Can anybody explain me these quotatations please ?
December 29th, 2008
Can you explain me these excerpts from the wealth of nation :
1/ “THOUGH the encouragement of exportation, and the discouragement of importation, are the two great engines by which the mercantile system proposes to enrich every country, yet with regard to some particular commodities, it seems to follow an opposite plan: to discourage exportation and to encourage importation. Its ultimate object, however, it pretends, is always the same, to enrich the country by an advantageous balance of trade. It discourages the exportation of the materials of manufacture, and of the instruments of trade, in order to give our own workmen an advantage, and to enable them to undersell those of other nations in all foreign markets; and by restraining, in this manner, the exportation of a few commodities, of no great price, it proposes to occasion a much greater and more valuable exportation of others. It encourages the importation of the materials of manufacture, in order that our own people may be enabled to work them up more cheaply, and thereby prevent a greater and more valuable importation of the manufactured commodities….”
2/ The importation of gold and silver is not the principal much less the sole benefit which a nation derives from its foreign trade. Between whatever places foreign trade is carried on, they all of them derive two distinct benefits from it. It carries out that surplus part of the produce of their land and labor for which there is no demand among them, and brings back in return for it something else for which there is a demand. It gives a value to their superfluities by exchanging them for something else, which may satisfy a part of their wants, and increase their enjoyments. By means of it, the narrowness of the home market does not hinder the division of labor in any particular branch of art or manufacture from being carried to the highest perfection. By opening a more extensive market for whatever part of the produce of their labor may exceed the home consumption, it encourages them to improve its productive powers and to augment its annual produce to the utmost, and thereby to increase the real revenue and wealth of the society.”
3/”Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer. The maxim is so perfectly self-evident, that it would be absurd to attempt to prove it. But in the mercantile system, the interest of the consumer is almost constantly sacrificed to that of the producer; and it seems to consider production, and not consumption, as the ultimate end and object of all industry and commerce….”
1: basically it argues that rather than have an unregulated import and export base a nation should limit what it imports to just those goods it needs for internal production so it has the inputs it needs to keep it’s workers employed.
The export of any goods which are excess to its own internal needs to gain advantages of economies of scale thus making the product cheaper for interal consumers while allowing it to build a positive trade advantage over other nations through exporting value added goods.
2. Keeping internal employment up by exporting only those goods which are surplus production goods made from taking advantage of the economies of scale and sellling them for goods of lesser value which the nation needs. Either as an input in the factors of production or because they can manufacture the final goods for themselves once they have all the inputs they need.
This allows a broader market to develop within the nation thus improving choice of goods, quality of goods, and maintaining a healthy supply and demand for the internal market at a good price.
The argument is that a nation needn’t trade just to gain gold or silver or foreign currency but as a means of ensuring full internal employment and as a means of gaining resources/inputs for production which it needs.
3. The argument is that the market may not necessarily be run according to consumer wants/desires but if given a chance, production could, by virtue of introducing a larger variety of consumer goods, would stimulate more wants from the consumers thus ensuring more production output for the benefit of all.
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1: basically it argues that rather than have an unregulated import and export base a nation should limit what it imports to just those goods it needs for internal production so it has the inputs it needs to keep it’s workers employed.
The export of any goods which are excess to its own internal needs to gain advantages of economies of scale thus making the product cheaper for interal consumers while allowing it to build a positive trade advantage over other nations through exporting value added goods.
2. Keeping internal employment up by exporting only those goods which are surplus production goods made from taking advantage of the economies of scale and sellling them for goods of lesser value which the nation needs. Either as an input in the factors of production or because they can manufacture the final goods for themselves once they have all the inputs they need.
This allows a broader market to develop within the nation thus improving choice of goods, quality of goods, and maintaining a healthy supply and demand for the internal market at a good price.
The argument is that a nation needn’t trade just to gain gold or silver or foreign currency but as a means of ensuring full internal employment and as a means of gaining resources/inputs for production which it needs.
3. The argument is that the market may not necessarily be run according to consumer wants/desires but if given a chance, production could, by virtue of introducing a larger variety of consumer goods, would stimulate more wants from the consumers thus ensuring more production output for the benefit of all.
References :