Discussion starter for 'The Wealth of Nations'

Essay by Cowgirl82302University, Bachelor'sA+, September 2006

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Adam Smith was a philosopher but is also accredited to creating the market economy, supply, and demand. Smith's book, "The Wealth of Nations," not only explained how his new way of economics would work but also left some insight on how wealth could better our societies.

Through the division of labor he used a perfect example. Instead of one person making a whole nail; why not use a few people to create the same nail? These few people would be able to create exponentially more nails a day compared to the one black smith in a day.

As products are created at a higher volume with the assembly line technique, the supply would go up which would inevitably drop the price of nails. As the price lowers, more people are more inclined to purchase them. This in turn will free up more of their money to purchase more products of a different nature.

This will also create more of a profit for the business owner.

Since the business owner has a higher profit he can then invest in new machinery to produce the products cheaper but also hire more labor. In return for this labor he would, of course, have to compensate them monetarily. This would create a circular effect of income, expenses, and revenue. As each person in this circle buys and creates goods it will, in theory, lower the price of certain goods and leave that consumer with extra money to spend.

Since people would be buying goods at a cheaper price and working less, they are able to have more free time and create more ideas to increase productivity. As all this is taking place the country is growing and producing a richer society. Through the technical progress of economics and the division of labor,