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Adam Smith and Laissez-Faire Economics
16
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Sources Cited:
Adam Smith and Laissez-Faire Economics
by Edward Rigney
"Adam Smith." Wikipedia, en.wikipedia.org/wiki/Adam_Smith.
"Laissez-Faire." Wikipedia, en.wikipedia.org/wiki/Laissez-faire.
"Economics Basics: Supply and Demand." Investopedia, www.investopedia.com/
university/economics/economics3.asp.
World History 2011 National Modern IText Online. E-book.
Laissez-Faire Economics
- Legend has it the term originated in a meeting between a French finance minister and a group of businessmen
- Not just an economic idea, also a philosophical school of thought
- Belief that the individual is the base unit in society and each individual has a natural right to freedom
- Free market system where the government has no control over the economy
- No tariffs, regulations, or subsidies
- Allows economy to self-regulate through supply and demand
Lasting Effects
Adam Smith
What did he do?
Supply and Demand
- Modern free-market economies include US and Australia
- Philosophical ideas well known
- Revolutionized modern economic thought.
- Adam Smith is regarded as father of modern economics.
- Demand is the quantity of a certain product that the consumer base is willing to buy
- Supply is the amount of a certain product the market can offer
- As the price of an item goes up, the demand goes down.
- As demand rises, price rises.
- If demand goes up, suppliers must decide if the change is temporary or permanent and act accordingly.
- Equilibrium is when supply and demand are equal, and everyone is happy. Suppliers are selling all their goods, and all demand is being met.
- Equilibrium will naturally be reached eventually.
- Leading pioneer of moral philosophy
- Best known for 2 works, The Theory of Moral Sentiments and his magnum opus, The Wealth of Nations
- Notable factor in Scottish Enlightenment
- Laid foundations of Free Market Economics
Who was he?
- Born in Kirkcaldy, Scotland, on June 16, 1723.
- Attended University of Glasgow, studied moral philosophy under Francis Hutcheson
- Died on July 17, 1790
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