| With
this landmark treatise on political economy, Adam Smith paved
the way for modern capitalism, arguing that a truly free market
was the engine of a fair and productive society. Books I-III
of "The Wealth of Nations" examine the "division
of labour" as the key to economic growth, by ensuring
the interdependence of individuals within society. They also
cover the origins of money, the importance of wages, profit,
rent and stocks. Smith's work laid the foundations of economic
theory in general and "classical" economics in particular,
but the real sophistication of his analysis derives from the
fact that it also encompasses a combination of ethics, philosophy
and history to create a vast panorama of society.
All Customer Reviews
5 out of 5 - Nov 26, 2001
Adam Smith like Marx sees changes in the economic
system as a logical, inevitable sequence of events. For example
the power of the landed aristocracy declined as a consequence
of the increasing importance of the towns. Good government
was a result of this decline as people that had worked on
the estates in conditions close to slavery moved to cities
where they had considerable freedom. The difference between
Marx and Smith is that Smith considered all of these changes
leading to steady improvements whereas Marx considered the
results of capitalism and industrialisation and urbanisation
disastrous. Marx lived about one hundred years later than
Smith. The system had not produced wealth for all as Smith
foresaw. Smith believed that if governments would refrain
from interfering in the economy prosperity would increase
for all. Marx considered that a revolution whereby the capitalist
class would be eliminated and private property is abolished
a necessary consequence of the exploitation of the workers.
Smith believed the opposite in that private property was the
main driving force for progress. Their analysis of the historical
development looking at it now shows many serious mistakes.
However many more of the ideas of Adam Smith are still valid
in hindsight than those of Marx. Somewhat surprising both
being persons with interest in morality do not ascribe any
importance to that subject. Both are imprisoned by the concept
that "mechanical" or systemic changes in society
can explain changes in the economic system. Many economists
to day still fall in the same trap. They do not believe that
moral standards can play an important role in the development
of economic system. They therefore typically reject new developments
such as "socially responsible investing ". Like
"Capital" of Marx, the "Wealth of Nations"
presents many interesting facts about for example the near
slavery conditions in the large agricultural estates throughout
Europe. This information is a good antidote to the romantics
that believe conditions in the countryside in the past were
very pleasant. The Wealth of Nations is lucidly written and
shows quite clearly the dependence of wealthy creation on
essential but minimal government regulation.
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