Adam Smith's Contributions to Modern Free Market Economics

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Among economists, it is said Adam Smith is one of the main contributors to modern free market economics. His thoughts attacked mercantilism which was the prevalent form of government at the time. His works provided systematic rationales in the subjects of capitalism, free markets, and limited government intervention. His most popular books changed history because without them, many of these thoughts and ideas would not be so prevalent. Smith is regarded and cited as the father of modern economics. With this said, not all of Smith’s ideas were in agreement with laissez-faire. Although Adam Smith pioneered many ideas on modern free market economics, Smith cannot be depicted as a defender of laissez-faire because of his ideas on retaliatory tariffs, public goods, and taxation. Laissez-Faire The term laissez-faire (meaning ‘let it be’) was popularized by Vincent de Gournay in the 1750’s. From Merriam-Webster’s dictionary the term is defined as a doctrine opposing governmental interference in economic affairs beyond the minimum necessary for the maintenance of peace and property rights. This form of economic thought is often referred to as Capitalism. Capitalism Capitalism puts emphasis on free-markets (laissez-faire) and property rights. That is, nothing is publicly owned, and everything is private property. By leaving government out of the economy, Capitalism’s main goal was for the economy itself to grow. With this, promote social efficiency throughout the society. If left alone, the best possible use of resources will result. Along with this, a ‘natural price’ will result. That is, profits will equal zero and price will be at the lowest possible point. This results in ‘perfect competition’. Any profits have alr... ... middle of paper ... ...dea about the invisible hand. However, Smith was not a pure capitalist in the modern sense. While many people regard Smith as a key proponent in free market economics, some of his ideas do not go along with that thought. Works Cited Broadie, A. (2003). The Cambridge companion to the scottish enlightenment. New York, NY: Cambridge University Press. Nation Master, Initials. (2010). Encyclopedia > Adam Smith. Statemaster. Retrieved (2010, March 9) from http://www.statemaster.com/encyclopedia/Adam-Smith#_note-1 Ross, K. (2008). Smith's law, free trade, and free immigration. Retrieved from http://www.friesian.com/smith.htm Smith, A. (1895). An Inquiry into the nature and causes of the wealth of nations. New York, NY: T. Nelson and Sons. Weiner, N. (n.d.). Adam smith's recommendations on taxation. Retrieved from http://www.progress.org/banneker/adam.html

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