply more and with constant demand, there will be drop in the price of that produce. In turn, this will make few individuals some spare time and specialize in other production of good/service which is in demand.  Wealth of nation increases as the wealth of the individual, who is now specialized, has increased.

In simple terms, Before Adam smith, wealth was only measured to the amount of crop produced. But he added lot more to it. according to him wealth was measured by amount of good/service produced taking into consideration of labour and time involved.