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Essay on Adam Smith

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Introduction

Adam Smith Adam Smith is possibly the most influential economist the world has ever known and certainly the majority of his beliefs and models have had a great effect on and have been proven true in the modern world. Not only this, but his undoubted influence on so many great economists preceding him prove what a genius and original thinker he was. Born on the 5th June 1723 in Kirkcaldy, Scotland he was not and would never be a rich man, however he was undoubtedly a gifted individual, joining Glasgow University at the tender age of 15 to study moral philosophy. Two years later he joined Oxford University although it seems Smith was unhappy with the lesser intellectual activity in the English universities compared to the Scottish and so he returned to Scotland in 1746. Smiths contribution to the academic world was vast and his work was not restricted to just the economic world, however if we just look at his economic contribution to the world, its clear his most significant work was published in 1776 named "The Wealth of Nations". ...read more.

Middle

An economy with a free trade policy regarding goods from outside of the economy Smith believed would increase: production, competition, choice, living standards and opportunity to invest. He encouraged the British Empire to adopt this policy however it became very hard to do so when the American colonies refused to cooperate and use the same policy. The attraction of the current mercantilist policy was that by reducing the amount imported by setting tariffs or quotas on imported items, home-grown firms could prosper and produce more for the domestic market as well as foreign markets, thus exporting more. Smith however was strongly apposed to such a protectionist agenda, clearly of the belief that free international trade would benefit everybody; this idea can be linked back to the division of labour and the invisible hand. Some countries have a comparative or absolute advantage in producing certain products, therefore if these countries produce what they are best at producing and if every country seeks to increase their own benefits by selling the surplus of goods they do not need everybody in the international market will benefit. ...read more.

Conclusion

Population growth being reliant on ability to accommodate an increasing workforce and investment relying on the rate of savings and land growth being limited and relying on conquest of foreign lands these are endogenous. As these are not always produced in the working of the market economy we are brought back to Smiths belief that Government needs to be active to assure long run growth. This model of growth remains the main model of classical growth. To summarise I think to even to question Adam Smith as influential would be a mistake. The man is surely one of if not the most influential economists that have walked this earth. Many have described him as the "father" of modern-day economics and his influence upon brilliant economists that have followed him speaks for itself. All the major economic and political powers of today's world are influenced by if not built upon Smiths idea of Capitalism and free trade. His image has been placed on the �20 note and rightly so I believe. The truths of his predictions and models are clear for everybody to see and his ability to create ideologies well in advance of the time he lived in was quite remarkable. ...read more.

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