An Inquiry Into The Influences And Causes Of The Wealth Of Nations

1256 Words Oct 2nd, 2015 null Page
What we know as modern economics today started out during the 18th century by an author by the name of Adam Smith. Adam Smith is often accredited as the father of classical economics through his analysis of markets in his book An Inquiry into the Influences and Causes of the Wealth of Nations. However, his concepts go strongly against what was the common economic thinking of his time which is known as mercantilism. Adam Smith’s book was thought of as revolutionary and brought about drastic changes in economics and politics. To this day, his concepts are still relevant and often used in economic decision making. However, it is important to recognize the role that mercantilism has in our modern way of thinking. Economics would not be as developed as it is today without the ideals of both of these early economic thinkers.
Adam Smith and mercantilists had very different views on the role of government in the economy. Adam Smith strongly believed that in economics, the government had it easy and that its only task was to prevent harm (Smith, 2011). His theory is that when the markets are left on their own without government intervention, all goods have a ‘natural’ price and that the market price naturally gravitates towards this natural price. The market price of goods may at times be higher or lower than the natural price and many other factors may affect the price, but over time, the price of the good will return back to its natural price (Smith, 2011). He also believed that a…

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