Adam Smith was born in Kirkcaldy, Fife, Scotland. His exact date of his birth is
unknown but he was baptized on June 5, 1723. At the age of fifteen, Smith began
attending Glasgow University where he studied moral philosophy. In 1748 he began
giving lectures in Edinburgh where he discussed rhetoric and later he began to
discuss the economic philosophy of the “simple system of natural liberty”
which he later proclaimed in his Inquiry into Nature and Causes of the Wealth of
Nations. In 1751, Smith was appointed professor of logic at Glasgow university,
transferring in 1752 to the chair of moral philosophy. His lectures covered the
field of ethics, rhetoric, jurisprudence and political economy. In 1759 he
published his Theory of Moral Sentiments, embodying some of his Glasgow
lectures. This work was about those standards of ethical conduct that hold
society together, with emphasis on the general harmony of human motives. Smith
moved to London in 1776, where he published An Inquiry into the Nature and
Causes of the Wealth of Nations, which examined in detail the consequences of
economic freedom. It covered such concepts as the role of self-interest, the
division of labor, the function of markets, and the international implications
of a laissez-faire economy. The Wealth of Nations established economics as an
autonomous subject and, launched the economic doctrine of free enterprise. In
the western world, it is the most influential book on the subject. When the
book, which has become a classic manifesto against mercantilism, appeared in
1776, there was a strong sentiment for free trade in both Britain and America.
This new feeling had been born out of the economic hardships and poverty caused
by the war but the British public and parliament still clung to mercantilism for
many years to come. Smith laid the intellectual framework that explained the
free market and still holds true today. He is most often recognized for the
expression "the invisible hand," which he used to demonstrate how
self-interest guides the most efficient use of resources in a nation's economy.
In 1778, he was appointed to a post of commissioner of customs in Edinburgh,
Scotland. He died there on July 17, 1790, after a painful illness. After his
death it was discovered that Smith had devoted a considerable part of his income
to numerous secret acts of charity. In the piece entitled Four Percent Follies
from The Accidental Theorist Krugman discusses how some people think Alan
Greenspan should let the economy grow faster. Four Percenters, those against
Greenspan, feel that he is not putting enough currency into circulation
therefore slowing growth. If more money is put into the economy then nit will
grow faster but if too much is put in, inflation will occur. Also, they feel
that this will remedy the low rate of unemployment which will soon cause
inflation to spiral upward if it continues to decrease below the standard 6%.
Adam Smith would surely understand the Four Percenter’s plea. He would want
the economy to be free from too much government control. Greenspan is abusing
his place and should let the currency flow into the market rather then hold
back. Sure, Smith would say some mediation is necessary to keep too much money
from pouring in so inflation doesn’t occur. Smith believes that the economy
should be free from the government yet the government should still silently
oversee it to prevent any problems. Greenspan is preventing problems but is
being too cautious and Smith would want him to let more currency into our market
but still keep it from getting out of control. My view on this matter is quite
similar to that of Adam Smith’s view on the matter. I also feel that an
economy should be allowed to flourish and grow to its fullest capacity. As the
article illustrates, inserting more money into the economy will certainly cause
the economy to grow and also help fix the unemployment rate. So I feel that
Greenspan should loosen his control over the money and let more currency be
distributed into the economy. But I also feel that it is very important that
Greenspan maintains a watchful eye over this inserting of money into the
economy. His job is to keep the economy prosperous and safe. So while he must
let more money flow he still must be sure to keep too much money from entering
our market. He can not let inflation occur because that would hurt our economy
and he will have failed. That is why his job is difficult, however, as the man
placed in that position he must be able to handle this. Either Greenspan lets
more money enter the economy while overseeing it as too prevent inflation or
America simply needs to find a new Chairman of the Federal Reserve. The second
article from The Accidental Theorist is called Technology’s Wonders: Maybe not
so wondrous.