Summary Of The Wealth Of Nations By Adam Smith

805 Words4 Pages
In the passage given, Adam Smith examines the different methods that can increase the production of land and labour. He discusses that production can be raised by using the methods of, division of labour and capital accumulation. Smith also provides evidence throughout The Wealth of Nations, proving that his method of labour division is the best way to develop the economy. The key behind Smith’s writing is to prove how division of labour will improve economic progress.
Initially, Smith proposes the idea of division of labour in the workplace. Division of labour is the separation of tasks to its rawest form, broken into specializations. He believes that this is the key to increase productivity and used the pin factory example to prove it.
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This allows for employees to work more efficiently since it helps them complete the task with ease. Along with the growth model, Smith attempts to prove that a market system is self-regulating. He explains how the first step to a self-regulating system is self-interest. As humans, we thrive off of profit or any method of material gain from goods and services. This self-interest is what initiates the system. The presence of competition keeps any one business from dominating the market. When there are multiple sellers of a good or service, consumers will often purchase the one that they can get at a more affordable price. This keeps competitors from raising their prices to gain a higher profit, since the consumer most often opts for the lowest priced item. The last factor to the self-regulating system states that, “changing desires of society lead producers to increase production of wanted goods and to diminish the production of goods that are no longer as highly desired” (Heilbroner 50). Therefore, businesses must keep advancing their products in order to maintain relevance in the market. Society has expectations that business must achieve, hence they must have an ongoing development in their goods and service that adjust to the needs of the consumer. If they fail to do so, the product becomes obsolete, which causes businesses to shut down. Smith’s theories about the economy are based on the assumption that all humans follow the rule of natural
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