According to some classical economists the most important economic factors are capital accumulation and growth, and this concept has originated from Adam Smith’s Nature and Causes of the Wealth of Nations…
Download file to see previous pages...
Smith has emphasized that a historical perspective is necessary to study the science of man and society, and only with this study it is possible to establish an efficient social science system. He has said that in any society it is the collective contribution of all individuals that lead to economic stability since it is the individuals who produce and sell goods according to their requirements as a society. He has named the controlling factor of this mechanism as the invisible hand. The principle rule of classic economics is that non-intervention of the government in the marketplace will give freedom to everyone to contribute towards economic growth by creating the required goods for the greatest number of people. Adam Smith Adam Smith was an eighteenth century Scottish philosopher who is known as the father of modern economics. He was baptized on June 5, 1723. He is well known for his two books: The Theory of Moral Sentiments (1759) and An Inquiry into the Nature and Causes of the Wealth of Nations (1776). He studied moral philosophy from the University of Glasgow under the renowned philosopher Francis Hutcheson. In 1740, he entered the Balliol College, Oxford after being awarded the Snell Exhibition (Biographiq, 3-4). In his second book Wealth of Nations, Smith has given a coherent description of the history of development of industry and commerce in Europe, and has voiced his opinion against the doctrine of government intervention in trade and commerce. He has also explained that a sustainable economy is possible by people’s effort to fulfill their self-interests through competition. Smith’s economic philosophy contributed towards “creating the modern academic discipline of economics and provided one of the best-known intellectual rationales for free trade, capitalism, and libertarianism.” (Biographiq, 3-4) Economic theories The invisible hand theory Smith has focused on people’s contribution towards production, and has argued that it is the annual labour which is the principle source to meet the demands of the consumers regarding all necessaries and conveniences of life. The produce of the labour is generally consistent with the immediate produce of the labour, or the commodities or services that are purchased with the produce from other nations. Therefore, the produce from labour or what is purchased with the produce can be more or less in proportion to the demand in the consumer market of a nation. This means that the nation is economically developed when there is better supply of necessaries and conveniences or is economically worse when there is insufficient supply of the same. Smith has argued that this proportion is determined by two factors – 1) skill and dexterity of labour and proper application of the skills, 2) proportion of labour employed to that of labour not employed in useful work. Smith has emphasized only on these two factors irrespective of the soil and climate of the nation (Smith, 8). According to Smith, it is the market conditions that are responsible for the production of right kind of goods and services. This is because the objective of the producers and manufactures is to make profits by supplying goods and services to the market. If there is no intervention by the government in the matters of trade, then the business environment of the nation will be free from government restrictions. This will lead to well-being of the public with increased competition between producers and manufacturers to produce goods and services as and when required by the public. This is the general picture of a free market economy. With growing competition betwe
...Download file to see next pagesRead More
Cite this document
(“Adam Smiths economic theories Research Paper Example | Topics and Well Written Essays - 1250 words”, n.d.)
Retrieved from https://studentshare.org/macro-microeconomics/1475536-adam-smiths-economic-theories
(Adam Smiths Economic Theories Research Paper Example | Topics and Well Written Essays - 1250 Words)
“Adam Smiths Economic Theories Research Paper Example | Topics and Well Written Essays - 1250 Words”, n.d. https://studentshare.org/macro-microeconomics/1475536-adam-smiths-economic-theories.
Particularly, the western economies like USA, UK, and EU have created an economic network on the foundations of the global market system world wide. Therefore, the paper would reflect on global economy and the modern capitalist system with reference to the contributions of Adam Smith.
Adam Smith's Theory According to Raphael (1985), Adam Smith is eminent for his theory Wealth of Nations which he developed as the foundation of economics. The theory has been in existence since 1776 and many are inspired by great insight of Adam Smith. Many emulate his work as people view him as the father of economics.
Outline Introduction The purpose of this assignment is to reflect upon the roles of the government in a particular nation and how government can help in the success of the nation. These roles were suggested by Adam Smith in his writing named as Wealth of the Nation.
The scarcity imposes a variety of constraints on both the choices of the society and the opportunities open to members. Economists, therefore, examine the activities of consumers, producers, suppliers of resources and the actions of the government in an attempt to examine how resources will be allocated efficiently.
Erickson argued that in each stage of development, a person confronts and should successfully conquer the new challenges in order to avoid conflicts in future. Further, Erickson asserts that each stage is crucial since it depends on a successful passage of earlier stages.
There are certain set societal rules and norms that govern this process, as opposed to the actual exchange of goods and services for money or other valuables as seen in barter trade or the true market economy in modernized industrial societies (Kranton, 1996).