Comparison of Adam Smiths Wealth of Nations and Thomas Malthus Essay on Population - Term Paper Example

 Compare and Contrast Adam Smith’s ‘Wealth of Nations’ and Thomas Malthus’ ‘Essay on Population’, Analyzing Their Ideology on Human Nature, Freedom, and Morality Introduction The late 1770s had presented a few crucial contributions towards the formulation of classical economics. During this period, the book titled as ‘An enquiry into the nature and causes of the wealth of nations”, written by Adam Smith, proved to be the most influential book related with the context of market economics representing a classical ideology towards economic productivity (Smith, 1776). On the other hand, during the similar period, Reverend Thomas Malthus, published another thesis titled as ‘An essay on the principles of population’ criticising the views of the Utopians who believed the fact that life of the human being will enhance on earth and likewise contributing to the conceptualisation of classical economics (Malthus, 1798). Although, the ideologies presented by both the authors tend to focus on the implications of classical theory, there are certain differences that can be observed in terms of the ideologies presented through these publications related with human nature as well as freedom and morality. Focusing on these aspects, the objective of the discussion henceforth is intended to compare and contrast the views presented by Adam Smith and by Thomas Malthus through their publications respectively. Adam Smith’s ‘Wealth of Nations’ and Thomas Malthus’s ‘Essay on Population’ It can be observed that the early classical economists, such as Adam Smith as well as Thomas Malthus stated the fact that business cycles function because of alterations in population in reaction to the availability of the resources, capability of the capitalists to exploit the labour, socio-psychological mass associations, unanticipated business inventories as well as public confidence (Malthus, 1798). Ideology for human nature Adam Smith was of the opinion that the number of the labours within an economy is directly proportional to the wealth of the nation. Moving in-depth towards human contribution for economic wealth creation, he further assumed the fact that human beings can be motivated emphasising on their self interest treating it to be the most-powerful motive in human behaviour’ (Coase, 2010). While, on the other hand, it was opined by Malthus that increase in labour would restrain the resources within an economy acclaiming a diverse relation with the aspect of economic wealth creation (Malthus, 1798). However, with regards to the explanation of Malthus, a contradictory view can be obtained with reference to the statement of Adam Smith, where he narrates that capital can be stimulated by frugality and every frugal man is a public benefactor (Smith, 1776). In his words, “This frugality and good conduct, however, is, upon most occasions, it appears from experience, sufficient to compensate, not only the private prodigality and misconduct of individuals, but the public extravagance of government” (pp. 280). As per the views of Malthus (1798), the economic condition of the person is likely to worsen with the pace of time majorly because of innovations making difficult to maintain a pace with the needs of the human population. Furthermore, it was observed by the author that the rate of population growth generally can be observed at geometric rate unlike the growth of food production which can be examined at an arithmetic rate. Thomas Malthus was also of the opinion that capitalism generally leads to disparity in the distribution of income apparently contradicting that frugality can be of great significance to overall economic growth (University of California Museum of Palaeontology, 2012). However, it needs to be mentioned in this regards that Adam Smith also did not render much significance to the aspect of frugality in human nature explaining a moderate inclusion of the aspect in the economic growth process (Smith, 1776). From a similar perspective, Thomas Malthus favoured moral self-control as a “check on population” and its growth rate, especially in the case of the lower-income economic classes. Hence, according to his theory, the people belonging to lower social classes were assumed to take a larger proportion of accountability for social ills (Malthus, 1798). With reference to both the articles, it can be observed that Adam Smith focused upon the production of the income in relation to labour growth; however, Thomas Malthus’ book can be observed as focused upon the notion of diminishing returns in order to describe the impact of low living standards on economic growth. The major similarities between the theories of the two authors of the 1770s can be identified in the context of industrial revolution where both demonstrated a rational account for social developments strictly relating their theories with human nature. They made use of various reasons in order to suggest abstract theories related to numerous aspects on human society such as economics as well as population. By evaluating the emerging factory system, Adam Smith hypothesised two main economic theories such as division of labour as well as ideologies related to laissez faire based upon capitalist principles by a large extent. He assumed that capitalist are quite likely to be increasingly productive, provided the government restricts its intervention (Smith, 1776). However, presenting a negative view, Malthus stated that the society was destined for destruction because of the population growth rate which would reduce the food supply in the future decades. He was of the view that population growth rate was the main reasons behind the poverty within an economy and thereby acted as a barrier to the overall economic growth (Malthus, 1798). However, Adam Smith stated wealth as the produce of labour growth within a nation (Smith, 1776). Malthus (1798) in this respect assumed that wealth is a material object which is quite important for the man despite the fact that objects had no labor employed upon it. Malthus further can be identified to criticise Smith’s uncreative labour definition since labor was socially not significant. However, it can be mentioned that Malthus concurred with Smith on the opinion that quantity of labour was the most significant measure of value when it comes to economic growth through wealth creation. With reference to the above discussion, the major difference among the views of Adam Smith as well as Thomas Robert Malthus can be identified on the basis of labour