Adam Smith Wealth Of Nations Analysis

1) The two questions which Adam Smith’s Wealth of Nations contains are i) the nature of the wealth of nation ii) the causes of the wealth of nation

For the nature of wealth of nation, Adam Smith explained it with respect to the value of wealth. Mercantilist used to think that they should focus on to collect metals by preventing it to leave the country. Adam Smith cleared that the value of wealth is not determined be the accumulation of metals but by the flow of goods and services. Further, he explained that value has two meanings which is value in use and other is value in exchange. A good can be extremely useful but it may have zero exchange value. Hence, value is use is merely the power of a good to satisfy human wants. The concept of value
The key to economic growth is labor. Thus, it is necessary that the labor must be productive to achieve economic efficiency. Hence for economic efficiency, specialization of labour is important. He stated that specialization will make the process more productive. By employing labor who specialize in their own area, let them do what they make best and collaborate. This notion of productivity not only cuts the time and effort needed to make a commodity but also increases their skills. He stated that the increase in output which results from the division of labour offsets the
His argument against free trade was motivated by the fact that he noticed that the free trade has caused an increase in overseas production which lead to deindustrialization in U.S. This deindustrialization has led to trade deficiency due to the rise in imports and decrease in exports. Furthermore, because of free trade, the U.S family has not seen a rise in wages over a span of time as well as there is a loss of more than one-third of U.S manufacturing jobs. Therefore, he argued to restrict free trade and favor capital accumulation to increase economic growth in