Things change but remain much the same

The main lesson that Adam Smith wanted to teach in his great book, The Wealth of Nations is that a country doesn’t become prosperous by accruing wealth. It is only by recycling the wealth by means of trade that new ideas and different forms of wealth can enter a country — and, as a consequence, the original wealth is renewed.

Fortunately, London and half a dozen ports along the northern rim of Europe were already doing that and trade took a great leap forward when the industrial revolution started taking off at the time of Smith’s book (1776). Unfortunately — for the rest of the world — the maximum benefits of trade tends to take place between countries making goods of comparable value and complexity. Thus today — with the exception of Japan, South Korea and China — the predominant trading countries in the world are the same as those of 250 years ago.

This can change, of course — the brilliant leadership of Lee Kuan Yew (Singapore) or a new country of exceptional scholarship (Israel) — can alter things dramatically for one or two countries. But it doesn’t change the overall balance of world trade. The present situation won’t last forever obviously but it’s difficult to envisage any great change within a century or two unless something very new comes along by way of exceptional discoveries or exotic technologies.

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