Adam Smith
Adam Smith was born in Kirkcaldy, Fife,
Scotland. His exact date of his birth is
unknown but he was baptized on June
5, 1723. At the age of fifteen, Smith began
attending Glasgow University
where he studied moral philosophy. In 1748 he began
giving lectures in
Edinburgh where he discussed rhetoric and later he began to
discuss the
economic philosophy of the "simple system of natural liberty"
which he later
proclaimed in his 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 of ethics, rhetoric, jurisprudence and political
economy. In 1759 he
published his Theory of Moral Sentiments, embodying some
of his Glasgow
lectures. This work was about those standards of ethical
conduct that hold
society together, with emphasis on the general harmony of
human motives. Smith
moved to London in 1776, where he published An Inquiry
into the Nature and
Causes of the Wealth of Nations, which examined in
detail the consequences of
economic freedom. It covered such concepts as the
role of self-interest, the
division of labor, the function of markets, and
the international implications
of a laissez-faire economy. 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 most
influential book on the subject. When the
book, which has become a classic
manifesto against mercantilism, appeared in
1776, there was a strong
sentiment for free trade in both Britain and America.
This new feeling
had been born out of the economic hardships and poverty caused
by the war but
the British public and parliament still clung to mercantilism for
many years
to come. Smith laid the intellectual framework that explained the
free market
and still holds true today. He is most often recognized for the
expression
"the invisible hand," which he used to demonstrate how
self-interest guides
the most efficient use 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 was discovered that Smith had devoted a
considerable part of his income
to numerous secret acts of charity. In the
piece entitled Four Percent Follies
from The Accidental Theorist Krugman
discusses 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 into circulation
therefore slowing growth. If
more money is put into the economy then nit will
grow faster but if too much
is put in, inflation will occur. Also, they feel
that this will remedy the
low rate of unemployment which will soon cause
inflation to spiral upward if
it continues to decrease below the standard 6%.
Adam Smith would surely
understand the Four Percenter’s plea. He would want
the economy to be free
from too much government control. Greenspan is abusing
his place and should
let the currency flow into the market rather then hold
back. Sure, Smith
would say some mediation is necessary to keep too much money
from pouring in
so inflation doesn’t occur. Smith believes that the economy
should be free
from the government yet the government should still silently
oversee it to
prevent any problems. Greenspan is preventing problems but is
being too
cautious and Smith would want him to let more currency into our market
but
still keep it from getting out of control. My view on this matter is
quite
similar to that of Adam Smith’s view on the matter. I also feel that
an
economy should be allowed to flourish and grow to its fullest capacity. As
the
article illustrates, inserting more money into the economy will certainly
cause
the economy to grow and also help fix the unemployment rate. So I feel
that
Greenspan should loosen his control over the money and let more
currency be
distributed into the economy. But I also feel that it is very
important that
Greenspan maintains a watchful eye over this inserting of
money into the
economy. His job is to keep the economy prosperous and safe.
So while he must
let more money flow he still must be sure to keep too much
money from entering
our market. He can not let inflation occur because that
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. Either Greenspan lets
more money enter the economy while
overseeing it as too prevent inflation or
America simply needs to find a
new Chairman of the Federal Reserve. The second
article from The Accidental
Theorist is called Technology’s Wonders: Maybe not
so wondrous.