History UsefulNotes / AdamSmith

[[https://en.wikipedia.org/wiki/Adam_Smith Adam Smith]] (16 June 1723 – 17 July 1790) was a famous Scottish author, philosopher, and economist nicknamed "The father of {{UsefulNotes/Capitalism}}". His most influential work, ''[[https://en.wikipedia.org/wiki/The_Wealth_of_Nations The Wealth of Nations]]'',[[note]][[LongTitle Full title]]: ''An Inquiry into the Nature and Causes of the Wealth of Nations''.[[/note]] is considered the first modern work on economics. It is still influential in the 2020s.

[[https://en.wikipedia.org/wiki/Adam_Smith Adam Smith]] (1723-1790) was a famous Scottish author, philosopher, and economist nicknamed "The father of {{UsefulNotes/Capitalism}}". His most influential work, ''[[https://en.wikipedia.org/wiki/The_Wealth_of_Nations The Wealth of Nations]]''[[note]][[LongTitle Full title]]: An Inquiry into the Nature and Causes of the Wealth of Nations[[/note]], is considered the first modern work on economics. It is still influential in the 2020s.

In his first book, ''The Theory of Moral Sentiments'', Smith proposes the idea of an "invisible hand". This refers to the tendency of free-markets to regulate themselves by means of competition, supply and demand, price signals and business owners' seeking their self-interest via profit. Smith is also known for his theory of compensating wage differentials, meaning that dangerous or undesirable jobs tend to pay higher wages to attract workers to these positions.[[note]]This seems true in some jobs, like oil rig drillers, who are well paid. But other sectors, such as caring for babies and elders with dementia, both of which involve changing diapers and cleaning people, are poorly paid. For childcare, this may be due to gender based wage differences, a tendency for female-dominated jobs to pay less than male-dominated jobs.[[/note]]

In ''The Wealth of Nations'' (1776), he says free markets, private property and competition are needed to drive economic growth and encourage innovation. Smith says that division of labour increases productivity. The way to divide labour is to break down the work that needs to be done into its sub-tasks. A baroque lute maker in 1600 might have made all the parts of the instrument himself in a workshop and then assembled and finished them. You paid a high price for that lute, as there were few artisans who knew all the complex steps. A modern industrial guitar factory divides up the labor. It will have one worker who only makes guitar necks, one worker who only adds frets, one who makes guitar tops, one who only makes sides, one who only glues, one who only varnishes, and so on.

GoodNewsBadNews: the good news is that with workers specializing, productivity goes way up, so the factory owner is happy. As well, the customer is happy, because the factory-made instrument is much cheaper than an artisan-made one built by a craftsman. The bad news is that the former instrument craftsman and artisan of yesteryear is transformed into a factory floor of lower-skilled workers doing repetitive, routine tasks all day (this is a downside of division of labor). Karl Marx said this could make workers feel alienated; if all you do is screw in the same part all day, you'll probably feel less satisfied than the craftsman who makes an entire instrument and then admires it at the end of the day. As well, since the job is de-skilled, the factory worker gets lower pay than their artisan predecessor. Another downside is poor job security; a worker who does routine, repetitive work is easier to replace with a machine or, in the 2000s, a {{robot}}.

Another big Smith argument is that competition is good for society. In everyday life, sometimes we think competition is a bad thing. A BourgeoisBohemian family might send their kid to a hippie-inspired school where the kids play cooperative games to learn to work together. In a business context, though, Smith believed that when businesses compete for customers, this motivates them to trim the costs of production and work more efficiently to produce more "widgets" than the competition and at a lower cost.

This is also a GoodNewsBadNews situation. If you are buying widgets, this is great, because you get a better widget with more widget features, and for less money. The new Super Widget may work better and do more than yesteryear's. The star example that proves Smith's argument in the 2020s is computers: a schoolkid's $300 laptop in 2020 is exponentially more powerful than a 1970s Cray supercomputer that cost a gazillion dollars. A poor worker's smartphone is way more powerful than the Apollo Moon landing computer.

Advocates of Capitalism use the declining price abd increasing power of high technology items to show how Capitalism makes ''everyone'' better off. A good point, but there's more to quality of life than fast, cheap computers; Capitalism does a poor job providing affordable, high quality housing, daycare and eldercare. As well, Capitalism sometimes can focus on getting shareholder profit ahead of taking care of the environment. While MegaCorp firms are starting to "clean up their act" on that front, the [=19th=] and [=20th=] centuries are filled with examples of big companies extracting resources with little care about the human costs ([[NoOSHACompliance injuries and diseases to workers]] due to poor safety measures) and environmental impacts (pollution from factories creating IndustrialGhetto areas).

