Wealth of Nations

I'm reading Adam Smith's Inquiry Into the Nature and Causes of the Wealth of Nations. It's surprisingly well-written for an economic tome of the 18th century. Smith, as you know, was the first person to lay down modern economic theory, and parts of Wealth of Nations read like my first-year econ textbooks. Here are a few choice quotes from Book IV, Chapter 2:

To judge whether such retaliations [in import restrictions] are likely to produce such an effect, does not, perhaps , belong so much to the science of the legislator, whose deliberations ought to be governed by general principles which are always the same, as to the skill of that insidious and crafty animal, vulgarly called a statesman or politician, whose councils are directed by the momentary fluctuations of affairs... Humanity may...require that the freedom of trade should be restored only by slow gradations, and with a good deal of reserve and circumspection. Were these high duties and prohibitions taken away all at once, cheaper foreign goods...might be poured so fast into the home market as to deprive all at once many thousands of our people of their ordinary employment and means of subsistence. The disorder which this would occasion might no doubt be very considerable.

Anti-free-trade people would be quick to apply this to the case of underdeveloped nations in today's economy. However, I think Smith would point out that these poor countries are getting what they earn; the value of their produce is very low, and they can thus buy very little with their labor. They're no worse off than their ancestors - better, in fact, because of free markets - it's just that they're not keeping pace with the developed world.

It's more complicated than that, of course, and one part of modern economics that Smith doesn't know about is the problems associated with maintaining capital. He certainly makes the distinction between capital and non-capital money, but (because of the times he lived in) does not address the problem of capital flight that is so central to today's international economic policies.