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What Are The Merits And Demerits Of Wealth Definition By Adam Smith?

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Nicole Manion answered
There are many merits to the definition of wealth as outlined in Adam Smith's seminal work, and little to criticize particularly when it is considered just how much difference he made to  the world of economics and how much of it still holds true today.

  • Adam Smith

Adam Smith was an 18th century economist and philosopher who changed the way people looked at economy and wealth through his renowned work, 'An Inquiry into the Nature and Causes of the Wealth of Nations,' which was published in 1776.

  • 18th century economics

Up until Smith's book, the countries of the world viewed their economy by how much gold and silver they had in the coffers. This was very definitely an era of when cash was king. This meant that they viewed exporting goods as something that was good and beneficial to the nation because it brought more gold and silver into the country.

On the other hand, imports were considered to be a negative thing because they drained the country's cash.

In order to promote one and deter the other, taxes were levied against imports and subsidies were given to exporters in the United Kingdom.

Even on a smaller level, artisans were forbidden to practice their trades in other towns so that their own would be the only one to benefit from that trade and manufacturers applied to the monarch for monopolies that would protect them.

Smith argued that all trade was good and that nobody would bother if it there was a negative outcome. He made it apparent that a free exchange was beneficial to both sides and that a country could not simply measure its wealth by counting its coins. Instead, all production and commerce should be included.

This idea is still used today and is referred to as the gross national product.

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