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Adam Smith’s Economic Relations Essay


Introduction

When man introduced barter trade, the essence of the innovation was to enable every individual to attain his or her individual interests with reference to the acquisition of different goods and services. As revealed by Adam Smith, humans are naturally inclined to relate to each other in the quest of achieving personal interests, and this forms the basis of the relationships between different people in the business.

In a capitalist world, individuals only care about their personal gains, but their efforts in reaching their personal objectives come in handy in the attainment of other people’s goals. Smith looks into the development of sufficient products in the country, and the human factors that are integrated to meet the demands of every individual in the nation.

This paper focuses on Adam Smith’s description of economic relations between people, businesses and nations as they interact in a capitalist environment. To engage in economic relations, people, businesses, and nations have to develop a need to satisfy their different private economic interests. As Smith states, ‘One man, we shall suppose, has more of a certain commodity than he himself has occasion for, while another has less’ (Smith 2005, p. 25).

Smith’s description

Smith is a critic and a philosopher in every sense of the words because he provides a comprehensive description of the relationship between people and the factors that influence their interaction in a capitalist environment. He begins by highlighting the complex understanding of how human beings in a nation develop the products that are supposed to suffice the entire society.

From his description, it is apparent that human beings in a given society have to integrate their efforts to develop marketable products that enable every individual in the nation to become economically independent. The national capital is generated from the articulation of the competencies held by the people, the available resources, and the political-economic policies governing the production and sales processes. In the civilised nations, the governments develop policies that enable every individual to enjoy a good life regardless of their occupations (Smith 2005).

The development of economic relationships between people, businesses, and nations depends on the goods and service produced by individuals. According to Smith, labour is the most important part of the production process in a capitalist environment. He explains that the production level in a given nation is dependent on the competence levels of the individual labourers. The production quotient also relies on the number of people involved in the provision of labour in the nation building projects.

In this light, he claims that nations with lower unemployment rates have a lower rate of poverty. His sentiments are backed by the fact that the production level of a community depends on the people involved in the process. For instance, Smith states ‘a proportionable increase of the productive powers of labour’ (Smith 2005, p. 12). Smith emphasises on the importance of the division of labour in the society. He claims that the division of labour determines the number of people involved in the annual production process in the nation.

Their productivity translates to the economic performance of the nation in question. In addition, Smith claims that the division of labour increases productivity because it leads to the development of expertise among the labourers in different areas of the workflow. As Smith claims, the dexterity of an individual in handling a specific task increases his or her productivity.

Adam Smith defines the economic relationship between people, businesses and nations as a quest for individual interests. In addition, he claims that the process is naturally oriented toward individuals using their talents to make their products desirable to other people. He emphasises that two people must have different requirements that they can provide for each other for trade to happen.

Smith believes that trade is a result of the reciprocal needs of individuals, and it forms the basis of the interaction between different people in a capitalist environment. He states further that the development of currency was gradual, starting from using metal as the means of exchange. Business persons abandoned the use of metal and shifted to the use of coins. In the current world, money is the main mode of exchange of different products.

The presence of money in a society means that despite the involvement of different people in the production of different commodities in a nation, there are people in the chain who receive larger shares of the currency. This phenomenon has led to the division of the society into different socioeconomic groups.

For instance, lawyers and blacksmiths belong to different economic groups. Smith reveals that the only difference between people in different positions of the economic ladder is the relevance of the skills they possess. This difference does not necessarily mean that having more contribution to the nationwide production translates to higher income levels in a capitalist world (Smith 2005).

Conclusion

According to Adam Smith, capitalism entails the development of individual interests, and the pursuit of the aggressive pursuit of the interests. This process leads to the development of the national production, but the level of power in the labour determines the amount of resources available for the people. Indeed, the development of economic relationships depends on the existence of distinct interests, which result in trade between two or more individuals.

Reference

Smith, A. 2005, An inquiry into the nature and cause of the wealth of nations.

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IvyPanda. (2020, March 29). Adam Smith’s Economic Relations. Retrieved from https://ivypanda.com/essays/adam-smiths-economic-relations/

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"Adam Smith’s Economic Relations." IvyPanda, 29 Mar. 2020, ivypanda.com/essays/adam-smiths-economic-relations/.

1. IvyPanda. "Adam Smith’s Economic Relations." March 29, 2020. https://ivypanda.com/essays/adam-smiths-economic-relations/.


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IvyPanda. "Adam Smith’s Economic Relations." March 29, 2020. https://ivypanda.com/essays/adam-smiths-economic-relations/.

References

IvyPanda. 2020. "Adam Smith’s Economic Relations." March 29, 2020. https://ivypanda.com/essays/adam-smiths-economic-relations/.

References

IvyPanda. (2020) 'Adam Smith’s Economic Relations'. 29 March.

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