What were Adam Smith's main propositions in the Wealth of Nations? Why didn't Adam Smith like Mercantilism?
>>53648016
Do your own book report, underage.
>>53648016
Nigga I'm not underage, but I need help.
>>53648016
His complaint was that while countries were competing with each other economically, because of Mercantilism they resorted to beggar-thy-neighbor strategies (My country will be richer if I take stuff from the other countries). It created a system where a tiny number of countries completely controlled all trade and left most people worse off as wealth trickled up.
He proposed we let individual people compete with each other without the government getting involved.
Because of course people wouldn't create a system that involves a small percentage of the people making all of the money by ensuring the rest got very little, while the wealth trickled up. That could never happen.
>>53648016
He starts out talking about how the division of labor allows for far greater productive capacity than everyone doing everything for themselves, and that this principle of specialization extends to nations, and as such trade between nations allows for greater wealth than would be possible in a protectionist system. At least that's part of it.
>>53648435
I have these as a few of his main propositions.
Division of labor (specialization) is the source of economic growth
economic growth brings higher wages and a higher standard of living
supply and demand govern prices and guide investment decisions
therefore regulations and restrictions on the exchange of goods were horrible for it and would fail
nevertheless the duty of a nation includes defense, education, and commercial infrastructure
>>53648669
And no Protective tariffs.
>>53648016
Also what is the fuck is his diamond and bread and water paradox
>>53649028
Water is absolutely necessary to live but is cheap, while diamonds are useless luxuries (18th century, there weren't diamond-tipped drills or anything) that are expensive. Basically it's that the degree to which a product is necessary is far from the sole determinant of its price.
>>53648016
>Mercantilism
mercantilism, at least in it's original form, is just the encouragement of monopolies
>>53649289
In other words, utility is not the main determinant of price, but marginal utility is. The more you have of something, the less you are willing to pay for one more unit. The less you have of something, the more you are willing to pay for one more unit.
>>53650199
Gotcha, thanks
>>53648669
The invisible hand.....
>>53650199
Would you happen to have a source for this? I trust this, it's just that I'd like to look more into it and it's impossible for me to find.
>>53650328
Most econ texts talk about marginal utility. It's a pretty fundamental concept of micro economics
