Who is the Father of Modern Economics? – About and his Contribution
The Father of Modern Economics is Adam Smith, born in 1723, was one of the leading intellectuals of his time, both in Scotland and in the rest of Europe
Adam Smith is one of the most famous economists in history and is considered modern economics.
In his economic theories, he combines history, philosophy, economic development, psychology, and ethics.
It is one of the greatest exponents of classical economics. He was born in Scotland in 1723.
Founder of economics as a science, Smith, wrote the book The Wealth of Nations, considered the first treatise on political economy and classical economics’s founding text.
The same is true for economists.
For Adam Smith, the Father of Modern Economics implication of his second book, “The Wealth of Nations,” is something that the Scotsman, born almost 300 years ago (June 16, 1723), could never have known.
Today is dominating by financial derivatives, stock options, and tax regimes that are almost indecipherable.
Labor regulations are quite far from the economic system in which Smith operated at the end of the 18th century.
Adam Smith is commemorated with a statue at the University of Edinburgh, although the philosopher studied in Glasgow
Smith’s most famous analogy refers to the “invisible hand” that motivates individuals in their actions.
And although throughout the centuries, it was taken to extremes by both its critics and its fans.
Smith’s intention in his writings was always in pursuit of the greatest possible general benefit.
Contribution of Father of Modern Economics
The Theory of Moral Sentiments and The Wealth of Nations.
The main contributions to economic progress that we can extract from them are the following:
1. Economic liberalism
Adam Smith is the first in the Anglo-Saxon context to bet on an economy disconnected from the State.
The explanation given by Adam Smith was that when the different agents seek their interest.
There is an invisible hand that leads them to make that search for the personal benefit a benefit for the entire society.
Such as, State intervention in the economy would only worsen the results given by the free market.
This idea would be developing by the Austrian school in the 19th and 20th centuries.
2. Division of labor
In an agrarian society where commerce was not developing, Adam Smith realizing that he could increase labor division production.
For example, he gives of the pin factory illustrates this very well, if a worker did the whole process, he could not make more than twenty pins a day.
However, if they each specialized in one phase of the process, and they could make twelve pounds of pins.
This theory is basing on the production specialization, first implemented by Taylor and Ford in the same name’s car factory.
3. Importance of international trade
As a result of specialization, each nation will be more productive in manufacturing some goods and less in others.
Adam Smith breaks with the tradition of restricting imports and advocates the specialization of a nation.
What is cheaper to produce and then sell it and also buy from others what it does not manufacture.
This theory is called absolute advantage, which was later improving by David Ricardo and his comparative advantage theory.
In conclusion, Adam Smith was one of the fathers of economics.
As the main contributions, we have the beginning of economic liberalism, international trade promotion, and work vision.
However, the objective theory of value was a negative point as the germ of what communism would be.
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