Innovation and Governance in Book 1 of Wealth of Nations

• “Smith is a friend of competitive markets and the division of labor and the institutions that secure these. But within the division of labor and the governance of these institutions, the population needs to be not just prudent, but also to become educated in skill, dexterity, and good judgment, as Smith shows in Book V.”

A standard criticism of Adam Smith, going back to John Rae in 1834, is that in “Wealth of Nations economic growth is caused by capital accumulation, which is in turn the result of saving.