Sign Up Now
Get instant access to over 1 million+ study documents
OR
Already registered? click here to login
By creating your account, you agree to our terms of service, privacy policy and student honor code.
¶ … Wealth of Nations, According to Adam Smith
Adam Smith's seminal text The Wealth of Nations stands a tribute to the value of capitalism. Fundamentally its author espouses an optimistic faith in the essential rationalism of human society and human desires. He believes in the ability of human economic impulses to balance one another in a state of equilibrium of supply, costs, and consumer demand, if not interfered with by outside forces. Smith suggests that there is a famously invisible hand that guides market forces in a harmonious way that the state should not interfere with. The state should only enforce laws so conflict between human beings is kept at a minimum, and so the economy can function. The reason for the existence of this invisible hand is not purely generated by the economy, but by the nature of modern, human social life that Smith believes is, at is essence, rational and good.
The division of labor, states Smith, is such that a harmony of desires exists between the interests of all whom are engaged in mutually productive efforts. Modern society has shown, Smith states in Chapter I of The Wealth of Nations, the "greatest improvement in the productive powers of labor, and the greater part of the skill, dexterity,...
The division of labor introduced into the economy a proportionate "increase of the productive powers of labor. The separation of different trades and employments from one another, seems to have taken place, in consequence of this advantage." (Chapter I, "The Division of Labor, Values and Distribution) The division of labor allowed for human beings to specialize in the trades and occupations they do best. Thus a cobbler could exchange shoes with a farmer for food, and thus, in an industrial plant, different workers could concentrate and specialize on specific cogs in specific aspects of production and ensure that more goods are produced.
In Chapter II, Smith discussed the nature of exchange and his theory of value regarding money. If the barter system between the cobbler and the farmer outlined above seems crude, he notes that now money has improved notions of valuing human labor because it has provided individuals with "a great wheel of circulation, the great instrument of commerce" by which labor can be valued in more objective terms. Although Smith allows that the division of labor is finite and limited by the extent of the market,…
Adam quotes that small republics have derived considerable revenue from profits of mercantile projects. Adam lists Republic of Hamburg, Venice and Amsterdam that had made profits from profits of a public wine cellar and apothecary's shop. Even Great Britain has said to make profit this way. Adam quotes "Postal Office as a perfect mercantile system"; the government advances the expense of establishing the different offices, and of buying or
Give me that which I want, and you shall have this which you want, is the meaning of every such offer" (Smith, 1776, p. 118-119). The unintentional consequence is thee same as it was before: an increasingly respectable and thriving nation, one so much so that it is as if shaped by what Smith deems the "invisible hand," from which Smith thus concludes that "it is the necessary, certain propensity
Adam Smith He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases,
The roadways and other such necessities which are constructed by the government at the government's expense, and of which the private individuals are unable to finance, ultimately are predicted by Smith to come at higher and higher costs to the society. SUMMARY & CONCLUSION Smith, in his work, demonstrates how it is that self-interest is held at bay to an extent by rivalry of economy results in a prosperity that is
His lectures were a success as many eminent people of Edinburgh attended them and earned him a decent income. During the course of his lectures on English literature, Smith perhaps realized that his real vocation was economics. Hence, addition to English literature, he started to deliver lectures in economics in 1750-51 in which he advocated the doctrines of commercial liberty, based largely on the ideas of Hutcheson. It was also
Adam Smith's Economic Philosophy: Just as Smith's moral point-of-view was ahead of his time with respect to ideas that others would popularize later, Smith presented matter-of-fact observations on the nature of work and the relationship between working people and society at large. More than one hundred years before Henry Ford revolutionized modern industry with his production line, Smith had explained the mechanism that accounted for its success. Using the example of manufacturing