Research on the Nature and Causes of National Wealth (Volume 2)

Author: Adam Smith
Publisher:
Publish Date: 2004-10-19
Features: Adam Smith, a renowned British bourgeois economist, is the author of this representative work, The Wealth of Nations, published in 1776. At that time, it was the period of the growth of British capitalism, and British handicraft manufacturing was beginning to transition to large-scale industry. The development of British industry was still largely constrained by the remnants of feudalism and the restrictive policies of mercantilism, which were once in vogue. The young British bourgeoisie, eager to remove obstacles from its path forward, urgently demanded a free economic theory system to pave the way for its progress. Adam Smith's The Wealth of Nations emerged during this historical period, undertaking such a class historical mission. This book summarized the experience of capitalist development in various countries during the early modern period and, on the basis of critically absorbing important economic theories of the time, provided a systematic and clear description of the entire process of national economic movement. After its publication, it not only significantly promoted the development of British capitalism but also had a more extensive impact on the development of world capitalism than any other bourgeois economic work. It is no wonder that some bourgeois scholars at the time revered it as a treasure. However, history soon revealed its limitations and flaws. In the decades of the 1870s and 1880s, nearly a century after the book's publication, capitalist economies had gradually begun to transition from a stage of free competition to one of monopoly. From then on, the free and natural system emphasized by Smith had ceased to function. Less than half a century later, a socialist country emerged on the historical stage, which thoroughly negated the perceived permanence of capitalism as emphasized by Smith. Now, in this historical stage where imperialism is increasingly declining and socialist revolutions are continuously advancing toward victory, although some reactionary bourgeois vulgar economists still emphasize free-market capitalism in different ways and advocate the reform or rebirth of capitalism, Smith's economic treatise from the era of capitalist growth has long lost its practical significance and only holds historical significance in the history of political economy. Lenin once instructed us: "When judging the merits of historical figures, we should not measure them by the standards of modern requirements but by the new contributions they made compared to their predecessors." What contributions did Adam Smith's The Wealth of Nations make to the history of political economy, and what new insights did he offer through this work compared to his predecessors? To answer this question, we must first understand the economic questions posed by the era in which he lived. The economic life of modern capitalism began in the mercantilist era. This economic life initially demanded answers to fundamental questions such as what wealth is, what its sources are, and how it can be accumulated rapidly. Mercantilism first provided answers to these questions. Scholars who held differing views on these answers included British Enlightenment economists such as Petty and Locke, as well as French economists like Boisguilbert and the Physiocrats Quesnay and Turgot. For an economist to establish a fundamental theory related to the movement of the entire national economy, it is essential to determine whether the economic development of the society or country in which they live allows for a comprehensive observation. Smith's predecessors in the field of economics lacked such conditions, but Smith, living in Britain during the period of capitalist growth, had the opportunity to propose new insights on these issues based on the theories of his predecessors. When mercantilists, based on the practical needs of commodity circulation in their societies and relying on intuition, emphasized that wealth consisted solely of money or gold, Enlightenment economists Petty and Locke underwent considerable effort to break free from this misconception. However, later physiocrats, while correctly arguing that the products of labor, including means of production and means of subsistence, were wealth, did not consider money or gold, which were also products of labor, as wealth. It was not until Adam Smith that, building on these debates, conclusions were drawn from the realities of economic life that money was a component part of the total wealth or only one component of it. This conclusion encompassed the sources of social wealth and how wealth accumulated. If wealth was not primarily money or gold, then its sources were not gold mines, wealthy colonies, or trade surpluses. Enlightenment economist Petty first emphasized that wealth came from nature and labor, but he did not clarify the relationship between the two in production. Physiocrats emphasized the use value of goods, arguing that wealth came from agricultural labor, which produced pure products. Adam Smith, however, approached the formation of commodity value and, in the opening sentence of his work, deliberately excluded the factor of nature, arguing that "the annual labor of a nation is originally the source of the whole