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A Smith, The Wealth of Nations

A Smith, The Wealth of Nations - The Flaws of Mercantilism...

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The Flaws of Mercantilism Adam Smith, THE WEALTH OF NATIONS We have surprisingly few biographical details known about Adam Smith, the  economic thinker famed for his devastating attack on mercantilism in  The Wealth  of Nations.   Born in 1723 in a small Scottish fishing village and educated at  Glasgow and Oxford, between 1751 and 1763 he held chairs in logic and moral  philosophy at the University of Glasgow. The publication of his  Theory of Moral  Sentiments  in 1759 ensured his literary and philosophical reputation. In 1763 he  became the tutor of an English aristocrat's son and lived in France for three years,  meeting many prominent French intellectuals. From 1767 to 1776 he lived in  semiretirement in Scotland and finished   The Wealth of Nations,   published in  1776. In 1778 he became commissioner of customs in Scotland and died in  Edinburgh in 1790. The Wealth of Nations  went through five English editions and was published  in several European translations in the eighteenth century. Its importance lies in  its general approach to economics, which brought systematic analysis to wages,  labor, trade, population, rents, and money supply, and in its theoretical assault on  mercantilism, the prevailing government economic policy in Europe for two  centuries. The key to economic growth, Smith asserted, was not regulation but  free competition among individuals and among nations. Many English businessmen and a few politicians embraced Smith's doctrines  of   economic   freedom,   but   the  French   Revolution   and   the   Napoleonic   wars  prevented their implementation. Only in the early 1800s did the British convert a  theoretical acceptance of free trade into actual policy. QUESTIONS FOR ANALYSIS 1. Smith denies that a nation's wealth consists of the amount of gold and silver it controls. What is the basis for his argument? 2. Smith suggests the paradox that each individual, by pursuing his or her own self-interest, promotes the general welfare of society. How is this possible? 3. Why, according to Smith, are high tariffs self-defeating? 4. What will be the short-term and long-term effects of free trade, according to Smith? 5. What groups in society would you expect to be most enthusiastic aboutSmith's ideas? What groups might be likely to oppose them? BOOK IV Chapter 1. Of the Principle of the Commercial or Mercantile System That wealth consists in money, or in gold and silver, is a popular notion which naturally arises from the double function of money, as the instrument of commerce, and as the measure of value. In consequence of its being the instrument of commerce, when we have money we can more readily obtain whatever else we have occasion for, than by means of any other commodity. The great affair {thing to do}, we always find, is to get money. When that is obtained, there is no difficulty in making any
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