What ideas did adam smith contribute to economic thought

Reference no: EM131485477

Question: Profiles in Economics

Adam Smith (1723-1790)

• introduced the idea that the division of labor led to the great prosperity of Britain

• defined the wealth of a nation as the sum of the goods produced by its people

Division of Labor

Adam Smith did not set out to become an economist. In fact, he focused on philosophy when, at age 14, he earned a scholarship to attend Glasgow University. Travels throughout Europe and talks with notable thinkers helped Smith turn his attention to economics. In 1776 he published his most influential book, An Inquiry into the Nature and Causes of the Wealth of Nations, in which he observed that labor becomes more productive as each worker becomes more skilled at a single job. This made him the first to introduce and recognize the importance of the "division of labor."

Invisible Hand

Smith's most important contribution was the notion that competition and individual self-interest would somehow act as an "invisible hand" to guide resources to their most productive uses. He suggested that the role of government should be limited to enforcing contracts, granting patents and copyrights to encourage inventions and new ideas, and providing public works, such as roads and bridges

Wealth of Nations

Smith also put forth the new idea that the "wealth of nations" should be defined as the sum of the goods produced by labor, not the personal financial wealth of those who owned them. Competition in markets, along with the division of labor and the invisible hand, would lead to increased productivity and output. Smith's doctrine of laissez-faire (French for "let it be") marked the beginning of modern economic thought, and it still serves as the basis of our free market economy

1. Summarizing Ideas What ideas did Adam Smith contribute to economic thought?

2. Synthesizing Explain how Smith's ideas are evident in the workings of the American economy.

Reference no: EM131485477

Questions Cloud

Write a brief paragraph about the potential effects : Inferring How might major events such as labor strikes affect you and your community? Select a possible event and write a brief paragraph about the potential.

Discuss importance of this medication in treatment of asthma : Discuss the importance of this medication in treatment of Miss Bell's asthma. Are there any perceivable issues relevant to Miss Bell's circumstances

What level of education and experience should be necessary : How and why are the job description functions, education, experience, and knowledge so important in attracting qualified candidates for possible interviews?

How would productivity change : Specialization Provide at least three examples each of specialized workers and specialized capital that are used in your school to provide the service.

What ideas did adam smith contribute to economic thought : Introduced the idea that the division of labor led to the great prosperity of Britain.

Discuss the difference between diversity and multiculturalis : Discuss the differences between diversity and multiculturalism as well as to discuss the pros and cons of diversity in the workplace.

Differences between c3-c4 and cam plants : Discuss similarities and differences between C3, C4, and CAM plants. Provide examples of each.

Calculate the pressure difference between the two chambers : Calculate the pressure difference between the two chambers and indicate which chamber has greater pressure.

What occurs to american imports when us dollar is strong : Describe what occurs to American imports and exports when the U.S. dollar is strong. Describe what occurs to American imports and exports when the U.S. dollar.

User Account

All Pages