Dead Economics

“For Adam Smith, the development of a commercial society produced a social structure divided into three classes, landowners, capitalists, and labourers, ‘the three great constituent orders of every civilized society’”(Smith, 1998:27). Thus, Smith’s ideal society would be of people would work for themselves. He was a strong advocate for free market and posed strong opposition to the feudal system. He, along with other Enilghtenment thinkers, believed that the State had no legitmate role in the free market. Smith’s defence of the free market was tied to the belief that state interference with the market benefits the rich and hurts the poor(Lecture Notes, 2001:5). Therefore, Adam Smith’s vision of an ideal society was one in which most people are involved in independent commodity production(Lecture Notes, 2001:5). Thus for society to develop and prosper as a whole, its individual members must serve their self-interests.

Another man named Adam Smith, a Scottish man, became well recognized for writing the “Wealth of Nations” in 1776. Smith wanted to demonstrate his idea towards a political economy throughout the Industrial revolution. Smith’s ideas were helpful in the beginning of the Industrial Revolution and are still reflected to today’s economy, now known as the gross national product. The gross national product is the overall amount of goods produced and provided by the occupants of a country during a year (usually).

With the working classes seeking aid against the massive hoarding of wealth due to seventeenth century mercantilism, Adam Smith’s The Wealth of Nations can be understood as the answer for which they were searching. Released in 1776, Smith’s magnum opus offered a scathing critique of the mercantilist system along with a prescription that claimed to expand wealth throughout all classes. Smith argued that a nation’s wealth was dependent not on precious metals as seen by the mercantilists, but rather “consisted of both farm output and manufactured goods along with the labor it took to produce them.” According to Smith, a nation’s wealth can only increase through increases in economic production, which depends on specialization and the division of labor. As production increases so does supply, thus lowering prices of goods and increasing the purchasing power for all individuals. Smith contended that

Throughout history, economists have debated over various theories, in an effort to discover the one solution that will achieve the most efficient and beneficial economy. One school of thought titled, Classical Economics, is infamous has been called the “first modern school of economic thought.”[1] Two economist/philosophers who have been placed within this Classical category are Adam Smith and Karl Marx. Though these two men are polar opposites in the political-economic spectrum they share some similarities; and although dated, there are points of value to both Adam Smith’s and Karl Marx’s theories.

In this work, be that as it may, the thought of the business sector is not talked about, and "private enterprise" is never used. By the time he composed The Wealth of Nations in 1776, Smith had mulled over the monetary models of the French Physiocrats for a long time, and in this work the undetectable hand is all the more specifically connected to creation, to the vocation of capital in backing of household industry. The main utilization of "imperceptible hand" found in The Wealth of Nations is in Book IV, Chapter II, "Of Restraints upon the Importation from remote Countries of such Goods as can be created at Home. The thought of exchange and business trade naturally directing self-enthusiasm toward socially attractive closures is a focal support for the free enterprise financial rationality, which lies behind neoclassical economics. In this sense, the focal contradiction between monetary belief systems can be seen as a difference about how effective the "undetectable hand" is. In option models, powers which were beginning amid Smith's life, for example, substantial scale industry, back, and publicizing,diminish its

Adam Smith wrote the book “Wealth of Nations”, where he stated his opposition to mercantilist beliefs. “Wealth of Nations” basically provided an outline of what we know today as Capitalism, which was to replace feudalism. Smith built his view on the principle that the nation is best served when state power is used to create wealth, which results in more power and national security. Smith also believed that the best interest of society was served by an “invisible hand”, which was based on an individual’s personal self-interest. The five dominant features of Capitalism are strongly based on Smith’s work: markets coordinate society’s economic activities; extensive markets exist for the exchange of land, labor, commodities, and money; competition

The issue of the effectiveness of government intervention in an economy has been hotly debated since Adam Smith wrote the Wealth of Nations in 1776. Classical economists have always believed that unfettered market forces produce the best outcomes for society, including full employment. Any attempts to prevent the owners of capital from pursuing self-interest via government intervention would prevent an economic outcome where all segments in society fully benefitted. Under classical economics, therefore, the implications stemming from state intervention in economic matters are invariably adverse. The growth rate of the economy is ultimately determined by decisions made by the private sector. Any attempts

"The Wealth of Nations" argues that division of labor and the specializing in work will yield abundance. Smith states, “It is the great multiplication of the productions of all the different arts, in consequence of the division of labor, which occasions, in a well-governed society, that universal opulence which extends itself to the lowest ranks of the people”. The ideas that Smith presents in “The Wealth of Nations” has effectively changed the import and export livelihood. Smith constituted the idea that is currently known as GDP or Gross Domestic Product and he fought for free commerce.

“He (or she) 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, led by an invisible hand to promote an end which was no part of his intention,”(Smith b, p.184). This idea of the “invisible hand” has been greatly transformed by modern economists, but Adam Smith simply saw it as how the free market would allow individuals to pursue their self-interests. This ultimately promoted the society as a whole in the most efficient way.

The value of Wealth of Nations did not lie on the presented ideas being original, but it rested on the brilliant way in which Smith organized and fitted the different ideas from different thinkers into one massive masterpiece – like a completed jigsaw puzzle, his work has been described as a comprehensive landscape of economics . His work and contribution to the world of economics made him the ‘Father of Economics’ and inspired many economists after him such as David Ricardo and Thomas Malthus.

Throughout the history of economics, there have been many experts and professors whose ideas and theories have fundamentally affected our thoughts and practices, but none has been as influential on this subject as John Maynard Keynes. He was a British economist who revolutionized economic thinking and to this day his work continues to be appreciated and utilized by many into what is known as “Keynesian Economics.”

Adam Smith proposed the basic principals of capitalism in 1776 with the publication of his book, The Wealth of Nations. Smith emphasized four main points: Laissez Faire, Self Interest, Specialization, and Free Trade. Laissez faire means no government involvement in the economy. In Smith’s day, governments were corrupt and government involvement in business meant certain business would be favored above others. Smith also emphasized self-interest, meaning that each individual should pursue their interests and seek to better their own life. The result is a society indefinitely getting better. Specialization is division of labor into specific tasks. For example, one man is

Before the “Keynesian” era in the middle of the nineteenth century, economists Adam Smith, David Ricardo, Thomas Mathus, and John Stuart Mill all shared somewhat similar economic views of the world. Some of the main concepts covered during this time included the division of labor, theories of rent, value, and distribution, theories of market “gluts” and population, and opportunity cost, competition, and trade. These classical economists believed capitalism was the foundation for an efficient economy where little to no government intervention was recognized. Although they disagreed on some issues, economics is interesting in the sense that ideas are always changing based on the shifting markets and viewpoints of economists. Economics, which is described as the knowledge or rationalization of how a market works based on production, consumption, the transfer of wealth, or a person’s income from one set of hands to another, can relate even to this day, back to the revolutionizing conception of one extremely important economist, John Maynard Keynes.

Finally, the search for higher wages and profits and lowest prices implies competition among workers, business man, and consumers. Every companies wants to win the war in economy, so they always change the types and prices of goods to attract consumers just like the control of market economy(Made in Canada P101).

Free markets result in efficiency and economic growth by improving the living standards of its participants. Adam Smith’s argument supports this idea where he suggested that an invisible hand moves the economy into prosperity. He argued that if people can participate in the economy freely, good consequences will follow and if one pursues his own interest, the society gains more effectually than he really intends. However, this may be true, people must keep in mind there are good and bad consequences. Social benefits are usually ignored because people exchange goods and services to benefit oneself. This results in inefficient allocation of resources.