Adam Smith Minimum Wage Analysis

The United States of America is considered by many to be a prime example of a nation that exemplifies capitalism. The free markets and horizontal relationships that Adam Smith proposed were intended to afford all citizens the opportunity for economic growth and success. However, I firmly believe that our modern system of capitalism falls short of that envisioned by Adam Smith, especially regarding wages. Smith believed that if an individual worked diligently, the compensation for such labor should be more than sufficient to sustain the needs and well-being of a family. Adam Smith maintained that the purpose of government is to regulate free markets, provide ensure justice, and promote national defense, and provide public works. Minimum wage
The overall effect is that society as a whole can grow and prosper. Yet, a low minimum wage curtails financial independence and ends the horizontal relationships that Smith envisioned with capitalism. Adam Smith would staunchly disagree with this philosophy. This can be seen when he writes, “A man must always live by his work, and his wages must at least be sufficient to maintain him. They must even upon most occasions be somewhat more; otherwise it would be impossible for him to bring up a family, and the race of such workmen could not last beyond the first generation…(Smith, pg. 500)” For Smith, the value of a minimum wage system that reflected that worker’s production was essential. A worker was paid a fair amount for the labor that was provided. This, Smith argued, would lead to a symbiotic relationship between workers and employers. However, modern capitalism has led to a large gap between the worker and the employer because of the employer’s goal of decreasing wages and increasing profit. Smith would have rejected this relationship as unfair and
Adam Smith sought to create an economic system that would benefit everyone, no matter if they were rich or poor. Despite these noble intentions, capitalism has demonstrated that greed and corruption undermine this system. The race to the bottom has jeopardized the very fabric of society by causing individuals to rely on government for all their needs. Further, many workers feel outcast from society because they cannot afford commodities like a smart phone. I agree with Smith that capitalism needs strong regulation to function properly. The staunch inequality that exists is a reflection of the lack of federal and state initiatives. Especially with regards to minimum wage, people do not have the money to provide necessities for themselves or their