Explorations of the major themes of the course "The West and the Modern World". Primary analyses of major documents that form the basis of the Western World.
Monday, October 03, 2005
19.4] Mercantilism, Adam Smith
Comment on Smith's idea of human nature and economics
Adam Smith was an innovative economist that helped develop the current capitalist-economic ideas that are still used today. Smith understood that the need for a currency that could maintain a reasonable monetary value (such as gold and silver) is important to all economies. He understood that the size of the currency had a direct effect with trade. The currency would have to be universally accepted (demanded) and easy to transport. This was an idea that was understood at the time; however Adam Smith understood the need for monetary-liquidity necessary for trade. In the late 1700’s the major controlling powers such as England, Spain, Portugal etc. all had the general concept of hoarding money. Smith knew that the money must be liquid and had to be spent to revive economies. Smith proposed that free trade exporting and importing would send a currency ‘flow’ back and forth between countries. Circulation of money, quickly, between countries helped the economy and standard of living to all countries by increasing spending power (demand) while increasing manufacturing/production (supply). This idea of free trade would create specific demographics that are known as markets and increase competition therefore improving technology and price. He believed in limited government interference because at that time monopolies did not pose a threat to consumers. Trade between countries would appear to be uneven, (for example one could export more than import) however that balances out through the scope of competition and the demand for money. When the government interfered in trade it would potentially retard the growth of its own economy. In conclusion Smith realized that money was only good for its purchasing power and holds little value for hoarding. 1. Open trade brings many benefits to the state; it increases competition, improves technology, expands purchasing power, and improves standards of living. 2. Smith view of people probably wasn’t negative, but he did understand that people were inherently competitive and wanted to improve their own personal lives with material things. 3. Smith’s theories are enlightened because they make sense and are still used today. America uses his idea by not interfering with trade, except for minor taxing, dumping, and anti-trust.
1 comment:
Joseph Cecere posted this:
Adam Smith was an innovative economist that helped develop the current capitalist-economic ideas that are still used today. Smith understood that the need for a currency that could maintain a reasonable monetary value (such as gold and silver) is important to all economies. He understood that the size of the currency had a direct effect with trade. The currency would have to be universally accepted (demanded) and easy to transport. This was an idea that was understood at the time; however Adam Smith understood the need for monetary-liquidity necessary for trade.
In the late 1700’s the major controlling powers such as England, Spain, Portugal etc. all had the general concept of hoarding money. Smith knew that the money must be liquid and had to be spent to revive economies. Smith proposed that free trade exporting and importing would send a currency ‘flow’ back and forth between countries. Circulation of money, quickly, between countries helped the economy and standard of living to all countries by increasing spending power (demand) while increasing manufacturing/production (supply).
This idea of free trade would create specific demographics that are known as markets and increase competition therefore improving technology and price. He believed in limited government interference because at that time monopolies did not pose a threat to consumers. Trade between countries would appear to be uneven, (for example one could export more than import) however that balances out through the scope of competition and the demand for money. When the government interfered in trade it would potentially retard the growth of its own economy. In conclusion Smith realized that money was only good for its purchasing power and holds little value for hoarding.
1. Open trade brings many benefits to the state; it increases competition, improves technology, expands purchasing power, and improves standards of living.
2. Smith view of people probably wasn’t negative, but he did understand that people were inherently competitive and wanted to improve their own personal lives with material things.
3. Smith’s theories are enlightened because they make sense and are still used today. America uses his idea by not interfering with trade, except for minor taxing, dumping, and anti-trust.
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