This article records tradition as it has been passed down and reported. Its sources are not yet part of the atlas's verified catalogue.
When Adam Smith sat down to write An Inquiry into the Nature and Causes of the Wealth of Nations, published in 1776, the target he had most immediately in view was not an abstract economic error but roughly two centuries of European state practice. Book Four of the Wealth of Nations is a sustained argument against what Smith called the mercantile system, the doctrine that had shaped trade policy in Britain, France, Spain, Portugal and the Netherlands since the sixteenth century, and it remains one of the most successful acts of intellectual demolition in the history of economics: no government has seriously defended mercantilism's core premises since.
Smith's central move was to attack the doctrine's founding assumption, that a nation's wealth is measured by its stock of gold and silver. Gold and silver, he argued, are simply commodities like any other, useful for buying things but not themselves the substance of wealth; a nation's real wealth is the goods and services its labour and land can produce, which trade increases rather than merely redistributes. From that single correction, the rest of mercantilist policy unraveled. If wealth is not a fixed stock, then trade between nations is not the zero sum contest mercantilism assumed; both trading partners could genuinely gain from an exchange each valued differently, the same logic Smith applied to trade between individuals within a single country. Tariffs designed to protect favoured domestic industries, on this account, did not enrich the nation as a whole; they enriched the protected industry at the expense of everyone who had to pay higher prices for what that industry produced, a less efficient, more costly outcome than simply buying the goods from whoever could make them most cheaply.
Smith's own term for the alternative he favoured, though not the one history remembers him by, was a system of natural liberty: government confined to defence, justice and a limited set of public works, leaving prices, wages and the direction of trade to the competitive market. Later economists and popular usage folded that position into the older French term laissez-faire, and it became, over the following century, the dominant governing philosophy across much of the industrializing world. Smith himself was more cautious than the doctrine that grew from his name; he defended some government intervention, in banking regulation and public education among other areas, that self-described laissez-faire advocates would later drop. The Wealth of Nations did not end government involvement in the economy. What it ended, more durably, was the intellectual respectability of the belief that had organized European trade policy for two hundred years.