ABSTRACT
In this chapter, the author begin by briefly canvassing the overall story line, and major principles of economics, to be found in WN. WN is both a systematic explanation of the basic principles underlying economics and a polemical attack on mercantilism and Physiocracy, the dominant theories of political economy in Smith’s day. WN’s polemical thrust provides the reader with an illuminating key to its overall structure. Smith sets up two dichotomies of price, in Book I of WN: nominal price vs. real price, and market price vs. natural price. Measuring goods by labour rather than labour by goods also enables Smith to sharpen a general question he has been implicitly raising, throughout the opening of WN, about the value of an advanced division of labour. Smith’s dichotomy between productive and unproductive labour has been dismissed just as uncomprehendingly as his dichotomies between natural and market prices, and between real and nominal prices.
