Adam Smith's "Tolerable Administration of Justice" and the Wealth of Nations

No 20636, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In the Wealth of Nations, Adam Smith argues that a country's national income depends on its labor productivity, which in turn hinges on the division of labor. But why are some countries able to take advantage of the division of labor and become rich, while others fail to do so and remain poor? Smith's answer, in an important but neglected theme of his work, is the security of property rights that enable individuals to "secure the fruits of their own labor" and allow the division of labor to occur. Countries that can establish a "tolerable administration of justice" to secure property rights and allow investment and exchange to take place will see economic progress take place. Smith's emphasis on a country's "institutions" in determining its relative income has been supported by recent empirical work on economic development.

JEL-codes: B12 B25 B31 K2 O43 P14 P16 P48 (search for similar items in EconPapers)
Date: 2014-10
New Economics Papers: this item is included in nep-his, nep-hpe and nep-law
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Published as Douglas A. Irwin, 2020. "Adam Smith's “tolerable administration of justice” and the Wealth of Nations," Scottish Journal of Political Economy, vol 67(3), pages 231-247.

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