Adam Smith
Capitalism refers to the factors of production being privately controlled rather than by the state and that money is invested in businesses to make a profit. The foundation of capitalism was created by Adam Smith, a Scottish philosopher and economist, during the Age of Enlightenment. Smith’s objectives differed from those of the feudal empires and monarchies. The natural laws created by Adam Smith, which characterize the Industrial Revolution in the United States, led to a dramatic increase in competition and a transcendence in the rate of innovation, it is best exemplified through Thomas Edison and Nikola Tesla’s war of currents. Adam Smith is regarded as the father of capitalism due to his work in political economics, specifically production,
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His second law is, the law of supply and demand. The law of supply and demand explains the correlation between the supply of an item or service to the demand for that good. Ceteris paribus, when there is low supply and high demand, the price will be high. Conversely, when the supply is high and there is low demand, the price will be low. These theories are generally taught in all economic classes are still relevant today in the pricing of goods. Smith’s laws of supply and demand are the foundation of economic understanding. The third is the law of competition. He states that competition forces individuals to make a better product in order to survive in the markets. Other individuals behaving in their own self-interest will lead to competition between producers to attract consumers, this increases productivity and innovation. Competition also decreases price gouging and corruptions in the markets. It also decreases the probability of a monopoly existing, which was frequent during feudal empires and monarchies. Therefore competition reduces self-interested behavior from taking advantage of the consumers. The final assertion Smith made was that government regulation should not interfere with the …show more content…
Smith's theory coincided with a long-developing American tradition of individualism and opposition to government interference. America, not Britain, would be the great testing ground of Adam Smith's ideas (Miller and Masur). The industrial revolution was characterized by a technological revolution and a commercial revolution fueled by economic individualism and unrestricted competition. Private investments and loans enabled inventors and scientists to develop these new technological advancements at expediting rates. Without capital, many inventions would have not occurred due to insufficient funding, which was required to create their vision. Without capitalism, innovation would not have been as rapid as due to lack of sufficient funding from private investors. In conclusion, capitalism’s effects of increased globalization and competition through innovation enabled rapid technological advancements through necessary
His second law is, the law of supply and demand. The law of supply and demand explains the correlation between the supply of an item or service to the demand for that good. Ceteris paribus, when there is low supply and high demand, the price will be high. Conversely, when the supply is high and there is low demand, the price will be low. These theories are generally taught in all economic classes are still relevant today in the pricing of goods. Smith’s laws of supply and demand are the foundation of economic understanding. The third is the law of competition. He states that competition forces individuals to make a better product in order to survive in the markets. Other individuals behaving in their own self-interest will lead to competition between producers to attract consumers, this increases productivity and innovation. Competition also decreases price gouging and corruptions in the markets. It also decreases the probability of a monopoly existing, which was frequent during feudal empires and monarchies. Therefore competition reduces self-interested behavior from taking advantage of the consumers. The final assertion Smith made was that government regulation should not interfere with the …show more content…
Smith's theory coincided with a long-developing American tradition of individualism and opposition to government interference. America, not Britain, would be the great testing ground of Adam Smith's ideas (Miller and Masur). The industrial revolution was characterized by a technological revolution and a commercial revolution fueled by economic individualism and unrestricted competition. Private investments and loans enabled inventors and scientists to develop these new technological advancements at expediting rates. Without capital, many inventions would have not occurred due to insufficient funding, which was required to create their vision. Without capitalism, innovation would not have been as rapid as due to lack of sufficient funding from private investors. In conclusion, capitalism’s effects of increased globalization and competition through innovation enabled rapid technological advancements through necessary