In 1776, Smith published An Inquiry Into the Nature and Causes of the Wealth of Nations.
This concept of natural liberty leading to optimal outcomes is perhaps the most significant contribution to what we now call economic theory. He described this idea as an “invisible hand” that guided individuals toward paths that simultaneously improve their lives and the lives of the people on the other side of a trade. In it, Smith discussed the idea that self-interested people naturally end up working toward an outcome that benefits everyone. Smith published his first notable body of work, The Theory of Moral Sentiments, in 1759. Smith and Hume are rumored to have spent many hours in the Edinburgh taverns discussing their ideas. Smith continued his education at Oxford University in 1740, where he became close friends with David Hume - Another philosopher whose work would become well-known during this age of Scottish Enlightenment. One professor in particular, Francis Hutchinson (a notable Scottish philosopher of the time), had a profound impact on Smith’s training and seems to have guided his early work.
Smith grew up in Kirkcaldy, Scotland and studied moral philosophy at the University of Glasgow in the 1730s. In the early 18th century, moral philosophy was the closest thing to what we now think of as the field of economics. Smith’s ideas formed the basis for how most countries determine their wealth to this day - By determining the market value of the products created within their borders (aka gross domestic product ), or by their people (aka gross national product ).Īdam Smith didn’t just contribute to economics, he basically invented it. Instead, he argued that wealth existed in the value a commercial society created through production and trade. In The Wealth of Nations, Smith showed that a nation’s wealth wasn’t determined by the precious metals it held in its vaults. These merchant protection policies later became known as mercantilism. Domestic businesses (aka merchants) tended to support these policies because it eliminated foreign competition for their products. Many believed that a nation’s wealth was measured by the amount of gold it had - And while imports meant bringing goods into a country, it also meant sending gold out. Smith’s laissez-faire (French for “let it/them do”) approach to economic policy in the 18th-century came at a time when governments discouraged international trade. Smith argued that rational people (aka acting in their own interest) would naturally find the best way to use the nation’s resources - He viewed government regulation as potentially detrimental to economic growth. Adam Smith’s economic theory is the idea that markets tend to work best when the government leaves them alone.
0 kommentar(er)
