What is the economy?
A scholarly explanation might be complicated, but simply put, it is the total sum of consumption, distribution, and production carried out by every individual and group in society.
Making products, approving documents at a company, buying food at a store—all these actions together, interacting with one another, constitute the economy.
And The Wealth of Nations is the first book to define this vast and complex organic/inorganic interaction as an academic discipline.
In other words, this book is the origin of economics, akin to the Old Testament.
No, actually, it’s just the Bible of economics.
Even scholars refer to it that way.
“Is it really that great of a book?”
“Of course!”
The reason the modern Ministry of Finance can implement economic policies is all thanks to Adam Smith and The Wealth of Nations.
Setting interest rates, adjusting the currency supply to stabilize exchange rates, and executing large-scale restructuring—if not for him, experts might still think printing more money was the only way to stimulate the economy.
They wouldn’t have even dreamed of creating credit-based currency beyond the gold or silver standard.
In short, all economic advancements in human civilization owe something to The Wealth of Nations.
And that’s not an exaggeration—it’s just the truth.
‘Its prestige has somewhat faded in modern times… but it’s still remarkable.’
Of course, certain aspects of Smith’s theories have been criticized due to historical limitations and societal changes.
Some of his claims no longer align with reality.
Even so, the value of this book should never be underestimated.
After all, those very societal changes were influenced by The Wealth of Nations itself.
“This book focuses on one particular policy: the division of labor.”
“If the term means what I think it does… it’s about splitting up work?”
“Exactly. Breaking down a task into smaller parts and assigning them to multiple people.”
So, what exactly does this book say to warrant such high praise?
Adam Smith, in The Wealth of Nations, heavily emphasizes the concept of division of labor.
He argues that this was the key factor that allowed Britain to surpass its competitors and become the world’s most powerful empire.
Despite France’s vast farmlands and Spain’s dominion over the New World, a small island in the North Sea rose to become a global superpower.
All thanks to the enhanced productivity brought about by division of labor, along with the resulting economies of scale and market expansion.
‘It was also a driving force behind the Industrial Revolution.’
In fact, the book presents this example:If ten workers each produced 20 nails a day, their total output would be 200.
But when those ten workers were assigned specific tasks in a production process, their combined daily output skyrocketed to 48,000 nails.
Just by changing the way work was structured, productivity increased 240 times.
‘That’s a bit of an exaggeration.’
Of course, real-world improvements aren’t that dramatic.
But depending on the type of product and technology involved, efficiency can increase several times or even dozens of times over.
If a factory originally produced 100 units, it could start producing 2,000 or 3,000 with a simple change in workflow.
The point is, massive improvements can be achieved without any groundbreaking innovation—just by reorganizing the process.
Britain leveraged this explosive productivity to strengthen its national power.
It expanded overseas markets, grew its domestic industries, and boosted its economy.
But what about Hispania?
“When division of labor is successfully implemented, production increases, and product prices drop.And conveniently, there are plenty of eager customers nearby.”
“So, you’re saying they’ll start trading by selling their surplus goods to countries in need of supplies?”
“Exactly.”
As labor time per unit decreases, labor costs shrink.
In other words, the more a product is mass-produced, the cheaper it becomes.
While neighboring countries still rely on artisans and craftsmen to make goods by hand,Hispania, with its newfound price competitiveness, will aggressively sell its goods to Kram and Navre.
With their people and industries weakened by war, demand will be sky-high.
Hispania will amass enormous trade profits by exporting its overflowing products.
“I understand your point, but…”
After contemplating my explanation, Kalia raised a question.
“Isn’t this beneficial only for Hispania? They’ll make a fortune and strengthen their industry.”
“You’re right. But you’re only looking at one side of the equation.”
She wasn’t wrong.
On the surface, this seems entirely advantageous for Hispania.
Rather than weakening the empire, The Wealth of Nations will actually help it grow stronger.
However, at the same time, Hispania’s rapidly expanding economy will become completely dependent on the ongoing war.
When the war ends and international demand shrinks, the resulting oversupply will lead to an economic collapse.
“After the war, Kram and Navre’s imports will plummet.
Then where will Hispania sell its goods?
They don’t even have colonies big enough to absorb the surplus.”
“…Ah.”
The law of supply and demand is absolute.
To solve overproduction, artificial demand must be created—or the economy will collapse.
But there’s no one to take the hit.
The New World is still largely undeveloped and lacks the economic scale to handle such exports.
Allein, Artium, and Helvetia would never allow Hispania to flood their markets and cripple their industries.
As for other potential buyers, there are only a few small island nations like Hawaii or the Alkione Federation in the southern seas…None of them can support large-scale trade.
In the end, by embracing this book, Hispania will be setting itself up for economic disaster.
“Unless they join the war themselves to artificially boost demand and stimulate consumption.Either way, it works in our favor.”
“…You really are a wicked person.Which is precisely why I like you even more.”
That… what exactly do you mean by that?
I had the sudden urge to tease her about it but held back.
After all, both Kalia and I already understood the underlying meaning.
*****
‘I’ll need to make a lot of edits this time.’
Before writing, I outlined a few key modifications.
To use this great scholar’s work for my own goals—tailoring it to my needs.
“First, I’ll remove all references to freedom.Any mention of individual rights or human dignity—all gone.”
Adam Smith praised economic and political freedom.
He believed that diligent and virtuous individuals, living freely, would lead to the prosperity of the entire nation.
As someone who saw himself as a moral philosopher,he championed financial liberty and the rights of the people.
While he acknowledged the necessity of laws as common regulations and controls,he fiercely criticized tyranny and abuses of power.
The “invisible hand” was born from this philosophy.
Smith argued that in the absence of monopolies and government
interference,the market would naturally regulate itself, balancing prices and supply.
“But I don’t need any of that nonsense.”
That knowledge must remain hidden in this world.
I’m not doing this to make humanity happier or more prosperous, am I?
Thus, I stripped out the core ideas,highlighting only the aspects of non-intervention and unlimited economic activity.
Even if problems arose in the market later, people would be conditioned never to consider intervention.
Of course, I kept the essential arguments intact.
Modifying the real-world examples took some effort, though.
References to Scotland, England, and actual historical events had to be completely rewritten.
Instead, I fabricated plausible examples.
It wouldn’t be an issue—without wireless communication, real-time information sharing was nonexistent.
As long as I adjusted the numbers and made the narrative convincing, readers would be none the wiser.
“This is done. Take it to the printing press.”
Handing the manuscript to Kalia, I felt my heart pounding with excitement.
Ah, I couldn’t wait.
How would these fools react this time?