CRITICAL WRITING ASSIGNMENT 1
ECON 350-B01
LIBERTY UNIVERSITY
BY
SUQUETTA ELLIS
Adam Smith was an economist who wrote The Wealth of Nations (1776) he expressed
that an economy works best when the common strengths of free market activity work without
government impedance. “Today Smith’s reputation rests on his explanation of how rational self-
interest in a free-market economy leads to economic well-being” (The Concise Encyclopedia of
Economics, 2008). This research was prepared on Adam Smith using different materials that can
be used to express how he would respond to modern-day claims that unequal distribution of
wealth leads to social unrest.
Smith consider wealth as the consists of the goods which all people of society consume
however, he rejected the traditional views of wealth as gold and treasure; rejected the restrictions
of merchants, farmers, and guilds. Smith mention “we are in the modern world where the flow of
goods and services consumed by everyone constitute the ultimate aim and end of economic life”
(Smith, 1776). Smith claimed, a nation needed to increase its economic productions which lead
him to inspire the division of labor. Therefore, Smith claimed that workers could produce more if
they specialized. Smith discussion of the pins, states one worker who did every one of the
operations needed to make a solitary pin could create close to 20 in one day. Ten workers could
make 200 pins along these lines. Assuming, be that as it may, the 10 workers each concentrated
in maybe a couple of the pin production operations from attracting the wire to putting the
completed pin on a paper card they would work all the more productively. Smith assessed that
these 10 workers could deliver 4,800 pins for each specialist or 48,000 inside and out in a day.
This particular example gives an insight of Adam Smith thoughts on unequal distribution.
“No society can surely be flourishing and happy, of which the far greater part of the
members are poor and miserable” (Smith, 1776). These words reverberation Smiths opinions on
unequal distribution. Generally, everyone can agree along with Smith that this is, in fact, a true
statement of this world. If Smith was aware that something he said during his era would still be
applicable today, he would probably feel like he has made an impact in the world. However, he
would likely call attention to that as long as there are individuals who have more money than
their partners there will be an unequal distribution of wealth.
Smith speaks more on the unequal distribution of wealth in this quote. “Wherever there is
great property there is great inequality. For one very rich man, there must be at least five
hundred poor, and the affluence of the few supposes the indigence of the many. The affluence of
the rich excites the indignation of the poor, who are often both driven by want, and prompted by
envy, to invade his possessions” (Smith, 1776). This is a situation that is inevitable because the
world nevertheless operates despite the fact that there are occasions where the levels are not
equivalent. Regardless of the fact that Adam Smith couldn’t see this far into the future, his
economic theories turned out to be spot on point.
Smith have many thoughts on profits and inequality when it comes to wage rates. “In
regards to the price of commodities, the rise of wages operates as simple interest does, the rise of
profit operates like compound interest. Our merchants and masters complain much of the bad
effects of high wages in raising the price and lessening the sale of goods. They say nothing
concerning the bad effects of high profits. They are silent with regard to the pernicious effects of
their own gains. They complain only of those of other people” (Smith, 1176). In Boucovannis
article “The equalizing hand: Why Adam Smith though the market should produce wealth
without steep inequality” mention “Smith's views on profits may be far simpler than what
contemporary economics accepts, but he is clear about their causes and pernicious effects. High
levels of profits are inversely related to the health of the economy. For instead, High rates of
profit are therefore typical in "ruined countries," like Bengal. There, capital is scarce, lowering
wages whilst increasing the price of goods, leaving everyone worse off--except manufacturers”
(Boucovannis, 2013). Smith saw the ability for calamity in the economic policies in his time. The
way that unequal distribution of wealth leads to social unrest has been shown in various nations
around the world. The unequal distribution has transformed into a type of abuse; this can be
plainly found in nations like Iraq and Afghanistan because in these places the unrest has raised
rebellions and political unsteadiness. It seems as if Smith knew that these sorts of things could
and would happen if the poor kept on being held around individuals with more wealth than they
had. He also wanted inform other to consider it to be an issue and attempt to stop or reduce it. By
looking at today’s world Smith would see that it has not transformed from his era however it had
quite recently shown signs of improvement at concealing a portion of the problems that were
brought to light by Smith.
Adam Smith contradicts himself in his writing because invisible hand does distribute
wealth unequally. Smith mention invisible hand in this quote
“Every individual necessarily labors to render the annual revenue of the society as great
as he can. He generally neither intends to promote the public interest nor knows how
much he is promoting it ... He intends only his own gain, and he is in this, as in many
other cases, led by an invisible hand to promote an end which was no part of his
intention. Nor is it always the worse for a society that it was no part of his intention. By
pursuing his own interest, he frequently promotes that of the society more effectually
than when he really intends to promote it. I have never known much good done by those
who affected to trade for the public good” (Smith, 1776).
It’s pretty clear that Smith would say that it is important to have unequal distribution. Somehow
it must occur all together for the world to work legitimately. On the other hand, if there were a
fixed level of wealth, there would be no requirement for individuals to need and learn new tasks
or have more businesses since they couldn’t go over that fixed level. Even though he has
contradicted himself it demonstrations that he was just striving to place everyone in a better
position.
During the course of Adam Smith’s book, the subject of inequality constantly appeared, it
was conveyed diverse however it implied the same thing in any case. His thoughts about the 21st
century most likely are the same but on a larger level. However, Smith would be intrigued to
realize that a large portion of his speculations became applicable to the way that the world’s
economics are taken a gander at. Also without his theories, economics would not be so exact.
Reference
Boucoyannis, D. (2013). The equalizing hand: Why Adam smith thought the market should
produce wealth without steep inequality. Perspectives on Politics, 11(4), 1051-1070. Retrieved
from http://search.proquest.com.ezproxy.liberty.edu:2048/docview/1466259878?pq-
origsite=summon&accountid=12085
Smith, A. (1776). The Wealth of Nations. London: W. Strahan and T. Cadell. Retrieved from
http://www.econlib.org/library/Smith/smWN6.html
The Concise Encyclopedia of Economics. 2008. “Adam Smith.” Library of Economics and
Liberty. Retrieved from http://www.econlib.org/library/Enc/bios/Smith.html
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