Deat Adam Smith and the Wealth of Nations
They would do this not as a means of benefiting society, but in an effort to outperform their competitors and gain the greatest profit. But all this self-interest would benefit society as a whole by providing it with more and better goods and services, at the lowest prices. To explain why all society benefits when the economy is free of regulation, Smith used the metaphor of the “invisible hand”: “Every individual is continually exerting himself to find the most advantageous employment for whatever capital he can command.
It this own advantage, and not that of society, which he has in mind, but he is in this, as in many other cases, led by an invisible hand to promote and end which was no part of his intention, for the persuade of his own advantage necessarily leads him to prefer that employment which is most advantageous to society. ” The “invisible hand” was Smith’s name for the economic forces that we today would call supply and demand, or the marketplace. He sharply disagreed with mercantilists who, in theft quest for a “favorable balance of trade,” called for regulation of the economy.
Instead, Smith agreed with the physiocrats and their policy of “laissez faire” letting individual and businesses function without interference from government regulation of private monopolies. In that way, the “invisible hand” would be free to guide the economy and maximize production. The Wealth of Nations goes on to describe the principal elements of the economic system. In a famous section, Smith turned to the pin industry to demonstrate how the division of labour and the use of machinery increased output. One man draws out the wire, another straights it, a third cuts it, a fourth points it, a fifth grinds it at the top for receiving the head; to make the head requires two or three distinct operations. ” Also modern technology has improved the methods by which pins are produced; the principles pertaining to the division of labour remain unchanged. Similarly, other section dealing with the factors of production, money and international trade are as meaningful today as when they were first written. You can see, therefore, hat Thomas Jefferson’s Declaration of Independence and Adam Smith’s The Wealth of Nations have more in common that a birthday. More importantly, both contain some of the best descriptions of the principles upon which our political and economic systems are based. 2. Comprehension 2. 1. Fill in the gaps with the necessary prepositions. 1. The year of 1776 associates … the signing … The Declaration … Independence. 2. It earned the author the title “the father … economics,” Smith objected … the principal economic believes … his day. 3.
He disagreed … the mercantilists who measured the wealth of a nation … its money supply, and who called … government regulation of the economy … order … promote a “favorable balance … trade. ” 4. It this own advantage, and not that … society, which he has … mind, but he is in this, as … many other cases, led … an invisible hand to promote and end which was no part of his intention, … the persuade … his own advantage necessarily leads him to prefer that employment which is most advantageous to society. 5. … that way, the “invisible hand” would be free … guide the economy and maximize production. . Also modern technology has improved the methods … which pins are produced; the principles pertaining … the division … labour remain unchanged. 7. Thomas Jefferson’s Declaration … Independence and Adam Smith’s The Wealth of Nations have more … common that a birthday. 8. Both contain some … the best descriptions … the principles … which our political and economic systems are based. 2. 2. Answer the questions to the text. 1. When and where was The Wealth of Nations by A. Smith published? 2. What is a famous nickname of Adam Smith and why? 3. What economic issues did Adam Smith deny? 4.
What does a nation’s wealth depend upon according to A. Smith? 5. What was the heart of his economic philosophy? 6. In what way did he explain why society benefits when the economy is free of regulation? 7. What is “invisible hand” in the text? How do we call it today? 8. What physiocrats’ policy did Smith agree with? 9. What is described in Adam Smith’s “The Wealth of Nations”? 10. How can the division of labour and the use of machinery increase output according to Smith? 11. Is there anything common in Thomas Jefferson’s Declaration of Independence and Adam Smith’s The Wealth of Nations? 2. 3.
Find out the correspondent definition to the given English business colloquialisms. Give the Ukrainian variants. Make up a dialogue about your business using 5 of the given English business colloquialisms. ColloquialismDefinition All in everything included in the price Big notesa very important person Book of wordsgenerally