Essays24.com - Term Papers and Free Essays
Search

Smith's Modern Economy

Essay by   •  December 21, 2010  •  317 Words (2 Pages)  •  1,154 Views

Essay Preview: Smith's Modern Economy

Report this essay
Page 1 of 2

Like modern economists, Smith believed that the standard of living (the Wealth of a Nation) could rise only if the productivity of labor would rise. For Smith, the most important force leading to a rising standard of living was division of labor.

What most people associate with Adam Smith is the idea of the "invisible hand;" the idea, that is, that free markets restrain prices to some "natural" level and assure the supply of goods and services at the "natural" price. Indeed Smith's discussion of the "invisible hand" comes quite early in The Wealth of Nations, but it is not the first topic Smith takes up. In Smith's logic, it could not be. The very first topic Smith takes up is the division of labor.

Smith argues that increasing the division of labor increases productivity. In one of the most famous passages in the book, Smith illustrates this tendency by a description of work in a pin factory:

Like modern economists, Smith believed that the standard of living (the Wealth of a Nation) could rise only if the productivity of labor would rise. For Smith, the most important force leading to a rising standard of living was division of labor.

What most people associate with Adam Smith is the idea of the "invisible hand;" the idea, that is, that free markets restrain prices to some "natural" level and assure the supply of goods and services at the "natural" price. Indeed Smith's discussion of the "invisible hand" comes quite early in The Wealth of Nations, but it is not the first topic Smith takes up. In Smith's logic, it could not be. The very first topic Smith takes up is the division of labor.

Smith argues that increasing the division of labor increases productivity. In one of the most famous passages in the book, Smith illustrates this tendency by a description of work in a pin factory:

...

...

Download as:   txt (1.8 Kb)   pdf (41.5 Kb)   docx (8.5 Kb)  
Continue for 1 more page »
Only available on Essays24.com
Citation Generator

(2010, 12). Smith's Modern Economy. Essays24.com. Retrieved 12, 2010, from https://www.essays24.com/essay/Smith's-Modern-Economy/23580.html

"Smith's Modern Economy" Essays24.com. 12 2010. 2010. 12 2010 <https://www.essays24.com/essay/Smith's-Modern-Economy/23580.html>.

"Smith's Modern Economy." Essays24.com. Essays24.com, 12 2010. Web. 12 2010. <https://www.essays24.com/essay/Smith's-Modern-Economy/23580.html>.

"Smith's Modern Economy." Essays24.com. 12, 2010. Accessed 12, 2010. https://www.essays24.com/essay/Smith's-Modern-Economy/23580.html.