In the mid 1700s Smith met with the French economist Francois Quesnay. Quesnay's theory was known as Physiocracy and he developed a chart he called tableau economique. It contradicted what people believed in this period - that gold and silver constituted wealth. Quesnay believed that wealth came from production - agricultural production that is. What the manufacturing and commercial sectors produced was not truly wealth in the way that agriculture was. Adam Smith took this and shaped into his own belief that labor in general was the source of value, not just agricultural labor.
It was in 1776 that Smith published what is perhaps his most famous book, the Wealth of Nations. Anyone who has ever read or even looked at this book knows just how large a tome it really is. It does not make for light reading over a bowl of Alpha-Bits at the breakfast table. The index alone is sixty-three pages long which caps off the 900 pages of text. To say that Smith often wanders throughout the book is an understatement. Just as he once walked fifteen miles in his pajamas without realizing it, certain parts of the book make it seem like he is wandering about in his pajamas. Yet it is trite to say that parts of this book are nothing short of brilliant.
In the beginning Smith talks about the specialization of labor in a pin factory. He argues that when the duties of producing pins are divided up amongst the workers, the amount of productivity is increased, which increases output, which in turn leads to more wealth.
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