3.1 The Natural Progress of Opulence
Town and Country
Commerce in every civilized society involves the trade of goods between town and country. The country supplies food, some of which is consumed in the country and some of which is sold to the town. The country also provides raw materials, which are sold to the town to manufacture into finished goods, some of which are consumed in the town and some of which is sold to consumers in the country.
Since neither food nor raw materials is produced in tow, in can rightly said to gain its whole subsistence from the country - however, it cannot be correctly suggested that the gain of the town is the loss of the country, as exchange among them is reciprocal. The town provides a market for the goods of the country and vice-versa, and each exchange among them is done voluntarily, in amounts agreeable to buyer and seller.
There could exist a country life without the benefit of the town, the crudest necessities of life being achievable on a rural farm without the aid of tradesmen or manufacturers. There could also be a town without production in the surrounding countryside, though it would need to obtain the product of rural production from more remote locations.
However, the general course of progress, in every age and nation, has begun with production in a rural setting, and towns have evolved only as surplus production in the nearby countryside has provided for their establishment. A town may grow to a larger size in vicinity of a more productive countryside, but logistics facilitates the growth of towns and cities that draw the resources from more remote locations.
International Trade
In Smith's time, the rise of colonization was a reflection of the power of logistics to enable a city to draw upon the produce of remote countryside, even though vast oceans separate them. But the fundamental relationship between a farmer who grows crops on one continent and a townsman who purchases the harvest on another is fundamentally no different than if only a narrow river stood between them.
In general, exchange among locations proximate to one another are more efficient, as a consequence of less cost of transportation, than trade abroad. However, when people produces more of a good than can be consumed locally, or has a demand for consumption of a good that is not produced locally, it is desirable and efficient that surplus goods are exported and scarce goods are imported from remote locations.
It is also true that, in cases in which the cost of producing a good locally is higher than the cost of production in another location by a higher degree than the cost of transporting the good from producer and consumer, it is more efficient to purchase cheap goods from abroad rather than those that are manufactured domestically at a higher cost.
It is also the natural course of progress for production and consumption to occur in very close proximity, and for the geographic spread of change to spread outward gradually, such that trade begins within a tow, then spreads to nearby towns, then more remote ones, until it at last expands across national borders to nearby countries, then to more remote ones.
Deviation from the Natural Order
Smith suggests that, were an economy left to develop of its own accord, the natural order as described above would occur: first to agriculture, then to manufacture, and finally to trade.
However, the "manners and customs" by which the nature of progress arises, can be influenced to an "unnatural and retrograde order" by the design of men, and particularly those of government, to the detriment of the producers and consumers of goods.