Monday, May 4, 2009

Adam Smith on Creating Wealth: The Secret Revealed

In his landmark book The Wealth of Nations, but in particular in the section "Division of Labor," Adam Smith discusses three points:

(1) Humans show a propensity "to truck, barter, and exchange one thing for another." Though smith isn't explicit, he hints that this propensity may well be inherent in humans.
(2) Humans don't differ greatly in natural talents; the difference is caused by habit, custom, and education.
(3) By the division of labor (specialization), humans produce a surplus of product that they can sell to others.

None of the above discussion would have any practical value if one doesn't reduce the discussion to a very simple conclusion:

To satisfy not only your needs, but also to have something leftover to add to wealth, you either sell your labor (skills) or you sell a product, or merge both. The wealth-hungry individual will do both. Adam Smith's most famous quote:
It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our necessities but of their advantage.

is the secret hidden in plain view is: "never talk to them [customers and vendors]of our necessities but of their advantage." Riches will follow you if you make money for those about you.

President Kennedy's famous words: "ask not what your country [customers and vendors] can do for you - ask what you can do for your country [customers and vendors]," is a 20th century version of Adam smith's insight.

The writing techniques I use are explained in Mary Duffy's Toolbox for Writers e-book.

Mary Duffy's Toolbox for Writers

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