Adam Smith lived during the era of mercantilism, an economic system where national wealth was viewed as static and best increased through maximizing exports and minimizing imports. Mercantilism often involved military protection of supply sources.
Since Adam Smith's influential ideas some of his ideas have changed for example, production activities, international relations, market places and market forces have all changed since his time (Dominique). But an idea that he had that has stayed true is his ideas on, "The Wealth of Nations" and "The Invisible Hand" stating that people working towards their career and working for themselves helps out the economy more than they know (Smith), and that all the people of society have wants and needs and trade makes them richer. Smith's greatest ideas have stayed true till this day
During the period of Adam Smith's ideas for a new economy, having a free market capitalist economy. As well as being one of the founders of the laissez-faire economy, some things that have stayed the same from his ideas was continuing to have free trade within some countries. Also some countries continuing the free market economy which he founded. However, some things that have changed about his ideas were that capitalist societies have been overthrown for the most part.
Historical Prespective
Adam Smith lived in a world that's economic system were operated under philosophy of mercantilism. Mercantilism is an economic system based on trade that was based on the worlds wealth being static (Kenton). The idea that a nations wealth was at best when increasing exports and reducing imports (Kenton). Due to this stores supply sources were protected by military (Kenton). Mercantilism was later replaced by the free trade economy which was created by Adam Smith (Adam Smith). Smith's idea of the free market critiqued ideas of mercantilism (Kenton) for example, Smith's ideas did not reduce exports while increasing imports or have military protecting stores.
Adam Smith was an innovative and influential thinker of his time, he published "The Wealth of Nations" which was one of his most famous pieces of work. This is where he first created the idea of a free market capitalist society which laid the foundation for economists to come. He created this theory because of his thought to try to help all social classes and lead a fair economy that meets the needs of the people.
Cause and Consequence
Adam Smith first created the ideas of the laissez-faire economy. It received lots of support because of his influence (The Editors of Encyclopaedia Britannica). Smith Laissez-faire economy was caused from the fall out of Mercantilism. Laissez-faire was a popular belief during the time (The Editors of Encyclopaedia Britannica), and was later developed further by the Physiocrats (The Editors of Encyclopaedia Britannica). The consequences of this economy were that in the beginning of the great depression, held that the government could relieve unemployment and increase economic activity (The Editors of Encyclopaedia Britannica).
Adam Smith's idea of the free market capitalist society stemmed from that before him that he had to live with. Smith lived in a Mercantilism economy This caused him to think of a better way to have a greater economy. Mercantilism ended up falling out to increase exports which would also increase the country's wealth (Kramer). The British government fully embraced free trade and Smith's laissez-faire economy (Sonnenshein). This system is a key component of free-market capitalism (Sonnenshein).
Historical Significance
Another reason why Adam Smith was historically significant was about his idea of The Invisible Hand, he used this term to explain, when someone pursues their career for their own self interest they are inadvertently lead by the invisible hand, and inadvertently helps the society more than they know (Adam Smith). Today, this theory is known as supply and demand which regulates the market to provide for the needs of the purchasers and helps the economy. These theories have been taken from more modern economists to create their own conclusions on supply and demand and a free market economy.
Adam Smith was historically significant because he was one of the greatest economists and intellects of his time and his ideas like a free market capitalist society were very innovative for the time period. Smith's the division of labour stated it was a necessary key to economic growth (Adam Smith). Also the free market system was what Smith believed the best economic system to support his argument. He thought if people had different careers they would have a lot more productivity (Adam Smith).
