How Adam Smith's Writings Help Us to Grasp One or More Specific Issues Essay

How Adam Smith's Writings Help Us to Grasp One or More Specific Issues in Contemporary Politics - Essay Example In the book Wealth of Nations, Smith argued that wealth does not only mean possessing metal but also included the ability to satisfy one’s needs and desires (Otteson 7). He stated that prosperity can be increased if the division of labor is increased, which he demonstrated by using the example of pins. He established logical insights like equality of returns, which was explained by the relation between wage rate and the type of the work. In short, economic and political theories of Adam Smith provided the guidelines that help to understand the wealth of nations and throw light on the political scenario and policy making (â€Å"Adam Smith†). Theories of Adam Smith - Theory of Invisible Hand at Work and Division of Labor In his book Wealth of Nations, Smith has focused on the fact that market forces ensured the production of the goods and services in quality and volume. This was coined as the metaphor of invisible hand at work. People should be allowed to regulate the mar kets on their own. He was of the idea that if people are given the liberty to control the market, they will utilize the resources in the best possible ways with the welfare of the public as the byproduct. This will be possible when producers prefer making profits by supplying the products or services. This will increase competition, and thus the public life will be influenced in a better way. Smith suggested that this can be achieved only without the intervention of the government, thus devising a ‘laissez faire’ form of economy (Smith). Another theory proposed by Smith was division of labor in the book Wealth of Nations. He suggested that, with proper division of work, there would be an increase in productivity. With proper allocation of work, there is an increase in the efficiency of the worker as regards one specific kind of work. Assembly line made it necessary for the workers to focus on minute details, as any mistake in one part can make the entire assembly line n on functional. Smith proposed that a worker can perform best if he or she is assigned the work he or she is best at. He said that the division of labor would lead to producing tangible objects and in surplus amounts (Dhamee). The political environment during the time of Adam Smith was more capitalistic in nature. Mercantilism was present that dictated almost the society in its entirety. Adam Smith was the severe opponent against mercantilism. In mercantilism, the only beneficiaries were the producers and the monopolists. This was done at the cost of the interests of the consumers. The government had no policies to address the needs of the common man. Also, there was no proper division of work. Further, after the industrial revolution and the American Revolution, the western world flourished considerably. But it was only a section of the people who were receiving the benefits, while the condition of the average common man degraded (Skousen 6). The book The Big Three in Economics: Ada m Smith, Karl Marx and John Maynard Keynes by Mark Skousen in 2007 explained how Wealth of Nations dismissed the traditional economic outlook where mercantilists controlled the commercial and political interests of the society. This book reported that mercantilist policies benefited only the producers and