growth rate in context of price equation along with the shift of market price towards a symmetrical orientation. According to Smith (1776), labour was the only crucial social cost of production. Expanding this ideology regarding human nature in classical economic, Malthus (1798) stated that there were other three factors such as wages, rents as well as profits which should be considered as equally important costs in the context of price equation. Furthermore, as opposed to Adam Smith, Malthus stated that market forces related to supply and demand were not solely responsible to push the market towards equilibrium. Ideology for freedom It can be observed that Adam Smith did not merely demonstrate a theory regarding increasing production along with the maximisation of wealth in the then national contexts. Rather, from a rational point of view, he attempted to work out the ways in which this is likely to occur introducing a “free market mechanism” where he connotes that free markets could be described as a simple system of natural freedom (Smith, 1776). In this respect, Adam Smith was of the notion that government needs to liberate the economy to flourish with no or minimum intervention in its functioning process. He further claimed the fact that government must not obstruct with the natural course of free markets as well as free trade. This demonstrates that Adam Smith’s “Wealth of Nation”, largely favoured freedom which was one of the most significant rights of mankind (Smith, 1776). To be precise, Adam Smith, through his publishing stated that when the aggregate number of labours is growing steadily within a nation, there would be greater flexibility in terms of operations (Smith, 1776). Affirming a more in-depth explanation, Malthus (1798) presented the opinion concerning the ideology of freedom that with the increase in the population, government is likely to impose restrictions in the operation to control the supply of commodities, especially food, thereby giving rise to greater complexities towards economic growth. Malthus (1798) had also focused upon human freedom ascertaining that it is crucial to give power to a certain class of people who will administer the vital institutions to offer relief to the entire economy. He had further claimed that government endeavouring to suppress disparity of fortunes by means of welfare methods are more likely to destroy the human liberty, thereby favouring the notion of freedom as presented by Smith (1776). According to Malthus (1798), in an attempt to mitigate the dilemma of lower-income group population by means of welfare laws, the liberties and freedom of the concerned needs to be sacrificed leading them towards “tyrannical regulations” in exchange for promises of relief (pp. 31). However, it is quite difficult for the society to eliminate the distress related to poverty without removing checks on population and thus leading to increase number of poor in the society. In this context, it can be claimed that the poor people are forced to forgo their liberty and thus gain quite little in return. He had suggested institutional reforms which are consistent with the law of population that can assist in making an equitable and just society. According to him, there must be freedom of movement so that people can easily move to those places where work is plentiful and thereby augment an equal distribution of wealth which was again considered to be quite vital by Smith (1798). This particular notion was further extended with the additions made by Malthus (1798) stating that such freedom is likely to help the families to earn a significant amount of money for the subsistence of their children. Ideology for morality It can be observed that Smith (1776) also focused upon the morality aspects and thus favoured that public works is significant in overall economic development and thus maintain an infrastructure to prosper a free flow of commerce. Based on the discussion of the referred book, it can be analysed that the economy of a particular nation is likely to develop being largely depended upon collective gains instead of the advantages earned by the individuals (Smith, 1776). On the other hand, Malthus (1798) has also presented his theory based upon the principles of morality and its impact on economic development where he stated that increase in the population by a significant volume might interrupt the employment opportunities in the future years. He further asserted that it would be a wise decision to control population with due emphasis to the supply of resources within the economy aimed at preserving a balance between the two aspects (Malthus, 1798). This particular notion presented by Malthus (1798) can be apparently related with the aspect of morality and its role within an economy to control population growth and likewise, mitigate the risk of scarcity of resources. Conclusion With reference to the above discussion a certain degree of differences can be witnessed between the views presented by Adam Smith in his writing of “Wealth of Nation” as well as Thomas Malthus’ “An Essay on the Principle of Population”, even though both the writings have been emphasised on presenting theories towards economic development. In his theory presented in Smith (1776), the author anticipated a future where the market system would offer the means where the attempts made by the individuals along with their intellectuality will create collective advantages sufficient to offset any limitation in terms of resources. However, presenting a contradictory view, Malthus (1798) identified a future in which the rate of population growth would surpass the degree of production within an economy which will ultimately give rise to the mass poverty. Furthermore, Smith (1776) asserted that society tends to gain several advantages from the growth attained by the economy which is driven by specialisation as well as free markets; however, Malthus (1798) further presented a contrasting opinion in this regards elaborating on the requirement of government intervention to control the components of population growth and economic developments. References Coase, R. H. (2010). Adam Smith’s view of man. Retrieved from http://www.chicagobooth.edu/faculty/selectedpapers/sp50a.pdf Malthus, T. R. (1798). An essay on the principle of population. Electronic Scholarly Publishing Project. Smith, A. (1776). An inquiry into the nature and causes of the Wealth of Nations. Strahan. University of California Museum of Paleontology. (2012). Thomas Malthus (1766-1834). Retrieved from http://www.ucmp.berkeley.edu/history/malthus.html Read More