443 lines
12 KiB
Markdown
443 lines
12 KiB
Markdown
--- ENTITY: productive and unproductive labour ---
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# Productive and Unproductive Labour
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## Definition
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A fundamental classification of economic activity distinguishing labour that
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adds value to materials through transformation into vendible commodities from
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labour that provides services without creating lasting value. Productive labour
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fixes and realizes itself in particular subjects or commodities that endure
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after the labour is past and can be stored, exchanged, or employed again,
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while unproductive labour perishes in the very instant of performance without
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leaving any vendible commodity or value that can be stored or exchanged.
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## Source Chapter
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Book II, Chapter 3
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## Context
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The central analytical framework of this chapter, introduced to explain how
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different types of labour affect capital accumulation and economic growth.
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Smith uses this distinction to show why manufacturers grow rich while those
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maintaining unproductive servants grow poor, and how this affects the overall
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productive capacity of a nation.
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## Economic Domain
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Production
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---
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--- ENTITY: capital accumulation ---
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# Capital Accumulation
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## Definition
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The process by which savings from revenue are added to capital stock, enabling
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the employment of additional productive labour. Capital grows through
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parsimony when individuals save part of their revenue and either employ it
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themselves in maintaining productive hands or lend it to others, creating a
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perpetual fund for maintaining productive labour across time.
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## Source Chapter
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Book II, Chapter 3
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## Context
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The chapter's primary focus, explaining how individual saving behavior
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accumulates into national capital growth. Smith argues that parsimony, not
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industry, is the immediate cause of capital increase, and that this process
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determines whether a nation tends toward industry or idleness.
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## Economic Domain
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Accumulation
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---
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--- ENTITY: revenue destined for capital replacement ---
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# Revenue Destined for Capital Replacement
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## Definition
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That portion of annual produce which immediately replaces capital by renewing
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provisions, materials, and finished work withdrawn from capital. This revenue
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maintains only productive hands and pays wages of productive labour, forming
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the foundation for continued production and economic growth.
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## Source Chapter
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Book II, Chapter 3
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## Context
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Smith divides annual produce into two parts: one replacing capital and one
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constituting revenue. This portion is crucial because it determines the
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proportion between productive and unproductive hands in society and thus the
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general character of inhabitants as to industry or idleness.
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## Economic Domain
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Accumulation
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---
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--- ENTITY: revenue constituting profit and rent ---
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# Revenue Constituting Profit and Rent
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## Definition
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That portion of annual produce which forms revenue either as profit of stock
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or rent of land. This revenue may maintain either productive or unproductive
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hands indifferently, unlike capital replacement revenue which maintains only
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productive labour. It represents the surplus after capital renewal.
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## Source Chapter
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Book II, Chapter 3
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## Context
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The second major division of annual produce, distinguished from capital
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replacement revenue. Smith notes that owners of this revenue often show
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predilection for maintaining unproductive hands, affecting the overall
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productive capacity of society.
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## Economic Domain
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Distribution
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---
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--- ENTITY: spare revenue ---
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# Spare Revenue
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## Definition
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That portion of revenue which remains after necessary subsistence is met and
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which may be employed in maintaining either productive or unproductive hands.
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Productive labourers have little spare revenue, while landlords and merchants
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have most to spare, giving them greater influence over the proportion of
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productive versus unproductive labour in society.
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## Source Chapter
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Book II, Chapter 3
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## Context
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Smith explains how different social classes use their revenue, noting that
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spare revenue is the key determinant of whether additional labour will be
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productive or unproductive, thus affecting capital accumulation and economic
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growth.
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## Economic Domain
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Distribution
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---
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--- ENTITY: funds for maintaining productive labour ---
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# Funds for Maintaining Productive Labour
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## Definition
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The capital and revenue sources that employ productive hands whose labour
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adds value to materials. These funds are much greater in rich countries and
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bear a much greater proportion to those likely to be employed in maintaining
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idleness, determining the general character of inhabitants as industrious or
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idle.
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## Source Chapter
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Book II, Chapter 3
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## Context
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Smith argues that the proportion between these funds and those for maintaining
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unproductive hands determines whether a country tends toward industry or
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idleness, with rich countries having larger proportions of productive labour.
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## Economic Domain
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Production
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--- ENTITY: funds for maintaining unproductive hands ---
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# Funds for Maintaining Unproductive Hands
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## Definition
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Capital and revenue sources that employ unproductive labourers and those who
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do not labour at all, including servants, soldiers, churchmen, lawyers,
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physicians, and entertainers. These funds tend to have predilection for
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unproductive labour, especially among the wealthy, affecting the overall
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productive capacity of society.
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## Source Chapter
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Book II, Chapter 3
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## Context
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Smith contrasts these funds with those for productive labour, noting that
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their proportion determines whether a society tends toward industry or
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idleness, and that rich countries often maintain larger proportions of
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unproductive hands.
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## Economic Domain
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Production
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---
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--- ENTITY: proportion between productive and unproductive hands ---
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# Proportion Between Productive and Unproductive Hands
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## Definition
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The ratio determining the relative numbers of productive labourers who add
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value to materials versus unproductive labourers who provide services without
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creating vendible commodities. This proportion depends on the relative size
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of funds for maintaining productive versus unproductive hands, and determines
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whether a country tends toward industry or idleness.
