The Wealth of Nations

Smith's inquiry into what makes nations prosperous, published in 1776 after more than a decade of work. Book I opens with the pin factory to show how the division of labour multiplies output, traces it to a human propensity to truck, barter and exchange, and then explains money, prices, wages, profit and rent. Book II treats capital and the difference between productive and unproductive labour. Book III asks why Europe's towns and countryside developed as they did. Book IV is a long attack on mercantilism, the policy of hoarding gold and protecting home industries, and contains the book's single use of the 'invisible hand'; it also assesses the French physiocrats. Book V covers what the state should do: defence, justice, public works and some public education, partly to offset the dulling effect of repetitive work. Smith is also sharp about merchants who combine against the public. Admirers read it as the founding case for free markets; critics, notably Marx, built on and attacked its account of labour and value.

It founded economics as a discipline, and its arguments about markets, specialisation, trade and the role of government are still the reference point for all sides.