The Father of Economics - Adam Smith

The pivotal second chapter of Adam Smith's Wealth of Nations, "Of the Principle which gives occasion to the Division of Labour," opens with the oft-cited claim that the foundation of modern political economy is the human "propensity to truck, barter, and exchange one thing for another."1 This formulation plays both an analytical and normative role. It offers an anthropological microfoundation for Smith's understanding of how modern commercial societies function as social organizations, which, in turn, provide a venue for the expression and operation of these human proclivities. Together with the equally famous concept of the invisible hand, this sentence defines the central axis of a new science of political economy

The Age of Enlightenment brought forth some of history’s greatest philosophers who introduced and provided the arguments for contemporary thought and social systems in continued use today. Although historians consider the ideas of natural rights and separation of powers in democracies of the highest order of importance, the economic theories developed by the leading thinkers of the era pervade daily life in all societies. The idea of wealth is timeless, but philosopher Voltaire and economist Adam Smith wrote opposing theories on the true value of wealth and how society should allocate its wealth and resources. Voltaire’s satire Candide, or Optimism features El Dorado, a socialist utopia where the inhabitants treat precious metals and stones as dirt and provide for the general welfare of their city, while Smith’s The Wealth of Nations discusses macroscopic economies and how these economies interact to maximize production and encourage human advancement. Both arguments make use of ethical, moral, and social ideas, but only work perfectly in a utopian setting. By comparing and contrasting the arguments presented in each of these texts, one establishes an understanding of how economies and societies operating on either capitalism or socialism alone compare to those that incorporate elements of both ideologies.

Adam Smith and Karl Marx both came from very different worlds, however they saw the world in similar ways. Both had thoughts derived from different views. Smith had a very capitalistic view on things, while Marx was socialist in many ways. They expressed their thoughts in ways that were surprisingly similar while other ideas were dissimilar. Ultimately socialism and capitalism can go hand in hand. One main idea that both works addressed was the productivity of work and the ability to accumulate property, stock and capital. They both wanted a wealthy nation but Marx believed that redistribution of wealth was the way to go. Smith believed in a free economic system that gave capitalists rights to accumulate their wealth.

The market model of economy, developed by Adam Smith entails a freely flowing economy that places little or not restriction on occupation allowing individuals utmost rights. America took on an ethos of a mixed economy of market and command that struck a successful economic equilibrium. American economy also changes with different periods of history. The Civil War had lit the spark of industrialization needed to enhance the American economy. Technology advanced by leaps and bounds and free labor was done away with to make room for Industrialization and Adam Smith’s market model of capitalism. Capitalism was a promoter of the entrepreneur and individual success. It was only natural that during this time of private interest the gap between rich and poor would be greatly widened and a state of disorder might arise. Capitalism was a new ideology and drastic labor problems and social disorder arose because Americans were simply adjusting to (and taking advantage of) the new system.

In the eighteenth-century, the prevailing economic thought was mercantilism. Mercantilism advocated that people are the riches of a nation (Wallerstein 25).

Can greed and self-interest benefit our society’s economy? majority of people would say, but one man by the name of Adam Smith would’ve disagreed. he believed that profit motive even greed could be good for the economy. This very theory spiraled an onset of controversies and debates. However, his theory shined in the right light; justified is the best solution for the economy.

Since the early days of the United States, the Founding Fathers and other brilliant minds sought ways to understand and make sense of the inner workings of society and the economic market. Out of the many thinkers and developers of that time period, perhaps none made so great an impact on American society as the Scottish contemporary philosopher and political economist, Adam Smith—who is most known for his influential work, An Inquiry into the Nature and Causes of the Wealth of Nations, By the early nineteenth century, other streams of economic theory emerged from various individuals who were also influenced by the ideas of Smith. Some of these individuals included David Ricardo, Karl Marx and later John Maynard Keynes and Milton Friedman—each of whom contributed their own ideas on economic activity. However, it was Smith’s ideas on capitalism and his laissez-faire approach to free markets that have transcended other economic theories and continue to impact American economic thought to this day.

As far back as man has been on earth, he has been driven towards building a community among his peers. Whether that is a community of hunters and gatherers who share whatever the day has brought to them within their tribe, or a larger community which within its structure lie the inner dwellings of division of labor and societal classes. Adam Smith (18th Century), John Stuart Mill (19th Century), and Karl Marx (19th Century) are of the same cloth, but in modern terms their community is referenced as a government, and they each have their own distinct opinions on the 'drive' instilled within human nature that shape their personal economic theories. I will be dissecting the views of each of these economists, in regards to the role of

The aim of this paper is to discuss government intervention in the economy. Adam Smith, the founder of economics, stated that the free market is guided by the invisible hand, reduces government intervention and identifies three main functions of the government: national defense, administration of justice and public utilities. However, many issues emerged during the Great Depression, leading to the emergence of new theories about government intervention in society. Also discuss the role of government in a capitalist system and how Smith’s thoughts were misinterpreted in countries that undergone transition to capitalist systems

Throughout the book An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith uses the term “commercial society” rather than more accustomed words like “capitalism.” Smith explains what he means by this term,

Sympathy and self-interest, when examined superficially, seem like conflicting notions. For this reason, Adam Smith is often criticized for writing two philosophical books – one about the human nature to exhibit sympathy, and one about the market’s reliance on our self-interest – that contradict each other. Through careful examination of Smith’s explanations, however, these two apparently separate forces that drive human behavior become not only interwoven, but symbiotic.

Adam Smith had a stimulating life. He was born in a middle class family in Kirkcaldy in 1723. Who could recognize this little boy who was born in the small town could become the invisible hand for the economic market? This boy’s name has been studying in most economic classes. Smith’s father was administrator of consumer. Adam’s father never saw him. .He died six months before Adam was born leaving Adam fatherless. Adam’s mother Margaret Douglas was a daughter of the owner of

Why is the work of Adam Smith considered so crucial in the development of economic thought?

There is perhaps not a more famous ongoing dialectic argument in the field of political economy than the one between Adam Smith and Karl Marx in regards to capitalism. The two thinkers, although coming to radically different conclusions about the outcomes of the capitalist system for all parties involved, agree on a surprising number of ideas such as labor being the source of commodities’ value, as well as the fact that the division of labor increases productivity. However, their different conceptions of what determines the price of a commodity, the driving force behind and the effects of the division of labor, and the purpose of the capitalist system have widespread implications that cause their holistic arguments to diverge considerably.

Many economists tried to explain the source of value of goods and services and find the best way to measure it. Along with other theories two most popular ones were created. First of them is the labour theory of value mainly known from the writings of Adam Smith, David Ricardo and Karl Marx. Despite the fact that their views on value had minor differences, their main idea was that “with few exceptions the quantity of labour employed on commodities determines the rate at which they will exchange for each other”