[[TropeNamers Has it been mentioned]] that [[AdamSmithHatesYourGuts he hates your guts]]?

!! Notable Works

In his first book, ''The Theory of Moral Sentiments'', Smith proposes the idea of an "invisible hand". This refers to the tendency of free-markets to regulate themselves by means of competition, supply and demand, price signals and business owners' seeking their self-interest via profit. Smith is also known for his theory of compensating wage differentials, meaning that dangerous or undesirable jobs tend to pay higher wages to attract workers to these positions.[[note]]This seems true in some jobs, like oil rig drillers, who are well paid. But other sectors, such as caring for babies and elders with dementia, both of which involve changing diapers and cleaning people, are poorly paid. For childcare, this may be due to gender based wage differences, a tendency for female-dominated jobs to pay less than male-dominated jobs.[[[/note]]

In ''The Wealth of Nations'' (1776), he says free markets, private property and competition are needed to drive economic growth and encourage innovation. Smith says that division of labour increases productivity. The way to divide labour is to break down the work that needs to be done into its sub-tasks. A medieval lute maker in 1600 might have made all the parts of the instrument himself in a workshop and then assembled and finished them. You paid a high price for that lute, as there were few artisans who knew all the steps. A modern industrial guitar factory divides up the labor. It will have one worker who only makes guitar necks, one worker who only adds frets, one who makes guitar tops, one who only makes sides, one who only glues, one who only varnishes, and so on.

One area where Smith is sometimes misunderstood is regarding the role of government. Since Smith advocates free markets and free competition, some people mistakenly think he calls for completely "laissez-faire" markets. In fact, Smith believed there was a role for government, which was protecting private property rights and setting up systems to ensure orderly trade (courts and laws to ensure contract law is done fairly). That said, he didn't want governments setting price controls or trying to help certain firms, as he thoughtthis reduced efficiency and productivity. Two modern examples of price controls are minimum wage (a government-set price floor on the cost of labor) and rent control (a government-set price ceiling on the rental price of housing). An example of government help to selected firms is regional industrial subsidies; for example, a country may subsidize a factory in an economically depressed region to help create jobs.

Advocates of Capitalism use the declining price abd increasing power of high technology items to show how Capitalism makes ''everyone'' better off. A good point, but there's more to quality of life than fast, cheap computers; Capitalism does a poor job providing affordable, high quality housing, daycare and eldercare. As well, Capitalism sometimes can focus on getting shareholder profit ahead of taking care of the environment. While MegaCorp firms are starting to "clean up their act" on that front, the [=19th=] and [=20th=] centuries are filled with examples of big companies extracting resources with little care about the human costs ([[NoOSHACompliancd injuries and diseases to workers]]) and environmental impacts (pollution from factories creating IndustrialGhetto areas).

Advocates of Capitalism use the declining price abd increasing power of high technology items to show how Capitalism makes ''everyone'' better off. A good point, but there's more to quality of life than fast, cheap computers; Capitalism does a poor job providing affordable, high quality housing, daycare and eldercare. As well, Capitalism sometimes can focus on getting shareholder profit ahead of taking care of the environment. While MegaCorp firms are starting to "clean up their act" on that front, the [=19th=] and [=20th=] centuries are filled with examples of big companies extracting resources with little care about the human costs (injuries and diseases to workers) and environmental impacts (pollution from factories).

One area where Smith is sometimes misunderstood is regarding the role of government. Since Smith advocates free markets and free competition, some people mistakenly think he calls for completely "laissez-faire" markets. In fact, Smith believed there was a role for government, which was protecting private property rights and setting up systems to ensure orderly trade (courts and laws to ensure contact law is done fairly). That said, he didn't want governments setting price controls or trying to help certain firms, as he thoughtthis reduced efficiency and productivity. Two modern examples of price controls are minimum wage (a government-set price floor on the cost of labor) and rent control (a government-set price ceiling on the rental price of housing). An example of government help to selected firms is regional industrial subsidies; for example, a country may subsidize a factory in an economically depressed region to help create jobs.

One area where Smith is sometimes misunderstood is regarding the role of government. Since Smith advocates free markets and free competition, some people mistakenly think he calls for completely "laissez-faire" markets. In fact, Smith believed there was a role for government, which was protecting private property rights and setting up systems to ensure orderly trade (courts, laws, etc). That said, he didn't want governments setting price controls.

