Adam Smith: The Father of Economics

Adam Smith's work discusses the evolution of human society.

• First, he presents the hunter stage without property rights or fixed residences to nomadic agriculture with shifting residences.
• The next stage is a feudal society where laws and property rights are established to guard privileged classes.
• Finally, modern society is characterised by free markets where new organisations conduct market transactions.

• Adam Smith advocated for reducing the role of government intervention and taxation in free markets, but he saw the government as responsible for a country's education and defence sectors.
• From Smith comes the idea of the "invisible hand" that guides the forces of supply and demand and competition in an economy.
• For Smith, an institutional framework is necessary to steer humans toward productive pursuits that benefit society. The framework consists of institutions like a justice system that protect and promote free and fair competition.

Adam Smiths' ideas in "The wealth of nations" were a motivating factor in the evolution from land-based wealth to wealth created by assembly-line production methods that included labour division.

Smith argued that the division of labour and the associated specialisation creates prosperity.

The ideas in "The wealth of nations"(Adam Smith) provided the seed for the concept of GDP and altered the importing and exporting business.

Before, countries declared their wealth based on the value of their gold and silver. Smith argued that countries should instead be evaluated based on their levels of production and commerce. This concept was the foundation for creating the GDP metric for measuring the wealth of a country.