Book 5, Chapter 2 Summary and Analysis

The second chapter of Book 5 focuses on taxes. "The revenue of a Tartar or Arabian chief consists in profit...It arises...from the milk and increase of his own herds, of which he himself superintends the management...It is in this earliest and rudest state of civil government only that profit has ever made the principal part of the public revenue of a monarchical state," (p. 769). From here, Adam Smith goes on to explain how he has found that traders and sovereigns are of two different character types. At this point, it is worth mentioning that sovereign has more than one meaning. It can mean an individual, such as a monarch, but it can also mean an entire commonwealth, or a "board of trustees." To put it into common updated language, sovereigns would be "politicians," and traders are the...