Download - Adam smith
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Adam Smith Scottish Moral Philosopher & Economist(Baptized June 5, 1723 Kirkcaldy, Scotland.—died July 17, 1790, Edinburgh)
Pir Qasim Shah MS Management Science – Management Thoughts for Dr. Gohar
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Overview
IntroductionEarly lifeGlasgowThe Theory of Moral SentimentsTravels on the ContinentThe Wealth of NationsSociety and the “invisible hand”Economic growth
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IntroductionSocial Philosopher and Political EconomistMajor Works:
o The Theory of Moral Sentiments (1759)o An inquiry into the nature and causes of
wealth of nations (1776)Foundation Stone of Political and Social Evolution Lectures on :
Philosophy, Government, Law & Economics
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Early life
Elementary Schooling in Kirkcaldy At the age of 4 he was carried off by gypsiesAt the age of 14 Entered University of GlasgowInfluenced by Francis Hutcheson (Scot-Irish philosopher and major exponent of the theory of the existence of a moral sense through which man can achieve right action)Got a Scholarship (i.e Snell Exhibition) of Oxford University
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Early life
Started delivering public lectures in Edinburg after returning from OxfordSubjects: Rhetoric, History, Economics etc.Appointed as a professor of Logic at Glasgow when he was 27In 1752 he was transferred to “moral philosophy” (a combination of natural theology, ethics, jurisprudence and political economy)
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Glasgow
Happiest and honorable period of Smith’s lifeLectures and University AffairsAppointed as a Dean in 1758Evenings were spent in Society of GlasgowCompany with Aristocrats, Scientists, Government Officials & other intellectuals:
Joseph Black Pioneer of ChemistryJames Watt Famous for Steam EngineRobert Foulis Publisher
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The Theory of Moral Sentiments (TMC)
Didactic, Exhortative, Analytic in Nature*It lays the psychological foundations for later workDescribes the principles of “human nature”It was taken as a universal & unchanging datum from which social institutions & behavior could be deducedLong debates about the conflicts between the TMC & later works of Adam Smith
* Didactic: Intended to teach with moral instructions, Exhortative: Motivational, Analytic: Using logical reasoning
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The TMC Cont…Question in TMC that attracted attention of Philosophers:
“The “source” of the “ability” to form “moral judgments”; including the judgments on one’s “own behavior”, in the face of the seemingly “overriding passions” for “self-preservation & self-interest””
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The TMC Cont…Smith’s Answer: “The presence of an “Inner man” who plays the role of “impartial spectator”, “approving or condemning” “our own & others’ actions” with a voice “impossible to disregard.”
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Simple definition of QuestionHow “instinctual drives” are “socialized” through the “superego”?
Better Understood by:Sigmund’s Personality Iceburg
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Travels on the Continent
Started tutoring to the stepson of “Charles Townshend” (duke & role in American Revolution)Remuneration £300 p.a. + travelling expenses and £300 pensionMeeting Voltaire (Greatest of all French Writers)Started writing “Wealth of Nations”Returned to London after the death of Duke’s brother and worked in Royal Society
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An Inquiry into the Nature and Causes of the Wealth of Nations.• Four Stages of Society:1. Hunters2. Nomadic
Agriculture3. Feudal Farming4. Commercial
Interdependence• Laissez-faire Capitalism
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Wealth of Nations cont.…
The Philosophy of Smith in Book is: Focused on “human nature”Driven by the “desire for self-betterment”Guided by “Faculties of Reason”
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Society and the “Invisible Hand”
• Arguments: • How a system of perfect liberty,
(operating under the drives and constraints of human nature) and intelligently designed institutions, will give rise to an orderly society?
• Study:• Explanation of “Laws” that “Regulated” the
“Division of Entire Wealth” and “Distribution of Goods & Services amongst, Laborers, Landlords and Manufacturers”
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Invisible Hand Explanation • An “institutional mechanism” that acts to
“reconcile” the “disruptive possibilities” inherent in the blind obedience in the passion alone. (i.e. competition)
• “A desire that comes with us from the womb and never leaves us until we go into the grave”
• Unintended outcome of competitive struggle for self-betterment
• The said force pushes the prices to a so called “natural” level that correspond to the cost of production
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Invisible Hand (Explanation) Capital flows from less profitable to more profitable
businesses or areas or occupations Competitive mechanism continuously forces the
prices to stay at the natural levels despite short-run aberrations
Wages, Rents and Profits (Factors of cost of Production) are also subject to the same self interest and competition
Smith provided a rationale for these natural prices and also revealed an orderliness in the distribution of income (i.e. wages for workers, rents for landlords and profits for manufacturers)
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Economic Growth & Smith Division of Labor Output Efficiency Examples of a Pin Factory Accumulation of Capital/Stock for wages, costs,
machine & tools Division of Labor makes individuals stupid Division of labor, Labor Supply, Wages & Mortality
Rates are closely related Against Monopolies, Mercantilists and Accumulation
of Wealth
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Excess Labour SupplyBrings down Wages to Natural Price
Fall in AccumulationConsequences of Natural Mechanism
Hiring Additional LabourRequires More Wages then their Natural Price
Accumulation of StockRequires More Labour
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Human Nature & Philosophy of Smith
• Wealth of Nations would grow if individuals grow laissez-faire
• System of “Natural Liberty” not mercantilism or monopolies
• Merchants & Manufacturers are neither are; nor ought to be the rulers of mankind
• Intellectual degradation resulting in commercial division of labour
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Final Years of Life• Wealth of Nations received recognition• Appointed as a commissioner of Customs
Duty for Scotland• Well off in the final years of life• Spent time in Edinburg with occasional visits
to Glasgow & London• Died at the age of 67 • Buried in church yard Cannon Gate with a
monument “Adam Smith Author of Wealth of Nations”
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Thank You
Q/A Session