Book summary – the wealth of nations

The supply chain

  • producers (agriculture and mining)
  • manufacturers
  • wholesalers
  • retailers

Types of profits

  • labor wages
  • stock profits
  • rental profit

Types of currency

  • gold and silver ( internationally)
  • fiat money (domestically)

Political economy

  • Free Trade increases volume of goods available for consumption
  • As more territories join the free trade network overall price of goods will decrease due to competitive advantages and economies of scale.
  • Colonies where country do not assume tight control tends to economically fair better  – British West Indies (modern day US)
  • Revenue generated by far flung colonies will often not be enough to cover for expenses incurred for their military protection
  • Slaves are more productive when well taken care of – French West Indies versus British West Indies
  • Wars are costly and force countries to take on debt they will unlikely repay
  • Capital circulation is faster when trading with near by neighbors versus far flung colonies
  • Rapidly growing far flung colonies consume more capital than they make available

Types of colonization

  • Tightly controlled
    • central government assumes tight control to extract resources for parent country – French East Indies
  • Loosely coupled
    • citizens outgrew their space in their mother country and are surrounded by hostile neighbors. New colony assumes an independent administration and foreign policies – Greek colonies

Types of monopolies

  • Of produce by colonies
    • the common form utilized by companies
    • easier to enforce
    • bad for colonies
  • Of trade routes
    • utilized by the Portuguese for traveling sailing along the East Indies after successfully navigating the cape of good hope
    • not feasible to enforce except on countries that don’t have a navigation industry
  • organization aimed at restricting supply
    • trade guilds
    • universities
    • trading companies
      • Types
        • Government exclusive companies
        • Joint stock companies
      • Example
        • British East India company
        • Dutch East India company

Types of military

  • Standing Army
    • professional and kept even in times of peace
    • Official types – Rome
    • By environment – the Mongolian nomads whose hardy lifestyles were beneficial
  • Militia
    • drafted in times of necessity
    • as war fare became more complex and long drawn campaigns instead of skirmish, militia eventually harden to achieve skill levels of standing army
    • The Greek army transited from a militia to become a standing army during the Peloponnesian War

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