chapter  6
13 Pages

Smith and the international economy

We now continue our examination of Wealth of Nations by turning to Book IV, where Smith applied the analysis of capital allocation to trade between nations. As we would expect, Smith’s concern was still with how different uses of capital affected the nation’s annual produce, but his account was coordinated with an attack on what he termed the ‘mercantile system’. Smith redescribed much of the material we have been calling counsel on trade as mercantilist, and both his label and the caricature it conveyed have been enduring.