Abstract For more than two centuries Adam Smith has been recognized as one of the most influential analysts of economic behavior in spite of the fact that his work was done during the very early stages of the industrial revolution. The paper traces Adam Smith's life and two of his books "The Theory of the Moral Sentiments" and "An Inquiry into the Nature and Causes of the Wealth of Nations".
Table of Contents:
Introduction
Adam Smith's Early Life
The Theory of Moral Sentiments
An Inquiry into the Nature and Causes of the Wealth of Nations
Laissez-Faire Capitalism
Society and the "Invisible Hand"
Division of Labor
Free Trade
Conclusion
From the Paper "At the time The Wealth of Nations was published, the power of free trade and competition as influencers of innovation and progress was not well understood or practiced. For example, governments granted monopolies and gave subsidies to protect their own merchants, farmers and manufacturers against 'unfair' competition. The guilds operated stern local cartels: artisans of one town were prevented from traveling to another to find work. Local and national laws forbade the use of new, labor-saving machinery and poverty was accepted as the common, natural, and inevitable lot of most people. In The Wealth of Nations, Adam Smith railed against the restrictive, regulated, 'mercantilist' system, and showed convincingly how the principles of free trade, competition, and choice would spur economic development, reduce poverty, and precipitate the social and moral improvement of humankind. From this book came well-known economic theories related to laissez-faire capitalism in general and society and the "invisible hand", division of labor, and free trade."
