The Wealth of Nations, Books IV-V

In the final two books of his great work, The Wealth of Nations, Adam Smith elaborates his views on some of the key economic issues of his - and our own - times. It is here that Smith (1723-90) offers his considered response to the French Physiocrats, perhaps the first great school of economic theorists. It is also here that he assesses the nature of the mercantile system, and particularly the colonial relationship with America, whose achievements could have been even more spectacular in conditions of free trade and perhaps economic union. Even on the eve of the Declaration of Independence, Smith famously predicted that America 'will be one of the foremost nations of the world'. And it is here that he develops the case for a limited state role in economic planning, notably to combat market failure and induce efficiency in areas such as education, public works, justice and defence. His pioneering analysis still provides many subtle and penetrating insights into one of today's most vital and controversial policy debates.