Two and a Half Centuries of Equilibrium Economics : Adam Smith and the Evisceration of the Spatial Dimension from the Theory of Production

Two concepts of Adam Smith sealed off the relevance of the mercantilist and physiocratic traditions. Both concepts involve, although in different ways, the evisceration of the spatial dimension from the theory of production. The first concept, the division of labor, identifies the source of productivity and wealth while disregarding regional heterogeneity. This disregard produced an equilibrium economics that is ill-equipped to effortlessly explain the ubiquity of protectionism. The second concept, the productive/unproductive labor distinction, specifies the source of growth while disregarding how production undermines environmental resources. This disregard generated an equilibrium economics that is ill-equipped to effortlessly explain entrepreneurial activities