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Now, let's consider the very famous [br]<i>Book 1, Chapter 2</i> of "Wealth of Nations"

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on mankind's propensity[br]for truck, barter, and exchange.

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This chapter, by the way, is called

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<i>Of the Principle which gives [br]Occasion to the Division of Labour</i>,

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and that principle, of course, [br]is going to be trade and exchange.

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Indeed, the ability to make deals, [br]to consummate binding agreements,

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to exchange goods and services

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is portrayed by Smith[br]as a fundamental characteristic of mankind

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and one which is going to drive [br]a lot of economic reasoning.

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In a famous passage, Smith compares[br]human beings to most other animals

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and notes that he's never seen [br]one dog trade a bone to another dog

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for something in return.

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So for Smith, what sets [br]man apart from the animals

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is not necessarily some notion [br]of an immortal soul,

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as in the theology of his time,

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but rather the ability to engage [br]in market exchange.

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The self-interested desire [br]for other goods and services

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obtained through the medium of trade[br]drives a lot of human behavior.

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There's a very famous quotation [br]in this chapter and it reads as follows,

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quote:

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In a key part of this very busy [br]and very profound chapter,

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Smith is going to tie together [br]two key themes of the book

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and that is trade and division of labor,

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and Smith notes it's the desire to trade [br]which gives rise to specialization

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and the division of labor.

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After all, if you want [br]other goods and services,

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what's the best way to get them?

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Well, you should produce [br]what you are best at and specialize,

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and then use what [br]you have produced and trade it

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in return for other goods and services.

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We again see this key idea of [br]trade specialization and division of labor

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as being part of some[br]self-reinforcing dynamic

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which will arise with economic growth [br]and also help drive that growth.

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At the end of this chapter, [br]there's also an interesting observation

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on differences and observed talents.

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Smith notes that individuals[br]have very abilities,

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but a lot of these are not inborn [br]but rather they come from

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custom habit and experience.

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So, here, Smith is asserting [br]one kind of vision

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of a general or broad natural[br]quality of mankind.

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Overall, this really is one [br]of the most important

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and most interesting chapters [br]in the entirety of Wealth of Nations.