Adam Smith

Adam Smith (1723-179) was the main founder of economics. He was born in Cocteady, Scotland in 1723 and studied at Oxford University as a young man. From 1751 to 1764, he served as a professor of philosophy at the University of Gusgo. During this period, he published his first book "On Moral Sentiments", which established his prestige in the intellectual world. However, his immortal reputation mainly lies in his great book "A Study on the Nature and Causes of National Prosperity" published in 1776 (referred to as "The Wealth of Nations"). The success of the book made him enjoy honor and love for the rest of his life. He died in Cocteau in 1776. Smith never married and had no children.

Adam Smith is not the earliest pioneer of economic theory, and many of his most famous ideas are not novel and unique, but he put forward a comprehensive and systematic economic theory for the first time, which laid a good foundation for the development of this field. Therefore, it can be said that The Wealth of Nations is the starting point of modern political economy research.

one of the great achievements of this book is to abandon many wrong concepts in the past. Smith refuted the old mercantilist theory. This theory unilaterally emphasizes the importance of the state storing a large number of gold coins. He rejected the view that the land of physiocrats is the main source of value and put forward the basic importance of labor. Smith emphasized that the division of labor would lead to a large increase in production, and attacked a set of decadent and arbitrary political restrictions that hindered industrial development.

The central idea of The Wealth of Nations is that the seemingly chaotic free market is actually a self-adjusting mechanism, which automatically tends to produce the quantity of the most urgently needed goods in society. For example, if the supply of a required product is in short supply, its price will naturally rise, and the price increase will make the manufacturer get higher profits. Because of the high profits, other manufacturers also want to produce this product. The increase in production will alleviate the original supply shortage, and with the competition among producers, the increase in supply will reduce the price of goods to "natural price", that is, its production cost. No one helped the society by eliminating the shortage purposefully, but the problem was solved. In Smith's words, everyone "only wants to get their own interests", but it seems that they are "led by an invisible hand to achieve a goal that he has no intention of achieving at all ... They promote the interests of society, and the effect is often better than what they really want to achieve." (The Wealth of Nations, Volume 4, Chapter 2)

But if free competition is hindered, the "invisible hand" will not do the work properly. Therefore, Smith believed in free trade and defended himself against high tariffs. In fact, he is firmly opposed to government interference in commerce and free markets. He claimed that such interference would almost always reduce economic efficiency, and ultimately make the public pay a higher price. Although Smith did not invent the term "laissez-faire policy", he did more work to establish this concept than anyone else.

Some people think that Adam Smith is just a defender of business interests, but this view is not correct. He often denounces the activities of monopolists in the strongest terms and insists on their elimination. Smith's understanding of real business activities is not naive. There is a typical observation in The Wealth of Nations: "People in the same trade seldom get together, but they talk about either plotting a conspiracy against the public or concocting a plan to raise prices in disguise."

Adam Smith's economic thought system is rigorous in structure and powerful in argument, which makes the school of economic thought abandoned within several decades. In fact, Adam Smith absorbed all their advantages into his own system, and at the same time systematically revealed their shortcomings. Smith's successors, including famous economists like thomas malthus and david ricardo, have carefully enriched and revised his system (without changing the basic outline), and today it is called the classical economic system. Although modern economic theory has added new concepts and methods, these are generally natural products of classical economics. In a sense, even Karl Marx's economic theory (naturally not his political theory) can be regarded as a continuation of the classical economic theory.

In The Wealth of Nations, Smith foresaw Malthus' view of overpopulation to some extent. Although Ricardo and Karl Marx both insisted that the population burden would prevent wages from rising above the subsistence level (the so-called "wage steel law"), Smith pointed out that wages would increase if production was increased. Facts have clearly shown that Smith is right on this point, while Ricardo and Marx are wrong.

Apart from the correctness of Smith's viewpoint and its influence on later theorists, it is his influence on legislation and government policies. The Wealth of Nations is a book with superb skills and clear writing style, and has a wide readership. Smith's views of opposing government intervention in business and commercial affairs and in favor of low tariffs and free trade had a decisive influence on government policies throughout the nineteenth century. In fact, his influence on these policies can still be felt today.

Economics has developed by leaps and bounds since Smith, so that some of his ideas have been put aside, so people tend to underestimate his importance. But in fact, he is the main founder of making economic theory a systematic science, so he is the main figure in the history of human thought.