Quotations from Adam Smith
The market price will sink more or less
below the natural price, according as the greatness of the excess increases
more or less the competition of the sellers, or according as it happens to be more
or less important to them to get immediately rid of the commodity.
The lowest class being not only
overstocked with its own workmen, but with the overflowings of all the other
classes, the competition for employment would be so great in it, as to reduce
the wages of labour to the most miserable and scanty subsistence of the
labourer. Many would not be able to find employment even upon these hard terms,
but would either starve, or be driven to seek a subsistence either by begging,
or by the perpetration perhaps of the greatest enormities. Want, famine, and
mortality would immediately prevail in that class, and from thence extend
themselves to all the superior classes, till the number of inhabitants in the
country was reduced to what could easily be maintained by the revenue and stock
which remained in it, and which had escaped either the tyranny or calamity
which had destroyed the rest.
...increasing the competition, necessarily
reduces the profit..
Monopoly, besides, is a great enemy to
good management
The quantity of such commodities,
therefore, remaining the same, or nearly the same, while the competition to
purchase them is continually increasing, their price may rise to any degree of
extravagance, and seems not to be limited by any certain boundary.
To widen the market and to narrow the
competition, is always the interest of the dealers. To widen the market may
frequently be agreeable enough to the interest of the public; but to narrow the
competition must always be against it, and can serve only to enable the
dealers, by raising their profits above what they naturally would be, to levy,
for their own benefit, an absurd tax upon the rest of their fellow-citizens.
This free competition, too, obliges all
bankers to be more liberal in their dealings with their customers, lest their
rivals should carry them away. In
general, if any branch of trade, or any division of labour, be advantageous to
the public, the freer and more general the competition, it will always be the
more so.
Bankruptcies are most frequent in the most
hazardous trades. The most hazardous of all trades, that of a smuggler, though
when the adventure succeeds it is likewise the most profitable, is the
infallible road to bankruptcy. The presumptuous hope of success seems to act
here as upon all other occasions, and to entice so many adventurers into those
hazardous trades, that their competition reduces their profit below what is
sufficient to compensate the risk. To compensate it completely, the common
returns ought, over and above the ordinary profits of stock, not only to make
up for all occasional losses, but to afford a surplus profit to the adventurers
of the same nature with the profit of insurers. But if the common returns were
sufficient for all this, bankruptcies would not be more frequent in these than
in other trades.