The oft-quoted and more often assumed summary of Smith's analysis - for that is precisely what this book represents - arises from the author's repeated insistence on the albeit presumed existence of a "natural" order of things. Smith assumed that if left alone to find its own level, free of interference from interests capable of influencing the supply or price, then a traded good or service would inevitably gravitate towards natural levels of both consumption and price
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the one obviously influencing the other via the familiar concept of demand. This natural level, however, could become distorted. For Smith, government influence via regulation, quota, taxation or, more commonly, monopoly, usually results in disrupted, artificial trade, its dysfunction as often a consequence of incompetence as it is because of inappropriate control. But what is not usually quoted from Smith's work is that he often blames producer or merchant cartels for this counter-productive meddling as much as he does governments. Indeed, some of the most vehement and serious criticism in the Wealth Of Nations is reserved for commercial corporations, especially The East India Company, a giant of contemporary international trade. Their corporate interest receives Smith's blame for a whole host of ills, such as profiteering, distorting trade, creating surpluses and shortages and even causing famine. In addition, Smith was clearly no friend of those who populated chambers of trade or monopoly holdings of any kind, since all such interests could distort his "natural" markets.
Adam Smith was clearly in favour of both education and training. He saw education as being capable of developing skill, knowledge and sometimes wisdom. He recognised that different kinds of human labour would necessarily attract different rates of reward, since different skills and capabilities required different amounts of commitment to secure them. Effectively, he was recognising in his own language the existence of what we now call human capital.
The acquisition of such talents (the acquired and useful abilities of all the inhabitants and members of the society), by the maintenance of the acquirer during his education, study, or apprenticeship, always costs a real expense, which is a capital fixed and realized, as it were, in his person... The improved dexterity of a workman may be considered in the same light as a machine or instrument of trade which facilitates and abridges labour, and which, though it costs a certain expense, repays that expense with a profit.
Here then is human capital, but also recognition of education as an investment, both personal and societal. He also thus stated the labour theory of value.
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