Adam Smith Excerpt.docx

Flash cards on the Adam Smith Excerpt

Adam Smith's view on economic growth

Smith believed that society improves through the division of labor and productivity, leading to universal opulence.

Law of Accumulation

The principle that the majority of rising capitalists aim to accumulate savings, which benefits society as it increases the capacity for production.

Law of Population

Smith argued that laborers are produced according to demand; higher wages lead to more workers, while lower wages reduce the working population.

Market mechanism

The process by which supply and demand regulate prices and production in a market, leading to societal economic growth.

Secular evolution in economics

The long-term process of economic improvement driven by accumulation and the division of labor, not subject to business cycles.

Laissez-faire

An economic principle advocating minimal government intervention in the market, championed by Adam Smith.

Government's role according to Smith

Smith believed the government should protect society, administer justice, and maintain public institutions that benefit society.

Public investment

Investment by the government in projects that cannot be undertaken by the private sector, such as roads and education.

Interconnectedness of economic factors

Smith's idea that various economic factors are interlinked and influence each other, leading to a continuous upward economic trend.

Criticism of government intervention

Smith opposed government actions that interfered with the market, such as restraints on imports and subsidies for exports.