Adam SmithAdam Smith was born in Kirkcaldy, Fife, Scotland. His exact date of his birth isunknown but he was baptized on June 5, 1723.
At the age of fifteen, Smith beganattending Glasgow University where he studied moral philosophy. In 1748 he began givinglectures in Edinburgh where he discussed rhetoric and later he began to discuss theeconomic philosophy of the simple system of natural liberty which he later proclaimed inhis Inquiry into Nature and Causes of the Wealth of Nations. In 1751, Smith was appointed professor of logic at Glasgow university,transferring in 1752 to the chair of moral philosophy. His lectures covered the field ofethics, rhetoric, jurisprudence and political economy.
In 1759 he published his Theory ofMoral Sentiments, embodying some of his Glasgow lectures. This work was about thosestandards of ethical conduct that hold society together, with emphasis on the generalharmony of human motives. Smith moved to London in 1776, where he published An Inquiry into the Natureand Causes of the Wealth of Nations, which examined in detail the consequences ofeconomic freedom. It covered such concepts as the role of self-interest, the division oflabor, the function of markets, and the international implications of a laissez-faireeconomy. The Wealth of Nations established economics as an autonomous subject and,launched the economic doctrine of free enterprise. In the western world, it is the mostinfluential book on the subject.
When the book, which has become a classic manifestoagainst mercantilism, appeared in 1776, there was a strong sentiment for free trade in bothBritain and America. This new feeling had been born out of the economic hardships andpoverty caused by the war but the British public and parliament still clung to mercantilismfor many years to come. Smith laid the intellectual framework that explained the freemarket and still holds true today. He is most often recognized for the expression theinvisible hand, which he used to demonstrate how self-interest guides the most efficientuse of resources in a nation’s economy.
In 1778, he was appointed to a post of commissioner of customs in Edinburgh,Scotland. He died there on July 17, 1790, after a painful illness. After his death it wasdiscovered that Smith had devoted a considerable part of his income to numerous secretacts of charity. In the piece entitled Four Percent Follies from The Accidental Theorist Krugmandiscusses how some people think Alan Greenspan should let the economy grow faster. Four Percenters, those against Greenspan, feel that he is not putting enough currency intocirculation therefore slowing growth.
If more money is put into the economy then nit willgrow faster but if too much is put in, inflation will occur. Also, they feel that this willremedy the low rate of unemployment which will soon cause inflation to spiral upward if itcontinues to decrease below the standard 6%. Adam Smith would surely understand the Four Percenters plea. He would wantthe economy to be free from too much government control. Greenspan is abusing his placeand should let the currency flow into the market rather then hold back. Sure, Smith wouldsay some mediation is necessary to keep too much money from pouring in so inflationdoesnt occur.
Smith believes that the economy should be free from the government yetthe government should still silently oversee it to prevent any problems. Greenspan ispreventing problems but is being too cautious and Smith would want him to let morecurrency into our market but still keep it from getting out of control. My view on this matter is quite similar to that of Adam Smiths view on thematter. I also feel that an economy should be allowed to flourish and grow to its fullestcapacity. As the article illustrates, inserting more money into the economy will certainlycause the economy to grow and also help fix the unemployment rate. So I feel thatGreenspan should loosen his control over the money and let more currency be distributedinto the economy.
But I also feel that it is very important that Greenspan maintains awatchful eye over this inserting of money into the economy. His job is to keep theeconomy prosperous and safe. So while he must let more money flow he still must be sureto keep too much money from entering our market. He can not let inflation occur becausethat would hurt our economy and he will have failed. That is why his job is difficult,however, as the man placed in that position he must be able to handle this. EitherGreenspan lets more money enter the economy while overseeing it as too prevent inflationor America simply needs to find a new Chairman of the Federal Reserve.
The second article from The Accidental Theorist is called Technologys Wonders:Maybe not so wondrous. Economics Essays