Smith Adam The

Smith Adam The

Smith Adam The question of economic growth led on to the famous IV, in which Smith put forward his thesis that freedom within an economic society would lead to the greatest possible wealth. In many respects the argument is based upon The Theory of Mond Sentiments because the social harmony he described was dependent upon the delicate balance of man's conflicting motives. The search to satisfy individual sell-interest would benefit society and would be limited by the sell-interest of others. Producers sought to earn the largest possible profit, but in order to do so they had to produce goods desired by the community. Further, they must produce then in the right quantities, otherwise too much would cause a low price and a low profit, while too small a supply would cause an increase in price and eventually an increase in supply. The delicate mechanism of the 'invisible band' was also at work in the markets for the factors of production, providing harmony as long as factors sought the largest possible earnings. The right goods would be produced at the right prices, and the whole community would achieve the largest possible wealth as long as free competition held sway; but if competition were restricted, the work of the 'invisible hand' would be impaired and society would suffer.

The immediate success of the was due to its brilliant systemization of economic thinking round the central concept of markets and to the intellectual justification it provided for the newly emerging industrialists who were interested in ridding Britain of mercantilist controls. In a short time The Wealth of Nations was on the -shelves of economists and politicians and provided the code of economic behaviour that served Britain for most of the following century, its bright prospects only slightly dinned by the gloomy predictions of the Rev. Thomas Malthus and David Ricardo. Adam Smith 'persuaded his own generation and governed the next'.

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Since then his writings have in turn been increasingly reinterpreted as a special case both by some followers and by some economists who had not wholly accepted his writings. The content of economics is in a state of change, and this site is therefore not a final statement of economic doctrine.

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