Inflation/Deflation & The Wealth of Nations

From Chapter 8 of The Wealth of Nations:

"In that original state of things, which precedes both the appropriation of land and the acumulation of stock, the whole produce of labour belongs to the labourer. He has neither landlord nor master to share with him.

Had this state continued, the wages of labour would have augmented with all those improvements in its productive powers, to which the division of labour gives occasion. All things would gradually have become cheaper. They would have been produced by a smaller quantity of labour; and as the commodities produced by equal quantities of labour would naturally in this state of things be exchanged for one another, they would have been purchased likewise with the produce of a smaller quantity."

The jist of what this, admittedly difficult to read, excerpt is saying is that with advances in efficiency, technology, or effectiveness it is natural that a given specific product or service will effectively become less expensive. In other words, it is natural that deflation will occur. This is not exactly a groundbreaking discovery yet it is one that seemingly has escaped mainstream economic thought.

I have for a while been thinking on why it is that I instinctively disagree with the theory that deflation is inherently a bad thing. In reading this cut from The Wealth of Nations I am starting to see more clearly why my convictions on this issue are what they are.

In order to understand it one must look at inflation/deflation more closely than just the effects of each. We must break them down, look at them piece by piece. We must examine the components of inflation and deflation. In this line of thought one evidently will first state money as perhaps the key component. I will hopefully in the next couple weeks write on what exactly money is and represents.