The wealth of nations by Adam Smith

The Wealth of Nations By Adam Smith
The Wealth of Nations is a fundamental work in classical economics.
Firstly Smith mentioned the term division of labor, which is the specialization of cooperative labor in specific tasks. Adam Smith suggested that productivity would rise significantly when the division of labor principle was used. Output per worker would be raised while costs per unit produced would be reduced. In consequence of the division of labor, great improvements have been achieved: First, the increase of dexterity in every particular workman; second, the saving of the time which is commonly lost in passing from one operation to another; third, the invention of a great number of machines which facilitate and abridge labor, and enable one man to do the work of many.
In Smith’s opinion, the division of labor is limited by the extent of the market. As is the power of exchange that give occasion to the division of labor, so the extent of this division must always be limited by the extent of that power, or in other ords, by the extent of the market. For instance, the scattered families that live 8 or 10 miles distance from the nearest of them, must learn to perform a lot of little pieces of work while in more populous countries, they can call in the assistance of the workmen.
The principle of the division of labor is the difference of natural talents in different men, i.e. comparative advantage and different kinds of task should be separated. According to Adam Smith, individuals should take advantage of their different talents and produce the product in which they have a comparative advantage, and trade it to the individuals who cannot efficiently produce it for the products they need, thus enhancing the productivity. There are also disadvantages of the division of labor that needs to be taken into consideration. Workers in a company are subjected to doing the same work every day. This makes work monotonous and boring. Workers lack motivation, which can lead to decrease in production. None can be held responsible for bad production because none makes the complete article. When the thing is bad, everybody tries to shift the responsibility to somebody else. Also, the worker is doing only a part of the job. He knows only that much and no more.
In the essay, Smith also elaborated the origin and use of money. When the division of labor first took place, the power of exchange had been embarrassed in its operations. For instance, if one man has more of a certain commodity than he need, and another has less, the former will be glad to sell it while the latter purchase. However, if the latter have nothing that the former needs, no exchange can be made between them. In order to avoid such inconveniency of such situations, men endeavored to use something that few people would be likely to refuse in the process of exchange, then the money came into being. In all countries, men seem to give preference to metals. Thus for a long time metal was used as a measure of value in exchange.
The main theories of Adam Smith include the division of labor and the free trade. Smith has been celebrated by advocates of free market policies as the founder of free market economics. The “invisible hand”was coined by Adam Smith to describe the self-regulating nature of the marketplace. He believed that by allowing
business people to go after their own self-interests it would benefit society as a whole. He argued that in a free exchange, both sides became better off. Quite simply, nobody would trade if they expected to lose from it. The buyer profits, just as the seller does.
Smith is widely cited as the father of modern economics and capitalism and is still among the most influential thinkers in the field of economics today, and is perhaps best known for his work The Wealth of Nations.His theory, including the division of labor and the free trade, exerted profound impact on many economists. Many of the ideas that Smith discussed are still being argued today. His belief in the power of the free market can be heard echoed in the work of many modern day economists.。