This commentator writes:
On March 9, 1776, "An Inquiry into the Nature and Causes of the Wealth of Nations" (commonly referred to as simply "The Wealth of Nations") was published. Smith, a Scottish philosopher by trade, wrote the book to upend the mercantilist system. Mercantilism held that wealth was fixed and finite, and that the only way to prosper was to hoard gold and tariff products from abroad. This meant that nations should sell their goods to other countries while buying nothing in return. Predictably, nations fell into rounds of retaliatory tariffs that choked off international trade.
The big idea here is that mercantilism (practiced by some large nations today) and capitalism are two distinct ideas, where the former (from Adam Smith's point of view) is inferior.
Put simply, Mercantilism can be enunciated as:
Mercantilism focuses on wealth accumulation through extraction of wealth which they believe is measured by the amount of gold bullions that the nation has in its possession. Wealth extraction efforts are augmented by colonization to gain more wealth. Mercantilists assert the need for heavy regulation in order to prevent the people from pursuing their natural selfish motives of amassing wealth for themselves instead of enriching their country. They even believe that people should be forced to be patriotic and submit themselves to regulation. Mercantilists go to the extent of prohibiting people from purchasing luxury items because this would mean a large amount of money flowing out of the economy.
In contrast, Capitalism can be contrasted as:
Capitalism is an economic system that works around the concept of wealth creation in the pursuit of economic growth for the nation. Capitalists regard the individual member of society as the central figure in wealth creation. They believe that a nation’s wealth could grow through the productive efforts of each individual. They view individuals as naturally competitive. As such, they will enhance their skills to achieve greater efficiency in adding value to their own wealth and consequently contribute to the economic success of the nation.
My question is: What evidence is there that Adam Smith made mistakes in criticizing Mercantilism and upholding capitalism?
Here is an example of a criticism of The Wealth of Nations:
The third development that Smith does not seem to have foreseen, and which his line of arguments would seem to criticize, is the growing centrality of conspicuous consumption. While the division of labor and the expansion of the market has led to an increased standard of living, individuals have come to demand increased leisure time. They also increasingly spend money on consumable goods, choosing to consume instead of invest.
Here is another example:
Many 2nd world nations eschew capitalism in favor of mercantilism and severely damage capitalist economies in terms of employment and ability to build wealth. Did Adam Smith predict that capitalism would be weak next to Mercantilism style countries?