The Wealth of Nations was a critique of the existing organization of state controls referred to by social philosopher Adam Smith as mercantilism. Although rudimentary forms of capitalism existed as far back as ancient times, modern capitalism began to unfold in the late Middle Ages with the development of a merchant class. Continued exploration during the next few centuries and the formation of joint-stock companies allowed the development of mercantilism, a state-dominated commercial system that primarily endeavored to use commerce to strengthen state power. Factors such the Protestant Reformation, which supported a more positive view of wealth, the rise of scientific reasoning, and corresponding population increases influenced the desire for new economic systems. Drawing on Enlightenment thought—individual human beings came to replace God at the center of things—humans, with their rational minds, could improve themselves and society through systematic and rational action.
In the late seventeenth century, philosopher John Locke proposed that the state had a responsibility for maintaining people’s rights—one right, in particular, the right to own property. Smith’s economic theories met the desire for economic change that would benefit the individual. However, mercantilism, which stimulated economic nationalism and encouraged government intervention in every aspect of trade, was the major economic system in the still primarily agricultural economy of late eighteenth century Britain.
The publication of The Wealth of Nations, the first comprehensive system of political economy, in 1776 marks the birth of economics as a separate discipline. The central theme is the growth of national wealth, which Smith, the moral and social philosopher, saw as the nation’s annual production of goods and services among the three classes: laborers, landlords, and manufacturers. Smith theorized that the liberty to trade unhindered by government intervention would result in increased abundance and wealth for all involved. Deeply opposed to mercantilist practices, which encouraged government intervention in every aspect of trade, Smith’s policy of free-trade economic liberalism, otherwise known as laissez-faire (“Let it be, let it go”) led to extraordinary economic growth, particularly in Britain and the United States.