coincidence
gospel
genesis
solely ,
guess ,
rival
opulence ,
bedrock
Today, most people have a hard time understanding what
economists are talking about, but everyone knows what an
economist is a specialist in a recognized branch of academic
knowledge. At the beginning of the nineteenth century the term
was nothing like as specific. In England it was applied to anyone
who a^prcteched problems by putting0every argument and doctrine
on wMtever subject tojhe test of facts.
It was nor coincidence that England gave birth to the first
industrial revolution and what has since-become known as the
classical school of economics at the same time. The three most
important gospels of this school are Adam Smith's Wealth of
Nations (published in 1776), David Ricardo's Principles of Political
Economy and Taxation (1817), and James Mill's Political Economy
(1821),.
Of these books, the most important is that by Adam Smith. It is the first great classic of economic theory and one of the first known
attempts, to describe economic life as at whole.
The^rgenesis of The Wealth of Nations exactly mirrors the industrial revolution. Adam Smith was born in 1723, and was a
254 Unit 10
student at Glasgow University ia Scotland from 1737 to 1740. Between 1764 and 1766 Smith 'toured Europe. While in France Smith met Voltaire and was greatly influenced by a group of philosophers. On his return from France, Adam Smith sat down to write his great book.
The first key question the book Addresses is what is, wealth? Real wealth mVasured' by the availabiliti consumable goods, and the labour, which produces them. inciease in wealth equals an increase in goods., and plenty means heap goods. Anything that restricts the availability of goods iteoucei a nation's wealth. National wealth can only increase as trade dees between and within^ nations. For trade to grow you need a market and how the market works is the cdre of Smith's book.
What.makes markers c such important creators of wealth is that
they enccmrage the 'drvision'of labour and specialisation.
? An effective market reconomy andn the civjsed society that it
supports depends on^a ^erwdrk^o^cb-oper^pn tiiat is neither
""planned ^^.directe^by^a political power. The operation of market
force^lilce^trje dlytsjon of labour, brings great Benefits to society
and 'raises lhet sianaa'rd^.pf living, but this benefit ^cannpt be
planned. Buyers and lifers,a market are motivatedjilmost solely
| f inten'ded 'it' If the seller is the sole producer of a popular product, . J^P/t.o 7 r ^jJ-Zc* ^- lic^ push its price up as high as the market will bear. But, a his |
| he wnl push yits price up 8 high as market will bea^. But:,a high price ^wm^attract^Hv^ prb^uper^'dnce^tfieir goods are available in the market, the price will naturally fall. Thus the market is a self-regulating mechanism ^uiqecl not by a government, but by what Smith called "the invisible hand". One of the bedrocks of ^Smith's philosophy is that no government or group of men is'Wile enqugh tp do a better job at managing trade than a market which reflects the guesses and knowledge of millions. Sn^i^i,didn't believe that governments would ever allow trade!p^ercpmpietely free and he wrote that the interests of national idefence are always "more important than 7Tf-> in " ^ - 9 Q f Qfn 7,F,. * opulence. Under the^ final heading Smith was thinking, of infrastructure projects like rpadj,bndges; canals and^ajrbours which are expensive and often unprofitable to build but lead to an increase in trade and hence of national wealth. Smith's achievement was Immense: the science Smith discovered was called the modern economy. |
by sel.f-interest, but serve "uje public interest without Having
|
|
|
.
1. What ___ you_____ about Adam Smith and David
Ricardo? (say, know)
2. When___ Adam Smith___? (be born)
3. What university__ Adam Smith____ to? (go)
4. What ___ Adam Smith____ between 1764 and 1766? (do)
5. Who(m) ____ Adam Smith______ while in France? (meet)
6. Who____ he___ by? (influence)
7. What ___ he___ down to write on his return from
France? (sit)
8. What full title___ Adam Smith_____ to his book? (give)
9. When___ it_____? (publish)
10. What ___ the key question of this book? (be)