annual produce of its consumption, both of necessaries and of conveniences." The labor he referred to was general, breaking free from the narrow circle of agricultural labor set by the physiocrats. In Smith's view, social wealth came from labor, and the growth of social wealth depended not only on the amount of labor involved but more importantly on the greater labor productivity. For capitalist society, the productivity of labor was reflected in the fact that it not only produced wages as the price of labor for laborers but also generated profits for capitalists and rent for landlords. These two types of income were deducted from the products or value produced by laborers. Here, we see: first, Smith regarded labor as the correct universal measure of commodity value, believing that "only labor can compare the value of commodities in all times and places"; second, he saw capitalist production as the production of value and surplus value; and third, he considered the production relations of the three major classes in capitalist society as the foundation of circulation and distribution relations, with the theory of value being seen as the basis of distribution theory. Among all these fundamental arguments embodying the labor theory of value—surplus value, especially his comprehensive and systematic exposition of the entire capitalist economic movement or its process of capital accumulation, he indeed proposed some new insights that his predecessors in economics had not. However, due to the limitations of his class position and the relatively underdeveloped economic conditions of capitalism at the time, Smith could not correctly understand the historical transitional nature of the capitalist system itself. He consistently believed that capitalism was both humanistic and natural, and that as long as some artificial and unnatural socioeconomic measures that hindered its development, such as the abolition of outdated guild systems and mercantilist restrictions, were removed, allowing everyone to participate in free competition with their labor or capital, capitalism would establish itself freely and naturally and continue to develop indefinitely. He also believed that individuals were naturally self-interested and that as long as their freedom to compete was not hindered, the greater the benefits they gained personally, the richer society would become. This bourgeois utilitarian misunderstanding led him to remain within the limits of: "It began by critiquing the remnants of feudal production and exchange forms, proving that they would inevitably be replaced by capitalist forms," establishing the aforementioned relatively correct arguments about value—surplus value in this sense; but when faced with the contradictions of capitalism itself, guided by this bourgeois utilitarian thought, he could no longer advance. This dual methodology, determined by his class perspective—on one hand, examining internal connections, and on the other, examining external phenomena—made each of his correct arguments appear half-finished, half-hearted, and full of contradictions. For example, even regarding the crucial argument about the key labor determining commodity value, he argued on one hand that the value of commodities was determined by the amount of labor consumed in their production, but in other instances, he emphasized that the value of commodities was determined by the amount of labor they could obtain in exchange. On one hand, he stated that the value of commodities was decomposed into wages, profits, and rent, and the error in this proposition lay only in omitting constant capital; but in other instances, he emphasized that the value of commodities was composed of wages, profits, and rent, which not only omitted constant capital but also made the commodity value determined in the previous instance extremely uncertain. Not only were the statements about commodity value correct and incorrect, but also the claims about the functions and production process of money, and the theory of capital accumulation, were a mixture of correct and vulgar, scientific and unscientific arguments. Regarding this point, in addition to explaining it from the perspective of his viewpoints and methods, we must also deeply understand Marx's historical materialist evaluation of Smith's contradictory theory of value. He said: "In Adam Smith's book, we not only see the traces of 'opposing concepts' of value but also two, three, or even four sharply conflicting views on value, which coexist and interweave in his work. At the inception of political economy, this was natural, as he had to explore, experiment, and struggle against the confusion of ideas that had just begun to form." As for his relatively optimistic and naturally harmonious tendency in discussing distribution, regarding the relationships between the three major classes in society, this was also due to the fact that the struggle between the bourgeoisie and the proletariat was still in its early stages, and the conflict between the capitalist class and the landlord class was not as sharp as it would become after the Industrial Revolution. This was different from the later vulgar economists, who blindly advocated class harmony as a pretext to conceal the already intense class struggle. In summary, Smith's economic treatise, in terms of its analysis of capitalist production