Early industrialisation: The reorganisation of manufacturing around specialised tasks made the division of labour a visible fact, which Smith placed at the centre of his account of productivity.
Mercantilist restriction: Trade was hemmed in by navigation acts, bullion controls and chartered monopolies, giving Smith a concrete system to argue against.
The Scottish Enlightenment: Smith worked amid a circle including David Hume that treated society as a proper object of systematic, secular study.
Expanding overseas commerce: Growing long-distance trade and colonial commerce made the sources of national wealth a pressing practical question.
An audience of legislators: Political economy was addressed to Parliament and ministers, which shaped both what Smith examined and how plainly he wrote it.
Conditions That Produced Keynes's Economics
Mass, persistent unemployment: The Great Depression left a quarter of the US labour force out of work and British unemployment high through the 1920s and 1930s, an outcome the classical model treated as impossible for long.
The failure of self-correction: Years passed without the automatic recovery the orthodoxy predicted, which is the empirical anomaly the General Theory was written to explain.
The gold standard's constraints: Britain's 1925 return to gold at the pre-war parity produced deflation and pressure on wages, sharpening Keynes's doubts about relying on price adjustment.
An ineffective policy toolkit: The Treasury view held that public spending merely crowded out private spending, leaving governments without a theoretical basis for action.
Available statistics: The early development of national income data made it possible to think about the economy in terms of measurable aggregates.
What Smith's Book Changed
It reframed wealth: National wealth was redefined as the flow of goods and services a nation produces, not the stock of gold it holds, undercutting the case for mercantilist hoarding.
It supplied free-trade arguments: The attack on trade restriction became the intellectual backbone of nineteenth-century movements for freer commerce, including the repeal of Britain's Corn Laws.
It founded a discipline:The Wealth of Nations gave political economy a systematic text and a set of core questions that organised the field for a century.
It introduced spontaneous order: The idea that decentralised self-interest can produce coordinated outcomes without central direction became a permanent part of economic thinking.
It was selectively read: Later advocates of pure laissez-faire drew on Smith while quietly dropping his warnings about business collusion and his defence of public functions.
What Keynes's Book Changed
It created macroeconomics: The systematic study of the economy in aggregate, distinct from the analysis of individual markets, dates from the General Theory.
It legitimised fiscal policy: Government management of aggregate demand acquired a theoretical justification and, in the multiplier, an estimable magnitude.
It drove national accounting: The need to measure aggregate demand accelerated the construction of GDP and national income statistics.
It reshaped post-war policy: Commitments to full employment written into post-war Western economic policy drew directly on Keynesian reasoning.
It provoked a lasting counter-argument: Monetarist and later new classical economics defined themselves against Keynes, and the stagflation of the 1970s gave those critiques their opening.