Adam Smith Economics

Decent Essays
Adam Smith Adam Smith was an English political scientist who lived from 1723 to 1790. His most famous book was The Wealth of Nations, this book is considered one of the first works of modern economics. Adam Smith encouraged other thinkers, like Karl Marx, with his book. Smith is the father of modern day economics.
Adam Smith said that the law of accumulation is when profits are spent for expansion. Higher demands for wages lead to profit margins shrinking and then dissipating completely. For example when a worker sees a fellow worker get a raise they get envious and want one too, this vicious process of malice and greed leads to the hiring company running out of expenses for employees. This is what leads to budget cuts and people being laid off.
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This is something we are seeing now, more and more kids are getting part time jobs because of the increase in minimum wage. An increased population increases worker supply, this leads to companies having less money to pay the employees but, the companies are able to produce more product. The more workers there are the less money there is available unless the workers all take a cut in their salaries, and when workers get raises and the money get distributed unevenly, some get fired to free up some money. Smith believed that three elements were needed to bring universal prosperity. Hard work, enlightened self interest and thrift. He believed the idea of enlightened self interest was necessary for anyone to succeed in an economy. If someone sells bad product he will never have loyal customers. People will come once and be upset with the quality and never come back. However if you make quality product, the customers will keep coming back and will tell others to check you out. This leads to constant cash flow which keeps your business successful and
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