1723-1790 ADAM SMITH

ADAM SMITH 1723-1790
1723-1790 ADAM SMITH
Leading figures in the field of economic development theory, Adam Smith, was born in the town of Kirkcaldy, Scotland, in 1723. When teenager he studied at Oxford University, and from 1751 until 1764 he became a professor at the University of Glasgow.

Over there he published his first book, Theory of Moral Sentiments, which lifted him into the middle of the intellectual community. However, the peak of his fame rests mainly on his masterpiece book The Wealth of Nations, published in 1776. The book is an immediate success and seize the market, and the rest live Smith enjoyed fame and recognition thanks to the work. He died also in Kirkcaldy in 1790. No children he had, anyway never married.

Adam Smith was not the first to devote themselves to the economic theory, and many well-known ideas are not original out of his head. However, he was the first to present a systematic economic theory and easy to digest which is quite appropriate as the basis for the advancement of the field opposite it in the future. On the basis of that reason, it is worth considered that The Wealth of Nations is the starting base of the modern study of political economy.

One of the major results were presented this book is because he straightened and dispel the notion that a role model various people before. Smith an argument against the old theory of economic and trade which emphasizes the importance of the need for the country has gold bullion supplies in bulk. Similarly, the book rejects the view of the Physiocrats who say that the land is the main source of value. Instead Smith emphasized the most important subject is labor. Smith stressed that the persistent increase in production can be achieved through the division of labor, and he attacked the exhausted all government regulations and interference following outdated barriers that hinder the development and expansion of the industry.

The central idea of The Wealth of Nations is a free market that moves according to the market mechanism automatically thinks can produce many kinds and quantities of goods of the most favored and necessary consumer society. For example, inventories are actually favored degenerate, by itself the price will rise and this price increase will bring much benefit for anyone who produce it. Because fortunately many, other factories moved to produce well. As a result of the increase in production can not be rid of the state of shortage of goods. Moreover, the increase in supply in relation to competition between the various companies will tend to lower the price of the commodity at a price that is "normal," for example, the cost of production. There is no party that helps eliminate scarcity, but scarcity it will resolve itself. "Everyone," said Smith "tend to seek profit for himself, but he was" guided by the invisible hand to achieve the ultimate goal which is not a part of his desire. With the pursuit of self-interest he frequently advancing society more effectively than when he was actually suffering from a mean of enhancing "(The Wealth of Nations, Chapter IV, Article II).

"Unseen Hand" was not able to do the job properly if there is a disruption of free competition. Smith therefore believe in the free enterprise system and opposed the high price. Basically he opposed nearly all the interference of government in business and the free market. This intervention, says Smith, is almost always going to result in deterioration of the economic efficiency and ultimately will raise the price. (Smith does not create the slogan "laissez faire," but he more than anyone also spread the concept).

Some people get the impression that Adam Smith was none other than one that just "dance to the sound of the drum" for the sake of economic interests. This claim is not true. He repeatedly and with hard words, condemned depleted economic monopoly practices and want to eliminate it. And Smithbukannya naive people in economic relations practice. It can be read from the typical observations in the book The Wealth of Nations: "The world trade in the same goods can seldom meet together, but the talks will end in the formation of a plot as opposed to the people, or in other forms raise prices."

So perfect Adam Smith organizing and promoting economic thought system, so only within a period of just a few decades earlier economic schools excluded. In fact, all the thoughts they have a good system combined with Smith, while Smith to systematically reveal their shortcomings that exist. Substitute Smith including renowned economists such as Thomas Malthus and David Ricardo, develop and refine the system (without changing lines anyway) into a structure which has been classified into the category of classical economics. Up to a certain critical level, even Karl Marx's economic theory (though not political theory) can be regarded as a continuation of the classical economic theory.

In the book The Wealth of Nations, Smith mostly use Malthus's views about overpopulation. However, if Ricardo and Karl Marx both insist that population pressure would prevent wages rise beyond the purposes (so-called "law of wages steel"), Smith asserts that the conditions of production increase in wages can be raised. It is increasingly clear, the events - to prove that Smith was right in this respect, while Ricardo and Marx missed.

There was nothing to do with the provisions of view Smith or influence on economic theorists who came later, the most important is its influence on legislation and policy taken by the government. The Wealth of Nations was written with high intension and the clarity of the view that appropriate and very widely read. Arguments Smith faced government interference in business and world trade and for the low price and free economy, has affected accurately the lines of government policy throughout the 19th century. Indeed, its influence in that it is still felt today.

Since economic theory developed rapidly after the time of Smith, and some ideas displaced by the opinions of others, it is easy to play down the significance of Adam Smith. It must be so, the fact remains, he was the starter and founder economic figures as a systematic study, and he is indeed a prominent figure in the history of human thought.