Adam Smith, Figures of Economic Development Theory

Leading figures in the field of economic development theory, Adam Smith, was born in Kirkcaldy, Scotland, in 1723. As a teenager he studied at the University of Oxford, and from 1751 until 1764 he became professor at the University of Glasgow. As long as that's where he published his first book, Theory of Moral Sentiments, which lifted him into the midst of an intellectual community. However, the peak of his fame mainly lies in the book masterpiece An Inquiry Into the Nature and Causes of The Wealth of Nations, published in 1776. This book is immediately successful and win the market, and enjoy the rest of Smith's fame and recognition thanks to the work. He died also in Kirkcaldy in 1790. Not a single child he had, after all had never married.

Adam Smith was not the first to devote themselves to economic theory, and many ideas that the original is not known outside of his head. However, he was the first to offer a systematic economic theory and easy to digest right enough as the basis for the progress of the field opposite it in the future. On the basis of reason,'s worth is considered that The Wealth of Nations is a departure from the research base of modern economic politics.

One of the major results presented this book is because he straightened and dispel the assumption that a variety of previous conviction. Smith's argument for and against the old theory that emphasizes trade economic importance of the need to have a supply of gold bars in large numbers. Similarly, his view of the physiokrat refused saying that the land is a major source of value. Instead Smith stressed the most important point is labor. Smith emphasized that persistent increase in production can be achieved through the division of labor, and he struck out all outdated government regulations and following the intervention barriers that prevent the development and industrial expansion.

The central idea of The Wealth of Nations is a free market that moves according to market mechanisms that can automatically considered memprodusir kinds and number of items needed most liked and the consumer society. For example, inventory declined liked it, its price will rise and this price increase will bring much benefit for those who produce it. Because fortunately a lot, other factories moved to produce too. As a result of the increase in production can not be rid of is deficient goods. Moreover, an increase in supply in relation to the competition between various companies will tend to lower the price of the commodity at the price level "normal," such as the cost of production. There was no any party that helps eliminate scarcity, but scarcity would be solved by itself. "Every person," said Smith "tend to seek profit for himself, but he was" guided by the invisible hand to achieve the final goal is not to be part of his desire. With the road to pursue his own interests he used to promote the community more effectively than if he intended to promote betulbetul "(The Wealth of Nations, Chapter IV, Article II).

"Invisible hand" is not able to do the job properly if there is interference with free competition. Smith because it believes in free trade system and vigorously opposed the high price. Basically, he strongly opposes almost all government campurnya participate in business and free markets. This intervention, Smith said, almost always will result in deterioration of economic efficiency and ujungujungnya will raise the price. (Smith did not create the slogan "laissez faire," but he more than anyone else to spread the concept).

Some people get the impression that Adam Smith was none other than one who just "dancing by the sound of the drum" for the sake of economic interests. This opinion is not correct. He repeatedly and with harsh words, been criticized practices of economic monopolies and want to eliminate it. And instead of Naive Smith in economic relations practice. This can be read from specific observations in the book The Wealth of Nations: "People in world trade the same goods could seldom meet together, but the talks will end in the formation of the conspiracy against the people, or in other forms of raising prices."

Adam Smith was so perfectly organized and forward thinking economic system, so that only a period of just a few decades of economic schools of previously excluded. In fact, all the subjects they are good thoughts have been combined with the system of Smith, while Smith systematically disclose their shortcomings are. Substitute Smith including famous economists like Thomas Malthus and David Ricardo, developed and perfected the system (without changing the main lines) into structures that are now classified into the category of classical economics. Arrive at a certain critical level, even the economic theory of Karl Marx (although not a political theory) can be considered as a continuation of the classical economic theory.

In the book The Wealth of Nations, Smith's part to use the views of Malthus on overpopulation. However, if Ricardo and Karl Marx both insist that population pressures will prevent wages rise above the limit purposes (so-called "steel-wage law"), Smith asserted that the condition of the wage increase in production can be increased. It is clear, events, proving that Smith was right in this aspect, while Ricardo and Marx missed.

There was nothing to do with Smith's view or provisions affect economic theorists who came later, the most important is its impact on legislation and politics taken by the government. The Wealth of Nations was written with a high skill and clarity of the view that no appeal and readability bertolok very broad. Smith's argument against government intervention in business and commerce and by the low prices and free economy, has certainly influenced the government's policy line in seseluruh the 19th century. Indeed, its influence in the case was still felt to this day.

Since economic theory flourished after the Smith, and some ideas displaced by other opinions, it is easy to minimize the importance of Adam Smith. It must be so, the facts show, he was the beginner and the founder of economics as a systematic study, and he's actually leading figure in the history of human thought. Michael H. Hart,One hundred most influential figures in the history.