Adam Smith was a Scottish economist from the 18th century. He is often called the “father of economics” because his ideas form the basis of classical economics. As an advocate of laissez-faire economic policies, he emphasized the importance of free markets to economic growth. His ground-breaking work, The Wealth of Nations, is credited with laying the foundations of modern capitalism.
The central thesis of An Inquiry into the Nature and Causes of the Wealth of Nations (shortened to The Wealth of Nations) is that the people’s need to fulfill their self-interest will result in societal benefit. Smith used the term “invisible hand” as a metaphor to refer to the unseen market forces that drive the free market economy. In a free market economy, the invisible hand and people’s self-interest will naturally lead to stability and prosperity for the society.
Moreover, in The Wealth of Nations, Adam Smith called for the division of labor, increased trade with other countries, and the measurement of a nation’s prosperity through the Gross Domestic Product (GDP). He argued that countries would accumulate more wealth through assembly-line production methods, made possible through a division of labor. Additionally, he opposed mercantilism and claimed that free trade would leave nations better off. Smith recommended measuring wealth through production levels and commerce rather than gold and silver deposits. To measure productivity, Smith created the GDP metric.
Seohyun Park Staff Reporter
1. Who is Adam Smith and why is he called the "father of economics"?
2. What is the "invisible hand" in the context of Adam Smith's economic theory?
3. What is GDP and how did Adam Smith contribute to its development?
1. Do you agree with Adam Smith's idea that self-interest leads to societal benefit? Why or why not?
2. How has Adam Smith's economic theory influenced modern capitalism?
3. Do you agree with Adam Smith's view that free trade leaves nations better off? Why or why not?
4. What criticisms of Adam Smith's economic theory have emerged since the publication of The Wealth of Nations?
Adam Smith was a Scottish economist from the 18th century. He is often called the “father of economics” because his ideas form the basis of classical economics. As an advocate of laissez-faire economic policies, he emphasized the importance of free markets to economic growth. His ground-breaking work, The Wealth of Nations, is credited with laying the foundations of modern capitalism.
