Richard Dowling (Tasmania, Australian Labor Party) Share this | Hansard source

This week marks 250 years since the publication of one of the most influential books ever written about how economies work: Adam Smith's Wealth of Nations, published in March 1776. It's easy to forget just how radical Smith's ideas were in their time. The world he wrote in was dominated by mercantilism—the belief that trade was a zero-sum game, where one nation's gain must come at another's loss. Governments imposed tariffs and monopolies not to expand prosperity but to hoard it. Smith challenged that orthodoxy with a simple but powerful insight: prosperity grows when people are free to specialise, to trade and to innovate.

He began his famous book with a humble example of a pin factory. One worker making pins alone might produce only a handful in a day but, when production was divided into specialised tasks like drawing the wire, cutting it, sharpening it and attaching the head, 10 workers could produce many thousands of pins. As Smith observed:

The greatest improvement in the productive powers of labour … seems to have been the effects of the division of labour.

From that simple example, Smith drew a larger lesson. The wealth of a nation does not come from hoarding gold or protecting favoured industries; it comes from the productive capacity of its people and from markets that allow them to exchange what they create. He also captured how markets coordinate human activity through incentives. He famously wrote:

It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.

Smith's point was not to celebrate self-interest but to observe how markets organise the efforts of ordinary people. Millions of people, each pursuing their own livelihood, cooperate through markets to produce the goods and services that sustain modern life.

But Smith was never the caricature sometimes invoked in modern debate. He did not believe markets should operate without rules. Smith understood that prosperity requires competition and institutions that prevent monopoly and collusion. His warning still resonates today:

People of the same trade seldom meet together … but the conversation ends in a conspiracy against the public …

Two hundred and fifty years on, Smith's warning still resonates with the modern Australian economy. Across sectors, from supermarkets to airlines to digital platforms, we see how market concentration can undermine competition and raise prices. Adam Smith would have recognised the problem immediately.

For much of the 20th century, Australia operated behind a wall of protection, with tariffs shielding domestic industries from global competition. Over time, it became clear that that protection came at a cost: lower productivity and lower innovation. Beginning in the 1980s, Australia undertook major economic reforms, reducing tariffs, opening our economy to trade and strengthening competition law. Those reforms recognised a truth Smith identified centuries earlier—that open, competitive economies generate greater prosperity. Smith rejected the mercantilist obsession with trade imbalances and protection. On this side of the chamber, that lesson remains as clear as ever: open, competitive markets, supported by strong institutions that serve the public interest.

But not everyone in Australian politics has absorbed those lessons equally well. Too often, those opposite speak the language of free markets while overlooking Smith's deep suspicion of monopoly and corporate power. Over on the crossbench, there are moments when it seems like the law of supply and demand is treated as optional—opposing new housing supply, seeking to fix prices and resisting infrastructure and trade arrangements that expand opportunity.

In different ways, both perspectives risk missing Smith's fundamental balance: markets must be open and competitive but supported by strong institutions that serve the public interest. For Labor, that balance remains central. We support open trade because it expands opportunity for Australian workers and businesses; we support strong competition because markets must work for consumers, not just powerful incumbents; and we support public investment in education, infrastructure and institutions because Smith recognised that these foundations enable markets to flourish. Two hundred and fifty years after The Wealth of Nations was published, Adam Smith's insights remain clear. Prosperity grows not from protection or privilege but from open markets, real competition and institutions that serve the public interest.