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Transcript of Adam Smith
• He was a Scottish moral philosopher, pioneer of political economy, and key Scottish Enlightenment figure.
• Smith's father had shown a strong interest in Christianity.
•Adam Smith received the Snell Exhibition suggests that he may have gone to Oxford with the intention of pursuing a career in the Church of England.
• Economist Ronald Coase has challenged the view that Smith was a deist.
THEORY OF MORAL SENTIMENTS
THE WEALTH OF NATIONS – FIVE-BOOK SERIES
Intended to reveal the nature and cause of a nation’s prosperity.
Analysed how individuals can best apply their own labor or any other resource to earn the highest possible return on it.
Equality of returns
• University of Glasgow
•Balliol College at Oxford
• First chair of logic in 1751.
• Chair of moral philosophy in 1752.
• In 1778 he was appointed commissioner of customs.
• He died in Edinburgh on July 19th, 1790.
We have the ability to create our own moral, an ability given by God.
Our own moral can be corrupted.
• Smith vehemently opposed Mercantilism.
• The Government should provide specific infrastructure and benefits to the society.
The main cause of prosperity is increasing division of labor (famous examples of the pins)
The theory explained why wage rates differed for different trades, and which trades should be compensated with a higher rate:
Trades that are
difficult to learn
dirty or unsafe
such as coal miner
These ideas gave rise to the modern notion of Human Capital.
Modern economists call Smith’s theory the “Compensating Wage Differentials Theory”.
Vouchers and school choice programs
Students supported by charitable foundations chose what college they liked best
Such liberty might contribute to excite some emulation among different colleges
Smith believed that economic development was best fostered in an environment of Free Competition that operated in accordance with universal “natural laws.”
Smith’s theory was the most systematic and comprehensive study of economics
Basis for classical economics
"The theory that can absorb the greatest number of facts, and persist in doing so, generation after generation, through all changes of opinion and detail, is the one that must rule all observation. "