Adam Smith was an economist in 17th century England who gave groundbreaking ideas in economics, contrary to the popular opinion at the time.
He wrote 5 volumes on economic policies that determine the wealth of a nation. The basic ideas in those volumes are valid even today. The principles given in the book like GDP are used in evaluating the welfare of a modern nation.
The most groundbreaking idea of Smith was defining the wealth of a nation. In Smith's time it was popular opinion that the wealth of a nation is the amount of the gold and silver (precious metals) in the King's coffers. So nations in that era restricted import of goods/services from outside to prevent the outflow of precious metals from the country. This type of thinking was so strong that nations restricted even their colonies from trading with other nations. Smith theorized that the wealth of nation is not the amount of precious metals but the labour/goods those precious metals command. So, it would be beneficial for an industry to concentrate it's effort on producing goods that it makes efficiently and import whatever it cannot make efficiently from others.
In the first and second volume Smith talks about division of labour and how concentration of capital is necessary for a nation to build up industries. Even though Smith apparently advocates policies that favour concentration of capital (but also more competition) he explains how this would ultimately lead to welfare of the typical citizen.
In volume 3 Smith talks about policies that favour competition and increase the wealth of a country. Book IV appraises different theories of economics in the light of all these considerations. Book
V then identifies the proper role of government, the principles of taxation, and the impact of government on the economy.
Eamonn Butler here provides an excellent condensation of the 5 tomes.
He wrote 5 volumes on economic policies that determine the wealth of a nation. The basic ideas in those volumes are valid even today. The principles given in the book like GDP are used in evaluating the welfare of a modern nation.
The most groundbreaking idea of Smith was defining the wealth of a nation. In Smith's time it was popular opinion that the wealth of a nation is the amount of the gold and silver (precious metals) in the King's coffers. So nations in that era restricted import of goods/services from outside to prevent the outflow of precious metals from the country. This type of thinking was so strong that nations restricted even their colonies from trading with other nations. Smith theorized that the wealth of nation is not the amount of precious metals but the labour/goods those precious metals command. So, it would be beneficial for an industry to concentrate it's effort on producing goods that it makes efficiently and import whatever it cannot make efficiently from others.
In the first and second volume Smith talks about division of labour and how concentration of capital is necessary for a nation to build up industries. Even though Smith apparently advocates policies that favour concentration of capital (but also more competition) he explains how this would ultimately lead to welfare of the typical citizen.
In volume 3 Smith talks about policies that favour competition and increase the wealth of a country. Book IV appraises different theories of economics in the light of all these considerations. Book
V then identifies the proper role of government, the principles of taxation, and the impact of government on the economy.
Eamonn Butler here provides an excellent condensation of the 5 tomes.
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