The Wealth Of Nations By Adam Smith Essay example
In 1776 Adam Smith wrote the famous book "The Wealth of Nations" and that book was the beginning of classical economics. It is quite ironic that the beginning of economic study was the same year as the American independence. Mr. Smith had the idea that individuals would always do what is best for themselves, and because of this, the cumulative result would be what is best for the whole nation. This thought reminded me of the second rule from our text: "Economists assume that individuals make choices that seek to maximize the value of some objective, and that they define their objectives in terms of their own self-interest."
After reading Mr. Smith 's I understand this idea somewhat better but it still feels counter productive.
Mr. Smith felt that there were three "factors of production" that helped build a countries wealth. Those three were land, labor and capital. This seems to still be true.
Classical economics touts the idea of a free market. At the time, markets were controlled by royalty, and decisions were not made to help the common man but to increase the coffers of the king. In a free market money flows back and forth between buyers and sellers, depending on what is needed and desired. Sellers who presented the best product would get the best prices and sub par products would be paid a lesser price. The idea of demand was…