Key Arguments

• Smith distinguishes the natural inequalities caused by the failure of his three requisites (well‑known, established, sole employments in their ordinary state) from additional, larger inequalities that result from European policy not leaving things at 'perfect liberty.'
• He explicitly lists three principal mechanisms: first, 'by restraining the competition in some employments to a smaller number than would otherwise be disposed to enter into them'; secondly, 'by increasing it in others beyond what it naturally would be'; and, thirdly, 'by obstructing the free circulation of labour and stock, both from employment to employment, and from place to place.'
• He immediately begins to develop the first mechanism and identifies 'The exclusive privileges of corporations' as the principal means used to restrain competition in certain employments.

Source Quotes

Such are the inequalities in the whole of the advantages and disadvantages of the different employments of labour and stock, which the defect of any of the three requisites above mentioned must occasion, even where there is the most perfect liberty. But the policy of Europe, by not leaving things at perfect liberty, occasions other inequalities of much greater importance. It does this chiefly in the three following ways.

But the policy of Europe, by not leaving things at perfect liberty, occasions other inequalities of much greater importance. It does this chiefly in the three following ways. First, by restraining the competition in some employments to a smaller number than would otherwise be disposed to enter into them; secondly, by increasing it in others beyond what it naturally would be; and, thirdly, by obstructing the free circulation of labour and stock, both from employment to employment, and from place to place. First, The policy of Europe occasions a very important inequality in the whole of the advantages and disadvantages of the different employments of labour and stock, by restraining the competition in some employments to a smaller number than might otherwise be disposed to enter into them.

First, The policy of Europe occasions a very important inequality in the whole of the advantages and disadvantages of the different employments of labour and stock, by restraining the competition in some employments to a smaller number than might otherwise be disposed to enter into them. The exclusive privileges of corporations are the principal means it makes use of for this purpose. The exclusive privilege of an incorporated trade necessarily restrains the competition, in the town where it is established, to those who are free of the trade.

Key Concepts

• the policy of Europe, by not leaving things at perfect liberty, occasions other inequalities of much greater importance.
• It does this chiefly in the three following ways. First, by restraining the competition in some employments to a smaller number than would otherwise be disposed to enter into them; secondly, by increasing it in others beyond what it naturally would be; and, thirdly, by obstructing the free circulation of labour and stock, both from employment to employment, and from place to place.
• The exclusive privileges of corporations are the principal means it makes use of for this purpose.

Context

Opening of Part II, 'Inequalities occasioned by the Policy of Europe,' where Smith shifts from natural, compensating inequalities under liberty to artificial inequalities produced by laws and institutions, and outlines three main policy channels, then begins with corporate exclusivity.