Economic Theories of Adam Smith Research Paper Example | Topics and Well Written Essays - 1250 words

Economic Theories of transport metalworker - Research Paper ExampleEconomic Theories of Adam smith This report will discuss different scotchal theories by Adam Smith, a Scottish philosopher. Adam Smith is the founder of a free-market dandyism. He is also the father of modern classical economics and a proponent of laissez faire economic policies. His arguments against mercantilism made him the father of modern economics. The Scottish philosopher spent many old age teaching and publishing some of his lectures in the Theory of Moral Sentiments in 1759. The material gained ground and place the foundation for the publication of The Wealth of Nations in 1776 which cemented Smiths place in history. However, many critics line of business that in his time Smith did not invent the ideas he wrote around. He only popularized the ideas that became known as classical economy. Using his work other economists solidified the theories of classical economy which became dominant during the time of keen depression or the global economic crisis. The report will also compare the current economic system with Smiths and conclude whether he would agree with current policies of today if he was alive. labor Theory From the economists point of view, business simply means the creation of goods and services which consumers will buy. Companies are the units of production, and they substitute input into output through a transformation process (Kurz & Salvadori, 1995). The theory of production then consists of how a company chooses and combines various inputs to produce an output at a condition level in the around efficient manner. The assumption is that decision making is done with the view of maximizing profits. Production is all about creation of wealth which in turn adds to the golf-clubs welfare. Resources are limited and must be efficiently utilized to create the maximum possible welfare. There are different inputs or resources of the society utilise in the production proc ess. These inputs or resources are the factors of production. Adam Smith identified three factors of production which are land, labor and capital. In the economics the definition of land refers to all the natural resources which are used in production. The land notion includes farming and building land, forests, rivers, lakes, and mineral deposits. Therefore, land does not mean a piece of earth. Labor attributes to both mental and physical efforts used in the production of goods and services. Labor is obvious in that it is the services of labor that are bought and sold. Labor is also unique because it is the reason why economic action at law takes place. The supply of labor is measured by the number of hours of work which is offered at a given wage rate over a given period of time (Kurz & Salvadori, 1995). Capital is a semisynthetic input and can be classified as working or circulating capital referring to stocks of nude materials, partly finished goods, and finished goods held by producers. Alternatively, it can be classified as fixed capital which consists of all the equipment used in production. The aspect of specialization is important in the production process. It refers to the concentration of activity in those lines of production where the company or an individual has some natural or acquired advantage. Adam Smith drew attention to the importance of the labor division in his book The Wealth of Nations. He was fundamentally concerned with the division of labor of a particular industry