Adam Smith - Wealth Of Nations

The wealth of nations is a great book by Adam smith which gives an insight to economic views. The writer has superbly managed to relate the economics to human psychology. He has explained in a quite detailed but complicated manner that how the economic system of his time was wrong and how the trade system will be a misfit for the future. The author has taken his time to carry extensive research before writing down his observations. The book is not merely theory but he has provided tanles and graphs and even formulas to calculate various economic terms and their value in the perception of human mind.

The complete edition is divided into five books. The first two parts lay emphasis on the division of labor concept and their direct relation to surpluses. The author explains how division of labor contributes in increasing productivity and efficiency both. The division of labor will also trigger technological advancement as the labors who are working on a certain task for long will develop ideas in how to do it in an easier manner. The surpluses according to the writer can be traded with other economies or they may be re-invested in the economy. The third book explains the economy of the United Kingdom and its causes and effects. Smith writes that decrease in efficiency leads to economic depression in one way or other. In the fourth part the author critiques the mercantile economic system of his time. The system used value of metals to determine the value of economy. According to smith this was not a correct measure, rather the number of goods and services a nation can produce should be considered the value for its economy. The wealth of a nation in his view is not increased by stuffing metals but it is increased by improving the production capacity of the nation. This could be done by increasing trade.

The entire 5 books revolve around the idea that the economic system works on the principle of automation. When something goes in access, its demand fall and so do its price and the production. Similarly it is the opposite in the case when some commodity is limited. This is termed as the invisible hand that controls the economy of various nations across the globe. If we look in a broader context it actually prevails in the world economy.

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