Adam smith Flashcards
what is book 1 of the wealth of nations about?
the causes of improvements in the productive power of labour
what is book 2 about?
of the nature, accumulation and employment of stock. he is attempting to anaylse the different forms of investment and capital stock and the nature of accumulating capital.
what has the phrase joint stock been replaced with?
the word capital
what is book 3 about?
the different progress of opulence in different nations. a theory of economic history that proposes 4 different stage in the history of human economic thought.
what are the four stages of economic history?
in the first most primitive, humans are simply foragers or hunter gathers. there is no fixed village.
in the second stage, there is domestication of animals and humans develop a form of existence based on pasturage
the third stage sees the development of settled agriculture and the development of crop culture.
in the final stage it is the age of the commerce with industrial development and the introduction of joint stock companies.
what was book 4 about?
of systems of political economy. two systyems smith attacks here is the mercantillistists and the physiocrats. mercantillist he critiqued for their lack of free trade and smith argues for limited government intervention
what was book 5 about?
the revenue of the sovereign or commonwealth. it deals with public finance such as taxation and public expenditure.
what are smiths principles of taxation?
a good taxation system should be governed by equality, certainty , convience and efficiency
what does smith list as the four main public expediture areas?
he states public expenditure should be on defence, the provision of a system of justice, the provision of nationial infrastructure and education.
what are smiths views on economic growth tied to?
Smiths views on economic growth are fundamentally tied on his analysis of the division of labour – workers should not work In isolation but should infact work as a part of a production line
why is the division of labour efficient?
1 the increase In skill of each worker
-2the work time saved since workers don’t have to pass from one task to another
-3 division leads aids invention of new productive technologies
what did smith believe about the productivity of agricultural sector?
Smith thought agriculture had roughly constant returns to scale
what did smith believe about the productivity of mining , and extractive activities?
mining or extractive activities had diminishing returns to scale
what did smith believe about the productivity of manufacturing?
he thought that the manufacturing industry had significant increasing returns to scale ( it is in manufacturing where the benefits of the division of labour are to be reaped)
what is circling capital?
Circulating capital- store of goods and materials from the last productive period avaliable at the beginning of the currnet productive period
