What is the historical significance of 'The Wealth of Nations' by Adam Smith?

Answer 1

The Wealth of Nations" is a seminal book that represents the birth of free-market economics, but it's not without faults. It lacks proper explanations for pricing or a theory of value and Smith failed to see the importance of the entrepreneur in breaking up inefficiencies and creating new markets.

1:Government Response to the Invisible Hand

When governments interfere with this process, unwanted shortages and surpluses tend to occur. Consider the massive gas shortages in the United States during the 1970s. The then newly formed Organization of Petroleum Exporting Countries (OPEC) cut production to raise oil prices

2:Enlightened Self-Interest

3:Limited Government

4:Solid Currency and Free-Market Economy

Answer 2

Wealth of Nations was a book by the Scottish philosopher and economist Adam Smith. The book appeared in 1776 and is the great classic work of laissez-faire economics (capitalism). It also played a key role in establishing economics as an area of study in its own right. It was the first major work in the science of economics. It explained how a free market, capitalist economy works and every economic treatise since then has been built on and influenced by it. See the Related Link for "Wikipedia, Adam Smith" below for more.

One of the key elements that Smith determined to be necessary for a capitalistic society to function was that of "property rights." He declared that without the establishment of owning property rights that not only would there be no incentive to produce and exchange goods, but also that their needed to be laws in effect protecting those rights for a capitalistic society to function properly.

Adam Smith also pointed out the faults in the Mercantile system of the day. He also made it clear that slavery was an inefficient institution. He believed the capital invested in slavery could be better invested in the industrial revolution.

Answer 3

Smith didn’t simply argue for a free market, and he was well aware that wealth for a few implies poverty for the many.