“For what purpose is all the toil and bused of this world! What is the end of avarice and , ambition. of the pursuit of wealth. of power. and , preeminence “Thus wrote Adam Smith (1723- 1790). of Scotland. who glimpsed for the social world ,of economics what Isaac Newton recognized for the physical.world of the heavens. Smith answered his questions in The Wealth of Nations (1776). where he explained the self-regulating natural order by which the oil of self-interest lubricates the economic machinery in an almost miraculous fashion. Smith believed that the toil and bustle had the effect of Improving the lot of the common man and woman. “Consumption is the sole end and purpose of all production.”
Smith was the first apostle of economic growth. At the dawn of the Industrial Revolution. he pointed to the great strides in productivity brought about by specialization and the division of labor. In a famous example. he described the specialized manufacturing of a pin,factory In which “one man draws out the wire. another straightens It, a third cuts it.” and so it·goes. This operation allowed 10 people to· make “48,000 pins in a day. whereas if “all wrought separately, they could not each of them make twenty. perhaps not one pin a day:’ Smith saw the result of this division of labor as “universal opulence which extends Itself to the lowest ranks of the people.” Imagine what he would think if he ‘returned today to see what two more centuries of economic growth have ‘produced! ‘
Smith wrote hundreds of pages railing against countless cases of government folly and interference. Consider the seventeenth-century guild master who was tempting to improve his weaving.The town guild died. “If a cloth weaver intends to process a piece accordion to his own invention~ he should Bunin permission from the judges of the town to employ the number and length of threads that he desires after the question has been considered by four of the oldest merchants and four of the oldest weavers of the guild.” Smith argued that such restriction-whether imposed by government or by monopolies, whether on production or on foreign trade-limit the proper workings of the market system and ultimately hurt both workers and consumers.
None of this should suggest that smith was an apologist for the establishment.He had a distrust of all entrenched power, private monopolies as much as public monarchies.He was for the common people.But, like many of the great economists, he had learned from his research that the road to waste is paved with good intentions.
above all , it is Adam smith vision of the self-regulating “invisible hand” that is his enduring contribution to modern economics.
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