The Wealth of Nations

by Adam Smith

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Why does Adam Smith consider a system producing poverty and inequality to be just?

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Adam Smith argues that systems producing poverty and inequality can be considered just because they reflect the natural state of humanity and offer opportunities for prosperity, even if unevenly distributed. He believes that while inequality is a persistent issue, the alternative—universal poverty—is worse. Smith sees developed societies, despite their inequalities, as preferable to more equal but impoverished societies, using historical and contemporary examples like hunter-gatherer societies and feudal China to illustrate his point.

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In The Wealth of Nations, Adam Smith points out that highly developed societies are not absolutely just but describes them as being preferable to less developed societies that are, or were, more equal. The economic systems of such societies include poverty and inequality but do not produce them, since poverty and inequality are the natural state of mankind.

In book 5, Smith remarks that "inequality of fortune" is a constant complaint in every period of history. However, he goes on to say,

The first period of society, that of hunters, admits of no such inequality. Universal poverty establishes their universal equality, and the superiority either of age or of personal qualities are the feeble but the sole foundations of authority and subordination.

Smith admits that inequality is a problem but does not believe there is any solution except "universal poverty." The opportunity for prosperity, even if it is unequally distributed, is better than a relatively equal society in which everyone is poor.

As well as looking back to the early history of humanity, Smith comments on other countries around the world, comparing them unfavorably with the wealth of Europe. In book 1, he describes the poverty of China, which remains feudal, and relies mainly on agriculture rather than trade:

The poverty of the lower ranks of people in China far surpasses that of the most beggarly nations in Europe. In the neighborhood of Canton, many hundred, it is commonly said, many thousand families have no habitation on the land, but live constantly in little fishing-boats upon the rivers and canals. The subsistence which they find there is so scanty, that they are eager to fish up the nastiest garbage thrown overboard from any European ship. Any carrion, the carcass of a dead dog or cat, for example, though half putrid and stinking, is as welcome to them as the most wholesome food to the people of other countries.

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