Adam Smith - the Wealth of Nations

Adam Smith was born in 1723 in a Scottish village. He attended and taught at the universities Glasgow and Oxford. He eventually moved to Scotland were he became a prominent figure of the Scottish Enlightenment, and was regarded as the "founder of the academic study of economics (Smith, pp.151)." During this time, 1776, Smith published The Wealth of Nations. In The Wealth of Nations, Smith introduced a different approach to analyzing economics. He used the wages, labor, trade, population, rents, and money supply to analyze a society. (Smith, pp. 151) Also within his book, Smith talked about economically why he opposed mercantilism and favored the free market.

In a mercantilism society, the government or the King would implement price controls over items in the market and therefore eliminating any competition. They determined how much items would cost and who was allowed to purchase certain items. Smith opposed mercantilism. He believed that mercantilism stunted the economic growth of a society, prohibited the best items from being made, and just increased the wealth of the nation. For a nation to maintain their wealth, the government or the King would invade other countries, seize their land and rob them of their raw resources with no regard to their lifestyle and culture. They would then enforce ridiculous policies and tariffs to make people buy from them only, and make it hard for foreign goods to enter their market. Adam Smith argued that if the government would let the people trade on their own and not control the prices, both society and the nation would benefit as a whole.

According to Smith, the free market is the ability to "free[ly] trade among nations and economic freedom for individuals...to pursue their own self-interest (Smith, pp. 152)." He argued that by allowing individuals to have economic freedom over there own goods, and trade with whomever they see fit would help increase societies economic growth as a whole. He goes on to say that the "the propensity to truck, barter, and exchange one thing for another (Smith, pp. 152)" has been around for as long as mankind has existed. For instance, when a man needed chickens instead of cows, he would go to his neighbor and tell him that he's willing to give him one cow for five of his chickens. Then the neighbor had the right to accept or decline the proposition. This proposition reflected Smith's idea of the free market, "give me that which I want, and you shall have this which you want...it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of (Smith, pp. 153)." In other words, these two men have agreed upon a set price for what they see as an even exchange or worth between a cow and chickens.

In the free market, price is driven by the consumer's willingness to purchase an item and pay the amount asked. If the consumer doesn't want to pay the amount requested, then he may seek what he wants from elsewhere. Smith points out that "it is in the interest