Adam Smith Wealth of Nations - Essay Example

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Adam Smith Wealth of Nations

Smith is actually considered to be the Father of Modern Economics.Adam Smith's ideas as reflected in his work are still relevant today. His concept of free-trade is still what majority of the world's economy is practicing. Free trade, according to Smith, is the ability of the economy to produce the sufficient amount of goods and provide different varieties with the guidance of what he calls "the invisible hand." If there is a shortage of a certain product, price tends to increase which, in turn, gives higher profit to the producers. This entices more producers to enter the market which leads to the increase in supply of the product and more competition among the producers. Given this condition, price naturally gets lower. Once the price gets too low that the producers would incur losses than profits, they will be out of business. Although this competition can be due to human's pursuit of self-interest, this benefits the society as a whole by keeping the prices of goods at a low level and, at the same time, having a variety of products and services.This idea is what happens in our modern economic society. Businesses get into the market because they can see a potential profitable market. And what prevents these businesses to monopolize in their field is the fact that there will be other businesses or individuals who would want to get into the same market and have a fair competition. ...Show more

Summary

Adam Smith is one of the well-known political economists in the 18th century because of his work called "An Inquiry into the Nature and Causes of the Wealth of Nations" or simply called Wealth of Nations. …
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