The Contributions by Adam Smith They baptized him as the father of the economy. The works of this Scottish economist and author marked a before and after in the economic and labor notions of the time.
His thinking was applied in a way that forged the foundations of economic systems that persist at world level.
Adam Smith was born in Scotland in 1723 and died in the same nation in 1790. Not only was he a great exponent of classical economics, he also contributed his own contributions to the development of social theories in terms of an economic system proposed.
He based his life by developing an understanding of the phenomenon known as Industrial Revolution .
The thought of Adam Smith is popularly regarded as an opposition to another economic and social thinker that would later appear: Karl Marx .
However, there is enough evidence today to show that Smith's proposals have survived over time, in theory and practice.
Smith left a short but complete written work, in which he presented almost, if not all, his ideas. The Wealth of Nations , Published in 1776, is considered his work of greater theoretical and historical value.
Most Recent Additions by Adam Smith
Intellectual Founder of Capitalism
He capitalism , As a reasoned economic system, can not be considered as founded by a man; from the feudalism Commercial practices were carried out that showed signs of what would be capitalism centuries later.
However, Adam Smith is considered to be the first to develop his mechanisms theoretically.
Smith approached economic processes on all possible scales, and allowed to elucidate how some commercial methods had the capacity to increase or decrease the wealth of an individual, a company or a state.
With these investigations the Scottish economist allowed himself to sketch a scheme of social order based on the commercial and production relations that were born of his thought, they began to see practiced during the Industrial Revolution, and eventually antagonized with the first communist ideas.
Theory of moral feelings
Smith's first work, and second in importance behind The Wealth of Nations . Before deepening economic systems and business relations, Smith developed his own conception of man in society.
Smith regarded man as a being who was guarding his own interests above all others. However, it is able to recognize the need to offer or accept help and cooperation from others, as long as this also reports a maximization in their moral, spiritual, or monetary return.
For Smith, individuality prevailed over collective values, at the human and business level.
To justify how such a society could remain functional, Adam Smith resorted to the presence of an"invisible hand"that regulated human phenomena and behaviors, subjectifying his thinking.
The Wealth of Nations
His most important work, from which all his economic thought is born and broken.
The ideas presented by Smith were shaped so that for the first time could be understood by any person, and thus improve the general notion that was had on the classic economic system.
Smith studied, as it happened, European industrial development. His theory of the mechanisms of classical economics would remain strong until the early twentieth century, when the Great Depression would push for a rethinking.
He managed to adapt the individual interests of the man to the business field, they affirm that to watch over the own, a collective environment is guaranteed profitable.
In this work Smith develops individual points such as the conception of free market, capital, division of labor, etc. It is these factors themselves that reinforce the importance of the thinking of its author.
Free market
Smith was considered a critic of the mercantilism and the economic hermetism, reason why it looked for to impel the free market through its concepts and exemplifications, in an era in which the nations saw the foreign trade with some suspicion.
The free-market economic theory proposed by Adam Smith consisted in the determination of prices to the products according to their level of production and consumption; As well as the implicit laws of supply and demand.
The free market proposed by Smith appears open and without the intervention or regulations of state entities like the government.
Division of Labour
Smith pushed the specialization of tasks in the work and commercial environment, not so much for the democratization of the working conditions, but to reduce the costs of production, creating a chain of simple mechanisms that would maximize the speed of production, and would reduce the risks.
This outline in classical economics would be strengthened over time, generating structures that do not function except under a system of hierarchical and vertical division.
It was the basis of these postulates that would then confront Smith's economic thinking with ideas that seek greater economic equity.
Usage value and exchange value
Adam Smith qualified the commercial valuation of a product according to its potential of use and the time of work and effort that was necessary to produce it.
The economist worked an abstract equation of time and effort to determine the value that that product could have in the market.
Then it was faced with the capacity or potential of use that that product could have for man. These two factors allowed a better understanding of the commercial value of the products.
Gross Domestic Product (GDP)
Developed in his work, The Wealth of Nations , Smith decided to leave aside the national conception that existed at that time to measure national wealth according to the deposits and reserves of silver gold that had, and give way to the classification according to the internal levels of production and trade.
From this foundation is born the outline of one of the economic indicators most used in today's society: GDP or Gross Domestic Product, which encompasses in general the trade and production relations of a country, yielding an approximate income as a result Of all trade.
References
- Ashraf, N., Camerer, C. F., & Loewenstein, G. (2005). Adam Smith, Behavioral Economist. Journal of Economic Perspectives , 131-145.
- Blenman, J. (April 19, 2017). Adam Smith: The Father of Economics . From Investopedia: investopedia.com
- Campbell, T. (2007). Seven theories of society. Chair.
- Carmona, J.L. (s.f.). The Ethics of Adam Smith: Towards a utilitarianism of sympathy.
- Fry, M. (2005). Adam Smith's Legacy: His Place in the Development of Modern Economics. Routledge.