Views of Adam Smith Adam Smith had many views that helped in making the world what it is today. I can’t imagine what the world would be like if there weren’t thinkers like Adam Smith. Our career as Pharmacists is a great example of this. What would we be working so hard for if we made the same amount of money as a trash man? He had many other views that were just as important. Adam Smith believed that a nation’s wealth was not derived by how much they had in resources, or in an exchangeable commodity, but rather by the labor that its residents produce. ‘The annual labor of every nation is the fund which originally supplies it with all the necessaries and conveniences which it annually consumes.’ (Wealth of Nations, p.
1) He stated that a nation could increase the efficiency of the potential of its people by increasing these two aspects of the work force: (a) Skill, dexterity, and judgement with which labor is applied, and (b) Proportion of those employed in useful labor to those not so employed. For the first aspect, Smith noted that the best way to increase the efficiency of labor is the division of labor. The division of labor is the central factor in Smith’s theory of economic growth. Division of labor is the splitting of a large task into smaller tasks and then having one person be responsible for only one or two of the smaller tasks, which leads to an increase in productivity and stimulates the entire growth cycle, which increases the efficiency of the whole task. The division of labor and the accumulation of capital are what Adam Smith believed to be the driving forces of economic growth in any nation. He found that when the division of labor had broken down the production of almost any commodity into a series of simple operations it was more natural for tools and machinery to be invented that replace hand labor and expedite the entire production process, thereby increasing worker productivity.
The Term Paper on Adam Smith 5
... which originally gives occasion to the division of labor (Smith 113). When Smith speaks of the division of labor he refers to the specialization ... Causes of the Wealth of Nations. New York: Random House, 1991. Griswold, Charles L. Adam Smith and the Virtues of Enlightenment. ... companies will be looking to higher workers and increase production.Adam Smith believed that the government should only tax a ...
This increased productivity, combined with the growing capital stock to increase national output, enables a society to enjoy higher levels of consumption, resulting in a genuine rise in the “wealth of the nation” according to Smith. Adam Smith stated that the value of all things is based on the amount of labor that must be produced to gain it. He believed that the price of an object could be split into three parts: rent, labor (wages), and profit. The person producing the quantity must pay rent on the land he is using to produce the commodity. To produce the quantity, he must either himself labor or hire people to do the labor for him, and pay them wages. Finally, the producer adds on a profit that will also be used to pay for the upkeep of equipment.
Originally, the laborer received the full value of the price. However, this state could not last because of the appropriation of land and the accumulation of stock. He believed that wages were very important and beneficial. The wage a laborer receives is the replacement for the profit he would gain by selling the product he produces.
In this manner, the laborer is spared the responsibility of procuring materials and equipment, and of having to try to market the product. Instead, he gains cash for his labor. Wages are affected by many factors. The first is the agreeableness of the employments themselves. The second is the difficulty and expense of learning the employment. The third is the constancy of employment in them.
The fourth is the amount of trust, which must be placed in the employees. Finally, the fifth is the probability of success in them. Smith decided that wages must be at least enough for two people to live on, so that the workers can raise a family to keep the workforce going. The higher the wage is, the more likely a working family is to have more children, because children become a benefit. He believed that wages are people’s incentive to work harder, since a man’s self-love will cause him to work harder so that he can get paid better. This is to the benefit of both employer and employee, because the employer gains more products to sell and the employee gains a larger wage, giving him more purchasing power.
The Essay on Should Minimum Wage Increase?
Should Minimum Wage Increase? I have many reasons why I do not think minimum wage needs to increase at this time. We need to look at the reasons for minimum wage. We must look at the amount of time the current minimum wage has been in effect. The affect on the economy needs to be well thought-out. The impact on businesses should be analyzed. Additionally, the individuals receiving minimum wage ...
Smith believed that the market system was more than capable of managing itself, and that no government intervention was ever required. He believed that the competition between different producers of a similar product would keep prices reasonable, and that the quality of a product would allow it to be sold at a slightly higher price than a similar product of lower quality. He stated that government interference in trade through taxing generally caused more problems for the consumers than they solved. Smith’s theory of economic growth can be formulated in a simple algebraic equation. Where G equals the growth rate, K equals the ratio of productive to unproductive labor, P equals the productivity rate and W equals the real wage (G = KP W).
From this equation it becomes clear that for growth to occur, both the product of the ratio of productive to unproductive as well as the productivity rate must increase more than the real wage. It would seem obvious that an easy way to do this would be to avoid any increase in the real wage, and indeed this view was accepted by many later classical economists who assumed that the nation had nothing to gain from an increase in wages. This was not Adam Smith’s view at all. If an increase in capital enlarges the wages fund from which workers are paid, and if this increase is greater than the increase in the number of laborers, than it is only natural for the real wage to increase. In addition Smith was a believer in what modern economists call the efficiency wage theories. Which state that higher wages both, enhance the vitality of the workers and reduce employee slacking and labor turnover.
The Essay on Min Wage Minimum Increase Increases
Should Minimum wage be increased? Introduction For many decades now, there has been heated debates concerning minimum wages and increases in those wages. Most people have a tendency to assume that when the minimum wage is increased people will benefit. They do not stop to think of the consequences that come from minimum wage increases. The general population merely assumes that people should make ...
By doing these things it will, in turn, lower productivity and profitability. In the equation above it is the product of K and P that is responsible for economic growth. It would appear then that K, the ratio of productive to unproductive labor, and P, the productivity rate are equally important factors in this equation. However, Adam Smith says that this is not so. He states that the ratio of productive to unproductive labor does not change much over time. The productivity rate is therefore almost entirely accountable for changes in a nations economic well being.
Adam Smith said that commerce in Great Britain, went from a system where the producers changed to adapt to what the consumers needed; to a system where the producers would try their hardest to corner the market, and leave the consumers with a mediocre product. In response to tightened importation laws, he wrote that a strong foreign trade system would be the only way to provide good products to the English public. Adam Smith was accurately seeing the future of the world’s commerce. He saw that as producers tried to make more and more money, they were forced to cut corners.
This, as a result, lead to products that were not as good as they should be. He knew that the way to improve product quality in Great Britain was to import goods from other counties. Adam Smith had many very important views. He had set ways that he thought things should have been and he spent his life explaining these views and trying to get others to see things as he did.
Many people supported and accepted his views, while others completely disagreed with him. Whether or not you agree or disagree with his views, you have to admit that Adam Smith is very important even in the world today. Works Cited Bibliography 1. Heilbroner, Robert, Teachings From The Worldly philosophy, 1 st ed. (Norton, 1997) “Wealth of the Nations.” Smith, Adam web (Accessed 4-1-02).
