The Political Economy In Adam Smith

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The Scottish thinker Adam Smith, considered by many the "father of political economy", adopted the mission of exposing social sciences (especially the economy and moral aspects) as a study material, achieving with his work "The wealth of nations"capture your ideas and immensely influence economic thinking. Smith realized “the connections between economic freedom and political freedom, between private property rights and a state and among individuals who act, in part, for personal interest and, in part, for concern about the concern forconsequences of their actions for others ".

If we are going to refer to an author like Adam Smith, it is very important to define that it is mercantilism and physiocracy, since its conception of the economy is derived from that of English mercantilists and French physiocrats. “The objective of economic activity was, according to most mercantilists, production, not consumption. According to mercantilist thinking, a country should encourage exports and discourage imports through tariffs, contingents, subsidies, taxes, etc. In order to achieve the so -called favorable trade balance. Production should be stimulated through government intervention in the national economy and foreign trade regulation. Protective encumbrances on manufactured goods from abroad should be established and the importation of cheap raw materials to produce manufactured goods for export should be encouraged.". At the same time that the mercantilist current emerged, the physiocrats went along with them, “what distinguishes the physiocrats is their idea of the role of natural law in the formulation of politics. They argued that natural laws ruled the functioning of the economy and that, although these laws were independent of human will, men could discover them objectively, as they could discover the laws of natural sciences ”, relevant contribution to economic thinking and sciencesocial. We can catalog Smith’s methodology as literary, it is a mixture of deductive theory with historical description, used a clear empirical method when narrating and explaining what happened within production.

Smith’s main interest was about the way in which political issues affected economic growth and development, focusing on the measures that promote the richness of a nation against the issue of shortage. It was faithful supporter of the Laissez Faire, a policy with which, according to Smith, a maximum rate of per capita income of the economy would be achieved. Within production, "the division of labor causes a proportional increase in the productive capacity of work", division that can only be allowed with the extension of the market and by the characteristic of human being of the human being. With the division of labor, dead times between activities are eliminated, causes an increase in goods and by granting concrete and simple tasks, the worker is allowed a specialization in his activity while developing improvements in his tools promoting the effectiveness in hiswork. Within this division we can highlight three classes: the landowner, which is the one that benefits from the income of their lands and is considered a parasite;the capitalist who is the one who owns the capital and benefits from the profits and the worker whose manifestation of his work is the salary he receives.

Using Smith’s own words: the source of all wealth is the work of a nation. With this, Smith referred to productive work, that carried out by workers, merchants and industrial capitalists, but not the unproductive work done by priests, sovereign, military, etc. Smith also reserved the "unproductive" work for domestic servants, who performed their services for their owner, who paid them with their money;"A transaction that had to be qualified as consumption and not of production, because these services were not followed or complemented by any other sale destined to obtain benefit". The way to establish the price of a product will be a topic that is not very clear due to the different criteria that can be taken. According to Smith "work is the real measure of the change value of all goods" (Smith 64), the value will depend on the fatigue and effort of the worker, a complicated postulate when calculating it so that all the actors are also satisfiedthat when talking about a capitalist market, it is very difficult to determine the value-work law. This referring exclusively to the exchange value, but not the use value that is related to satisfaction and does not determine the exchange value. Maurice Dobb exposes Smith’s theory as a "sum theory", an addition of the components that make possible the elaboration of a product, sometimes described as a production cost theory.

We can conclude that Smith collaborated significantly in the economic life of societies, their contributions remain in force and are of great help for the economic ones present. His ideas raise the economy as a good that must be studied and analyzed for a better understanding. Smith wants to imply that a good economy results in the common good of society. Adam Smith said: ‘It is not the benevolence of the butcher, brewer or baker where we will obtain our dinner, but of his concern for his own interests’. It is ‘the invisible hand of the market’, which makes the entire society benefit from the fact that individuals seek their own particular benefit. To finish the work "The wealth of nations" expresses economic freedom, tries to imply that the balance between production and demand is achieved through mechanisms, referring to an economy unlinked with the State, except to defend thesociety against violence from other societies.

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