ADAM SMITH 1723-1790

Leading figures in the field of economic development theory, Adam Smith, was born in the town of Kirkcaldy, Scotland, in 1723. As a teenager he studied at Oxford University, and from 1751 until 1764 he became professor at the University of Glasgow. As long as that's where he published his first book, Theory of Moral Sentiments, which lifted him into the midst of an intellectual community. However, the peak of his fame mainly rests on his great work An Inquiry book Into the Nature and Causes of The Wealth of Nations, published in 1776. This book won immediate success and the market, and the rest of Smith's life and enjoying the rewards of fame thanks to the work. He also died in Kirkcaldy in 1790. No child he had, after all never married.
Adam Smith was not the first to devote themselves to economic theory, and many of his ideas of the famous original is not out of his head. However, he was the first to present a systematic economic theory and easy to digest is quite appropriate as the basis for progress in the field opposite that in the future. On the basis of reason, it is worth is considered that The Wealth of Nations is a departure from the base of the modern study of political economy.
One result of this book is presented as he straightened and dispel the notion that various people become role models ever. Smith's argument against the old theory of economic and trade that emphasizes the importance of the need for the state have a supply of gold bullion in large numbers. Similarly, the book rejects the view of the Physiocrats who say that the land is a major source of value. Instead Smith emphasized the most important subject is the labor. Smith stressed that the persistent increase in production can be achieved through division of labor, and he attacked out all the outdated government regulations and interference following barriers that hinder the development and expansion of the industry.
The central idea of ​​The Wealth of Nations is a free market that moves according to market mechanisms that can automatically memprodusir considers the type and quantities of goods of the most loved and needed consumer society. For example, inventory declined liked it, naturally the price will rise and this price increase will bring in much profit for anyone who produces it. Because a lot of profit, other factories were moved to produce as well. As a result of an increase in production can not be rid of the state of shortage of goods. Moreover, the increase in supply in relation to the competition between various companies will tend to lower the price of a commodity at a price that is "normal," for example, costs of production. Nothing any party which helps eliminate scarcity, but scarcity would be settled by itself. "Everyone," said Smith "has tended to make a profit for himself, but he was" guided by the invisible hand to achieve the ultimate goal is not to be part of his desire. With the road pursuing his own interest he frequently advance the community more effectively than when he intends to promote these betulbetul "(The Wealth of Nations, Chapter IV, Article II).
"Unseen Hand" is not able to do the job properly if there is a disruption to the free competition. Smith because it believed in free enterprise system and strongly opposed to higher prices. Basically he strongly opposes almost all government interference in business and free markets. This intervention, Smith said, almost always will result in deterioration of economic efficiency and ujungujungnya will raise the price. (Smith does not create the slogan "laissez faire," but he more than anyone to spread the concept of it).
Some people get the impression that Adam Smith was none other than one who just "dance to the sound of drum 'economic interests. This opinion is not true. He has repeatedly and with harsh words, blasted out of economic monopoly practices and wants their elimination. And Smith instead of the naive in economic relations practice. It can be read from a typical observation in the book The Wealth of Nations: "The world trade in the same goods could seldom meet together, but the talks would end in the formation of a conspiracy against the people, or in other forms of raising prices."
Adam Smith was so perfectly organized and forward thinking economic system, so only within a period of some twenty years earlier economic schools of the marginalized. In fact, all the basic ideas are good they have been combined with a system of Smith, while Smith to systematically reveal their shortcomings are. Substitute Smith including famous economists like Thomas Malthus and David Ricardo, developing and refining the system (without changing the basic lines) into a structure that is now classified in the category of classical economics. Arrive at a certain critical level, even Karl Marx's economic theory (though not political theory) can be regarded as a continuation of classical economic theory.
In the book The Wealth of Nations, Smith partly using the views of Malthus on overpopulation. But, if Ricardo and Karl Marx both insist that population pressure would prevent the rise of wages beyond the purpose (so-called "law of wages steel"), Smith asserted that the conditions of wage increase in production can be increased. It is perfectly clear, the events, proving that Smith was right in this respect, while Ricardo and Marx missed.
Nothing to do with Smith's assessment or impact on the views of the economic theorists who came later, the most important is its influence on legislation and politics taken by the government. The Wealth of Nations was written by a high prominence and clarity of vision that is not very legible bertolok and broad appeal. Smith's argument in the face of government interference in business and world trade and for the low price and free economy, has affected the certainty of the line seseluruh government policy in the 19th century. Indeed, in terms of its influence was still felt to this day.
Since the economic theory developed rapidly after the time of Smith, and some ideas displaced by other opinions, it is easy to play down the importance of Adam Smith. It must be so, the facts show, he was the beginner and the founders of the economic figures as a systematic study, and he was actually leading figure in the history of human thought.