Adam Smith Research Paper

Adam Smith with his remarkable writing of ‘Wealth of the Nations’ laid the foundation for a classical school of economics. The other economists, David Ricardo, Thomas Malthus, Karl Marx, John Stuart Mill, Jean Baptiste Say, and others enriched the classical thorough of economics. Smith in his notable book argued that the wealth of a nation based on trade, but not on gold. The total wealth of a nation would increase when engaging in trade because both parties expect a profit, hence it would cause to increase the total wealth. According to the classical economists, market seeks the equilibrium naturally when market forces are freely moved. This free movement or market forces were called an invisible hand. The competition would lead the market to the natural equilibrium, hence, the monopoly would distort the market forces. Smith emphasized the impact of capital accumulation on labor productivity in the process of economic growth. He did not see upper bounds of labor productivity. Hence, he focused on the factors which determine the growth of labor productivity. Labor productivity depends on the division of labor. Capital accumulation smooths the process of division of labor. Capital accumulation and division of labor effect on labor productivity which in turn economic growth. According to Smith, an inadequate supply of workers, …show more content…
According to Malthus, if the population grows exponentially while the means of subsistence growing arithmetically the society will have to face difficulties in feeding the growing population. With this struggle with limited resources, the society will have to face growing of war, hunger, epidemic disease, etc. The most important idea of Malthus is the concept of diminishing return of factors of production which was used actively in the 20th century in economic models where population considered as