Why Is The Wealth of Nations So Important? Adam Smith and Classical Economics (2010)
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An Inquiry into the Nature and Causes of the Wealth of Nations, (generally referred to by its shortened title The Wealth of Nations), is the magnum opus of the Scottish economist and moral philosopher Adam Smith. About the book: https://www.amazon.com/gp/search?ie=UTF8&tag=tra0c7-20&linkCode=ur2&linkId=0241c1a71db971b89999870345b5d327&camp=1789&creative=9325&index=books&keywords=wealth%20of%20nations First published in 1776, the book offers one of the world's first collected descriptions of what builds nations' wealth and is today a fundamental work in classical economics. Through reflection over the economics at the beginning of the Industrial Revolution the book touches upon broad topics as the division of labour, productivity and free markets. George Stigler attributes to Smith "the most important substantive proposition in all of economics" and foundation of resource-allocation theory. It is that, under competition, owners of resources (labor, land, and capital) will use them most profitably, resulting in an equal rate of return in equilibrium for all uses (adjusted for apparent differences arising from such factors as training, trust, hardship, and unemployment).[61] He also describes Smith's theorem that "the division of labour is limited by the extent of the market" as the "core of a theory of the functions of firm and industry" and a "fundamental principle of economic organisation."[62] Paul Samuelson finds in Smith's pluralist use of supply and demand — as applied to wages, rents, and profit -- a valid and valuable anticipation of the general equilibrium modelling of Walras a century later. Moreover, Smith's allowance for wage increases in the short and intermediate term from capital accumulation and invention added a realism missed later by Malthus, Ricardo, and Marx in their propounding a rigid subsistence-wage theory of labour supply.[63] In noting the last words of the Wealth of Nations, If any of the provinces of the British empire cannot be made to contribute towards the support of the whole empire, it is surely time that Great Britain should free herself from the expence of defending those provinces in time of war, and of supporting any part of their civil or military establishments in time of peace, and endeavour to accommodate her future views and designs to the real mediocrity of her circumstances.[64] Ronald Coase suggests that if Smith's earlier proposal of granting colonies representation in the British parliament proportional to their contributions to public revenues had been followed, "there would have been no 1776, ... America would now be ruling England, and we [in America] would be today celebrating Adam Smith not simply as the author of the Wealth of Nations, but hailing him as a founding father."[65] Mark Blaug argues that it was Smith's achievement to shift the burden of proof against those maintaining that the pursuit of self-interest does not achieve social good. But he notes Smith's relevant attention to definite institutional arrangements and process as disciplining self-interest to widen the scope of the market, accumulate capital, and grow income.[66] Libertarian theorist Murray Rothbard, however, disagrees: [I]t is not just that Smith's Wealth of Nations has had a terribly overblown reputation from his day to ours. The problem is that the Wealth of Nations was somehow able to blind all men, economists and laymen alike, to the very knowledge that other economists, let alone better ones, had existed and written before 1776. The Wealth of Nations exerted such a colossal impact on the world that all knowledge of previous economists was blotted out, hence Smith's reputation as Founding Father. The historical problem is this: how could this phenomenon have taken place with a book so derivative, so deeply flawed, so much less worthy than its predecessors? The answer is surely not any lucidity or clarity of style or thought. For the much-revered Wealth of Nations is a huge, sprawling, inchoate, confused tome, rife with vagueness, ambiguity and deep inner contradictions. There is of course an advantage, in the history of social thought, to a work being huge, sprawling, ambivalent and confused. There is sociological advantage to vagueness and obscurity. The bemused German Smithian, Christian J. Kraus, once referred to the Wealth of Nations as the 'Bible' of political economy. In a sense, Professor Kraus spoke wiser than he knew. For, in one way, the Wealth of Nations is like the Bible; it is possible to derive varying and contradictory interpretations from various -- or even the same -- parts of the book. http://en.wikipedia.org/wiki/Wealth_of_nations
Comments
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Why was named book of that name .... I hope the answer quickly please
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excellent
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Adam Smith is still a giant... That's amazing to me.
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Long live EconTalk! Long live Russ Roberts!
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I Knew It! Bloody Republicans using Keynesian Theories when no one is looking and then accusing the man of being a Socialist to keep the New York Times Happy!! Keynes was not a Socialist he was a real Burkean Conservative!!
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that Russell Roberts dude has a look and sound similar to Alex Jones.
