Adam Smith was born in 1723 in the town of Kirkcaldy, County Fife, Scotland. By then, Kirkcaldy was having a population of one thousand five hundred people. He went to Oxford University under a scholarship studies. In 1751 he was made the chair of logic in the great University of Glasgow. He was a tutor in moral philosophy who was considered a natural theory and jurisprudential adept if not an authority. In 1759, he published a book the The Theory of Moral Sentiments which was more of natural theory subject. Smith was also known for his remarkable character of eloquent and erudite lectures. However, on most occasions, he was absentminded. He could be sported being in his reverie during the day time, and also he could be seen doing unfathomed acts unintentionally. In 1764, while in Paris, he began the work of writing another book, the The Wealth of Nations which took twelve years. In 1776, the book was published (Heilbroner 1986). Smith later died in 1790 during revolution times he was sixty-seven by then. The book has been rated as one of the best work in economics. The central ideas of the book revolve around the nature and causes of the wealth of nations. I will, therefore, give a brief analysis of the book in the subsequent paragraphs.
The Wealth of Nations
The book also referred as the outpouring not only of a great mind but a whole epoch,' has been a great book in history of economics. In his work, Smith has elaborately argued out a new dynamics of the human nature and social traits that have overwhelming influence on the way business is carried and how wealth made. He is arguments are mostly based on the mercantile system of trade probably because that is the trading system that was available during the writing period (Smith 2008)
In book I and II, Smith majorly tackles the theory of division of labor. He is one of the earlier writers who propounded the concept of specialization and how it would create wealth. He was the idea that several sections of production process when appropriated to different people, then work will be faster and in the long run surpluses will be acquired. He also argued that division of labor can increase the rate of technological innovation. Workers will be specialized in their areas of production. Hence, they will have more time in inventing new ways of making their work easier by machines. Division of labor also will be less cumbersome, and it will create morale to workers as one is given the work he suits and best in.
In book three, Smith is historically analyzing the evolution of social life in the greater Britain. He argues that initially the society was structured in a manner that their source of earning was from hunting wild animals and gathering fruits. The lifestyle then changed gradually with change in time. The climate change and too much stress on animal population then discouraged hunting, and human beings resorted to agricultural practices. In the agricultural stage, business was locally done due to perishability state of most of the agricultural products and inadequate technological skills in preservation. There then came the stage where international commerce was introduced, this was the current error by the time the work of Adam was published. The trade of durable commodities such as iron and its products such as steel facilitated this type of trade. However, Smith argued that the immense fall of the powerful Roman emperor and the rise of feudalism negated the commercial progression because the feudal system had several inefficiencies.
In book four, Smith invents the idea of gross domestic product. He highly criticizes the mercantile system of trade. The system was measuring wealth of the Nation by checking the value of the metals hoarded. Adam criticizes this act by evaluating a broader option of wealth evaluation. He argued that wealth should be measured by the rate of services and goods that flow in and out of the country economy. He affirms that the wealth of a state is amplified not by hoarding metals, but through increasing the productive capacity and escalating the market.
Generally throughout the book the writer is majoring on liberalism. The situation where the market is left on its own for effective growth. The writer describes it as the free hand situation. He advises that an economy has the ability to develop on its own without interference from external factors. The external factors according to him are special privileges given to specific group of people which through the preferences they are immune to some several market acts. Lobbying activities and groups are also seen to be a negation to free interplay of the market system. The unequal and impartial taxation is another factor that hinders the self-regulation of an economical system.
In conclusion, the writer is describes the activities that should be financed by the government through a clear taxation system. The activities, which are also seen to be important to the market growth are: security, fairness, the formation and conservation of public works that contribute to business, education, the upkeep of the dignity of the sovereign. If these activities are well financed and preserved, then the market economy will grow momentously.
Heilbroner, Robert L. The Worldly Philosophers: The Lives, Times, and Ideas of the Great Economic Thinkers. Simon & Schuster, 1986. print.
Smith, Adam. An Inquiry Into the Nature and Causes of the Wealth of Nations, Volume 2. BiblioBazaar, 2008. print.
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