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Adam Smith Economics

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Adam Smith

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Terms in this set (29)

Scottish born philosopher

Adam Smith wrote

Wrote The wealth of nations and wrote the theory of Moral sentiments

Smiths characteristics physically and mentally

Smith was middle sized and stout, had many friends quiet and often appeared distracted asked a question he responded with a lecture

Propounded a theory of Economic development that is still influential to this day..

Was considered a whig thinker

The wealth of Nations was the foundation for ...

market-based economics

Adam Smith called his economic philosophy (TWoN)....

"A system of National Liberty"

The wealth of Nations posed what questions?

What is wealth?
What causes economic growth?

Smith realized that money is not wealth its...

"Stuff"/ wants that accumulate to wealth

Smiths insights consisted of..

The Market System
1. Divison of Labour
2. Self Interest
3.Exchange or the law of association
4.Private property
5.Individual Freedom -freedoms of choice or enterprise
6.Limited Government
7. Capital (and technology)
8.Competition
9.Markets and prices (Supply and Demand)
10. Money

1. Divison of Labour

Dividing of production into specific tasks performed by different individuals
-market economies rely on it
-takes advantage of innate differences
-repetitve->learning by doing
-saves time
-Increases total output
-Ultimately leads to higher wages

-enables one to act toward maximizing profit or minimizing loss (producer)
-enables one to act toward maximizing utility (Consumer)
-enables one to potentially recieve the highest possible price for their resources even if the only resource owned is ones labor
-gives direction to the system --> order from "chaos"

Exchange, or the Law of Association

-fundamental social relationship
--> idea that man serves in order to be served
-->we enrich ourselves by enriching others
-exchange and trade are necessary once division of labour established

Private property

-Smith does not philosophize on the subject
-probably the most important of all characteristics
-meaning of: Individuals are free to have property in "things"--> goods, services, resources, ect

Individual Freedom

-Freedom of enterprise
--> the freedom to acquire resources, use in production, and dispose of the produce as one see's fit
-freedom of choice
-consumer sovereignty