To accomplish this assignment, identify and discuss the pertinent economic theories associated with Adam Smith and this research question.
The entire assignment will demonstrate the important areas of the classical economics. However, the assignment will be divided into 4 main segments. In the assignment 1, the study will focus and highlight how the world-famous economist Adam Smith would have responded or given his valuable thoughts with regards to the current-day claims of the unequal distribution of the wealth those results into the social unrest to a great extent. For accomplishing the study some of the economic theories related to Adam Smith will be identified and discussed.
Adam Smith with regards to the classical economics is known as the father of capitalism was born in Scotland. Adam Smith was always keen on his childhood days for developing some theories that will address the welfare of a society to a great extent. It has been observed and witnessed that Smith supported the idea self-interest in exchange of services and goods and also free trade in the marketplace. He later claimed by some his theories that the people are always free to choose the methods of trading and the goods that should be traded in the marketplace for maximizing their profits. On the other hand, Adam Smith also highlighted the limited role played by the government at that point in time. Arguably, he also believed that the available interventions of the government could have also burdened the society to a great extent. The division of labor concept was also introduced by Adam Smith for increasing the output of the resources that are scarce in nature. Throwing light on the above-mentioned discussion it can be said that there are a large number of theories that have been proposed by Adam Smith that still have a great impact on the societies across the globe. The theories that are developed by Adam Smith over the time are the limited government theory and harmony of interests, the division of labor, wealth of nation's theory, invisible hand theory, a wealth of nation's theory and moral sentiments theory. However, Adam Smith is generally known for his two classical economies works namely the theory of moral sentiments and the theory of wealth of the nations.
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Adam Smith once said that no society across the globe can be entirely happy as there a large number of people who are miserable and still live below the poverty line. The above-mentioned specific words clearly highlight the thoughts of Adam Smith with regards to the unequal distribution. The statement that is given by him is still quite true and also applicable for the developing countries across the globe. It can be said that if Adam Smith was still alive today then he might have smiled knowing that the words that came to his mind are so true even in the recent times. Arguably, Adam Smith would have pointed out if he was present today that as long as there are people who have a lot of money more than that is required then there will be surely an unequal distribution of wealth everywhere and nobody can stop this situation. The great economist also suggested that wherever there is a lot of property then there is also a huge possibility that inequality exists there. It has been also observed and witnessed that wherever there is a rich man then it means there are at least 1000 or even number of poor in that country. Smith also argued that it is the particular phenomenon that cannot be avoided by any people till the world comes to an end.
Theories of Adam Smith
Now coming back to Adam Smith two of the most significant theories with regards to the classical economics will be discussed now. Firstly, the Theory of Moral Sentiments was so famous and interesting theory that it attracted a lot of students from the abroad as well as from the home for studying and giving thoughts on it. The above-mentioned theory is developed by Adam Smith on the basis of the morals. The theory suggested that moral action and ideas of the human beings are the primary elements as they are regarded as the social beings (Smith, 2010). On the other hand, Adam Smith also argued that although each and every have some of the moral values inherited in them but there are some of the external factors that greatly influences and breaks the moral values of the human beings that is also one of the main reasons for corruption. The people who can be easily influenced is the individuals who greatly belong to the upper-class segment as they always have the desire to increase their wealth no matter how much wealth they have at the present. These types of people also want to acquire wealth in a short period of time which also breaks their moral values because there is no shortcut of being successful. Adam Smith also believed that when God made human beings then he has made the class stratification but an individual can change their status if they work hard towards their goal because nobody remains poor if they work hard towards their dream. On the contrary, Smith also argued that the rich people should be left for perusing their own interests as it will be the best outcome for the other people because after a certain point of time the rich people will be unable to consume resources more than the other individuals. Hence, the resources that will be left behind in excess amount will be distributed among the people who belong to the lower-class and worked hard for producing these goods. Furthermore, the Theory of Moral Sentiments also provides methodological, ethical, psychological, and philosophical support towards the other works of Adam Smith. It is also one of the theories that highlight the sympathy and self-interest where the human beings tend to protect themselves knowingly and unknowingly benefits them in a natural manner (Campbell, 2014). The theory closes beautifully by stating that the human beings experience particular instances with regards to the immoral and moral actions either indirectly or directly and they form basic moral principles that create a moral code within that everyone functions.
The other theory is the Wealth of the Nations that suggests that government to a great extent in the commercial as well as in the business transactions of the people and also Adam Smith strongly opposed it. In this theory, Smith also explained the exchange and production and their significant contribution towards the national income of a country (Adam, 2016). He also highlighted the fact that using the tool of specialization individuals can use their available skills or accumulate new skills. Furthermore, the individuals may also engage the machinery of labor-saving for boosting up the production to a great extent. Throwing light on the above-mentioned discussion it can be stated that when Adam Smith was born it was totally a different era from today. It has been also observed that before the Industrial Revolution came into existence everything around the people has changed. On the contrary, it can be also said that the Wealth of the Nations still is very much applicable in the present times as it can give a bunch of powerful solutions towards the worst economic problems that the world throws to the human beings.
Adam, S. (2016). The wealth of nations. New York: Aegitas.
Campbell, T. (2014). Adam Smith's science of morals (Vol. 3). New York: Routledge.
Smith, A. (2010). The theory of moral sentiments. New York: Penguin.
To Be Continued...