In this video in the series of chapter summaries for Adam Smith's 'The Wealth Of Nations', we look at chapter one of book two, "Of the Division of Stock, a look at how stock can be divided. 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.
In chapter one of book two, Smith explains that there are two kinds of stock, that stock which exists to be consumed, and that stock which exists to create a profit. The kind of stock Smith calls capital, and it can be divided into what Smith calls circulating capital and fixed capital.
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