Adam Smith: Primary Source Response to The Wealth of Nations
The implications of Adam Smith’s theory on modern capitalism
Adam Smith is known as the father of economics, but his work if influential in other areas as well including political theory, sociology, and even anthropology. Smith establishes the basis for capitalism such as free market, individuals working in self-interest and minimal government intervention in the market. Smith is also responsible for defining value, distribution of wealth and lastly the concept of trading between countries (comparative advantage). He advocates for free market, stating that it is required for the growth of the economy of the country. Furthermore, he argued that government intervention was unnecessary in the market, as the market was capable
…show more content…
Furthermore, one of Smith’s biggest achievements through The Wealth of Nations is the division of labour for efficient production. He discovered that workers will be more efficient if they are responsible for one specific task instead of moving around in the assembly line, which would essentially result in wasting time. Furthermore, he also stated the efficiency would generate additional profits and this money would be reinvested in technology that would allow for a more efficient production process. The consumers would benefit from as this would bring the labour prices down, and therefore the cost of the product itself. Adam Smith’s version of capitalism is ideal, with little to no flaws, however, his work tends to ignore other influences that can have a negative impact on the system. We have noticed various flaws in the capitalist system which have been magnified by these influences that Smith ignored or was unable to envision. To begin with, the capitalist system in our modern world, is inherently prone to exploiting workers, and especially through the