In the last of our series looking at Adam Smith's The Wealth of Nations, we look at Chapter 11, 'On the rent of land'. Smith looks here at rent, the last of the three components that make up it's price. Using clear and easy to understand examples we will summarize and analyse one of the key texts for understanding modern economics.
The Wealth Of Nations by Adam Smith was the first modern book of economics, the foundation on which all later economics was built. First published in 1776, its influence is still felt today. If you are interested in the works of later economists or theorists of political economy, they all build off what he started. Although some of the ideas are a bit dated now, it still has much to offer and is standard reading for anyone interested in economics. Much quoted, it is a bible of classical economics and free markets. It is often misunderstood though, and many of its ideas might surprise free market proponents today.
Chapter Eleven is by far the longest chapter in Book One, and it covers a wide range of topics. In the first part he describes the factors that affect the rent a landowner can get from their land. He considers the rent that land devoted to grain will regulate the other types of rent, as grain is the most essential commodity. He goes into a lengthy discussion on the history of the value of silver. Smith is highly critical of the protectionist trade policies that existed in his time, and uses the changing value of silver to show the flaws in the prevailing system. For Smith, the value of grain was constant, and changes in the price of grain reflected changes in the value of silver and gold rather than changes in the value of grain itself.
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