¶ … Adam Smith's Free Trade
In Wealth of Nations, Adam Smith recognized that human beings have a natural propensity "to truck, barter, and exchange one thing for another." Smith saw the free trade of goods across borders as an extension of this human instinct. People exchange products and services as "free agents" in pursuit of their own individual interests. In the process, people become part of an international economy, connected across national borders, as if guided by an "invisible hand."
Smith's concept of free trade was challenged immediately upon the book's publication. Indeed, while the urge to trade and barter may be an integral part of human nature, there remain significant barriers to international free trade. This paper examines some of those barriers, namely the institution of protectionist laws, political uncertainty in different countries and the lack of adequate infrastructure in many lesser-developed countries, such as roads and telecommunications.
Protectionism
Protectionist policies are not a new phenomenon. In the mid- 19th century, Friedrich List, a professor of political economy, believed that newly-established industries cannot possibly compete with more established industries abroad. Therefore, to protect its own "infant industries," countries should erect protectionist barriers to keep the prices of foreign manufactured goods as high as the costs of production of the new industrializing domestic enterprises (List, 1885).
To this day, even the United States, arguably the staunchest supporter of free trade, continues to practice protectionist regulations. For example, a large part of the U.S. automobile industry is protected by high tariff. Vehicles that are classified as light trucks are hit with 25% import duty, compared to only 2.5% for cars. The large import duty effectively keeps competitors from Japan, South Korea and other countries out...
ADAM SMITH'S FREE MARKET CAPITALISM Adam Smith's upheld the concept of free market capitalism at a time when the world did not trade in such complex environment. Each state was economically independent of the other. In saying that market capitalism could remain unregulated stem from the fact that at the time governments were too keen on taxing its nations. During the Gold system, a nation depended on the free flow of
Give me that which I want, and you shall have this which you want, is the meaning of every such offer" (Smith, 1776, p. 118-119). The unintentional consequence is thee same as it was before: an increasingly respectable and thriving nation, one so much so that it is as if shaped by what Smith deems the "invisible hand," from which Smith thus concludes that "it is the necessary, certain propensity
discovery of the New World and attendant new trade routes can certainly be described as momentous and significant, but the benefits of conquest and contact have been eclipsed by the inhumane, unjust, and hypocritical consequences thereof. Three major aspects demonstrating Old and New World exchanges. Discovery of new raw materials creating market demand and shifting patterns of trade, eg. Tobacco, cotton, corn. Global trans-Atlantic slave trade creating free labor for the owners
His lectures were a success as many eminent people of Edinburgh attended them and earned him a decent income. During the course of his lectures on English literature, Smith perhaps realized that his real vocation was economics. Hence, addition to English literature, he started to deliver lectures in economics in 1750-51 in which he advocated the doctrines of commercial liberty, based largely on the ideas of Hutcheson. It was also
The roadways and other such necessities which are constructed by the government at the government's expense, and of which the private individuals are unable to finance, ultimately are predicted by Smith to come at higher and higher costs to the society. SUMMARY & CONCLUSION Smith, in his work, demonstrates how it is that self-interest is held at bay to an extent by rivalry of economy results in a prosperity that is
For Hobbes, individuals must be a larger population beneath authority, and those individuals must, by the very nature of the perpetuation of the species, cede all rights and control over to that authority. It is also well within the natural rule of law that there might be abuses of authority, and that even though rebellion might be expected, it is up to the individual to maintain that the State
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