Adam Smith Wealth of Nations Book One review.

Essay by evilkid51High School, 12th gradeA, October 2004

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In the book, Wealth of Nations, Adam Smith believes the government should not control economic activity but should take more of a laissez-faire outlook. He believes that the economy can run by itself without external interference. The main concept that keeps the economy flowing is man's natural ability to exchange and trade. This human instinct ultimately leads to a division of labor, a work force. Adam Smith describes the causes of increased productivity, value and price, wages, and rent, all of which determines the flow of the economy.

When asked how advancements in productivity occur, most people would say through technology and machinery. However, Adam Smith believes advancements are due to increased specialization of labor. People such as philosophers, scientists, and engineers are significant to this division of labor; they create theories, formulas, and models which allow technology to develop and progress. This, in return, allows the people as a community to evolve.

The foundation of this division of labor is man's tendency to trade. Also, it is motivated by the human instinct to self-love and self-help. Contrary to popular believe, it is not based upon wisdom. "This division of labour... is not originally the effect of any human wisdom". Smith believes that something most people ask themselves is "will I benefit from this?" However, he does not believe self-interest is a form of selfishness nor is it the pinnacle of the force behind human motivation. If he believed that, then all humans would be nothing more than parasitic savages only looking to help themselves. In addition to self-motivation is cooperation and barter amongst others. Smith brings up an example of this through the market system. " the general disposition to truck, barter, and exchange, being brought, as it were, into a common stock, where everyman man purchase whatever...