Fazia Sameer

Adam Smith is the huge figure, mainly responsible for the illumination that took place in Scotland. Commonly known as the father of modern Economics is famous for his book “the Wealth of Nations”. The significant book came at the time of industrial revolution and was consulted by everyone. He suggested free trade, market competition and morality of private companies 200 years ago. He saw little role for the government in economy and was against the concept of nationalism. He was major proponent of the” Laissez-faire” a French approach. That disagrees with government getting involved in economic decisions. He was of the view that the main responsibility of the government was to look after the well being of the masses. He suggested that government should play its role in providing education and areas like defense and public welfare. Smith has the honor of having his portrait printed on banknotes in United Kingdom. His portrait appeared on the 50 pound notes and a new series of 29 pound notes, issued by the two banks of United Kingdom. A large memorial of Adam Smith is installed in Edinbrough, to pay tribute to him. He studied at the Glasgow University at the age of 14, and taught Philosophy at the same University. He later spent some years studying at prestigious Balliol College at Oxford University. After completing his graduation, he gave public lecture at Edinbrough, He was not very good at public speaking but his lectures proved very successful. During his tutoring at the Glasgow University he also travelled through Europe, where he met many scholars of that period and learned many other subjects. The period spent at Oxford proved not very helpful for his later work in life. He criticized the quality of education in the English universities and mentioned their low academic standards. He was author of number of books on Economics. In his first book titled “The Theory of Moral Sentiments,” he presented the thought of the invisible hand. He proposed that it is the forces of competition, supply and demand and self interest that act as the invisible driving force behind regulating the market. He also brought forward the idea of compensating wages to attract the people to unsafe and hazardous jobs. “The Theory of Moral Sentiments,” which brought him notorious fame as father of Capitalism, in reality discussed charity and human ethics significantly. The idea of empathy or mutual sympathy, i-e the ability to understand other person’s feelings and priorities originated from this book. He stated that social interaction between individuals has an influence on the conscience which leads to mutual sympathy. People have the ability of moral judgment that is translated into moral sentiments of sympathy. When people watch other and evaluate their actions, they came to know the behavior and feelings of others. Some scholars also say that this idea is a projection of a theory of psychology, in which a person has the tendency to get the approval of an observer to satisfy the desire of seeking his sympathies for his own sentiments. His main belief was that, that competition between religious organizations would help in the provision of general benefits to the society such as elementary education. He opposed the concept of mercantilism in his Famous book “An Inquiry into the Nature and Causes of the Wealth of Nations.". The book has two volumes with division of five books. The book was among the 100 best Scottish books. He was of the view that division of labor and specialization always lead to prosperity. To prove this he quoted the example of pin making. A single person making pins will not be able to make more than a handful of pins. But, by employing the principle division of labor and specialization, in the form of an assembly line it is possible to makes much greater number of pins. This book The Wealth of Nations came in 1776, in which he also presented the idea of GDP; this brought him fame and the title of father of modern free trade. Earlier the countries used to state their wealth in terms of the gold and silver reserves held by them. He strongly opposed the concept of mercantilism, and proposed that countries should be assessed on the bases of their production and trade and commerce. This theory led to formulation of GDP. Before Smith’s theory, free trade was very occasional between the countries. It was not considered very beneficial by the trading countries. Smith explained the concept, that how free trade can be very profitable for the countries. Consequently, imports and exports increased among the countries, as the countries are able to evaluate their worth in terms of production and commerce. As a result of the dominating claims of Adam Smith and his fellow British economists, faith in mercantilism  began to decrease. When industrial revolution started in the 18th century, countries like Britain started practicing free trade based on the Smith’s principle of laissez-faire economics. The British Empire at that time constituted many countries around the world. This led to the spreading of this model of economics to many parts of the world. This system had the features of open markets and barrier free trade within and between the nations. According to some intellectuals the theories presented by Adam Smith in “ The Theory of Moral Sentiments” and “The Wealth of Nations” contradict with each other. In the” Theory of Moral Sentiments” main focus is on sympathy for the others. While in the “Wealth of Nations”; emphasizes on the part self interest plays in human life and the economy. Many Scholars describe” The Theory of Moral Sentiments” and “The Wealth of Nations” as having mismatching aspects of human nature, Other scholars are of the opinion that the works of Smith describe varying viewpoints of human nature that differ according to the circumstances. Later, Karl Max presented theories that had their roots in the Smith’s model of classical economics. He presented the labor theory of value claiming that the worth of a product depends on the labor that is used in its production The concept of Invisible Hand presented in the middle of his work: An Inquiry into the Nature and Causes of the Wealth of Nations is the major point of difference among the classical and neoclassical school of thoughts. The economists of the neo classical thought claim that this approach is very helpful while the followers of the classical school say that the wealth of nations and wellbeing of the society is the outcome of division of labor. Smith faces the criticism that he did not formulated majority of the ideas that he presented. Even though he organized them and presented them in layout that is helpful even for an ordinary person. All these theories compiled together laid the foundations of the popular school of thought “classical economics”. He with the other economists continues to build the classical economic theory which became the most influencing school of thought during the great depression. Some writers question the support of Smith towards the laissez-faire approach. They claim that the views of Smith about this theory have been misinterpreted. They further say that he was against the involvement of government in the economic matters but, he was ready to accept it under special circumstances. Work Cited 1. BLENMAN, J. Adam Smith: The Father of Economics In-text: (Blenman) Your Bibliography: Blenman, Joy. "Adam Smith: The Father Of Economics." Investopedia. N.p., 2017. Web. 1 Aug. 2017. 2. ADAM SMITH: THE CONCISE ENCYCLOPEDIA OF ECONOMICS | LIBRARY OF ECONOMICS AND LIBERTY In-text: ("Adam Smith: The Concise Encyclopedia Of Economics | Library Of Economics And Liberty") Your Bibliography: "Adam Smith: The Concise Encyclopedia Of Economics | Library Of Economics And Liberty." Econlib.org. N.p., 2017. Web. 1 Aug. 2017 3. SMITH, ADAM | INTERNET ENCYCLOPEDIA OF PHILOSOPHY In-text: ("Smith, Adam | Internet Encyclopedia Of Philosophy") Your Bibliography: "Smith, Adam | Internet Encyclopedia Of Philosophy." Iep.utm.edu. N.p., 2017. Web. 1 Aug. 2017. "