adam smith (1).pptadas

7/27/2019 adam smith (1).pptadas

http://slidepdf.com/reader/full/adam-smith-1pptadas 1/30

Adam SmithCIA 4U

Analyzing Current Economic Issues



“The Father of ModernEconomics & Founder

of Capitalism”



Overview

Biography

Economic Times

Ideas that Advanced Economic Thought



Biography

Born: ?

Exact date isunknown, but was

baptized on June 5,1723 .

Place of Birth:

K irkcaldy, Fife,Scotland.



Biography

Family

Father was the controller of the customsat Kirkcaldy

Strong interest in Christianity Belonged to Church of Scotland (national

church)

Died 6 months previous to Adam‟s

baptism Mother raised him until age of 14

*At age 4, kidnapped by Gypsies, but was

rescued by uncle and returned to Mother



Biography

University

Age of 14, proceeded to University of Glasgow

Studied „Moral Philosophy‟ concepts such as right, wrong,

good, evil, and responsibility

Developed strong passion forliberty, reason, and free speech

Influenced heavily by Francis

Hutcheson (famous philosopher)



Biography

1740 -1746

Attended Balliol College, Oxford uponwinning a scholarship.

“Gave little if any help towards hislifework”



Biography

1748

Began delivering public lectures in Edinburgh

Influenced by Henry Home (Lord Kames)



Biography

Edinburgh

Lectures dealt primarily with rhetoric or

„belles-lettres‟ literary works, especially fiction, poetry, drama, or

essays, valued for their aesthetic qualities andoriginality of style and tone

Later took up subject of “The Progressof Opulence” Progress of being wealthy, rich, or affluent



Biography

Edinburgh

First thought of the economic philosophy of “theobvious and simple system of natural liberty” (Main

thesis of his „Inquiry into the Nature and Causes of the Wealth of Nations‟)



Biography

1750

Met David Hume, who became oneof his closest friends

Scottish philosopher, economist, andhistorian

One of the World‟s most importantphilosophers

Humean Philosophy - human

knowledge comes to us through oursenses

“We cannot be certain a thing, such as God, a soul, or a self, exists unless we can point out the impression from

which the idea of the thing is derived.”



Biography

1750 Beginning of his role in the emergence of the Scottish

Enlightenment

“Scottish thinkers began questioning assumptions previously taken for granted; and

with Scotland's traditional connections to France, then in the throes of the

Enlightenment, the Scots began developing a uniquely practical branch of humanism to the extent that Voltaire said "We look to Scotland

for all our ideas of civilisation."



Biography

1750 Went to England with intention of a career in

Church of England (footsteps of his father)

Lost his belief and returned to Scotland as aDeist reject supernatural events (prophecy, miracles) and divine

revelation, along with holy books and revealed religions thatassert the existence of such things.

hold that correct religious beliefs must be founded on humanreason and observed features of the natural world, and thatthese sources lead to belief in the existence of one God orsupreme being.



Biography

1751-1752

Appointed Proffessor of Logic at the Universityof Glasgow

Transferred to the Chair of Moral Philosophy

Lectured on fields of ethics, rhetoric, jurisprudence, political economy, and “police

and revenue”



Biography

1759 Published „Theory of Moral Sentiments‟ which

embodied his lectures Established his reputation, became Dean of the

Univeristy, and became Glasgow‟s most illustriouscitizen. Work concerned with how human communication

depends on sympathy between agent and spectator(individual and other members of society)

His own capacity for fluent, persuasive argument(rhetoric) was evident Very different from other thinkers of the time who

stated communication was based on morals or utility



Biography

1759-1763

Began to give moreattention to

jurisprudence andeconomics, andless to theories of morals



Biography

End of 1763 - 1766

lucrative offer from Charles Townshend totutor his stepson, the Duke of Buccleuch

Traveled with pupil, mostly in France, andaround Europe

Came to know intellectual leaders,

and learn and respect many of theirworks



Biography

1764 Became acquainted with a new school of

economic though whose leaders were knownas „physiocrats‟ laws created by humans are artificial and

unneccessary interfere with natural laws, ie. individuals pursuit

of self-interest, which would ultimately benefit allsociety.

Became known as „Laissez-Faire‟ – leave to do, orleave things alone so that matters can work outnaturally.



Biography

1766-1776 Returned to Kirkcaldy Devoted his time to creating his two-volume,

master work “An Inquiry into the Nature andCauses of the Wealth of Nations” (aka. “TheWealth of Nations”)

Published his work in 1776 where it becamevery, well-received and popular amongst the

society of the day. Recognized as the foundation of „Modern

Economic Theory‟



Biography

1778 His work made him

famous, as it was the first

to outline in detail thecharacteristics andbenefits of a completeeconomic system – thefree-market economy

Appointed toCommissioner of Customsof Scotland

Lived with his mother in

Edinburgh



Biography

1790 Died after a painful illness

on July 17 Buried in the Canongate

Kirkyard, Royal Mile, inEdinburgh Became known after his

death of his numerous actsof charity

Left behind many notesand unpublished material,but gave instructions todestroy anything that wasnot fit for publication.



The Times

Mercantilism

Prevailing economic system

State control of economic productionand trade, with goal of exporting asmany goods as possible for sale abroadwhile, at the same time, importing asfew foreign goods as possible.

When successful, gold flows in whilevery little flows out.



The Times

Mercantilism Gold & Silver reserves were thought to

constitute the real wealth of a nation.

A country‟s government had to adopt aprotectionist policy to safeguard its gold andsilver reserves by limiting entry of foreigngoods.

Imposed stiff taxes/tariffs on imported goods,to make them more expensive than the goodsproduced in the country



The Times

Mercantilism

Each of the society‟s class felt

increasingly handcuffed by governmentregulations and taxes.

Negative effect on: Trade; and

Prices



The Times

Laissez-Faire Provided a strong argument for replacing

state control of economy on natural laws to

regulate activity This led to the French Revolution

The American Revolution to the British wasalso a direct result of this thinking –

Declaration of Independence in 1776 Too much interference from government that

had a long history was now being rejected.



The Times

Enclosure Movement

Smith‟s ideas developed in response to rapideconomic changes observed in Britain

Broke up the large plots of land that towns had heldin common since the Middle Ages

Redistributed them in small

plots to individuals

These individuals ran thesefarms for profit rather than

subsistence



The Times

Enclosure Movement

Inventions made itpossible for factory

owners to increase boththeir scale of operationsand profits

Made workers performmore specialized tasks

using variety of machines Technological innovation

created the „IndustrialRevolution‟



Ideas that Advanced

Economic Thought

Self Interest

Human beings motivated by this

The desire to better our condition in life Profit motive is thus the major stimulus

for economic growth and prosperity

Greater production is not because of generous producers, but desire for profit



Ideas that Advanced Economic

Thought

Self Interest Trick is to ensure that desire for profit does

not overwhelm sense of obligation to society Free market – many producers in competition,

none of whom can raise their prices too high

Self-interest and competition work in unison

Government regulation not necessary – invisible hand at work (natural control)



Ideas that Advanced

Economic Thought

Ongoing Progress & Prosperity Division of Labour

specialization of workers in a complex andmechanized production process.

Law of Accumulation accumulated profits invested in additional capital

goods increase total production and efficiency as awhole.

Law of Population increase in production means more workers, and

must attract workers through higher wages, whichleads to better living conditions, reduced mortalityrates, and a natural increase in the population.

adam smith (1).pptadas

Documents

Transcript of adam smith (1).pptadas