Adam Smith Adam Smith was born in Kirkcaldy, Fife, Scotland. His exact date of his birth is unknown but he was baptized on June 5, 1723. At the age of fifteen, Smith began attending Glasgow University where he studied moral philosophy. In 1748 he began giving lectures in Edinburgh where he discussed rhetoric and later he began to discuss the economic philosophy of the “simple system of natural liberty” which he later proclaimed in his Inquiry into Nature and Causes of the Wealth of Nations. In 1751, Smith was appointed professor of logic at Glasgow university, transferring in 1752 to the chair of moral philosophy.
His lectures covered the field of ethics, rhetoric, jurisprudence and political economy. In 1759 he published his Theory of Moral Sentiments, embodying some of his Glasgow lectures. This work was about those standards of ethical conduct that hold society together, with emphasis on the general harmony of human motives. Smith moved to London in 1776, where he published An Inquiry into the Nature and Causes of the Wealth of Nations, which examined in detail the consequences of economic freedom. It covered such concepts as the role of self-interest, the division of labor, the function of markets, and the international implications of a laissez-faire economy.
The Wealth of Nations established economics as an autonomous subject and, launched the economic doctrine of free enterprise. In the western world, it is the most influential book on the subject. When the book, which has become a classic manifesto against mercantilism, appeared in 1776, there was a strong sentiment for free trade in both Britain and America. This new feeling had been born out of the economic hardships and poverty caused by the war but the British public and parliament still clung to mercantilism for many years to come. Smith laid the intellectual framework that explained the free market and still holds true today. He is most often recognized for the expression “the invisible hand,” which he used to demonstrate how self-interest guides the most efficient use of resources in a nation’s economy. In 1778, he was appointed to a post of commissioner of customs in Edinburgh, Scotland.
He died there on July 17, 1790, after a painful illness. After his death it was discovered that Smith had devoted a considerable part of his income to numerous secret acts of charity. In the piece entitled Four Percent Follies from The Accidental Theorist Krugman discusses how some people think Alan Greenspan should let the economy grow faster. Four Percenters, those against Greenspan, feel that he is not putting enough currency into circulation therefore slowing growth. If more money is put into the economy then nit will grow faster but if too much is put in, inflation will occur.
Also, they feel that this will remedy the low rate of unemployment which will soon cause inflation to spiral upward if it continues to decrease below the standard 6%. Adam Smith would surely understand the Four Percenters plea. He would want the economy to be free from too much government control. Greenspan is abusing his place and should let the currency flow into the market rather then hold back. Sure, Smith would say some mediation is necessary to keep too much money from pouring in so inflation doesnt occur.
Smith believes that the economy should be free from the government yet the government should still silently oversee it to prevent any problems. Greenspan is preventing problems but is being too cautious and Smith would want him to let more currency into our market but still keep it from getting out of control. My view on this matter is quite similar to that of Adam Smiths view on the matter. I also feel that an economy should be allowed to flourish and grow to its fullest capacity. As the article illustrates, inserting more money into the economy will certainly cause the economy to grow and also help fix the unemployment rate. So I feel that Greenspan should loosen his control over the money and let more currency be distributed into the economy.
But I also feel that it is very important that Greenspan maintains a watchful eye over this inserting of money into the economy. His job is to keep the economy prosperous and safe. So while he must let more money flow he still must be sure to keep too much money from entering our market. He can not let inflation occur because that would hurt our economy and he will have failed. That is why his job is difficult, however, as the man placed in that position he must be able to handle this. Either Greenspan lets more money enter the economy while overseeing it as too prevent inflation or America simply needs to find a new Chairman of the Federal Reserve.
The second article from The Accidental Theorist is called Technologys Wonders: Maybe not so wondrous.