relations, undoubtedly contained numerous contradictions and vulgar arguments, but as a representative work of bourgeois economics during its formative period, it indeed demonstrated many scientific elements and was a scientific research achievement of classical bourgeois economics built on the critique of previous economic theories. Due to the dual characteristics of correctness and error, science and vulgarity in its research methods, its influence on later political economy was also twofold. Shortly after the book's publication, British handicraft manufacturing, driven by the Industrial Revolution, rapidly developed into large-scale industry, while the internal contradictions of the capitalist system also began to emerge. Following Smith, Ricardo took the labor theory of value and the distribution theory based on it to a level that no other bourgeois scholar could surpass. Ricardo's representative work, Principles of Political Economy and Taxation, was published in 1817. In the 1820s, some utopian socialists used Ricardo's analysis to promote their social theories. By the 1840s, 1850s, and 1860s, Marx had continued his efforts to critique and absorb the entire classical bourgeois economics, establishing political economy serving the proletariat. Later, both Engels and Lenin regarded classical economics, as well as Adam Smith's and Ricardo's labor and surplus value theories, as the source of Marxist political economy. However, as capitalism developed further, its internal contradictions became increasingly apparent, the struggle between the working class and the bourgeoisie intensified, and the spread of Marxist political economy shook the dominance of the capitalist system. As a result, bourgeois economists after the 1820s of the 19th century eagerly avoided the correct arguments in Smith's theory and instead used its vulgar arguments to denigrate Marx's economic theories. After the 1870s of the 19th century, Marxist economics had already gained dominance in the workers' movement, and thus, the Austrian School and its variants in the United States and Britain, which claimed to oppose Marxist economics, used the opposition to classical economics—or more accurately, the opposition to the scientific elements of classical economic theory—as an indirect means to oppose Marx's economic theories. Regarding this point, we need only see how economists from to opposed Adam Smith and Ricardo. When bourgeois vulgar economists, in their efforts to oppose Marxist economics, fiercely attacked the classical theories of their predecessors, Adam Smith and Ricardo, we, in order to defend Marxist economics and to deepen our understanding of it from a historical perspective, should scientifically approach and reintroduce the economic theories of Smith and even Ricardo, which has practical significance. In the late 19th century, Yan Fu, a figure in China's late Qing reform movement, presented this book to Emperor Guangxu, advocating for a national policy modeled on Adam Smith's "enriching the ruler and enriching the people," hoping to contribute to the late Qing reform "great cause." However, his translation, titled The Wealth of Nations, published in 1902, failed to attract any significant attention. This was not only due to the overly difficult and classical translation, with many omissions, but primarily because the socio-economic and cultural conditions of the late Qing period were too far removed from its demands. In 1931, Comrade Guo Dali and I re-translated this book into Chinese and titled it The Wealth of Nations. Our motivation for re-translating this book, along with other works of classical bourgeois economics, was primarily to prepare for the translation of Capital and to promote Marxist political economy. We knew that Capital was established on the critique of bourgeois economics, especially on the critique of Adam Smith and Ricardo's works, as the foundation of Marxist political economy. A familiarity with and understanding of the works of Adam Smith and Ricardo would greatly enhance our comprehension of Capital. In fact, during the process of translating Capital, we deeply felt the help it provided to translate the works of Adam Smith and Ricardo. After the publication of Capital, our task of translating Smith's The Wealth of Nations was considered complete. After the liberation of the country, people's publishing undertakings had to be arranged comprehensively based on the current and long-term interests of socialism. The Commercial Press, in order to translate and introduce the great works of philosophy and social sciences from all over the world, repeatedly proposed the revision of the translation of The Wealth of Nations. This translation had been published for 35 years. In some places, it did not clearly express the original meaning of the author, and there were individual errors in others. Additionally, there were many grammatical and lexical issues that needed to be reviewed and standardized. After revision by Comrades Chen Fusheng and Chen Zhenhua, the translation had been significantly improved. However, it still contained errors, for which we, especially myself, were responsible. During this revision, the title was changed from The Wealth of Nations to The Nature and Causes of the Wealth of Nations, following the full title of the original work. Wang Yanan, May 1965, Xiamen