This is also a GoodNewsBadNews situation. If you are buying widgets, this is great, because you get a better widget with more widget features, and for less money. The new SuperWidget may work better and do more than yesteryear's. The star example that proves Smith's argument in the 2020s is computers: a schoolkid's $300 laptop in 2020 is exponentially more powerful than a 1970s Cray supercomputer that cost a gazillion dollars. A poor worker's smartphone is way more powerful than the Apollo Moon landing computer.

Another big Smith argument is that competition is good for society. In everyday life, sometimes we think competition is a bad thing. A BourgeoisBohemian might send their kid to a school where the kids play cooperative games to learn to work together. In a business context, though, Smith believed that when businesses compete for customers, this motivates them to trim the costs of production and work more efficiently to produce more "widgets" than the competition and at a lower cost.

This is also a GoodNewsBadNews situation. If you are buying widgets, this is great, because you get a better widget with more widget features, and for less money. The star example that proves Smith's argument in the 2000s is computers: a schoolkid's $300 laptop in 2020 is exponentially more powerful than a 1970s Cray supercomputer that cost a gazillion dollars. A poor worker's smartphone is way more powerful than the Apollo Moon landing computer. Advocates of Capitalism use the declining price abd increasing power of high technology items to show how Capitalism makes ''everyone'' better off. A good point, but there's more to quality of life than fast, cheap computers; Capitalism does a poor job providing affordable, high quality housing, daycare and eldercare.

This is also a GoodNewsBadNews situation. If you are buying widgets, this is great, because you get a better widget with more widget features, and for less money. The star example that proves Smith's argument in the 2000s is computers: a schoolkid's $300 laptop in 2020 is exponentially more powerful than a 1970s Cray supercomputer that cost a gazillion dollars. A poor worker's smartphone is way more powerful than the Apollo Moon landing computer. Advocates of Capitalism use the declining price abd increasing power of high technology items to show how Capitalism makes ''everyone'' better off. A good point, but there's more to quality of life than fast, cheap computers; Capitalism does a poor job providing affordable, high quality housing, daycare and eldercare. If you work in a computer factory or tech firm, this relentless drive to make faster computers for less money will cause lots of stress and pressure. You'll be pushed to work huge overtime hours and speed up, to produce more computers per hour and what's more, the company will look for ways to cut production costs, so benefits may be cut.

Another big Smith argument is that competition is good for society. In everyday life, sometimes we think competition is a bad thing. A BourgeoisBohemian might send their kid to a school where the kids play cooperative games to learn to work together. In a business context, though, Smith believed that when businesses compete for customers, this motivates them to trim the costs of production and work more efficiently to produce more "widgets" than the competition and at a lower cost. This is also a GoodNewsBadNews situation. If you are buying widgets, this is great, because you get a better widget with more widget features, and for less money. The star example that proves Smith's argument in the 2000s is computers: a schoolkid's $300 laptop in 2020 is exponentially more powerful than a 1970s Cray supercomputer that cost a gazillion dollars. However, if you work in a computer factory or tech firm, this relentless drive to make faster computers for less money will cause lots of stress and pressure. You'll be pushed to produce more computers per hour and what's more, the company will look for ways to cut production costs, so benefits may be cut.

[[TropeNamers Has it been mentioned that]] [[AdamSmithHatesYourGuts he hates your guts]]?

In his first book, ''The Theory of Moral Sentiments'', Smith proposes the idea of an "invisible hand". This refers to the tendency of free-markets to regulate themselves by means of competition, supply and demand, price signals and business owners' seeking their self-interest via profit. Smith is also known for his theory of compensating wage differentials, meaning that dangerous or undesirable jobs tend to pay higher wages to attract workers to these positions.[[note]]This seems true in some jobs, like oil rig drillers, who are well paid. But other sectors, such as caring for babies and elders with dementia, both of which involve changing diapers, are poorly paid. For childcare, this may be due to gendser based wage differences, a tendency for female-dominated jobs to pay less than male-dominated jobs.[[[/note]]

In his first book, ''The Theory of Moral Sentiments'', Smith proposes the idea of an invisible hand. The tendency of free-markets to regulate themselves by means of competition, supply and demand, and self-interest. Smith is also known for his theory of compensating wage differentials, meaning that dangerous or undesirable jobs tend to pay higher wages to attract workers to these positions.

GoodNewsBadNews: the good news is that productivity goes way up, so the factory owner is happy. As well, the customer is happy, because the factory-made instrument is much cheaper than an artisan-made one built by a craftsman. The bad news is that the former instrument craftsman and artisan of yesteryear is transformed into a factory floor of lower-skilled workers doing repetitive, routine tasks all day. Karl Marx said this could make workers feel alienated. As well, since the job is de-skilled, the factory worker gets lower pay than their artisan predecessor. As well, a worker who does routine, repetitive work is easier to replace with a machine or, in the 2000s, a {{robot}}.

