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Copy of Adam Smith Presentation

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Andrew Owen

on 13 April 2013

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Transcript of Copy of Adam Smith Presentation

Adam Smith Father of Economics Exploring and the reason why he's one of the few economists this class has taught us He established the very foundation of the modern society. How we work, How we interact with each other, ...and How we Think. We could say,
without him... ALL of this would
not have 1723 Adam Smith's greatest accomplishment was his book,
"An Inquiry into the Nature and Causes of the Wealth of Nations" or more commonly known as The Wealth of Nations Adam Smith introduced three important concepts in this book Division of Work: Free Market Specialization Economics 1737 1748 1752 1776 1787 1760 1790 In 1723, Adam Smith was born in Kirkaldy, Scotland. His father was an accountant, but passed away before his birth.
He lived his entire life with his widowed mother. At the age of 14, he entered the University of Glasgow to study philosophy then Oxford at 1740 In 1748, he became a professor at the University of Edinburgh When he returned to Scotland at the age of 23, he gave public speeches on philosophy for which he became renowned for. Consequently, he was invited to become a professor at the University of Glasgow He was elected as a member of Philosophical Society of Edinburgh Here, he published one of his famous book, In 1751, Adam Smith met , a highly-acclaimed philosopher, who became his lifelong friend. David Hume The Theory of Moral Sentiments In 1760's, the age of began Industrial Revolution and Smith's interest slowly shifted towards Law Economics In 1766, he returned to his home, Kirkaldy, to focus on his studies. and In 1776, March 9th, Adam Smith's The Wealth of Nations was published. His work instantly captivated the world. In the Industrial Age, it was used by nations world-wide as a to prosperity. Guide Book Adam Smith became one of the most influential figure in the period. He became the founding member of the acclaimed and occupied the honorary position of of the University of Glasgow Royal Society of Edinburgh Lord Rector He died on the 17th of June, 1790 and was buried in The Canongate Churchyard of Edinburgh The Wealth of Nation published Industrial Revolution began The Theory of Moral Sentiments in 1752 EXISTED I gotta do everything by my self. I've been working for days and not even barely finished! I don't have time to do anything else I'm a professional architectural designer! Leave the constructions to me. I've been painting walls for 30 years. It's my turn to paste the wallpaper. By dividing labor among specialized professionals, efficiency is greatly increased. The "Pin Production" Metaphor Number of pins produced by a single, inexperienced individual = less than 10 per day Number of pins produced by a team of 10 specialized individuals, dividing the labor into pulling, straightening, then cutting metal wire. = around 48 000 per day Division of labor allows an individual's mastery in a particular skill to develop. As one's mastery in his/her skill develops, amount of labor per person increases. Specialization is a concept best represented in trade among nations Brazil Mexico Coffee Coffee Broccoli Broccoli 200 200 150 75 Brazil has an advantage in the production of both goods Brazil needs to consume 100 units of coffee and 100 units of broccoli Mexico needs to consume 75 units of coffee and 32.5 units of broccoli Brazil Mexico Coffee Coffee Broccoli Broccoli 200 200 150 75 Mexico Produces 150 units of coffee Trades 60 units of coffee for 40 units of broccoli Brazil Produces 50 units of coffee and 150 units of broccoli Trades 40 units of broccoli for 60 units of coffee Result: Brazil obtains 110 units of coffee and 110 units of broccoli Mexico obtains 90 units of coffee and 40 units of broccoli Specialization Maximum Production Our modern society is shaped by specialization. Each one of us has a specific profession, which allows efficiency, and max production. "Study of the allocation of scarce resources" Does that mean Brazil will not benefit from trading with Mexico? Smith said that the price of product is the basis of market His "Labor Theory of Value" states that the price of a product is determined by the labor that is put into its production. however, Karl Marx later underscored that, stating, "the price is determined by how much an individual is willing to sacrifice to acquire the product." Although Adam Smith set up the base ground of economics by creating myriad of concepts such as "exchange value and utility value" and "natural price and market price", his idea of economics was still immature and was later reinforced by future economists. In Free Market, government regulation and monopolies do not affect the market, and the distribution of costs of goods and services, and wages are determined by the supply and demand. His belief was that owners of capital and natural resources will use resources in the least wasteful way possible; ultimately maximizing the efficiency, when there is competition Smith cognized “the most substantive proposition in all of economics.” What is responsible for this phenomenon? The invisible hand = tendency of one's self interest for profit to result in benefiting the society as a whole. America's early prosperity was reaped from its strict Free Market Policy. However, the Free Market ideology was ultimately proven flawed when the Great Depression hit the nation Why are Adam Smith's ideologies relevant today? Today's societies are mostly run under the "Mixed Economy" system Mostly Free Market, but during recession, the government may intervene. So, basically, the entire modern world is based on Adam Smith's ideologies. And there you have it, Sources: Adam Smith's The Wealth of Nations: A modern-day An Inquiry into the Nature and Causes of the Wealth Buchan, James (2006). The Authentic Adam Smith: of Nations: A Selected Edition Adam Smith (Author), Kathryn Sutherland (Editor), 2008, Oxford Paperbacks, Oxford, UK interpretation of an economic classic. Karen McCreadie, 2009, Infinite Ideas, Oxford, UK His Life and Ideas. W. W. Norton & Company Bussing-Burks, Marie (2003). Influential Economists. Minneapolis: The Oliver Press. Tribe, Keith; Mizuta, Hiroshi (2002). A Critical Bibliography of Adam Smith. Pickering & Chatto. A&E (1998). "100 Most Important figures of the Millennium" Arts and Entertainment Networks Brought to you by: Justin Shin Tim Zheng Sean Wei Father of Economics Adam Smith Mercantilism Physiocracy Economic system based on Economic system based on natural resources trade America- After WWII Dubai - Oil Mines UNSTABLE
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