The annual labour of every nation is the fund which originally supplies it with all the necessaries and conveniences of life. This labour is consumed annually and consists of either the immediate produce of that labour or what is purchased with that produce from other nations. The nation’s supply of all the necessities and conveniences for which it has occasion is determined by the proportion of this produce or what is purchased with it to the number of those who will consume it. However, this proportion must be regulated by two different circumstances in every nation. First, by the skill, dexterity, and judgment with which its labour is generally applied. Second, by the proportion between the number of those who are employed in useful labour and that of those who are not so employed.
Whatever the soil, climate, or extent of territory of any particular nation, the abundance or scantiness of its annual supply depends on those two circumstances. The abundance or scantiness of this supply seems to depend more on the former than the latter. Among savage nations of hunters and fishers, every able-bodied individual is employed in useful labor and strives to provide for themselves, their family, or tribe. However, such nations are so poor that they are frequently reduced to directly destroying or abandoning their infants, elderly, and sick. In contrast, civilized and thriving nations have a great number of people who do not labor but consume the produce of many times more labor than those who work. Yet, the produce of the whole labor of the society is so great that all are often abundantly supplied. Even a frugal and industrious workman of the lowest and poorest order may enjoy a greater share of the necessities and conveniences of life than any savage can acquire. The causes of this improvement in the productive powers of labor and the order according to which its produce is naturally distributed among the different ranks and conditions of men in the society make up the subject of the first book of this Inquiry.
Whatever the actual state of the skill, dexterity, and judgment with which labor is applied in any nation, the abundance or scantiness of its annual supply must depend, during the continuance of that state, upon the proportion between the number of those who are annually employed in useful labor and those who are not. The number of useful and productive laborers is everywhere in proportion to the quantity of capital stock employed in setting them to work and the particular way in which it is employed. The second book, therefore, treats the nature of capital stock, how it is gradually accumulated, and the different quantities of labor it puts into motion, according to the different ways it is employed. Nations well advanced in skill, dexterity, and judgment in the application of labor have followed different plans in the general conduct or direction of it, and those plans have not all been equally favorable to the greatness of its produce. The policy of some nations has given extraordinary encouragement to the industry of the country, while others have encouraged the industry of towns. Scarce any nation has dealt equally and impartially with every sort of industry.
Since the downfall of the Roman Empire, the policy of Europe has been more favorable to arts, manufactures, and commerce – the industry of towns – than to agriculture, the industry of the country. The circumstances that seem to have introduced and established this policy are explained in the third book. Though those different plans were perhaps first introduced by private interests.