Adam Smith: Rule of Law as the Backbone for Markets

Adam Smith’s 1776 book, An Inquiry into the Nature and Causes of the Wealth of Nations, is often described in casual conversation (at least by noneconomists) as a manifesto for the benefits and power of free markets. That’s a part of it, to be sure. But Smith was a profound thinker, not a pamphleteer, and he digs down into a much wider discussion of why the people of certain nations become wealthy. Barry R. Weingast offers his own thematic emphasis emphasis in “What Every PhD Student Should Know About Adam Smith” (Annual Review of Economics 2026, pp. 647-668). Weingast runs through the Smithian topics that are familiar to most economists: division of labor, supply and demand, wages and apprenticeships, the role of money, poor laws, land rents, free trade, and so on. But Weingast’s emphasizes Smith’s discussion of how the laws and institutions supporting these factors arose. Where the lords ruled, those who worked the land called “slaves” by Smith. They had no right to move to another…

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