Modern attempts to confront global poverty overlook many of the basic economic tenets of 18th century philosopher and economist Adam Smith, according to Dartmouth economics professor Douglas Irwin. To alleviate poverty, the world’s poorest countries need good governance, standards of justice and a system of economic incentives, he said.

Irwin, the Robert E. Maxwell Professor of Arts and Sciences, used Smith’s book “The Wealth of Nations” as a reference point to confront the question of global poverty in a lecture on Tuesday afternoon in Rockefeller Center, “Why Are Some Countries Poor? Adam Smith and Beyond.”

“[Global poverty] is a major issue in the world today because the inequalities have never been greater than they are right now,” Irwin said.

The key to increasing wealth may be more straightforward than many people realize, Irwin added.

“Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism but peace, easy taxes and a tolerable administration of justice: all the rest being brought about by the natural course of things,” Irwin said, quoting Smith.

Such a formula for economic success might seem simple, but Irwin described it as a “really stringent set of criteria” that is difficult for many countries to meet.

“It sounds easy, so countries think ‘If we just do that then we will be a rich country,’ but if we look around the world we see how difficult it is to meet these three requirements,” Irwin said.

The key for poor nations, according to Irwin, is to focus on achieving productivity, which he defined as “achieving more output per unit of input.”

Productivity is “the basis for a country being rich,” Irwin said, because it is connected to various other important economic factors such as trade and specialization.

“Exchange and trade is a prerequisite for specialization, and it is specialization that ultimately leads to productivity,” he said.

One of the biggest problems many poor nations face is “policy uncertainty,” Irwin said.

“Policy uncertainty is when you don’t know what the rules are and you are forced to go to a government bureaucrat and make a deal,” he said.

When businesses and entrepreneurs in poor countries are forced to deal with bureaucrats instead of following a prescribed set of rules, it hampers their ability to operate freely and progress naturally, Irwin said.

“If we don’t know what the rules are, it’s hard to make an investment, and the lack of rules often prevents and discourages investment,” Irwin said.

While the rule of law is a necessary foundation for economic development, the rule of law alone is not sufficient to build a wealthy nation, Irwin said. Rules must exist that allow people to benefit from their investments and labor, creating incentives that naturally lead them to better their condition, Irwin said.

“When they are secure of enjoying the fruits of their industry, they naturally exert it to better their condition, and to acquire not only the necessities, but the conveniences and elegancies,” Irwin said, quoting Smith.

As an example of the importance of policy incentives, Irwin cited several nations that suffered economically during the 20th century, despite having industrial economies.

“The inference that economists drew is that you want to get out of agriculture and move into industry, but that was the wrong inference,” Irwin said. “The inference they should have made is that if you can raise productivity in agriculture, then you will need to spend less resources on it and then you can naturally move into other industries.”

Countries should encourage investment in agriculture, not tax and suppress it, Irwin added.

Irwin cited diverse examples of beneficial agricultural reform ranging from the Plymouth Colony in 1620 — where Governor William Bradford switched from a collective farming arrangement to one in which each individual family had its own plot — to communist China in 1979, which similarly rejected collectivized agriculture in favor of individual plots.

Under these new agricultural policies, China rose from one of poorest countries in the world — with over 50 percent of its population living in poverty in 1979 — to a poverty rate of less than 10 percent today, Irwin said.

“By changing their policies and giving incentives to people, they were able to increase growth rates and reduce poverty dramatically,” Irwin said.

The most important factor for poor nations to consider when seeking economic success is to “get the government right” and “get the incentives in agriculture right,” he said.

“Governance is a hugely important issue, but I don’t know why some countries tend to get good leaders while others get bad ones,” Irwin said. “That’s something for the government department to figure out.”