CRITICISMS OF ADAM SMITH’S THEORY, AND THE CONCLUSION.

 

Criticisms of Adam Smith’s Theory

Summary and Conclusion 

Scottish economist and philosopher Adam Smith made a major impact on economic theory, most notably with his ground-breaking book "The Wealth of Nations." Smith's theories covered a wide range of topics in economics, including market analysis, international trade, value theory, income distribution, welfare, and the general level of prices. His ideas are fundamental to modern economics.

Smith's examination of markets highlighted the contribution that competition and self-interest make to economic growth. He was a supporter of limited government involvement and the idea of the "invisible hand," which holds that each person's seeking their own interests advances society as a whole. He also talked about the value of free trade internationally, the advantages of specialisation, and the division of labour.

Smith's theories have been widely accepted and have made a substantial contribution to our understanding of economics, but they are not without drawbacks and restrictions. These criticisms cover a wide range of topics, including inequality, environmental sustainability, the disregard of ethical and social considerations, and the oversimplification of human behaviour and the assumption of perfect competition.

In conclusion, many of Adam Smith's theories are still applicable in modern economics, and his theories have been instrumental in shaping economic thought. But in economic analysis, they ought to be regarded as a beginning point as opposed to a conclusion. A more sophisticated understanding of human behaviour, the function of government, and the significance of addressing social and environmental issues are frequently incorporated into modern economic thought. While Adam Smith's work is still regarded as a classic in economics, more recent theories that take into account the complexities of the real world have both challenged and enhanced it.

Written by G.A. Shehani Navodya

Reference:

Harry Landreth, D. C. (2002). History of Economic Thought (4th ed.). Boston, Toronto: Houghton Mifflin Company.