Book 2 addresses stock. Smith uses the term “stock” in reference to assets used either for consumption or from which to earn a profit. Smith explains that the amount of industry, and consequently wealth generated by a nation, increases with the amount of stock employed by that nation in commerce. With it, the quantity of labor also increases. By this, Smith means that as stock increases, society progresses. In advanced economies, much of people’s needs are supplied through voluntary exchange with others, rather than solely through their own efforts. Before this division of labor occurs, capital must be accumulated. The growth of capital promotes specialization, which creates larger surpluses to be reinvested, which in turn creates further specialization and growth. 

There are two kinds of stock: stock for immediate consumption consists of food, clothing, lodging, furniture, and other necessities for living; capital stock consists of two kinds—fixed capital and circulating capital.

Fixed capital remains with its owner and consists of land, buildings, tools, machines, and other instruments of trade. Circulating capital does not remain with its owner, and consists of wages and inventory, among others.