In ''The Wealth of Nations'' (1776), he says free markets, private property and competition are needed to drive economic growth and encourage innovation. Smith says that division of labour increases productivity. The way to divide labour is to break down the work that needs to be done into its sub-tasks. A medieval lute maker in 1600 might have made all the parts of the instrument himself in a workshop and then assembled and finished them. You paid a high price for that lute, as there were few artisans who knew all the steps. A modern industrial guitar factory divides up the labor. It will have one worker who only makes guitar necks, one worker who only adds frwts, one who makes guitar tops, one who only makes sides, one who only glues, one who only varnishes, and so on.

GoodNewsBadNews: the good news is that productivity goes way up, so the factory owner is happy. As well, the customer is happy because the factory-made instrument is much cheaper than an artisan-made one built by a craftsman. The bad news is that the former instrument craftsman and artisan of yesteryear is transformed into a factory floor of lower-skilled workers doing repetitive, routine tasks all day. Karl Marx said this could make workers feel alienated. As well, since the job is de-skilled, the factory worker gets lower pay than their artisan predecessor. As well, a worker who does routine, repetitive work is easier to replace with a machine or, in the 2000s, a {{robot}}.

[[https://en.wikipedia.org/wiki/Adam_Smith Adam Smith]] (1733-1790) was a famous Scottish author, philosopher, and economist. His most influential work, ''[[https://en.wikipedia.org/wiki/The_Wealth_of_Nations The Wealth of Nations]]''[[note]][[LongTitle Full title]]: An Inquiry into the Nature and Causes of the Wealth of Nations[[/note]], is considered the first modern work on economics. It is still influential in the 2020s.

[[https://en.wikipedia.org/wiki/Adam_Smith Adam Smith]] was a famous author, philosopher, and economist. His most influential work, ''[[https://en.wikipedia.org/wiki/The_Wealth_of_Nations The Wealth of Nations]]''[[note]][[LongTitle Full title]]: An Inquiry into the Nature and Causes of the Wealth of Nations[[/note]], is considered the first modern work on economics. In his first book, ''The Theory of Moral Sentiments'', Smith proposes the idea of an invisible hand. The tendency of free-markets to regulate themselves by means of competition, supply and demand, and self-interest. Smith is also known for his theory of compensating wage differentials, meaning that dangerous or undesirable jobs tend to pay higher wages to attract workers to these positions.

In ''The Wealth of Nations'' (1776), he says free markets, private property and competition are needed to drive economic growth and encourage innovation. Smith says that division of labour increases productivity. The way to divide labour is to break down the work that needs to be done into its sub-tasks. A medieval lute maker might have made all the parts of the instrument himself in a workshop and then assembled and finished them. A modernvindustrial guitar factory has one worker who only makes necks, one worker who only makes guitar tops, one who only makes sides, one who only glues, one who only varnishes, and so on.

GoodNewsBadNews: the good news is that productivity goes way up. The bad news is that the former instrument craftsman and artisan is transformed into a floor of lower-skilled workers doing repetitive, routine tasks all day. Marx said this could make workers feel alienated. As well, since the job is de-skilled, the factory worker gets lower pay than their artisan predecessor. As well, a worker who does routine, repetitive work is easier to replace with a machine or, in the 2000s, a {{robot}}.

->''“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest. We address ourselves not to their humanity but to their self-love, and never talk to them of our own necessities, but of their advantages”''

! Notable Works

* ''Essays on Philosophical Subjects'' posthumously
See Also UsefulNotes/{{Capitalism}}

-->--'''Adam Smith''', ''The Wealth of Nations'' Vol 1


Adam Smith was a famous author, philosopher, and economist. His most influential work, ''The Wealth of Nations'' [[note]]full title: An Inquiry into the Nature and Causes of the Wealth of Nations[[/note]], is considered the first modern work on economics. In his first book, ''The Theory of Moral Sentiments'', Smith proposes the idea of an invisible hand. The tendency of free-markets to regulate themselves by means of competition, supply and demand, and self-interest. Smith is also known for his theory of compensating wage differentials, meaning that dangerous or undesirable jobs tend to pay higher wages to attract workers to these positions.

[[TropeNamer Did we mention that]] [[AdamSmithHatesYourGuts he hates your guts]]?

See Also UsefulNotes/{{Capitalism}}