Adam Smith’s contribution to capitalism Essay - 2772 Words

Adam Smith is considered as one of the most influential economists in the 18th century. Although his theories have been criticized by several socialist economists, however, his idea of capitalism still has great impact to the rest of the economists during classical, neo classical periods and the structure of today’s economy. Even the former Prime Minister of Britain, Margaret Thatcher had praised on Smith’s contribution on today’s capitalism market. She commented â€Å"Adam Smith, in fact, heralded the end of the strait-jacket of feudalism and released all the innate energy of private initiative and enterprise which enable wealth to be created on a scale never before contemplated† (Copley and Sutherland 1995, 2). Smith is also being recognized†¦show more content†¦Smith believed that societies were being motivated by passions and self-interest. Therefore, motive of morality came in to explain what is backing up the passion of human beings. The ess ential components of passion are self-interest and reasons. Self-interest indicated the goal of an individual wanted to achieve in a certain period of time and the reason gives explanation why this individual wanted to achieve this goal in that period of time. With these two components, Smith was able to conclude that the behaviors of individuals are motivated by reasoning. Also because of human beings are always looking for better living standard, therefore, he explained that the motive of morality is one of the keys to improve our society. The â€Å"theory of moral sentiment† did not only explain how human behaviors are modified by sympathy, but in addition, the theory supported Smith’s view on what policies should be adopted based on these theories. Laissez-faire was the early form of attitudes that Smiths and some of economists pursued in Europe during 18th century. It suggested that government should reduce their intervention on import and export regulation, such as imposing taxes and tariffs on these transactions on private parties. In addition, governments should advocate perfect competition in the nation in order to maximize economic growth. The Theory of Moral Sentiment has properly backed Lassies-faire up and clarified why human beings can regulated themselves in anShow MoreRelatedThe Biography Of Adam Smith1505 Words   |  7 PagesThe Biography of Adam Smith Adam Smith was born in Kirkcaldy, Scotland in the year 1923, and died in the year 1790 at the age of 67 (Stewart, 1861). His exact date of birth is unknown but was baptized on 5th June 1723. His father was a prosecutor, advocate, and solicitor but passed on two months after his birth, leaving his mother to bring him up. His mother, Margaret Douglas, played a great role in his upbringing, especially in education. He joined the Burgh school where he learned history, writingRead MoreAn Inquiry Into Adam Smiths: the Rise and Fall of the Wealth of Nations1142 Words   |  5 PagesAn inquiry into Adam Smiths: The rise and fall of the Wealth of Nations What was the most important document published in 1776? The Declaration of Independence is the easy answer for Americans, but many would argue that Adam Smiths The Wealth of Nations had a more important global impact. In this article, we will look at Smiths masterpiece and its contributions to modern economics. (For background reading, see Adam Smith: The Father Of Economics.) In Opposition to Mercantilism On MarchRead MoreAdam Smith Division Of Labour Summary1636 Words   |  7 PagesAdam Smith’s arguments on economic growth are heavily based on the concept of division of labour. The idea of division of labour relates to distinct specialization of the said labour force by breaking down one job into smaller components. Whereby one worker becomes an expert of their field, which is an isolated part of the production process. Throughout the 19th century, Victorian industries grew out of Maximum utilization of division of labour making it easy for employees to focus on their areaRead MoreThe Fundamentals Of Economics With Modern Business Practices Essay865 Words   |  4 PagesModern Business Practices Divulging economist Adam Smith’s theory of wealth creation in William Nickels, James McHugh, and Susan McHugh’s book Understanding Business (2005), they summarize that despite a nucleus of self-interesting goals, business concludes by benefitting both self and extended community. Noting criticality in monetary reward for dedication and labor, Adam Smith believes an economy can prosper. Furthermore, in order for democratic capitalism to remain in balance and provision the greatestRead MoreAdam Smith and Karl Marx Essay2053 Words   |  9 PagesAdam Smith and Karl Marx Modern political economic theory and philosophy can be greatly attributed to the works of two men who seemingly held polar opposite views on the subject. Adam Smith, a Scottish philosopher, published his most well known work An Inquiry into the Nature and Causes of the Wealth of Nations in 1776 and is most often associated with the ideas and principles of the political economic system known as Capitalism. At the other end of the spectrum is Karl Marx; the German philosopherRead MoreThe Implications to the Pursuit of Prosperity1770 Words   |  7 Pageseconomic potential. However, by the same token, no one could quantify what factors fulfilled economic potential and public policy positioned itself aimlessly as governments were simply naà ¯ve with regards to economic science. Markedly, it wasn’t until Adam Smith, a Scotsman, published An Inquiry into the Nature and Causes of the Wealth of Nations which was released in 1776 that economics could be structured according to the new social environment. His innovative philosophical work new broke ground providingRead MoreAdam Smiths Contributions to Modern Free Market Economics Essay2275 Words   |  10 PagesAmong economists, it is said Adam Smith is one of the main contributors to modern free market economics. His thoughts attacked mercantilism which was the prevalent form of government at the time. His works provided systematic rationales in the subjects of capitalism, free markets, and limited government intervention. His most popular books changed history because without them, many of these thoughts and ideas would not be so prevalent. Smith is regarded and cited as the father of modern economicsRead MoreHow Natural Harmony Was A Key Characteristic Of Economic Growth Through Capitalism1422 Words   |  6 PagesThe works of both Adam Smith and Karl Marx have been highly influential on mainstream economics, and still hold precedence in global economic policy across the world. This essay will explo re how natural harmony was a key characteristic of economic growth through capitalism, and how Marx believed this was in fact false as the edicts of capitalism were contradictory to its own goals. In the ‘Wealth of Nations’, Smith believed harmony could be achieved through self-interest and free market economicsRead MoreAdam Smith And Karl Marx s Views On The Deregulation Of University Fees3256 Words   |  14 PagesECON1401 Written Assignment 2: Adam Smith and Karl Marx’s Views on the Deregulation of University Fees INTRODUCTION The Abbott government’s recent proposal for deregulation of university fees in Australia has brought about much controversial debate. Under current policy, university fees are set at a fixed rate, in which a price ceiling is placed on the amount universities can charge students and with no interest on student loans. The new proposal to deregulate these fees eliminates the price ceilingRead MoreThe Morality Of The Market System897 Words   |  4 Pagesthe U.S. so much so that the 5th amendment quotes Locke and his viewpoint that labor creates property rights. Locke’s theory further stated that people are free to form a government to protect and preserve their right to life. Adam Smith’s theory was based on a command economy and was based on utilitarian principles. Smith argued that free markets and private property will produce greater benefits that any amount of governmental interference. Smith further debated that when private