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adam smith will be seen as a primitive once capitalism n economics disappear as they only make sense in a growing expansionary world where mankinds grows in numbers n produces n consumes during colonizing days n industrial age creating consuming middle class, once resources start to end, n theres too many of us, n growth ends and stagnation n finally decay settles the whole economics bull n its theories n maths goes down the drain, we entered the stagnation phase n passed the number the planet can sustain and was grwing in the 70s, it was about 4 billion ppl, then only one thing can save us, technology n free energy, there wont be any countrys nor governments just ppl n technology serving mankind from dying, we are stagnated growth now is just banks injecting capital so countrys wont implode
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really? im a decent person and have no friends, actually im seen as a sucker in todays world, the guy who stops to help a dying dog while everybody is buzzing. heros n smart guys that have friends are exactly the ones who have money since having money is sign of everything to the world sheep. ppl without money die alone in the gutter, nobody cares if they are nice ppl or have morals, women dont marry or fall in love with good guys but ugly creeps that have bank accounts, homeless dont even exist.
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Scottish name places.
Kirkcaldy is pronounced kirkoddy
Glasgow is pronounced glazgoe -
Why does everybody ignore the context in Smith's use of the 'Invisible Hand'? Even from that snippet, more so if you read the whole chapter, it's clear to me he is trying to reassure British merchants and artisans concerned with the dangers of foreign trade at the expense of the domestic economy that national self-interest 'as if by an invisible hand' would naturally lead people to prefer goods produced domestically over cheaper goods produced abroad.
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Lovely discution !!! The fact that the economist appears to be an austrian and the pshiloshoper appears to be more to the left and yet they find so much common ground and concearn is wonderfull !!!
This showes that Smith was a person with a clear moral balance and solid intelect then the over doctrinal economist and philoshophers (some) of today . -
Even thou Smith was very careful, analytical and philosophical to the point of scientific approach to all he was writing about, he struggled with "balance" between private and "social" influence to "improve" society.
As mentioned in debate here: https://youtu.be/pOksHxsR_2w?t=3429 Both professors are in favour to this "general" view of Smith.
If we take a look at potential of free education leading to general understanding of potential of individual and profitable investment in talent (also enormous satisfaction of giving money to well managed charities - again - promoting education of poor) there is no place for third party to organize anything - means government as third party.
Only reason for Smith and both professors to take this stand is that government had and has influence in mind development of children during all time between Smith and today - by regulations leading to protect some workmanship and promote government in way general public value its role in human life. -
the caller from texas was inspiring
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who f cares
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i am pursuing economics honors(2nd yr) and this is a must read for a student like me.
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Watching this was adorable.
For anyone thinking they should read "The Wealth of Nations" my tip is that you only have to read the 19 page introduction in the Everyman's library edition.
It would be good if the two professors put their lectures on air like Michael Sandler.
Hume published his treatise in 1739 and still holds the title of the greatest thinker to have written in the English language. Popper would come a close second.
Hume and Smith were drinking partners and Hume had a massive influence on the thinking in Smith's works and why friendship would rate so highly in Smith's ideas about happiness.
It is a pity that so many Nobel Prize winning economists have really only offered magic dust rather than standing on the shoulders of Smith with a well rounded coherent model adjustment.
It is unfortunate that Marx, standing on the shoulders of Smith and Mill and the general fruits of British empiricism gained a louder voice than Smith. Despite Marx's historicism being patently ridiculous and born of Hegelian mischief. -
Did he say flyshagger ? A very long book ? Fuck me what an idiot .
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Wealth of Nations was part of Adam Smith's attempt to set forth a rational explanation that society--humankind, if you will, is not in need of the embrace of religious superstition to act as a foundation for its organization. By detection and exposition of such basic principles as supply and demand and specialization of roles in production, was part of Smith's attempt to alert us that we can see the rational functioning in society and use that knowledge to organize it in a rational way. Smith was a moral philosopher who sought to free us from the near universal cancer of faith.
Faith is the purposeful disengagement of our most human and most productive facility, rational curiosity. Faith says, "This I will believe regardless of the evidence." It is the closing of minds; the most pernicious of human habits. Faith in ones religion, state, leader or community is alway the unpinning of war. An open mind would see as decisions are being made rather than in retrospect after hard lessons.
Faith is humankind's greatest affliction. -
Ignored by modern economists is Smith's treatment of the role of landownership in a society's political economy. Smith is one of the first "English" writers to argue persuasively for the societal collection of rent via taxation. As I note below in my response to Marc Kaptijn, Smith was certainly influenced by Turgot on the subject.
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I think we were right to have bailed out the banks to prevent a global economic catastrophe. Having bailed out the banks, however, we should break them up. If they're to big to fail, make them smaller.
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