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## Source Chapter
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Book II, Chapter 3
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## Context
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The central analytical relationship in the chapter, showing how the division
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of annual produce between capital replacement and revenue affects the overall
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productive capacity and economic character of a nation.
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## Economic Domain
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General Theory
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--- ENTITY: frugality versus prodigality ---
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# Frugality Versus Prodigality
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# Frugality Versus Prodigality
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## Definition
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The contrasting principles governing individual and public expenditure that
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determine capital accumulation. Frugality increases public capital by saving
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revenue for productive employment, while prodigality diminishes it by
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consuming capital through excessive expenditure on unproductive labour and
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consumption.
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## Source Chapter
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Book II, Chapter 3
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## Context
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Smith presents this as the fundamental economic choice affecting national
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wealth, arguing that individual frugality accumulates capital while
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prodigality destroys it, with public prodigality being particularly harmful
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when it employs revenue in maintaining unproductive hands.
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## Economic Domain
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Accumulation
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---
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--- ENTITY: perpetual fund for maintenance of labour ---
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# Perpetual Fund for Maintenance of Labour
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# Perpetual Fund for Maintenance of Labour
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## Definition
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The accumulated capital created through individual saving that provides
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continuous employment for productive labour across all future time periods.
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Like a founder of a public work-house, a frugal person establishes a fund
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that, though not legally protected, is guarded by the evident interest of all
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who may ever possess any share of it.
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## Source Chapter
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Book II, Chapter 3
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## Context
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Smith uses this concept to show how individual saving creates lasting economic
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benefits beyond the immediate year, establishing a permanent capacity for
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productive employment that characterizes wealthy nations.
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## Economic Domain
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Accumulation
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---
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--- ENTITY: encroachment upon capital ---
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# Encroachment Upon Capital
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## Definition
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The process by which individuals who spend beyond their income consume their
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capital stock, perverting funds consecrated to productive employment for
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maintaining unproductive labour. This diminishes the quantity of labour that
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adds value to subjects and consequently reduces the real wealth and revenue
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of the country's inhabitants.
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## Source Chapter
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Book II, Chapter 3
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## Context
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Smith describes how prodigality leads to capital consumption, comparing it to
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perverting revenues of pious foundations to profane purposes, and showing how
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this behavior impoverishes both the individual and the country.
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## Economic Domain
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Accumulation
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--- ENTITY: exportation of gold and silver as effect of declension ---
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# Exportation of Gold and Silver as Effect of Declension
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## Definition
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The consequence rather than cause of economic decline, where diminishing
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annual produce leads to reduced domestic circulation of money, forcing its
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exportation to purchase consumable goods abroad. This exportation continues
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for some time to support consumption beyond the value of domestic produce.
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## Source Chapter
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Book II, Chapter 3
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## Context
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Smith refutes the mercantilist view that gold and silver export causes
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economic decline, arguing instead that it is the effect of declining
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production and can even temporarily alleviate the misery of declension.
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## Economic Domain
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Exchange
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--- ENTITY: increase of money as effect of prosperity ---
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# Increase of Money as Effect of Prosperity
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## Definition
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The natural consequence of economic growth where increased annual produce
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requires greater money circulation. The increased produce naturally employs
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itself in purchasing additional gold and silver necessary for circulating the
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rest, making monetary increase the effect rather than cause of public
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prosperity.
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## Source Chapter
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Book II, Chapter 3
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## Context
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Smith's complementary argument to the previous entity, showing that monetary
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growth follows rather than leads economic development, refuting mercantilist
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concerns about money scarcity.
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## Economic Domain
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Exchange
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---
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--- ENTITY: private misconduct versus public prodigality ---
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# Private Misconduct Versus Public Prodigality
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# Private Misconduct Versus Public Prodigality
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## Definition
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The distinction between individual economic errors and government
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extravagance as causes of reduced productive funds. While private misconduct
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rarely affects great nations due to compensation by others' good conduct,
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public prodigality employing revenue in maintaining unproductive hands can
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significantly diminish funds for productive labour.
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## Source Chapter
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Book II, Chapter 3
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## Context
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Smith argues that public prodigality is more dangerous than private misconduct
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because it operates at scale and is not compensated by others' frugality,
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potentially leading to national impoverishment.
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## Economic Domain
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Regulation
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---
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--- ENTITY: natural progress of improvement ---
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# Natural Progress of Improvement
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## Definition
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The inherent tendency of societies to accumulate capital and improve through
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individual efforts to better their condition, protected by law and allowed by
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liberty. This principle frequently restores health to the economic
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constitution despite government extravagance and administrative errors.
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## Source Chapter
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Book II, Chapter 3
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## Context
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Smith's optimistic conclusion that individual self-interest and frugality
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generally overcome government interference, allowing England's progress toward
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opulence despite public prodigality.
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## Economic Domain
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General Theory
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---
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--- ENTITY: modes of expense affecting public opulence ---
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# Modes of Expense Affecting Public Opulence
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## Definition
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The distinction between spending revenue on immediately consumable items
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versus durable commodities, where the latter contributes more to public
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opulence by providing useful goods to inferior ranks, encouraging frugality,
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and maintaining more productive hands than extravagant hospitality.
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## Source Chapter
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Book II, Chapter 3
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## Context
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Smith's final analysis showing how different spending patterns affect
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national wealth, arguing that investment in durable goods creates more
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lasting economic benefits than consumption of perishable items.
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## Economic Domain
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Consumption
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