• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Biography of Adam Smith.

Extracts from this document...

Introduction

Adam Smith was born in Kirkcaldy, Fife, Scotland. The exact date of his birth is unknown, however, he was baptized on June 5, 1723. Smith was the Scottish political economist and philosopher, who became famous for his influential book "The Wealth of Nations" written in 1776. Smith moved to London in 1776, where he published "An Inquiry into the Nature and Causes of the Wealth of Nations," which examined in detail the consequences of economic freedom. It covered such concepts as the role of self-interest, the division of labor, the function of markets, and the international implications of a laissez-faire economy. "Wealth of Nations" established economics as an autonomous subject and launched the economic doctrine of free enterprise. The Wealth of Nations was influential since it did so much to create the field of economics and develop it into an autonomous systematic discipline. In the Western world, it is arguably the most influential book on the subject ever published. One of the main points of the The Wealth of Nations is that the free market, while appearing chaotic and unrestrained, is actually guided to produce the right amount and variety of goods by a so-called "invisible hand." If a product shortage occurs, for instance, its price rises, creating incentive for its production, and eventually curing the shortage. The increased competition among manufacturers and increased supply would also lower the price of the product to its production cost, the "natural price." Smith believed that while human motives are often selfish and greedy, the competition in the free market would tend to benefit society as a whole anyway. ...read more.

Middle

In the real world of unregulated markets, successful players get larger and, in many instances, use the resulting economic power to drive or buy out weaker players to gain control of even larger shares of the market. In other instances, "competitors" collude through cartels or strategic alliances to increase profits by setting market prices above the level of optimal efficiency. The larger and more collusive individual market players become, the more difficult it is for newcomers and small independent firms to survive, the more monopolisitic and less competitive the market becomes, and the more political power the biggest firms can wield to demand concessions from governments that allow them to externalize even more of their costs to the community. Given this reality, one might expect the neoliberal economists who claim Smith's tradition as their own to be outspoken in arguing for the need to restrict mergers and acquisitions and break up monopolistic firms to restore market competition. More often, they argue exactly the opposite position--that to "compete" in today's global markets, firms must merge into larger combinations. In other words, they use a theory that assumes small firms to advocate policies that favor large firms. Market theory also specifies that for a market to allocate efficiently, the full costs of each product must be born by the producer and be included in the selling price. Economists call it cost internalization. Externalizing some part of a product's cost to others not a party to the transaction is a form of subsidy that encourages excessive production and use of the product at the expense of others. ...read more.

Conclusion

For at least a century it has been virtually taboo to talk about economic power in the capitalist context; that was a communist (Marxist) idea. The concept of class was similarly banned from discussion. Adam Smith was as acutely aware of issues of power and class as he was of the dynamics of competitive markets. However, the neoclassical economists and the neo-Marxist economists bifurcated his holistic perspective on the political economy, one taking those portions of the analysis that favored the owners of property, and the other taking those that favored the sellers of labor. Thus, the neoclassical economists left out Smith's considerations of the destructive role of power and class, and the neo-Marxists left out the beneficial functions of the market. Both advanced extremist social experiments on a massive scale that embodied a partial vision of society, with disastrous consequences. If corporate libertarians had a serious allegiance to market principles and human rights, they would be calling for policies aimed at achieving the conditions under which markets function in a democratic fashion in the public interest. They would be calling for an end to corporate welfare, the breakup of corporate monopolies, the equitable distribution of property ownership, the internalization of social and environmental costs, local ownership, a living wage for working people, rooted capital, and a progressive tax system. Corporate libertarianism is not about creating the conditions that market theory argues will optimize the public interest, because its real concern is with private, not public, interests. FAHIM TALUKDER L6SD ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. Bellway Plc is a holding company with subsidiaries; its main subsidiary company is Bellway ...

    Vast amount of acquisitions have driven the industry average. The dividend yield has also fallen from 4.0 to 3.6 in 2005 but it fluctuated over the last five years. This indicates that the market believes Bellway future growth prospects have improved however, it is still higher then competitors which agrees with the P/E ratio that investor perceive Bellway to

  2. Case Study: The Home Depot

    They attract their employees for new stores by placing advertisements in local newspapers and when more employees are needed, they display this at the stores that need more employees. The process of attracting new employees is leaded by a very well structured plan.

  1. Retailing In India - A Government Policy Perspective

    Specifically, speaking some of the laws that need to be reviewed on a priority basis are a. Essential Commodities Act b. Weights and Measures c. Agriculture product market act d. Prevention of food adulteration act e. Shops and Establishment Act These are just some of the main areas that need attention.

  2. Environmental Analysis Of Landis Lund.

    Nearly every product has examples at either end of the price scale, from houses and cars, to clothes and electrical items. In fact, if you've got the money, you can buy virtually anything you want. An excellent example of this is using the auction website eBay, where everything and anything is for sale.

  1. Transaction Cost Theory

    For asset specificity, assets involved in the transaction are, by definition, not freely available for other uses. There are costs involved in applying them in any other than this particular transaction. This results in a need for continuity, so that those who have invested in the assets can derive revenues from them.

  2. Explain why banks sometimes seek to merge with with

    By mid-2000, 28.8% of rural deposits were in banks or branches or out- of-state banking companies, compared with only 12.5% in mid-1990. Some of this increase in out- of-state ownership came at the expense of banking companies located elsewhere in the same state-for example, companies' headquarter in the cities around-but most was at the expense of strictly local banks.

  1. PEST and competitive analysis facing by confectionery organisations

    A high unemployment rate would mean employees could be obtained more easily and could be paid cheaper wages. On the other hand unemployment rate could low therefore employees are hard to obtain and to attract the right people higher wages must be paid.

  2. The Famous Grouse - company profile and exports

    Geographically Scotland is very central to any form of distribution whether that be to the USA or the continent it has well established sea distribution services and the air travel/distribution industry in Scotland is on the rise through the massive investment in both Glasgow and Edinburgh airport.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work