Adam Smiths economic theories Research Paper Example | Topics and Well Written Essays - 1250 words

Adam Smiths economical theories - Research Paper exerciseSmith has emphasized that a historical perspective is necessary to study the science of man and society, and only with this study it is possible to establish an efficient social science system. He has said that in any(prenominal) society it is the collective contribution of alone individuals that lead to economic stability since it is the individuals who produce and sell goods match to their requirements as a society. He has named the controlling factor of this mechanism as the invisible hand. The principle shape of classic economics is that non-intervention of the government in the marketplace will give freedom to everyone to contribute towards economic growth by creating the required goods for the greatest number of people. Adam Smith Adam Smith was an ordinal century Scottish philosopher who is known as the father of modern economics. He was baptized on June 5, 1723. He is well known for his two books The Theory of Moral Sentiments (1759) and An Inquiry into the Nature and Causes of the Wealth of Nations (1776). He analyse moral philosophy from the University of Glasgow under the renowned philosopher Francis Hutcheson. In 1740, he entered the Balliol College, Oxford after being awarded the Snell Exhibition (Biographiq, 3-4). In his second book Wealth of Nations, Smith has given a coherent description of the history of increment of industry and commerce in Europe, and has voiced his opinion against the doctrine of government intervention in hand and commerce. He has also explained that a sustainable economy is possible by peoples case to fulfill their self-interests through competition. Smiths economic philosophy contributed towards creating the modern academic discipline of economics and provided one of the best-known intellectual rationales for free trade, capitalism, and libertarianism. (Biographiq, 3-4) Economic theories The invisible hand theory Smith has focus on peoples contribution towards production, and has argued that it is the annual repulse which is the principle source to meet the demands of the consumers regarding all necessaries and conveniences of life. The produce of the labour is generally consistent with the immediate produce of the labour, or the commodities or run that are purchased with the produce from other acress. Therefore, the produce from labour or what is purchased with the produce can be more(prenominal) or less in proportion to the demand in the consumer market of a nation. This means that the nation is economically developed when on that point is better supply of necessaries and conveniences or is economically worse when there is insufficient supply of the same. Smith has argued that this proportion is determined by two factors 1) skill and dexterity of labour and proper application of the skills, 2) proportion of labour employed to that of labour not employed in usable work. Smith has emphasized only on these two factors irres pective of the soil and climate of the nation (Smith1, 8). correspond to Smith, it is the market conditions that are responsible for the production of right kind of goods and services. This is because the objective of the producers and manufactures is to make profits by supplying goods and services to the market. If there is no intervention by the government in the matters of trade, then the commerce environment of the nation will be free from government restrictions. This will lead to well-being of the semipublic with increased competition between producers and manufacturers to produce goods and services as and when required by the public. This is the general outline of a free market economy. With growing competition betwe