Chapter 10: Adam Smith’s Method of Theory Construction in Book I of Wealth of Nations
The aim of this chapter is to reconstruct and analyze the structure of some of the key parts of Book I of Adam Smith’s Wealth of Nations (henceforth, WoN).144 In contrast with the more common approaches to the analysis of WoN,145 we shall focus on the methods employed by Smith in the introduction and derivation of economic concepts, as well as on the categories explicitly or implicitly involved.
By the structure of Book I of WoN, we mean the set of relations among the key concepts and propositions of Smith’s theory. Therefore, the methods we shall focus on in this chapter are of a “conceptual” nature. As opposed to the application of empirical methods, the application of conceptual methods does not result in any new data on particular states of affairs in the world. Instead, conceptual methods yield new concepts or relations among preexisting concepts (e.g., via introduction by definition), or new propositions or relations among propositions (e.g., via the various types of inference). Hence, the application of conceptual methods is a conditio sine qua non of theory construction in any scientific field – the social sciences notwithstanding. More precisely, the application of conceptual methods is what the very process of theory construction primarily consists in. And even though the application of conceptual methods does not, by itself, lead to new data, the knowledge obtained by these methods can be used to predict and/or search for new data and to drive their collection.
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