Classical economic theories started developing during the late 18th century in England with Adam Smith. The theories of the classical school ended the mercantilism and dominated economic thinking till late 19th century. It focused on economic growth, economic freedom, and free competition.
Adam Smith is the greatest economic thinker of all time. His work changed the economic thoughts of his time. Like other early economic writers, Smith also was not just an economist. In addition he was a philosopher, a political scientist, a journalist, an educator, and a scholar also. He was influenced by his teacher, Francis Hutcheson. Adam Smith shared the idea about the egoistical nature of humans, but unlike some other economist of his time, he didn’t …show more content…
For example, Isaac Newton did some researches about astronomy. Adam Smith was not exception in this case. He was influenced by developments in the physical sciences. That’s why he believed that using hard analysis is the way to discover the laws of the economy. In his analysis of products prices and resource allocation, he called long-run prices ‘natural prices’ and short-run prices ‘market prices’. He found out with a great accuracy that in the long run prices resulting from competition would equal the cost of production. He mostly focused on natural prices. He calculated that self interest of resource owners would lead natural prices. In other words consumers could receive the good they want at the lowest possible price. Smith showed that competitive markets work better and he was against monopoly or government …show more content…
Adam Smith’s pursuit of wealth and profits directs the economy to an efficient allocation of resources and to economic growth. The source of capital in a private property economy is savings by individuals. Smith believed, and I think that it is absolutely right, that labor could not accumulate capital because the level of wages permitted only the satisfaction of immediate consumption desires. Members of the landowning class, he observed, have incomes sufficient to accumulate capital, but they spend them on unproductive labor to satisfy their immense desires for high living. So who accumulated the capital in the 18th century England? Smith concluded that it was the members of the industrial class, striving for profits to increase their wealth through saving and investment, who are the benefactors of
Adam Smith is the greatest economic thinker of all time. His work changed the economic thoughts of his time. Like other early economic writers, Smith also was not just an economist. In addition he was a philosopher, a political scientist, a journalist, an educator, and a scholar also. He was influenced by his teacher, Francis Hutcheson. Adam Smith shared the idea about the egoistical nature of humans, but unlike some other economist of his time, he didn’t …show more content…
For example, Isaac Newton did some researches about astronomy. Adam Smith was not exception in this case. He was influenced by developments in the physical sciences. That’s why he believed that using hard analysis is the way to discover the laws of the economy. In his analysis of products prices and resource allocation, he called long-run prices ‘natural prices’ and short-run prices ‘market prices’. He found out with a great accuracy that in the long run prices resulting from competition would equal the cost of production. He mostly focused on natural prices. He calculated that self interest of resource owners would lead natural prices. In other words consumers could receive the good they want at the lowest possible price. Smith showed that competitive markets work better and he was against monopoly or government …show more content…
Adam Smith’s pursuit of wealth and profits directs the economy to an efficient allocation of resources and to economic growth. The source of capital in a private property economy is savings by individuals. Smith believed, and I think that it is absolutely right, that labor could not accumulate capital because the level of wages permitted only the satisfaction of immediate consumption desires. Members of the landowning class, he observed, have incomes sufficient to accumulate capital, but they spend them on unproductive labor to satisfy their immense desires for high living. So who accumulated the capital in the 18th century England? Smith concluded that it was the members of the industrial class, striving for profits to increase their wealth through saving and investment, who are the benefactors of